Government owned corporations performance and governance
The Office of Government Owned Corporations (OGOC) manages the State's interest in the Government-owned corporations (GOC) sector to maximise the Government's return on investment while ensuring GOCs provide reliable, efficient and secure services; deliver market-like returns to shareholders; and adhere to corporate governance guidelines and statutory requirements.
We provide diverse services to a wide range of clients, encompassing shareholding Ministers, Government, business and other sectors, such as funds management and water resources.
Our services to these clients include:
- providing critical analysis and assessment of GOC operations and investments, ensuring a rigorous, efficient and effective GOC governance regime
- developing strategic advice and medium-to-long-term policy objectives for individual GOCs and the sector as a whole, as well as advising GOCs of shareholding Ministers' requirements and decisions, and facilitating their implementation
- providing oversight, high-level advice and leadership in strategic policy, governance, budgetary and fiscal issues affecting Queensland GOCs
- conducting structural reviews to ensure an economic, reliable and efficient delivery of services
- ensuring GOCs are best positioned to provide essential infrastructure.
- Under Treasurer, Gerard Bradley
- Deputy Under Treasurer, Tim Spencer
- Deputy Under Treasurer, Alex Beavers
- Executive Director, Adrian Noon
- Acting Deputy Executive Directors, Bill Brett and Stephen Hoult
- Director, Transport, Resources and Corporate, John Lawlor
- Director, Strategic Advisory, Reg Prakash
- Acting Director, Energy, Michael Mamczur
- Acting Deputy Executive Directors, Bill Brett and Stephen Hoult
- Executive Director, Adrian Noon
To provide high-level quality commercial, strategic and policy advice in relation to the Government's portfolio of GOCs.
To lead the management of the State's interest in its GOCs, with the aim of achieving market returns on that investment, while at the same time ensuring GOCs provide high-quality infrastructure and related services and meet appropriate corporate governance standards.
Key issues facing the output
Queensland's growing population has seen an acceleration in the demand for infrastructure, and the State's GOCs are driving large components of that infrastructure. This will bring the work of GOCs into greater focus and increase scrutiny of their governance and commercial arrangements.
A shareholder review is examining the preparedness of the GOC electricity generators to meet challenges such as carbon reduction measures and competition from large vertically-integrated retailers.
Output performance highlights
|Number of GOC Statements of Corporate Intent (SCI) completed||1||16||14|
|Number of quarterly performance monitoring reports completed||64||61|
|Percentage of SCIs received and reviewed within the scheduled timeframe||95%||95%|
|Cost of monitoring and governance per GOC||2||$220,000||$250,000|
- Amalgamation of ports reduced the number of SCIs due by one. In addition, QIC substantially revised and resubmitted its SCI in late June and missed the formal sign-off date.
- Although the number of GOCs has reduced, monitoring and compliance effort has increased.
The 15 Government-owned corporations
- CS Energy Limited
- ENERGEX Limited
- Ergon Energy Corporation Limited
- Queensland Electricity Transmission Corporation Limited (Powerlink Queensland)
- Stanwell Corporation Limited
- Tarong Energy Corporation Limited
- Queensland Investment Corporation Limited
- Far North Queensland Ports Corporation Limited
- Gladstone Ports Corporation Limited
- North Queensland Bulk Ports Corporation Limited
- Port of Townsville Limited
- Port of Brisbane Corporation Limited
- Queensland Rail Limited (from 1 July 2010)
- QR Limited
- SunWater Limited
Manage the State's interest in the GOC sector to maximise the State's return on investment while ensuring reliable and secure service delivery.
Actively work with GOCs to assist them in meeting their commercial performance and customer service objectives as agreed with shareholding Ministers through the Statements of Corporate Intent (SCI).
Optimum returns for essential services
Working with GOCs to monitor, report and improve their performance helps to protect the State's investment and optimise returns which are then reinvested in essential services. In 2009-10, we improved GOCs' performance monitoring by introducing sector-specific reports that capture emerging risks and ensure key financial and non-financial performance measures are reported consistently.
During the year, the State collected $1.11 billion in dividends and current tax equivalents from GOCs, which were then used to provide equity injections for critical water, energy, ports and rail infrastructure projects, as well as help fund the community service obligations (CSOs) expected of the GOCs. In the coming year, we forecast collecting $966 million in dividends and current tax equivalents for essential capital projects and CSOs. We will also continue monitoring the financial structures of GOCs to ensure debt-to-equity ratios remain appropriate.
Strengthened reporting, planning and governance
Sound planning and governance and rigorous reporting are key to ensuring GOCs achieve their strategic goals.
Each year, GOCs produce an SCI, a formal agreement with their shareholding Ministers which outlines objectives, strategies, expected financial performance, borrowings and project undertakings for the year ahead. SCIs help ensure that performance is commercially focussed, efficient and effective. A statutory document, the SCI is required to be finalised and submitted for shareholding Minsters' consideration before the start of the financial year. In 2009-10, all SCIs achieved this objective.
We also established a new standard quarterly reporting regime for all GOCs to allow them to report effectively on progress towards SCI targets. In 2010-11, quarterly reports will provide a valuable source of hard data on GOC performance, emerging risks and impacts, and mitigation strategies. In 2010-11, we will continue working with the GOCs to ensure GOCs report on their progress towards achieving SCI targets, and that all SCIs are finalised and agreed to by 30 June 2011.
Also in 2009-10, we implemented guidelines to provide guidance for GOCs to publish high-level non-financial and financial forecasts on their websites. Starting in July 2010, these forecasts will be published on GOCs' websites annually.
Looking forward to 2010-11, we will also finalise governance and performance monitoring arrangements for the newly created GOC Queensland Rail Limited.
Undertake reviews of asset holdings and capital programs aimed at maximising the efficiency of each GOC's capital utilisation as set out in the 2008-09 Major Economic Statement – Mid Year Fiscal and Economic Review.
Building for economic recovery
Queensland's record building program continued throughout 2009-10, playing a key role in economic recovery. GOC capital expenditure is a critical part of this program. We supported GOCs with a net equity injection of $593 million on behalf of shareholding Ministers. In 2010-11, GOCs have budgeted $6.412 billion for capital expenditure. This will include electricity distribution network upgrades worth $2.189 billion.
Focus on returns
In 2009-10, we progressed a review of the balance sheets of GOCs in accordance with the policy announced in the 2008-09 Major Economic Statement Mid Year Fiscal and Economic Review. These GOCs include parts of QR Limited, Abbot Point Coal Terminal, Port of Brisbane Limited and Forestry Plantations Queensland.
We continued to oversight the governance functions of businesses associated with these assets and participated in separating parts of these corporations which will remain in State ownership. In particular, we had a key coordinating role in formating and establishing the new GOC Queensland Rail Limited, which owns and operates the passenger rail and non-coal network assets and services. Queensland Rail Limited will remain in Government ownership after QR Limited's freight and coal network operations are sold.
We also conducted 14 capital structure reviews to establish GOCs' optimum capital requirements. We will continue these reviews during 2010-11 as part of the 2011-12 Budget process to ensure GOCs' debt/equity structures are appropriate to support their approved capital expenditure plans.
Verify all GOCs endeavour to meet the earnings before interest and tax (EBIT) savings target set in the 2008-09 Major Economic Statement – Mid Year Fiscal and Economic Review and undertake other reviews as set out in the statement.
Committed to savings targets
The 2008-09 Major Economic Statement – Mid Year Fiscal and Economic Review forecast specific savings targets for GOCs. The savings target of $61 million for 2009-10 is reflected in the financial outcomes of the GOCs.
During that time, we provided GOCs with capital expenditure monitoring programs to help them achieve on-budget results and monitored GOCs' reporting of actual savings compared to forecast savings.
In the coming year, GOCs are forecast to achieve savings of $89 million, and we will continue our ongoing communication with GOC Boards as we monitor progress towards the target. Review of capital programs will continue as a means of achieving best practice for capital decisions and cost management.
Increased scrutiny of investment proposals focussing on risks and financial returns to ensure only commercially viable projects which meet customer requirements are undertaken.
In 2009-10, we progressed a shareholder review (the Genco Review) of the preparedness of energy generator GOCs to meet challenges such as carbon reduction measures and competition from larger retailers. In the year ahead we will work with the energy generator GOCs to ensure their capital programs are consistent with the review's outcomes.
In addition, we reviewed GOCs' risk management strategies for a number of significant investment proposals, including:
- Powerlink Queensland's Stage 1 augmentation of the transmission connection between Bulli and South West Queensland
- Powerlink Queensland's $80 million Ruby substation to support gas industry processing operations
- Stanwell Corporation's further development of its coal reserves with Wesfarmers.
We also reviewed SunWater's proposed capital management strategy and approach to project development and timing, and the structure, capital works, income sources and cost base of the newly established GOC Queensland Rail.
Other significant reviews during the year included:
- Townsville Marine Industry Precinct
- Development of Berth 10 at Port of Townsville
- Agreements for development of Wiggins Island Coal Terminal
- Development of Abbot Point Coal Terminals.
These reviews will help ensure projects contribute to a trend of improving returns. A program of post-investment reviews will help determine actual operational results and develop best practice procedures for future investments.
Our program of reviews will continue throughout 2010-11, with:
- continuing work with ENERGEX and Ergon Energy to progress the joint workings program. This program aims to improve the financial and operational efficiency and performance of ENERGEX and Ergon Energy through developing and progressing initiatives for a joint approach to common business support activities
- ongoing assessment of significant current projects as well as reviews of Gladstone Ports Corporation developments to cater for proposed coal and LNG projects, additional coal terminals at Abbot Point, assessment for a potential coal export terminal at Dudgeon Point and land development strategies at the Port of Cairns
- continuing work with the coal industry proponents of the Wiggins Island Coal Terminal and Gladstone Ports Corporation to progress a range of activities under the Framework Deed aimed at achieving financial close.
Queensland Rail - a new era for passenger train services
Queensland Rail’s primary focus is to deliver high-quality passenger train services to Queensland commuters.
The formation of Queensland Rail will herald a new era for Queensland’s passenger train public transport services. For the first time in Queensland’s history, the State will have a Government-owned corporation with a primary focus on providing passenger train services.
Queensland Rail will continue QR’s focus on providing high quality, safe and reliable passenger train services, while continuing to manage and maintain the State’s vast regional rail network.
The State Government embarking on a major program of passenger service improvements. Station upgrades, network expansions, new modern passenger trains, more services and better timetabling are all part of Queensland Rail’s plans to deliver quality public transport for Queensland commuters.
The restructure of QR Limited and establishment of Queensland Rail was one of the State’s largest ever corporate restructures. The restructure, which was overseen by Queensland Treasury, included the transfer of contracts, information technology systems and employees.
Last reviewed 22 October 2012