TasFarmers Matters - GBEs about more than profit

In 1995, the then Liberal Government led by premier Ray Groom introduced the Government Business Enterprises Act, creating the framework that would shape the way some of Tasmania’s largest publicly owned businesses operated.

It brought major government bodies into the GBE model, including the Hydro-Electric Corporation, now Hydro Tasmania, Forestry Tasmania, now Sustainable Timber Tasmania, the Public Trustee, Tascorp and the Motor Accidents Insurance Board. 

The Act was designed around commercial operation, accountability and the payment of financial returns back to the State.

Within the same year, Tasmania had also adopted competitive neutrality as part of the National Competition Policy reforms sweeping Australia.

Together, those reforms fundamentally changed the way the State expected its publicly owned businesses to operate.

The model continued to evolve and, over the following decade, major transport and infrastructure businesses moved into similar State-owned company structures, operating under a more conventional corporate model.

TasPorts was established as a State-owned company on January 1, 2006, bringing Tasmania’s regional port corporations together under one business.

TasRail followed in 2009, after the State moved to bring the rail network back under public ownership, with Tasmanian Railway Pty Ltd established as a State-owned company on December 1 that year.

Over time, what began as an effort to bring commercial discipline, transparency and accountability to government businesses became the model through which some of Tasmania’s most important economic infrastructure is managed.

As such, State-owned businesses have increasingly been guided towards commercial objectives and the public benefit for Tasmanians has been forgotten. 

We still see too much stripped out through government dividends, executive payments and labour costs rather than being reinvested in delivering services and for the benefit of Tasmania’s productive economy.

Operating in the same financial, labour and regulatory markets should require the same commercial discipline as private enterprise.

Competitive neutrality was intended to ensure State-owned businesses did not enjoy an unfair advantage simply because they were publicly owned. But in markets where State-owned businesses operate as monopolies or near monopolies, competitive neutrality alone does not create competition or necessarily drive better outcomes for customers.

Competitive neutrality may have succeeded in making public businesses behave more like private businesses without necessarily delivering the competition, productivity or public benefit that justified the broader policy reforms in the first place.

The objectives for GBEs should be clear. They should enable the productivity of the private sector for the benefit of businesses based in Tasmania and the people who live here, while using profits to reinvest in the services and infrastructure needed to maintain and improve those services over time.

They should also operate with strong accountability and transparency to maintain social licence. While GBEs must properly account for the full cost of their business activities, they should also act in the public interest and deliver real, measurable benefits to Tasmania.

These are not vague social objectives; fair competition and cost-effective services delivered for the benefit of the public should be part of the DNA.

Operating in the same financial, labour and regulatory markets should require the same commercial discipline as private enterprise.

However, the drive to be competitive should ultimately serve us, the public shareholders, rather than private shareholders. That should mean greater benefits and value flowing back to Tasmanian businesses and taxpayers.

Like any good entrepreneur, we should be looking at how our State-owned businesses can be better integrated, almost vertically, into Tasmania’s economy to strengthen our competitive advantage.

Their role should not simply be to operate successfully as standalone businesses. Where appropriate, they should help reduce costs, improve productivity, strengthen supply chains and make Tasmania a more competitive place to do business.

As a state, we cannot maintain policy settings that unnecessarily suppress our own competitive advantages.