Result: Management of Crown Risks and Balance Sheet
What are we seeking to achieve?
This result seeks to ensure that the Crown's balance sheet is fit-for-purpose, and managed in a way that protects value, enhances performance and contains risk. It involves:
- monitoring the Crown’s investment and ownership interests in its portfolio of commercial entities, CFIs and CRIs, and providing shareholding Ministers with advice on the performance and issues arising from this portfolio
- assisting Ministers with advice on how to obtain better value from, and manage risks associated with, the assets and liabilities on the Crown’s balance sheet, and identify and reduce risks that could affect the Crown’s finances in the future, at both the aggregate and institutional levels
- developing a balance sheet strategy that over time aligns the composition and shape of the Crown’s assets and liabilities with the Government’s value, performance and risk objectives, and
- building a Centre of Excellence within the Treasury to assist other agencies in their monitoring and governance responsibilities, and to provide Ministers with an assessment of monitoring capability and performance within the State sector.
This work programme is closely related to fiscal, budget and debt management policy. The individual portfolio work is closely related to value-for-money and State sector performance, a focus on baseline capital spending and better capital management through budgeting and allocation processes.
The agencies we monitor are listed on page 42 of this Statement of Intent.
What will we do to achieve this?
We will achieve this by:
- improving the quality of information available, to ensure that the balance sheet is well measured and understood, and using this information to drive strategic decisions and improvements in performance
- developing a balance sheet strategy that meets Government objectives, and then subsequently plan and implement changes to the structure of the balance sheet and the ways in which the balance sheet is managed
- improving the performance and management of the Crown’s assets and liabilities through effective monitoring, risk management and governance, and
- recognising the need for improved balance sheet management and performance across the wider State sector, we will establish a Centre of Excellence to provide advice and support to other monitoring agencies on performance and governance issues.
Much of this work will be undertaken by the newly formed Crown Ownership Monitoring Unit (COMU), created by integrating the CCMAU with the Treasury's monitoring activities. While the monitoring of the performance of the Crown's commercial portfolio is core business for COMU, the work around balance sheet strategy, supporting other agencies' monitoring efforts and risk management is relatively new.
How will we demonstrate success in achieving this?
| Impact measures for 3 to 5 years | Milestones for 2010/11 |
|---|---|
Overall impact | |
| The Crown's balance sheet is fit-for-purpose in meeting the Government's objectives, and is managed in a way that protects value, enhances performance and contains risk. | The Government's objectives have been agreed, and a framework for managing towards these objectives has been put in place. |
Improved information for measurement and decision-making |
|
| The extent and quality of information around the value and risk associated with assets and liabilities is significantly improved. | Net worth, risk and portfolio return are adequately measured and monitored in a consistent and transparent manner. |
Development of a balance sheet strategy, and an associated plan for changing the structure and the way it is managed |
|
|
Clear strategy in place for the balance sheet. Agreed plans for implementing changes to the structure of the balance sheet. |
Clear strategy in place for the balance sheet. Agreed plans for implementing changes to the structure of the balance sheet. |
Improved performance through effective monitoring, risk management and governance |
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|
The overall net worth of the Crown's balance sheet has increased. The return from the economic assets owned by the Crown has improved. Both of the above measures are achieved without creating additional risk. |
The overall net worth of the Crown's balance sheet has increased. The return from the economic assets owned by the Crown has improved. Both of the above measures are achieved without creating additional risk. COMU's monitoring centre is up and running, and is engaged with a number of key agencies on implementing improved governance and monitoring measures. |
| COMU is recognised as a Centre of Excellence for monitoring and governance advice. | |
