Description

Treasury has revised the Financial Distribution Policy for Government Businesses. This May 2014 edition replaces and supersedes the previously issued TPP09-06. The Financial Distribution Policy for Government Businesses is a component of the NSW Government’s Commercial Policy Framework. The Commercial Policy Framework applies to Government businesses and consists of a suite of policies aimed at replicating, as far as possible, the disciplines and incentives that lead private sector businesses toward efficient commercial practices. The fundamental objective of the Framework is to maximise the wealth of the people of New South Wales by requiring the boards and management of Government businesses to be accountable for commercial financial management.

The purpose of the Financial Distribution Policy for Government Businesses is to outline the Government’s expectations for the payment of dividends. The policy also covers capital repayments, which represent a return of the Government’s equity investment. The Government has a significant equity investment in a portfolio of Government businesses, including State Owned Corporations. This equity investment has accumulated over time through the direct investment of capital and indirectly in the form of retained earnings. Government businesses make dividend payments as a return on this equity investment and these funds are returned to the State Budget to contribute to the funding of social services such as health, education, justice and transport provided by Government agencies.

This policy has been updated to clarify the mechanics of negotiating and calculating dividends, deriving Distributable Net Profit After Tax (NPAT) and constraints to the payment of dividends. This policy applies to financial distributions payable in respect of the 2013–14 financial year and financial years thereafter.