Story: State-owned enterprises

Banking, mining, forestry, electricity generation, rail, air and shipping transport, radio and television broadcasting – over the years the government has been involved in many commercial activities. From 1986 many of these commercial functions were performed by state-owned enterprises – some of which were then privatised.

Full story by Rob Laking
Main image: Selling state-owned electricity assets to Electricorp, 1988

The Short Story

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State-owned enterprises are government-owned companies, created by the State-Owned Enterprises Act 1986. They are often known as SOEs.

In May 2011 there were 17 state-owned enterprises. They included:

  • KiwiRail
  • New Zealand Post (including Kiwibank)
  • Genesis and Mighty River Power, which generate and sell electricity
  • Landcorp, a farming and land sales business
  • Solid Energy, which mines and sells coal.

Origins

The government has been involved in many commercial activities, including banking and finance, insurance, farming, forestry, mining, electricity, transport, postal and telephone services, and radio and television broadcasting. Reasons for government involvement in these businesses included:

  • taking control of important national assets such as railways and postal services
  • providing employment and training
  • breaking in new land for farming, then selling it to farmers
  • ensuring competition for private businesses
  • promoting growth in an area such as tourism.

The government often subsidised public enterprises or protected them from competition – for instance, limiting how far trucks were allowed to carry freight, in order to protect the railways.

State-owned enterprises were set up in 1986 to perform many of these commercial functions. Special protections were removed.

Later changes

Since state-owned enterprises were first set up, some new ones have been created. Others have been sold to private investors, including Contact Energy, the Rural Bank, State Insurance and Telecom. Sales of state-owned enterprises have often been controversial.

Some businesses that were sold have been bought back by the government – including the railways, and the majority of shares in Air New Zealand.

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How to cite this page:

Rob Laking. 'State-owned enterprises', Te Ara - the Encyclopedia of New Zealand, updated 9-Nov-12
URL: http://www.TeAra.govt.nz/en/state-owned-enterprises