Net Worth

Figure 14 - Net worth

Source: The Treasury

While assets increased by $21.9 billion, a $36.0 billion increase in liabilities and the continuation of operating deficits resulted in a decrease in the Crown's net worth for the third consecutive year (figure 14).

Assets grew by just under 10% (compared to 3% in the previous year). Financial assets increased by $19.4 billion while the property, plant and equipment held by the Crown increased by $1.5 billion. Growth in assets was mainly due to the increase in marketable securities from the increase in bond issues during the year.

Growth in liabilities at 28% was mainly due to an increase in gross debt as discussed in the previous section. Earthquake obligations have also contributed to this increase.

The composition of the balance sheet has changed from last year with property, plant and equipment and borrowings now making up 47% of assets and 55% of liabilities respectively (51% and 54% last year).

Assets

Figure 15 - Total Crown assets

Source: The Treasury

Total Crown assets increased by $21.9 billion this year to reach $245.2 billion at 30 June 2011 (figure 15).

Property, plant and equipment increased by $1.5 billion (1.3%) since 2010. Asset purchases of $6.6 billion were offset by depreciation of $3.7 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 ($2.8 billion)
• Economic and industrial - including the energy SOE's ($2.0 billion)
• Education - including school property ($0.6 billion)
• Health - including hospitals ($0.6 billion)
• Law and order - including correctional facilities ($0.4 billion).

Asset revaluations across asset classes resulted in downwards revaluations with the exception of the Crown's electricity generation assets. Of these asset classes, State highways and buildings were the largest of the downwards revaluations.

Financial assets (eg, advances) increased by $19.4 billion over the year. The largest contributor to the increase related to ‘other receivables' which increased by $6.9 billion from June 2010 due to insurance claims receivable from reinsurers of $4.2 billion and $0.7 billion estimate of recoveries from receiverships under the deposit guarantee scheme. Cash and marketable securities and derivatives in gain increased by $7.4 billion due to increased borrowings over the year. The value of Kiwibank's mortgage book rose by $1.0 billion while increases in the value of share investments also contributed $2.0 billion to the increase in financial assets.

Other assets (including intangible assets, equity accounted investments and inventory) increased by $0.9 billion. The largest increase was in relation to the Crown's investment in Tertiary Education Institutions which increased $0.2 billion reflecting the increase in the net worth of these entities.

Figure 16 - Total Crown liabilities

Source: The Treasury

Liabilities

Total Crown liabilities increased by $36.0 billion (28.0%) compared to June 2010 (figure 16). The largest driver of the increase related to borrowings (an increase of $20.5 billion or 29.4%).

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.

Table 18 summarises the increase in borrowings over the year. While gross debt[4] increased by $18.8 billion, a portion of that increase related to debt held by other government reporting entities (which are excluded from total Crown borrowings). In addition, Reserve Bank settlement cash and Reserve Bank bills decreased by $0.4 billion over the year and Kiwibank deposits increased by $1.0 billion (mirroring the increase in their loan book).

Source: The Treasury

The ACC claims liability remained static in comparison to the previous year.

Other liabilities (eg, accounts payable) increased by $15.5 billion. The main increase was in relation to EQC's insurance liability and the AMI financial support package increasing insurance liabilities from $0.1 billion to $12.3 billion. In addition earthquake-related provisions increased other liabilities by $1.2 billion. Other increases in liabilities were offset by a $0.7 billion reduction in the deposit guarantee scheme payment provision arising from payments to guaranteed depositors during the year.