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Forecast changes in asset values

The above forecasts show changes in a number of asset areas. Table 2.2 summarises the main sources of growth and reductions in asset values.

Table 2.2 - Forecast changes in asset values
$million 2010
Actual 		2011
Forecast 		2012
Forecast 		2013
Forecast 		2014
Forecast 		2015
Forecast 		5-Year
Total
Addition of property, plant and equipment 6,555 7,964 8,628 7,433 7,444 7,055 38,524
Other large asset investments:
  • Student loans issued
 1,525 1,579 1,590 1,615 1,644 1,648 8,076
  • CFI investment growth
 5,733 5,792 2,931 4,370 5,375 5,680 24,148
  • Forecast for new capital spending
 - - 242 454 651 800 2,147
  • Kiwibank mortgages
 1,927 836 2,238 1,870 87 86 5,117
Total other large asset investments 9,185 8,207 7,001 8,309 7,757 8,214 39,488
Approximate gross investment in assets 15,740 16,171 15,629 15,742 15,201 15,269 78,012
Reduction in assets:
  • Depreciation on PPE
 (3,582) (3,767) (4,032) (4,192) (4,328) (4,440) (20,759)
  • Reduction in NZDMO/RBNZ financial assets
 (2,981) 3,885 (8,066) (8,079) 4,303 (7,010) (14,967)
  • Balance sheet funding for new capital spending
 - - (100) (450) (650) (800) (2,000)
Other changes in assets (2,973) 1,768 (1,259) (3,048) (2,546) (858) (5,943)
Net change in assets 6,204 18,057 2,172 (27) 11,980 2,161 34,343
Total assets 223,355 241,412 243,584 243,557 255,537 257,698

Source: The Treasury

The table shows that:

  • The gross investment over the next five years is forecast to be $78 billion.
  • Half of this investment is due to property, plant and equipment (PPE) additions of $38.5 billion.
  • CFIs' investment growth - driven by projected increases in the value of the existing portfolio of assets, together with the reinvestment of returns - is the next largest driver, contributing roughly 30% (or $24.1 billion) to gross investment.
  • Student loan advances are expected to grow steadily each year, representing over 10% (or $8.1 billion) of gross investment, before initial write-downs.
  • Forecast new capital spending will be covered by incorporating sufficient capital released by the Mixed Ownership Model to cover new initiatives.[1][2]
  • This gross increase will be offset by a reduction in assets of $37.9 billion. This is mostly attributable to depreciation and to the continued unwinding of RBNZ's and NZDMO's assets accumulated during the global financial crisis. After other changes, the net increase in assets over the next five years is therefore forecast to be $34.3 billion, as above.

Notes

  • [1]Note that allocations will not sum to the gross capital allowance of $900 million per Budget for any given year, owing to timing differences between the decision to allocate funds and their eventual use. For example, construction of a major asset such as a prison will be spread over several years.
  • [2]For the purposes of preparing the Forecast Statement of Financial Position for the period from 2011 to 2015, we have estimated that new capital spending of $2 billion will be funded from the existing balance sheet; for example, by a portion of the capital released under the Mixed Ownership Model. The residual amount forecasted for new capital spending over the forecast period ($147 million) is covered by the Budget 2011 contingency.
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