Intermediate Outcome: The Crown Balance Sheet is Managed Efficiently and Effectively
The New Zealand State sector manages over $240 billion worth of assets - around half of which are physical assets - across three portfolios of social assets (such as roads and schools), commercial assets and financial assets and liabilities. Over time, we are seeking to align the composition and shape of the Crown's assets and liabilities with the Government's value, performance and risk objectives (eg, through advising on choices about the scale of new investment in social infrastructure assets versus reducing Crown debt).
The Treasury's roles with respect to these assets include ensuring there are incentives to use existing capital well, introducing private sector capital and commercial disciplines where this is appropriate and advising on the allocation of capital to its highest value use. These activities and interventions are designed to increase State sector productivity and the ability of the Crown to deliver more for less. We continued to roll out the Better Business Cases approach and undertook an inaugural round of asset management maturity assessments in capital-intensive agencies. We started to develop asset performance metrics with selected capital-intensive agencies. The Government's Investment Intentions are starting to be embedded into decisions around capital allocation. We supplemented the intentions with directions for investment in social, financial and commercial assets. For more information on these outputs, see pages 45 and 46.
We provided advice on the performance of SOEs and CFIs. We undertook a significant revision of the Owners' Expectations Manual. We analysed the extent to which the Crown's financial and commercial assets met their cost of capital and benchmark returns, publishing the results in the Treasury's Annual Portfolio Report (APR). As a consequence of Treasury engagement with companies on their dividend policies, some companies resumed dividend payments or established a timeframe for when they intend to do so. There is solid evidence that CFIs are well managed, with fee structures that are currently appropriate although it is worth keeping this under review. For more information on these outputs, see pages 54 to 55.
We provided the Government with advice on extending the Mixed Ownership Model and since the election have been working towards the implementation of this. For more information on these outputs, see pages 51 and 52.
