Learn from NZ’s SOE experience

 By MALUM NALU

PAPUA New Guinea’s state-owned enterprises (SOEs) can learn so much from the New Zealand experience, according to leading SOE reformer, Richard Prebble.

He said this when addressing a Port Moresby of Chamber of Commerce and Industry breakfast on “SOE reform – What can PNG learn from the New Zealand experience?”

Prebble, New Zealand’s longest-serving MP and first minister of state-owned enterprises, was one of the architects of its policy of corporatising government trading departments into companies with commercial objectives.  

The policy has been very successful with 21 government trading activities from post, telecommunications, forests, farms, insurance, banking, electricity, airlines, railways, property and printing going from loss-making to profitability. 

Service levels improved and prices to the public fell as a result. 

New Zealand’s SOE reform programme is internationally-recognised as being one of the most-comprehensive and successful programmes ever undertaken. 

Prebble recalled that when he became minister, SOE levels were at their lowest, and worst.

“One thing they had in common was that they never paid a dividend  – ever,” he said.

“They were all running at a loss. Three years later, all 21 businesses were profitable.

“We took up the government’s trading companies and set them up as companies under the companies’ act.”

“We appointed some of the country’s best private sector directors and we gave them very clear instructions: ‘Run these businesses like they are effective businesses and you are to make a profit and pay us dividends’.

“We also told them that if they had certain services that they were carrying out unprofitably, they were to identify what they were, and we would ask parliament whether they wanted taxpayers’ money to run these services.

“Our state-owned enterprises model has been copied around the world, as we went from a country with trading departments, to one with companies.”

Prebble has worked with the World Bank, United Nations Development Program (UNDP), and in the Pacific islands with the Asian Development Bank (ADB) promoting corporatisation and SOE reform. 

Prebble was once described as New Zealand’s most pugnacious politician , a reputation  which started as a 27-year-old new member  who bravely , some thought naively , stood up to prime minister, Robert Muldoon. 

He was born in Kent and raised in Auckland.

Prebble attended the University of Auckland, gaining a BA degree in 1970 and an LLB (Hons) degree in 1972.

He was admitted to the Bar in 1971, and practised law in both New Zealand and Fiji.

He is the author of many books and is now a shareholder and director of Mainfreight, one of New Zealand’s most-successful multinational companies.