Net Worth

While the size of the balance sheet increased (assets increased by $6.2 billion and liabilities increased by $10.7 billion) the continuation of operating deficits meant the Crown's net worth decreased for the second year in a row (figure 18).

Figure 18 - Net worth

Source:  The Treasury

Assets grew by just under 3%. Kiwibank mortgages increased by $1.9 billion while the property, plant and equipment held by the Crown increased by $3.2 billion.

Growth in liabilities was 9% mainly due to an increase in gross debt as discussed in the previous section.

The composition of the balance sheet remained similar to last year with property, plant and equipment and borrowings making up just over 50% of assets and liabilities respectively.

Assets

Total Crown assets increased by $6.2 billion this year to reach $223.4 billion by 30 June 2010 (figure 19).

Figure 19 - Total Crown assets

Source:  The Treasury

Property, plant and equipment increased by $3.2 billion (2.9%) since 2009. Asset purchases of $6.6 billion were offset by depreciation of $3.5 billion and disposals of $0.4 billion. The remaining movements related to asset revaluations and foreign exchange movements.

Significant asset purchases by sector were:

• Transport and communications - including state highways and KiwiRail ($2.3 billion)
• Economic and industrial - including the energy SOE's ($1.2 billion)
• Education - including school property ($0.8 billion)
• Law and order - including correctional facilities ($0.5 billion).

Asset revaluations were small compared with previous years. An increase in the value of the Crown's electricity generation assets was largely offset by decreases in the value of specialised military equipment and the Crown's buildings (particularly the value of school buildings which has decreased due to impairment for potential weather-tightness issues).

Financial assets (eg, advances) increased by $2.6 billion over the year. The majority of this increase was in relation to Kiwibank mortgages which increased by $1.9 billion.

Other assets (eg, intangible assets) increased by $0.4 billion. The majority of this increase was in relation to the Crown's investment in Tertiary Education Institutions (reflecting the increase in the net worth of these entities).

Liabilities

Total Crown liabilities increased by $10.7 billion (9.1%) compared to June 2009 (figure 20). The largest increase related to borrowings (an increase of $7.8 billion or 12.6%).

Figure 20 - Total Crown liabilities

Source:  The Treasury

Borrowings are a combination of gross debt (discussed earlier), the financial liabilities of Crown entities and SOE's and liabilities associated with the Reserve Bank's settlement cash and bank bills.

Figure 21 summarises the increase in borrowings over the year. While gross debt[4] increased by $10.2 billion, a portion of that increase related to debt held by other government reporting entities (which is excluded from total Crown borrowings). In addition, Reserve Bank settlement cash and Reserve Bank bills decreased by $2.2 billion over the year. This decrease was offset by Kiwibank deposits increasing by $2.0 billion (mirroring the increase in their loan book).

Figure 21 - Increase in borrowings

Source:  The Treasury

The ACC claims liability increased by $0.6 billion in comparison to the previous year. This follows an increase of $5.8 billion in 2009 (compared to 2008). The large 2009 increase was largely due to predicted increases in medical and rehabilitation costs along with a decrease in the discount rate used to calculate the present value of expected payments.

While reductions in claims rates and estimated medical costs and rehabilitation costs reduced the claims liability, this was partially offset by the occurrence of new injuries resulting in a $0.6 billion decrease in the claims liability. In addition, the mid-term discount rate decreased adding $1.2 billion to the liability.

Other liabilities (eg, accounts payable) increased by $2.3 billion. The main increase was in retirement plan liabilities.