Lyla Lindsey
In Australia, the predominant term for state-owned enterprises is Government Business Enterprise (GBE). The Australian government's relationship with its GBEs is similar to the relationship between a holding company and its subsidiaries. As of March 2021, there are nine GBEs in Australia, comprising two corporate Commonwealth entities and seven Commonwealth companies.
| Characteristics | Values |
|---|---|
| Number of GBEs | 9 |
| Type of entities | 2 corporate Commonwealth entities |
| Type of companies | 7 Commonwealth companies |
| Relationship with the Australian Government | Similar to the relationship between a holding company and its subsidiaries |
| Price setting | Based on economic forces, including demand and supply |
| Ownership | The Australian Government owns GBEs, but some were privatized in the 1990s |
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What You'll Learn
- Government Business Enterprises (GBEs) are Commonwealth entities or companies
- The Australian Government's relationship with its GBEs is similar to a holding company
- GBEs are subject to the Public Governance, Performance and Accountability Act 2013
- The Australian Government receives advice on its GBEs from the Commercial Division
- GBEs set prices, taking into account economic forces and demand
Government Business Enterprises (GBEs) are Commonwealth entities or companies
In Australia, the term used for State-Owned Enterprises (SOEs) is Government Business Enterprise (GBE). A Government Business Enterprise (GBE) is a Commonwealth entity or Commonwealth company that is prescribed by the rules (s8 of the PGPA Act). The PGPA Act refers to the Public Governance, Performance and Accountability Act 2013, and the PGPA Rule refers to the Public Governance, Performance and Accountability Rule 2014.
There are nine GBEs of the Australian Government, comprising two corporate Commonwealth entities and seven Commonwealth companies. The two corporate Commonwealth entities are the Australian Postal Corporation and Defence Housing Australia. The seven Commonwealth companies are ASC Pty Limited, Australian Naval Infrastructure Pty Ltd, Australian Rail Track Corporation Limited, National Intermodal Corporation Limited, NBN Co Limited, Snowy Hydro Limited, and WSA Co Limited.
The Australian Government's relationship with its GBEs is akin to the relationship between a holding company and its subsidiaries. This includes a strong interest in the performance and financial returns of the GBE, reporting and accountability arrangements, and active oversight by the shareholder. The government may also impose price conditions on GBEs providing goods and services in a monopolistic market or Community Service Obligations (CSOs).
The Department of Finance's Commercial Division provides advice to the Australian Government regarding its GBEs and other commercial entities. This includes providing strategic and analytical advice, engaging with the GBEs and consulting with stakeholders, and ensuring a robust governance framework is in place.
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The Australian Government's relationship with its GBEs is similar to a holding company
A Government Business Enterprise (GBE) is a Commonwealth entity or Commonwealth company that is prescribed by the rules (s8 of the PGPA Act). The Australian Government's relationship with its GBEs is akin to that of a holding company with its subsidiaries. This relationship is characterised by a strong interest in the GBE's performance and financial returns, with the government taking on the role of a shareholder.
The government's role as a shareholder involves active oversight and accountability arrangements, allowing it to facilitate management autonomy while also receiving regular performance reports. This dynamic enables the government to take action and direct the strategic path of its GBEs if their proposed direction diverges from the government's preferences. The Finance's Commercial Division plays a crucial role in this context, providing advice to the Australian Government regarding its GBEs and other commercial entities.
As of March 2021, there are nine prescribed GBEs of the Government of Australia, consisting of two corporate Commonwealth entities and seven Commonwealth companies. The two corporate Commonwealth entities are the Australian Postal Corporation and Defence Housing Australia. The seven Commonwealth companies include ASC Pty Limited, Australian Naval Infrastructure Pty Ltd, Australian Rail Track Corporation Limited, National Intermodal Corporation Limited, NBN Co Limited, Snowy Hydro Limited, and WSA Co Limited.
GBEs are expected to set prices while considering economic factors such as demand, supply capacity, and costs. The government may impose price conditions on GBEs operating in a monopolistic market or with Community Service Obligations (CSOs). These conditions ensure that GBEs operate efficiently, recover the full cost of resources, and earn at least a commercial rate of return.
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GBEs are subject to the Public Governance, Performance and Accountability Act 2013
In Australia, the predominant term used for SOEs (state-owned enterprises) is Government Business Enterprise (GBE). GBEs are either Commonwealth entities or Commonwealth companies that are prescribed by the rules of the PGPA Act (s8 of the PGPA Act). The PGPA Act refers to the Public Governance, Performance and Accountability Act 2013.
The PGPA Act and the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) establish the requirements and procedures necessary to give effect to the governance, performance, and accountability matters covered by the PGPA Act. The PGPA Rule prescribes nine GBEs: two corporate Commonwealth entities and seven Commonwealth companies.
The Australian Government's relationship with its GBEs is similar to the relationship between a holding company and its subsidiaries. This includes a strong interest in the performance and financial returns of the GBE, reporting and accountability arrangements, and management autonomy balanced with regular reporting of performance to shareholders.
GBEs are expected to set prices while taking into account economic forces, including the level of demand, the enterprise's capacity, and the cost of supplying individual goods and services. The government may impose price conditions on GBEs providing goods and services in a monopolistic market or Community Service Obligations (CSOs).
The Finance Minister has delegated certain powers and functions in the PGPA Act to accountable authorities of non-corporate Commonwealth entities. These authorities must govern their entities in a way that aligns with relevant policies of the Australian Government.
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The Australian Government receives advice on its GBEs from the Commercial Division
In Australia, the predominant term used for SOEs (state-owned enterprises) is Government Business Enterprise (GBE). The Australian Government's relationship with its GBEs is similar to the relationship between a holding company and its subsidiaries. The government has a strong interest in the performance and financial returns of the GBE, and there are reporting and accountability arrangements in place to facilitate active oversight.
The Commercial Division provides advice to the Australian Government relating to its nine GBEs, which are subject to the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and prescribed in the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). The Division's role is to provide sound strategic and analytical advice to the Government by engaging with the GBEs, analysing their operations and their environment, and consulting with stakeholders.
The Commercial Division also ensures a robust and sound governance framework is in place by initiating change and contributing to policy development. It advises on other public non-financial corporations that are not prescribed as GBEs, such as the Special Broadcasting Service, which combines government and commercial funding.
The GBE governance framework includes guidance for directors on setting prices. GBEs are expected to take into account economic forces, including demand, capacity, and supply costs. The government may impose price conditions on GBEs operating in a monopolistic market or with Community Service Obligations (CSOs). Such conditions ensure that GBEs price and operate efficiently, recovering the full cost of resources employed, including the cost of capital.
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GBEs set prices, taking into account economic forces and demand
In Australia, a Government Business Enterprise (GBE) is a Commonwealth entity or Commonwealth company that is subject to the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). As of March 2021, there are nine GBEs of the Government of Australia, comprising two corporate Commonwealth entities and seven Commonwealth companies.
GBEs are expected to set prices while taking into account economic forces and demand. This includes considering the level of demand for, and the GBE's capacity for and cost of supplying, individual goods and services. The GBE must recover the full cost of the resources employed, including the cost of capital.
The price of a good or service is determined by supply and demand in a market. Suppliers will keep producing as long as they can sell the good for a price that exceeds their cost of production. Buyers will keep purchasing as long as the satisfaction they derive from consuming is greater than the price they pay. If prices rise, additional suppliers will be enticed to enter the market, increasing supply. Conversely, if prices rise too high, consumers will buy less, and demand will decrease. This relationship between supply and demand can be charted on a graph, with prices on the vertical axis and quantities on the horizontal axis. The point at which the supply curve and demand curve intersect represents the market-clearing price, where supply and demand are equal.
In a perfectly competitive market, there are large numbers of identical suppliers and demanders of the same product, buyers and sellers can find one another at no cost, and no barriers prevent new suppliers from entering the market. In such a market, no one has the ability to affect prices, and both sides take the market price as a given.
However, in real-world markets, companies may try to take advantage of a boom in demand by raising prices. While this can be a reasonable aspect of a market-based economy, it can also lead to price gouging, where prices are raised to unfair levels, particularly during times of crisis or when consumers have no choice but to purchase a product. This can negatively impact consumers and communities and lead to government intervention to prevent companies from price gouging.
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Frequently asked questions
In Australia, the predominant term for state-owned enterprises is a government business enterprise (GBE). A GBE is a Commonwealth entity or Commonwealth company prescribed by rules set out in the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
As of March 2021, there are nine GBEs in Australia, comprising two corporate Commonwealth entities and seven Commonwealth companies. The Australian Postal Corporation and Defence Housing Australia are examples of the former, while ASC Pty Limited and Australian Naval Infrastructure Pty Ltd are examples of the latter.
GBEs are expected to set prices based on economic forces, including demand and supply. The Australian government's relationship with its GBEs is similar to the relationship between a holding company and its subsidiaries, with the government taking an interest in performance and financial returns, and having active oversight and accountability arrangements in place.
