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Commercial Portfolio


The Crown's Commercial portfolio includes a range of businesses with commercial objectives.[44] The entities are expected to be as profitable and efficient as comparable businesses that are not owned by the Crown. The portfolio consists of:

  • Listed Companies: Companies listed on the NZX with the Crown owning a majority holding. These include Air New Zealand, Mighty River Power (MRP) and Meridian Energy. Meridian was an SOE as at 30 June 2013, but listed in October 2013.
  • Commercial Priority Entities: Entities that operate, for the main part, as commercial enterprises in competitive environments. This includes all SOEs, as well as Television New Zealand, Public Trust, the corporatised airports and Fairway Resolution.

Like all Crown investments, Commercial assets require an underlying rationale for ownership, discussed more fully in Box 4.1.

As an example of Crown ownership changing, the Government Share Offer Programme saw a sale of shares in Air New Zealand and sales of up to 49% of two electricity generator-retailers.[45] This has allowed the Crown to recycle capital from one part of the balance sheet to fund other important social infrastructure.

For more information on the Commercial portfolio, see the 2013 Annual Portfolio Report (APR).[46]

Box 4.1 - Commercial asset ownership

Commercial asset ownership requires an underlying policy rationale. The reasons why any government may wish to own commercial assets can change over time and therefore the rationale for ownership should be continually monitored.

The ownership of the Crown's commercial assets mainly reflects a range of historical factors. Previously only the Crown had the financial, organisational, and technical capabilities to establish and operate large scale industries. In particular, these reasons were most acute for national network industries such as electricity, telecommunication, post, and railway. Other reasons for commercial asset ownership include:

  • Regulation does not sufficiently moderate the behaviour of a monopoly.
  • State ownership is needed to satisfy international treaties.
  • The market does not have sufficient scale or coordination to achieve investment or service levels needed for the national interest.
  • A business is systemically important and Crown ownership is the most cost-effective means to ensure continuity of goods and services.

With all assets, ownership needs to be as efficient as possible. With purely commercial assets this means maximising shareholder returns.

Over time ownership reasons for commercial assets have lessened, while the economic costs from Crown ownership have become more apparent. Governments may not manage commercial assets and entities as effectively and efficiently as private sector owners. This can be because of:

  • a lack of private sector disciplines and incentives to get better value and minimise costs because boards, managers and shareholding Ministers do not have a direct financial ownership interest
  • a lack of specialist knowledge and expertise
  • governments potentially weighting social responsibility more heavily than financial performance objectives
  • a status quo bias (in terms of buying/selling assets and greater/less investment)
  • governments typically not having an exit strategy with regard to devaluing assets that erode Crown wealth
  • public sector monitoring having less impact than market monitoring
  • difficulty in making speedy decisions.

Some of these barriers to performance are being addressed through the Government Share Offer Programme.


  • [44]Commercial companies incur liabilities as part of their operations, which are reflected in the Crown balance sheet. However, this section of the Investment Statement considers the performance of commercial entities as an organisation - ie, the net effect of their assets, liabilities and performance.
  • [45]Refer to pages 36-41 of HYEFU 2013 for further discussion on the Government Share Offer Programme.
  • [46]
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