The Government is taking an active role in shaping the Crown's balance sheet
A strong balance sheet is instrumental in helping to lower the Government's overall cost of capital raising and in providing a buffer to help withstand economic shocks. The Government is continuing to explore ways to better use its large balance sheet. This includes looking at options to use existing capital more efficiently and applying a higher level of scrutiny to all spending (not just the marginal new investment), to ensure it is directed to the areas of highest value.
The Government's balance sheet will grow substantially over the period from 2011 to 2015 with total new investment of $78 billion (once depreciation and other reductions in assets are taken into account, net assets are expected to increase by $34.3 billion). There is substantial planned infrastructure investment in roads, rail, broadband and electricity transmission and generation. The Government will also continue to invest in financial assets via its various investment arms.
A large portion of this total new investment will be funded commercially by SOEs, reinvested returns and investment gains within the CFIs, and the dedicated revenue stream for transport. The remaining portion, $21.4 billion, must be funded centrally from general revenue.
The Investment Statement signalled how the balance sheet will be shaped over time and how the performance of its individual components will be improved, The Government's balance sheet intentions are unchanged from those set out in the Investment Statement:
- rebuilding the Crown's balance sheet buffer against future adverse events
- systematically working to reduce the Crown's risk exposures, including through strengthening the economy
- sharpening incentives on State agencies to use existing Crown capital well
- continuing to look at introducing private sector capital and disciplines where appropriate to help drive up the performance of State assets, and
- more actively reprioritising Crown capital to its highest value use.
