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Budget 2016 Home Page Fiscal Strategy Report - Budget 2016

Managing the Crown's Assets and Liabilities

The Crown's assets support the delivery of valuable public services. Its liabilities help to fund these services and consist mostly of debt issued by the Crown.

The most recent year end results show the Crown currently owns $279 billion of assets (up from $223 billion five years ago) and has $186 billion of liabilities. The difference between these numbers represents the Crown's net worth.

Figure 13 - Total capital spending over the forecast period
Figure 13 - Total capital spending over the forecast period.
Source: The Treasury

More than $23 billion is forecast to be spent on capital across all parts of the Crown over the next five years (Figure 13). This investment will be funded through a combination of general taxation, ring-fenced levies, capital recycling and government debt.

The Crown has many liabilities requiring careful management. These can arise owing to contractual arrangements, such as government employee superannuation schemes or insurance obligations such as ACC. In addition, the Crown is exposed to contingent liabilities such as Crown guarantees, and a range of commitments driven by existing policy settings, the largest of which is New Zealand Superannuation.

The Government has been taking a more consistent and deliberate approach to balance sheet management. This involves, among other things:

  • introducing private sector capital and disciplines where appropriate, for example through public-private partnerships
  • better monitoring of Crown-owned entities and of actual investment performance against expectations, for example through the regular release of major projects performance reports
  • requiring Government agencies to produce long-term investment plans, improve capital investment decisions and develop meaningful asset performance measures
  • increasing transparency in the use of Crown assets and liabilities to deliver public services
  • monitoring the impact of asset and liability risks on the operating balance, and
  • a deeper assessment of balance sheet liabilities, including the impacts of policies on future balance sheets and contingent or implicit liabilities.

Execution of this balance sheet strategy will ensure the Government gets the best value possible from its capital spending and from the Crown's existing assets.

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