If you own publicly listed shares, you will know in the next week or two how your company performed for the year ended June 30, 2018. Most financial statements are released in August.
Why can’t government businesses release their financial statements in August? At present we don’t get to see annual reports of government businesses until the end of October.
Government businesses comprise half the state public sector in terms of net assets. Government departments and agencies comprise the other half. The businesses are very important.
We get a brief chance to ask questions for a few hours of parliamentary scrutiny at hearings early in December, months after the reporting period as part of the final act of political theatre for the year before Parliament rises for a three-month break.
Despite previous attempts, we don’t even see half-yearly financials, as shareholders of listed companies do. Only the government sees these.
Government businesses have two shareholders, the Treasurer and one other Minister. The latter varies from company to company. Both shares are held in trust for us, the people of Tasmania.
There’s scant evidence of benevolent trusteeship. They act more like gatekeepers impeding the flow of timely and relevant information to us, the real underlying shareholders.
The government businesses are very indebted. The government doesn’t borrow. Instead it arranges for its subsidiaries to borrow, mainly the electricity companies.
Almost all profits are paid as dividends allowing the government to crow about its own bottom line.
The businesses, however, are left with increased borrowings. In four years time borrowings across all businesses will total $3.7 billion.
Tas Networks for instance, currently has borrowings of $1.9 billion. In four years’ time borrowings will total $2.1 billion. The level of borrowings is influenced by prices the Regulator allows it to charge for transmission and distribution of electricity.
If the value of its assets is written down, as the respected Grattan Institute recommended last year, then the amount it can charge will fall thereby reducing retail electricity prices. Tas Networks would be left trying to service a huge debt with reduced income.
A greater level of understanding of government businesses is required with earlier and more frequent disclosure of financial information a good start.
The Advocate, August 20, 2018