Managing the Crown's Balance Sheet

The Government has been moving to more consistent and deliberate management of the Crown's balance sheet - that is, what it owns and what it owes. This will ensure that public assets are used as efficiently and effectively as possible, and that public services can continue to be provided to desired levels in the future.

The Government remains committed to its investment intentions, published in the 2010 Investment Statement of the Government of New Zealand. These outline the Government's strategy for effectively managing its balance sheet.

Numerous steps have been, and will continue to be, taken to give effect to this strategy including:

• rebuilding the Crown's balance sheet buffer against future adverse events. The Crown's balance sheet has played a crucial role in supporting New Zealand through the events of recent years, but that necessarily makes it less able to deal with future shocks. The Government's fiscal strategy focuses on quickly rebuilding its fiscal buffer through a return to surplus in 2014/15 and a subsequent reduction in net debt as a percentage of GDP
• reducing the Crown's risk exposures. In cushioning New Zealanders from the worst impacts of recession, the global financial crisis and the Canterbury earthquakes, the Crown took ownership of a number of risky assets and liabilities, through initiatives such as the Retail Deposit Guarantee Scheme (RDGS), introduced in 2008, and its support for AMI Insurance. The Government is actively managing its balance sheet to reduce these risks
• prioritising capital to its highest value use. Establishing the Future Investment Fund allows the Government to reallocate its capital from lower-priority areas to investments that will enhance the efficiency and effectiveness of the State sector and improve New Zealand's infrastructure
• sharpening incentives on State agencies to use existing Crown capital well. Through a number of mechanisms the Government is encouraging State sector agencies to use capital more efficiently. This is being reinforced through the Better Public Services project, which places strong emphasis on agencies collaborating on capital investment decisions and driving efficiency improvements through better transparency, and
• introducing private sector capital and disciplines. The Government intends to participate in PPPs where appropriate to introduce private sector expertise and risk-sharing. PPPs have been announced for the new prison at Wiri and two schools at Hobsonville. The Better Public Services project also emphasises more contestability in service provision and greater use of alternative service providers.