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Annual Report of the Treasury for the Year Ended 30 June 2006

Output performance – CCMAU

Statement of Objectives and Service Performance
section 45A Public Finance Act 1989

Votes at a Glance

Actual expenditure for 2005/06 by output class:

Vote State-Owned Enterprises

Crown Company Monitoring Advice to the Minister for State-Owned Enterprises and Other Responsible Ministers

This class of outputs involves the provision of policy and ownership monitoring advice on the SOEs, Crown companies and Crown entities covered by Vote SOEs (collectively referred to below as “SOEs”). This includes:

  • advising the Minister for SOEs and other responsible Ministers on the strategic direction of SOEs; the commercial and fiscal risks associated with Crown ownership; proposals to establish and restructure SOEs; and the processes and outcomes of significant SOE divestments and acquisitions
  • providing advice which assists Ministers to set ownership objectives and targets for SOEs
  • monitoring and advising Ministers of SOEs’ performance against these objectives and targets
  • providing policy advice on, and managing issues arising out of, the ownership of SOEs, including residual implementation issues
  • managing, on behalf of responsible Ministers, the appointment of SOE directors and monitoring the performance of those directors and boards
  • assisting responsible Ministers in the formulation of shareholders’ expectations in relation to the governance practices and structures companies adopt.

Maintaining and enhancing the Crown’s ownership interest in these entities contribute to the efficient management of the Crown’s assets and liabilities.

Significant work completed during the year

  • Completed the 2005/06 SOE business planning, which includes analysing and reporting on each company’s draft SCI and business plan so that shareholding Ministers are able to provide informed feedback to boards. The 2006/07 SOE business planning round was also substantially completed by 30 June 2006.
  • Completed a Briefing to the Incoming Minister for SOEs and other responsible Ministers that CCMAU advises under the purview of Vote SOEs.
  • Completed Crown Company Quarterly Performance reports for the June, September, December and March quarters, which were presented to Cabinet.
  • Completed long-term hold owners’ reviews for Meridian and Airways; and the commencement of reviews for Genesis and NZ Post. The long-term hold reviews of Asure and AgriQuality were put on hold pending the outcome of an organisational review involving these two companies, which was still outstanding at year end.
  • Completed a capital structure review of TVNZ, the appointment of a new Chair for the company, and the development of an expanded/enhanced shareholders’ expectations document for it.
  • Managed a number of company issues, and the provision of advice to Ministers on them, including:
    • the business case for CIAL’s terminal redevelopment plan
    • the proposed implementation of free-to-air digital television
    • the impact on Meridian of the final Waitaki Water Allocation Board plan for allocating water in the Waitaki catchment
    • the proposed increase in dividend distribution ratio by Mighty River Power
    • energy regulatory issues affecting Transpower in particular
    • a number of smaller-scale acquisitions by SOEs.
  • Completed a report on aviation industry developments and their implications for the Crown’s aviation investments.
  • Took a “lead agency” role in the establishment of an international best-practice sharing network of organisations with a similar role to that of CCMAU.
  • Convened an SOE Chairs’ meeting in May with the Minister for SOEs and other Ministers.
  • Provided advice to Ministers on a number of appointments and governance issues, including:
    • completion of the 2006/07 SOE appointment round
    • completion of a directors’ fees review for 2006/07
    • continuing active participation in the wider governance officials’ forum
    • hosting two prospective directors’ seminars
    • hosting a one-day induction seminar for new SOE directors
    • hosting a number of networking functions for serving directors to share issues of common interest
    • managing expressions of interest from candidates wishing to be considered for Crown governance roles
    • continuing to provide assistance to other agencies regarding nominations.

Service performance

Service performance
Performance Dimensions Achieved?

Quality

The Minister for SOEs and other responsible Ministers will expect advice to demonstrate a sound knowledge of the Crown company’s business, the environment within which the company operates and the consequences of shareholder or company actions.

All reports will comply with the generic quality standards for analysis and advice outlined on page 138. Output quality will be assessed as follows:

  • The Ministers will expect CCMAU to implement suitable quality control procedures to support the expectations for analysis and advice delivered under the relevant Votes.
  • Managerial and peer (internal and external, where appropriate) review will be maintained to ensure that the quality standards are met.
  • The Minister for SOEs will be formally requested, on a quarterly basis, to indicate his level of satisfaction with the overall quality of the outputs produced.

 

 

 

 

 


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More than
satisfied

Quantity

The quantity and nature of advice and operational services will be supplied on the basis agreed between the Minister for SOEs and the Executive Director of CCMAU (as amended from time to time) for 2005/06.

Quarterly and end-of-year reporting will enable the Minister to assess actual performance in output delivery against those expectations.

 


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Coverage

A comprehensive range of services will be provided as agreed with the Minister for SOEs. These will include the capacity to react quickly and provide support for the Minister in Cabinet committees, including relevant briefings on significant issues and regular evaluation of the impacts of shareholder decisions and company actions on the Government’s desired outcomes.

 

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Cost Effectiveness

Analysis and advice will be delivered within the cost parameters agreed with the Minister for SOEs (or as subsequently modified by agreement).

 

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Timeliness

Timeframes will be agreed between the Minister and the Executive Director of CCMAU for the financial year.

  • Advice will be delivered within the agreed and/or statutory timeframe so that Ministers have sufficient time to consider the issues and take appropriate action. Where agreed deadlines will not be met, extensions are to be formally requested.
  • Ministerial correspondence (MCs), parliamentary questions (PQs), Cabinet agendas and Official Information Act requests (OIAs) will be responded to within agreed and/or statutory timeframes.
  • CCMAU will respond appropriately to requests for attendance at Parliament during debates and at Cabinet and select committee meetings.
  • Quarterly and end-of-year reporting will enable the Minister to assess actual performance in the timeliness of output delivery against those expectations.

 


 

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2004/05 PQs MCs OIAs
Estimated 120-160 160-180 12-20
Actual draft replies 69 132 4
% answered by due date 100 99 100
Cost ($000)
2005/06 Actual 2,480
Supp. Est. – Voted 2,553
Main Est. 2,448
2004/05 Actual 2,260

Actual 2005/06 output class expenditure was $73,000 or 3% under Supplementary Estimates budgets.

The appropriation for this output class was increased by $105,000 in the Supplementary Estimates owing to a fiscally neutral transfer from Vote CRIs to cover the actual allocation of overhead costs between the two Votes that fund CCMAU and by an increase to cover the costs of the State Sector Retirement Savings Scheme.

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