Daughters of Themis Conference on Corporate Purpose in Theory, Law and Practice

Description

In the 1980s-1990s, neoliberal economic reforms saw a widespread move from the direct provision of government services to a regulatory state model in which many services were provided by either decentralised state-owned entities or private providers under government oversight. In many common law jurisdictions, this process saw a reconceptualization of the desirability and role of state-owned enterprises involved in the provision of essential infrastructure and other services. Government businesses were instructed to operate on a for-profit basis (commercialization). Commercialization was often accompanied by the creation of new corporate entities to house the businesses (corporatization). In some jurisdictions, corporatization was followed by privatization. In the jurisdictions where many commercialized businesses remained under government ownership, such as Australia, the new structures and focus on profits have led to questions and debates about what the purpose of these government business enterprises should be. Do they exist merely to provide revenue streams for their government owners, or does government ownership imply a greater public or social purpose?
This presentation considers the question of the corporate purpose of state-owned enterprises in the Australian context. It presents a model for analysis that may be equally applied to state-owned enterprises in other jurisdictions. This model is premised on the contention that obligations to operate on commercial, profit-seeking terms must be read in the context of the greater objects for which these businesses are created. Those objects can be identified by the legislative frameworks in which these businesses operate, corporate plans agreed to by SOE management and their state owners, and other corporate documents.
It is argued that even profit-seeking state-owned enterprises have public objectives tied to the specific service or role that the enterprise was created to perform. In the essential services context, these public objectives include widespread (if not universal) access to essential services at a reasonably affordable price. These objectives are often enunciated in terms that emphasise the critical role that these businesses often play in the broader context of facilitating not only economic growth and development but the exercise of social citizenship rights. Indeed, in Australia, the legislative framework in which many SOEs operates specifically mandate that such enterprises must be operated in ways that take account of the public interest, including sustainability concepts such as the precautionary principle. As such, these enterprises’ corporate purpose can be seen as fundamentally to facilitate social and economic objectives in the public interest, even if how they are expected to do so is on a commercial basis.

Period	16 Apr 2021
Event type	Conference
Degree of Recognition	International