From the 2026 budget audit
State companies that cannot cover their own costs — kept alive by your taxes
Companies under state ownership via MNV receive budget transfers because their revenues do not cover their operating costs. That gap is filled from general taxation.
Roughly 145 Ft per taxpayer per year — 604.8 million Ft to cover losses in companies the market has not validated.
What you see — and what you don't
The seen: companies that continue operating with the support of a budget transfer. The unseen: every wage-earner whose tax covers the losses of a company that neither earns enough to be viable nor faces the consequence of that fact.
Objection
"These companies provide services or employment — shutting them down would cost more."
Answer
The 3-year phase-out is not a shutdown order. It gives each company the time to convert to a commercial mandate with a hard budget constraint — the model under which New Zealand's state-owned enterprises became profitable after 1986 — or, where that is not possible, to be sold or wound down. The alternative — permanent subsidy — means taxpayers fund companies indefinitely regardless of whether they create value.
Share if you think state companies should cover their own costs or be sold.
The analyst's verdict
Resource allocations to companies under MNV ownership
Rationale
Budget transfers to companies the state owns through MNV. A state-owned company that needs an annual budget transfer to operate is, by that fact, not covering its costs from its own revenues. The transfer is the visible side of the soft budget constraint — the company faces no hard consequence for running at a loss because the shortfall is met from general taxation rather than from the discipline of either profitability or insolvency. A company permanently dependent on a subsidy is one whose continued existence the market has not validated. The amounts here are small, but the principle scales: the size of a line is not a criterion for its classification. Either the company can be made to operate on a commercial basis — the New Zealand SOE Act 1986 reconstituted every government trading entity as a commercial enterprise with an independent board, a hard dividend obligation, and standard accounting, after which the SOE sector's dividend revenue rose sharply[^5] — or, if it cannot, the activity does not have a demonstrated economic rationale and the company should be wound down or sold.
Transition mechanism
A 3-year linear phase-out. During the transition each recipient company is moved to a commercial mandate on the New Zealand SOE model — independent board, hard budget constraint, dividend obligation — or prepared for sale or wind-down. Year 1 saves 201.6 millió Ft.
Affected groups
Employees and managers of the recipient companies, who face the discipline of either commercial operation or ownership change; the 3-year glide gives time for the commercial conversion or the sale process.
Sources
- NZ Treasury State-Owned Enterprises / Mixed-Ownership Companies annual reports · New Zealand Treasury (1986)
Free Society Institute
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