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Opportunities and challenges

The APR highlights key opportunities and challenges for the portfolio, including:

  • More effective use of scarce capital. In aggregate, the companies have invested large sums in capital expenditure over the last five years. While the portfolio is now seeing a reduction in the level of capital investment, KiwiRail and Transpower continue to invest heavily.
  • Financial performance needs to improve. In spite of significant investment across the portfolio in recent years, this has yet to lead to a sustained improvement in performance.
  • Debt ratios need to remain within reasonable levels. While some of the recent investment has appropriately been funded from third party debt, there are limits around the extent to which higher gearing is desirable.
  • There is an opportunity to consider how the Crown fulfils its ownership and monitoring responsibilities. Ministers have shown an increased willingness to consider alternatives to the current institutional arrangements to improve outcomes.
  • Better performance may be achieved by utilising greater private sector expertise and disciplines.
  • The Government Share Offer Programme leads to a more complex set of relationships between the Crown, MOM companies and private shareholders.
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