Anderton reminds CCMAU directors of important role

At a breakfast function in Christchurch this morning Jim Anderton outlined the government's change of policy towards State Owned Enterprises and reminded the Crown company directors of the importance of their roles. The key change in the government’s policy is that SOEs are being asked to consider expanding the scope of their businesses by looking at allied products, markets and technologies.

This change is driven by the government’s emphasis on transforming the New Zealand economy. "We want a high-value, high-skill knowledge-based economy," the Minister said.

"It will succeed by focusing on niches in the global value chain, where we are responsive to consumer demand and where we harness the unique skills, strength and creativity of New Zealanders."

Mr Anderton said that New Zealand hadn't grown enough successful international skill-based businesses. "It’s more common to see our businesses reach a certain size and then sell out. That’s not surprising; it’s hard to grow a large business in New Zealand. A $100 million company in Los Angeles doesn’t need to leave the state, and possibly even the city. A $100 million business in New Zealand is much more likely to have to master the complexities of exporting and sophisticated management." He said that many SOEs have substantial management talent and businesses with enough scale to enter international markets.

However the Minister cautioned that the new policy is not a general licence to start new business in any sector. "The government still expects publicly-owned businesses to focus on their strengths and capabilities. The greatest risk is that boards and management might lose focus on their core activity. So proposals for entering new business areas will be assessed case by case. Generally, the government will want to see funding from the business’ own balance sheet. In many ways, the policy is not revolutionary; it formalises decisions we have begun to take anyway." Mr Anderton cited Kiwibank as an example of the kind of expansion he hopes to see from Crown owned companies. "It fitted with NZ Post’s mission statement: People connecting people in communities and commerce. It is a roaring success. It’s been signing up new customers at the rate of 2500 a week, every week for the last four years. It is making an operating profit already – most unusual for a new bank!"

He went on to urge the CCMAU directors to be innovative in their approach. "If we don’t take initiatives to increase the scale and productivity of Crown owned companies, they risk withering. They have to be given the chance to grow."

The Minister referred to past debates about the role of publicly-owned businesses. "These days the government is committed to realising the advantages that public ownership of enterprises can bring. It will generally look for spill-over benefits from new business activities that contribute to the wider economy in a positive way," said Jim Anderton today in Christchurch.

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