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Net Worth Attributable to the Crown

Table 13 - Net worth
Year ended 30 June
$ million
Actual
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2016
Forecast
30 June 2016
Budget
2015
Budget
2016
Net worth attributable to the Crown 59,348 68,071 75,486 86,454 89,366 77,812 83,547
Net worth attributable to minority interests 432 1,940 5,211 5,782 6,155 5,223 5,755
Total net worth 59,780 70,011 80,697 92,236 95,521 83,035 89,302
Net worth attributable to the Crown % of GDP 27.6 31.1 32.1 35.8 35.5 31.1 33.4

Net worth attributable to the Crown was $89.4 billion as at 30 June 2016, an increase of $2.9 billion from a year earlier, continuing the upward trend. As a share of the economy, net worth attributable to the Crown was 35.5% of GDP, which was 0.3% lower than a year earlier.

While the Crown's operating balance was a deficit, revaluation uplifts of the Crown's property plant and equipment (details on the next page) resulted in an increase in the Crown's net worth.

Figure 13 - Net worth attributable to the Crown
Figure 13 - Net worth attributable to the Crown   .
Source: The Treasury

Composition of Net Worth Attributable to the Crown

Net worth attributable to the Crown (NWAC) primarily consists of the accumulation of past operating profits (referred to as taxpayers' funds) and revaluation uplifts in the value of the Crown's property assets (the PPE revaluation reserve).

Figure 14 shows that, while the level of NWAC has recovered from the decline which began in 2008, the composition of net worth is quite different. From 2006 the PPE revaluation reserve has gone from being 51% of NWAC to 85% in 2016, after peaking at 94% in 2012. On a nominal basis the PPE revaluation reserve has remained fairly stable, with larger growth in the last two years mainly as a result of increases in land prices.

Figure 14 - Composition of Net worth attributable to the Crown
Figure 14 - Composition of Net worth attributable to the Crown   .
Source: The Treasury

Taxpayers' funds however, which is directly affected by the operating balance, decreased sharply since deficits began to be recorded in 2009, before increasing in the last few years. However, the $5.4 billion operating balance deficit recorded this year has resulted in a further decline.

This change in composition suggests that the NWAC is currently more reliant on property prices than operating results.

Total Crown Balance Sheet

Table 14 - Composition of the statement of financial position[5]

Year ended 30 June
$ million
Actual
2012
Actual
2013
Actual
2014
Actual
2015
Actual
2016
Forecast
30 June 2016
Budget
2015
Budget
2016
Social assets 121,218 124,348 133,158 139,706 149,419 137,066 141,254
Financial assets 72,500 72,378 74,636 87,039 87,921 83,200 85,739
Commercial assets 46,600 47,690 49,030 52,469 55,339 52,510 53,400
Total assets 240,318 244,416 256,824 279,214 292,679 272,776 280,393
Social liabilities 17,600 16,140 17,015 17,625 19,223 17,546 17,769
Financial liabilities 134,838 130,052 129,589 137,218 144,354 138,183 139,959
Commercial liabilities 28,100 28,213 29,523 32,135 33,581 34,012 33,364
Total liabilities 180,538 174,405 176,127 186,978 197,158 189,741 191,091
Net worth 59,780 70,011 80,697 92,236 95,521 83,035 89,302
Minority interests (432) (1,940) (5,211) (5,782) (6,155) (5,223) (5,755)
Net worth attributable to the Crown 59,348 68,071 75,486 86,454 89,366 77,812 83,547

Total Crown assets were $292.7 billion as at 30 June 2016, a $13.5 billion increase since last year. This growth was largely in social sector assets ($9.7 billion), commercial assets grew by $2.8 billion and financial assets by $0.9 billion.

Figure 15 - Total Crown balance sheet
Figure 15 - Total Crown balance sheet.
Source: The Treasury

Total Crown liabilities were $197.2 billion, an increase of $10.2 billion from the previous year. The growth was largely in relation to financial sector ($7.1 billion), social sector liabilities grew by $1.6 billion and commercial liabilities grew by $1.5 billion.

Social Balance Sheet

Social sector net worth at $130.2 billion was $8.1 billion higher than last year, driven largely by an increase in assets.

Figure 16 - Social balance sheet
Figure 16 - Social balance sheet.
Source: The Treasury

The Crown's social assets were valued at $149.4 billion, a $9.7 billion increase since last year, and made up just over 50% of the Crown's total assets. The largest uplifts related to the following:

  • The state housing portfolio increased by $3.3 billion of which $2.7 billion relates to land. The land increase mostly related to Auckland stock reflecting the strength of this market.
  • The value of state highways (including land) increased by $1.8 billion, mainly due to development of new and improvement of state highway assets.

Social liabilities were $19.2 billion, a $1.6 billion increase compared to last year mainly driven by an increase in the New Zealand ETS provision (refer page 14).

Financial Balance Sheet

Financial sector net worth at -$56.4 billion was $6.6 billion weaker than last year. The financial sector includes the Treasury's New Zealand Debt Management Office (NZDMO) which manages the Crown's bond programme and therefore holds the majority of the Crown's debt (while the assets funded by the debt are largely in the social sector).

Figure 17 - Financial balance sheet
Figure 17 - Financial balance sheet.
Source: The Treasury

The value of financial assets and financial liabilities are particularly sensitive to changes in market prices. Note 2, on pages 48 to 52, sets out some of the sensitivities of the key assumptions regarding these assets and liabilities.

The Crown's financial sector assets were valued at $87.9 billion, a $0.9 billion increase compared to last year. New Zealand equities held by the large investment portfolios (eg, NZSF and ACC) saw growth over the year while international equities held had poor results given concerns around weak global growth, continued effectiveness of quantitative easing programmes and geopolitical events such as Brexit.

Financial sector liabilities were $144.4 billion, an increase of $7.1 billion from the previous year. The main drivers of growth in financial liabilities were the following:

  • ACC's insurance liability increased this year by $6.6 billion from $32.5 billion to $39.1 billion. The key drivers of this increase were the discount rate reduction, partly offset by various inflation rates being lower than expected. For further information on ACC's inflation assumptions see Note 22 insurance liabilities.
  • Earthquake-related insurance liabilities of EQC and Southern Response were $0.5 billion and $0.4 billion lower respectively as insurance claims were paid out during the year.

Commercial Balance Sheet

Commercial sector net worth at $21.8 billion increased by $1.4 billion compared to last year.

Figure 18 - Commercial balance sheet
Figure 18 - Commercial balance sheet.
Source: The Treasury

The Crown's commercial assets were valued at $55.3 billion, a $2.9 billion increase over the year. A large component of this increase related to Kiwibank loans ($1.1 billion increase), along with increases due to property, plant and equipment valuation uplifts and additions across the sector.

Commercial liabilities valued at $33.6 billion were $1.5 billion higher than the previous year, primarily due to an increase in deposits held by Kiwibank ($1.1 billion), matched by an increase in its lending.

Notes

  • [5]Based on three different sectors as examined in the 2014 Investment Statement. The glossary on page 160 explains the definition of these three sectors.
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