Public ownership does not mean public accountability

From the Dom Post:

A parliamentary report has given a damning assessment of the monitoring and valuation of state-owned enterprises, describing the lack of transparency as “indefensible”.

This has prompted NZX chief executive Mark Weldon to offer free listings for five per cent of SOE shares so the market can enforce a higher degree of transparency and accountability.

The transparency and discipline listings would bring are an excellent reasons to have some private ownership in the SOEs. The public would actually get more and better information on the billions locked up in the SOEs.

Every year Treasury and the CCMAU publish a statement of corporate intent providing information such as shareholder rates of returns. There were no statistics included in the statements in 2007 and 2008.

The committee said it had been told by officials “informally” that satisfactory portfolio performance data was not published because of a lack of resources.

The report said this implied that portfolio performance and public accountability were not considered relevant or important, respectively.

Again ownership does not translate to accountability.

The committee said it was concerned because Government documents, particularly the State-owned Enterprises Act, state the main aim of an SOE is to be as efficient and profitable as a comparable private company.

The committee said if Treasury or the CCMAU lacked the resources to do the analysis, they could put the work up for tender.

One funds research analyst said the private sector “couldn’t do a worse job even if we were drunk in charge”.

A possibility that can’t be ruled out 🙂

The most recent financial statements value the Crown’s interest in the 18 SOEs at $23.5 billion at June 30, 2007, the equivalent of 40 per cent of the $59 billion market capitalisation of the New Zealand sharemarket at June 2008.

Issues like this are not sexy but can be vitally important.