The Government has now confirmed its decision against the merger of generation businesses CS Energy and Stanwell, due to competition policy concerns. The State owned transmission company Powerlink, will also remain an independent entity.
The Treasurer has also confirmed the merger of the Energex and Ergon distribution businesses to deliver projected savings of $680 million through to 2019-20. The new entity will be in place by mid-2016.
In addition a new energy services business will be formed by combining the competitive elements from Energex and Ergon, to deliver products such as solar panels, battery storage, energy management, smart meters and demand management solutions. This business will be headquartered in Townsville.
Government Owned Corporations and the Debt Action Plan
Other than for the energy network businesses, the current dividend payout ratio for Government Owned Corporations (GOCs) is 80% of net profit after tax.
It is now proposed to move the payout ratio for all government owned corporations, other than CS Energy Limited, to 100%. This will deliver $1 billion to the general government sector across the forward estimates.
The Government plans to raise $1 billion for debt reduction by regearing Gladstone Port Corporation, North Queensland Bulk Ports and Sunwater. Under the new gearing arrangements, GOCs will be able to make additional borrowings and distribute funds to government via a special dividend payment. This will bring GOC gearing levels into closer alignment with the private sector. This one-off of cash injection will bring the Government closer to its commitment to pay down general government debt. Total government debt, which includes the debt of all GOCs and impacts on the assessment of international ratings agencies, remains closer $80 billion.
The following chart, taken from the MYFER shows general government sector borrowings through to 2018-19.