The Treasury

Global Navigation

Personal tools

Social assets and liabilities

Introduction

Purpose

Social assets fulfil a range of functions including supporting the provision of services to the public, where Crown ownership has been seen as a necessary or preferable means of delivery.

Most liabilities incurred to support the provision of social assets are managed centrally by NZDMO, which is discussed separately in the Financial assets and liabilities section.

Current holdings

The value of all Crown assets held by the agencies included in the category of “social assets and liabilities” in this Investment Statement totals $111 billion at 30 June 2010.

Figure 13 - Major social assets at 30 June 2010
Figure 13 - Major social assets at 30 June 2010.
Source:  The Treasury

This section of the Investment Statement focuses on major elements to the value of $93 billion, comprising property, plant and equipment (PPE), such as schools, hospitals, prisons and roads, as well as the carrying value of tax receivables, student loans and the Crown's equity in Tertiary Education Institutions (TEIs).

The remaining $18 billion is made up of intangibles, inventory, cash and other minor asset classes, as well as all the assets of financially smaller entities. The following chart shows the current breakdown of the value of the major social assets discussed in this section.[1]

Notes:

  1. The “other” section captures the PPE of all other social entities. Notably, this includes TVNZ and the CRIs such as AgResearch, Institute of Environmental Science and Research and SCION. Additional values captured within “other” include the PPE of policy and monitoring agencies not represented elsewhere, and financially smaller entities such as Te Papa, Archives New Zealand and Land Information New Zealand.
  2. The three light blue elements (tax receivables, student loans and TEIs) in the chart are not PPE values. TEIs are treated as an equity accounted investment (rather than PPE) owing to a lack of clarity regarding the relevant accounting standard. Note 21 of the Financial Statements of the Government of New Zealand (30 June 2010) discusses this issue in detail.

The table below reconciles changes to the total value of major social assets over time, and outlines how they are anticipated to change out to 2014/15. It shows the impact of additions (cash spent on assets), disposals (selling of assets), revaluations of assets and depreciation (which reduces asset carrying values over time). Capital injections that have been approved by the Government through decisions already taken are included in the forecasts. The forecast years do not include new Crown capital injections that may be sought in future Budgets or any estimate for asset revaluations.

Only the assets representing PPE values are included, meaning that tax receivables, student loans and TEIs are excluded.

The table shows that additions of $17.6 billion are planned between 2010 and 2015, while the carrying value of the assets will only rise by $5.7 billion. This indicates the scale of cash expenditure on assets can be far larger than the change in asset carrying values over time. The impact of depreciation masks the scale of government investment in these assets.

Actual and forecast changes to the value of social assets
($ million) 2007
Actual
2008
Actual
2009
Actual
2010
Actual
2011
Forecast
2012
Forecast
2013
Forecast
2014
Forecast
2015
Forecast
Total across
forecast period
Opening balance  56,531  60,733  65,919  70,868  71,263  73,185  74,755  75,718  76,296  
Additions 2,776   2,688   3,758   3,647   4,268   3,793   3,322   3,007   3,184   17,574
Disposals  (171)  (345)  (435)  (250)  (120) (85)  (118)  (150)  (222) (695)
Revaluations 3,046   3,460   3,383  (458)  -  -  -  -  - -
Depreciation   (1,702)  (1,742)  (1,921)  (2,042)  (2,100)  (2,197)  (2,258)  (2,269)  (2,263)  (11,087)
Other movements   253   1,125   165  (503)  (126)  59  17 (10) (10)   (70)
Closing balance  60,733  65,919  70,869  71,263  73,185  74,755  75,718  76,296  76,984  

Source: The Treasury

Summary performance measures

This Investment Statement focuses on the performance and management of the Crown's assets and liabilities. Therefore, the following sections on each of the major social assets attempt to summarise available information which relates specifically to asset utilisation and performance rather than more generally to efficiency and effectiveness in the delivery of services. For each of the major social assets, other government reports are available providing a richer set of performance objectives and measures for the delivery of services.

The information available on asset performance is relatively weak in general and poorer in some areas more than others. This makes it difficult to draw firm conclusions on the “return” from Government's investment in social assets and how well these assets are being managed. Nonetheless, based on the information presented here and information collected as part of the Government's Capital Asset Management programme (including an examination of the 10-year capital intentions provided by capital-intensive agencies), the following common themes emerge:

  • Generally, asset disposals are low. The tendency has been to accumulate more assets, rather than releasing capital for better use, even within the same sector. This has been possible in part owing to the relatively easy availability of new capital as well as lack of transparency.
  • Longer term capital planning is essential but still emerging (the Capital Asset Management programme and National Infrastructure Plan are steps towards this).
  • Whole-of-life management of assets is needed to support making appropriate trade-offs between capital and operating expenditure - both of which are simply uses of public resources. Commercial disciplines, such as Public-Private Partnerships (PPPs), are one way of achieving this.
  • There is limited contestability of supply for many of the major social assets, and so limited competitive pressure or external benchmarking applied.
  • Good indicators of efficient capital use are almost universally absent.

Taken together, these problems make for poor use of resources.

Notes

  • [1]The values provided refer directly to the PPE of entities that carry the major types of social assets on their balance sheets. In practice there will be assets other than the major social assets within the PPE of an entity, but these are typically minor in comparison (for example, the value of computers at MoE is a minor element when compared to the value of schools, but both are captured within the Ministry’s PPE value in the chart).
Page top