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Net Worth

Table 10 - Movement in net worth
Year ended 30 June
$ million 		Actual
2004 		Actual
2005 		Actual
2006 		Actual
2007 		Actual
2008 		Forecast
Original
Budget 		Forecast
Est
Actuals 		Actual
2009
Opening net worth 28,012 39,595 54,240 83,971 96,827 99,383 105,514 105,514
Operating balance 7,309 5,931 9,542 8,022 2,384 3,105 (9,303) (10,505)
Property, plant and equipment revaluations 4,213 8,197 20,199 5,232 6,214 -  (707) 4,235
Other movements in reserves 61 518 (10) (398) 89 66 194 271
Closing net worth 39,595 54,240 83,971 96,827 105,514 102,554 95,698 99,515
Figure 11 - Net worth
Figure 11 - Net worth.
Source:     The Treasury

For the first time since 1999, the net worth of the Crown has declined. A small decrease had been forecast in last year's Budget but the deepening financial crisis led to further calls on the Crown's finances. Declining tax revenue, combined with higher expenses and losses on financial investments required the Government to increase borrowings by $15.8 billion (34%) as outlined in table 11.

Other liabilities grew by $6.5 billion, primarily due to the increase in the ACC claims liability which increased by $5.8 billion from last year. A large portion of this increase was the result of the year-end valuation which increased the liability by $4.5 billion, discussed earlier in this commentary.

While total liabilities were increasing, total assets also grew during the year by $16.3 billion (8.1%). This growth includes purchases of property, plant and equipment, and increases in financial assets (mainly Kiwibank mortgages and marketable securities) as well as the purchase of KiwiRail.

The increasing size and diversity of the Crown's balance sheet, particularly the levels of financial assets and liabilities (refer table 11), have increased the Crown's exposure to financial risk. The level and types of financial risks and the risk management policies are set out in note 33 of these financial statements. The Crown's exposure to financial risk also arises from sources that are not represented by assets or liabilities in the statement of financial position. This exposure includes the volatility in tax revenue arising from volatility in taxpayers' incomes and volatility in interest rates. It also includes contingencies, such as the $124 billion of retail deposits and $6 billion of wholesale bank securities, discussed above and in more detail in note 30 of these financial statements.

Table 11 - Composition of the statement of financial position
Year ended 30 June
$ million 		Actual
2004 		Actual
2005 		Actual
2006 		Actual
2007 		Actual
2008 		Forecast
Original
Budget 		Forecast
Est
Actuals 		Actual
2009
Property, plant and equipment 57,940 67,494 89,141 95,598 103,329 101,276 106,498 110,135
Financial assets 32,654 42,005 66,396 73,718 85,063 84,860 99,522 93,359
Other assets 18,756 19,714 9,503 11,031 12,443 13,517 13,104 13,657
Total assets 109,351 129,212 165,040 180,347 200,835 199,653 219,124 217,151
Borrowings 37,720 37,728 40,027 41,898 46,110 48,656 69,156 61,953
Other liabilities 32,036 37,243 41,042 41,622 49,211 48,443 54,270 55,683
Total liabilities 69,756 74,972 81,069 83,520 95,321 97,099 123,426 117,636
Net worth 39,595 54,240 83,971 96,827 105,514 102,554 95,698 99,515
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