The work of my Office has been focused on the theme of Our future needs: is the public sector ready? This report focuses on the ability of Crown-owned companies' governance systems to support "future thinking" and to realise and adjust strategies accordingly.
It has been more than 25 years since New Zealand's State-owned enterprise model for governing and delivering certain public services was set up. Since then, other types of Crown-owned companies, such as Crown research institutes and other Crown companies, have been formed, and individual entities have changed. For example, while we were preparing this report, the decision was made to wind up Learning Media Limited and to sell Orcon Kordia's retail service provider to private investors.
Crown-owned companies provide strategically significant services, such as electricity infrastructure and assuring meat quality, and have considerable public resources – about $28.3 billion in assets and $5.1 billion in annual revenue.
In this report, I describe how Crown-owned companies are preparing for the future. I set out for Parliament and the public:
- the challenges in maintaining a focus on the future that were described to us; and
- insights and lessons from Board members working within the commercial model.
My staff were told that there are inherent tensions in the governance arrangements for Crown-owned companies, and these tensions can be significant problems for Boards, raising questions such as:
- How is seeking profit balanced with long-term strategic interest and social responsibility?
- What benchmarks are useful to compare the performance of Crown-owned companies against?
- Should one public sector entity compete against another, possibly resulting in duplication of infrastructure or capability?
Lyn Provost
Controller and Auditor-General
5 February 2014