The future for Norfolk Island Government Business Enterprises

The Norfolk Island Government delivers a number of services to the Norfolk Island Community through entities that are described a Government Business Enterprises, these include Norfolk Air, Norfolk Telecom, Norfolk Energy and Norfolk Post.

The funding agreement recently signed off with the Commonwealth requires that;

The Chief Executive Officer must report to the Chief Minister in writing by 30 April, 2011 on options and any issues for reforming the existing business model for the delivery current Norfolk lsland Government services

Any report on service delivery would need to include the service delivery models of the GBEs and would need to establish what the ground rules for operation are, why a particular service needs to be delivered by the public sector exclusively or in competition with the private sector, the options for future delivery of that service including outsourcing, total privatisation and finally, competition policy.

The following definition of Government Business Enterprises by the Association of Canadian Chartered Accountants is useful to this discussion;

"A government business enterprise is an organization that has all of the following characteristics:

1. it is a separate legal entity with the power to contract in its own name and that can sue and be sued;
2. it has been delegated the financial and operational authority to carry on a business;
3 it sells goods and services to individuals and organizations outside of the government reporting entity as its principal activity; and
4. it can, in the normal course of its operations, maintain its operations and meet its liabilities from revenues received from sources outside of the government reporting entity.

Selling goods and services involves a direct exchange relationship between the revenues and the goods and services provided. Selling prices are related to the quantity and quality of goods or services sold, and not just to the recovery of administrative costs. Imposed fees and penalties, such as licenses and fines, do not represent sales of goods and services. Insurance premiums charged by a government organization are a sale of a service and not an imposed fee.
A government business enterprise should, in the normal course of its operations, be able to maintain its operations and meet its liabilities from revenues received from sources outside of the government reporting entity. These revenues include not only amounts from the sale of goods and services, but also transfers received from other governments or sources outside of the government reporting entity.
When determining if an organization can maintain its operations and meet its liabilities with revenues received from outside of the government reporting entity, the following factors should be considered:

1. the organization's history of maintaining its operations and meeting its liabilities;
2. whether the organization would continue to maintain its operations and meet its liabilities without relying on sales to, or subsidies in cash or kind from, the government reporting entity;
3. past, present and future economic conditions within which the organization operates; and
4. whether the organization has realistic and specific plans that show how it expects to be able to maintain its operations and meet its liabilities in the future. "

The writer's emphasis on the underlined areas of the above definition are important to any examination of the Norfolk Island GBE landscape. All of Norfolk Island's GBEs should stand or fall on their ability to survive as entities while providing a fair commercial dividend back to its owners, in this case the people of Norfolk Island. This has not been their history, but it should be their future.
Corporate governance of the activities of GBE's on Norfolk is not well provided for through the Public Monies Act and perhaps a specific GBE Act modeled on one of the mainland states Acts would be appropriate ifthe GBE service delivery model is to continue in the future.