STATE-OWNED COMPANIES
BRIAN KANTOR: Staff of SOEs are doing it for themselves
The Budget Review for 2018-19 informs us: "In cases where state-owned companies are making large investments in infrastructure, capital expenditure reduces profitability. Even after these investments are paid for, profitability is unlikely to match private sector profit rates because these entities often provide public goods and services below the cost of production to enable economic activity..." Capital expenditure, properly managed, should improve profits and returns rather than additional waste. The review tells us that "in many cases, however, falling profitability reflects mismanagement, operational inefficiencies and rising financing costs. Over the medium term, state-owned enterprises (SOEs) need to raise returns to generate value and to reduce their reliance on debt and injections from the fiscus." A combined balance sheet of state-owned companies provided in Table 8.2 of the Budget Review indicates how poor the financial performance has become over the years. The combined ...
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