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Budget 2006 Home Page Half Year Economic & Fiscal Update 2006

Core Crown

Table 2.12 –Components of core Crown net worth
  Year ended 30 June
($ billion) 2006 Actual 2007 Forecast 2008 Forecast 2009 Forecast 2010 Forecast 2011 Forecast
Total assets 102.3 109.7 116.3 118.4 121.5 127.9
Total liabilities 62.2 64.5 66.8 65.5 64.4 66.4
Net worth 40.1 45.1 49.5 52.9 57.1 61.5

Source: The Treasury

Over the forecast period, core Crown assets are expected to increase from $102.3 billion to $127.9 billion, largely due to the planned strategy of running operating surpluses (refer Table 2.3) and additional borrowing to build up assets.

As Figure 2.9 illustrates, the majority of growth occurs within financial assets, which increase by around $20.8 billion, while investments in Crown entities (primarily to fund hospital and housing capital projects) and physical assets also increase slightly.

Figure 2.9 – Core Crown asset growth
Figure 2.9 - Core Crown asset growth.
Source: The Treasury

Within the financial asset portfolio of the core Crown:

  • the NZS Fund is expected to increase by around $16.8 billion over the forecast period. These funds are being set aside to assist in meeting pressures on future NZS payments associated with an ageing population
  • advances are forecast to increase by around $3.5 billion, primarily due to student loans, and
  • the financial asset portfolios of the Reserve Bank, New Zealand Debt Management Office and GSF holdings are expected to slightly increase over the forecast period.

By 2010/11 the make-up of the financial asset portfolio is expected to have changed significantly, primarily driven by the increase in the holdings of the NZS Fund.

Figure 2.10 – Core Crown financial assets by portfolio
Figure 2.10 - Core Crown financial assets by portfolio.
Source: The Treasury

Investments in Crown entities are forecast to increase by around $0.8 billion to allow for maintenance to and increase in the asset base, especially within the health and housing sectors.

Physical assets are expected to increase slightly over the forecast horizon, illustrating the maintenance and expansion of the core Crown’s physical asset base. Figure 2.11 provides a breakdown of the physical assets held by the core Crown, by major asset classes.

Figure 2.11 – Core Crown physical assets by asset class (including capital provisions)
Figure 2.11 - Core Crown physical assets by asset class (including capital provisions).
Source: The Treasury

The level of liabilities is expected to increase over the forecast period from $62.2 billion in 2005/06 to $66.4 billion by 2010/11. The major component of core Crown liabilities is gross debt, which as previously mentioned, is forecast to increase but decrease as a percentage of GDP over the forecast period.

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