Source: The Treasury
– Our balance sheet has more than doubled in size over the last decade
– The growth in size and complexity of the balance sheet means it is more important to manage it effectively.
– Over the next ten years, assets and liabilities are projected to increase at a slower rate.
– The strength of the balance sheet is likely to deteriorate if current policy settings do not change.
– We need to manage our assets better, ensure we’re investing in the right assets, and improve our understanding and management of risk we’re exposed to.
The Treasury has published its final stewardship report, He Puna Hao Pātiki Investment Statement 2025. It describes the current state and value of the Crown’s significant assets and liabilities, how they have changed, how they are expected to change, and any differences since the previous investment statement. It also explores how more effective management of the Crown balance sheet can help ease tough fiscal choices in the future.
Over the past decade, both assets and liabilities have doubled, and the composition of the balance sheet has changed. It has become more complex with more entities and asset types. It also faces ongoing risk with climate change and geopolitical tensions, reflecting the need for effective management of public resources.
“The balance sheet provides a clear picture of the country’s resilience. As demands on public services and investment have changed, the balance sheet has become increasingly important, and challenging to manage,” said Secretary for the Treasury, Iain Rennie.
Without policy change, spending is projected to increase much faster than revenue over the next 40 years, which will put downward pressure on net worth. This could reduce the Crown’s ability to borrow to fund investments, provide adequate services to future generations, and maintain a buffer against adverse shocks. The Investment Statement looks at opportunities to help address these challenges by improving balance sheet management.
“The Investment Statement shows we need to improve our asset management – to get more value from existing investments, ensure we’re investing in the right assets, and improve our risk management and understanding,” said Iain Rennie.
The Treasury’s stewardship documents collectively demonstrate the key fiscal challenges ahead. To navigate these challenges, a wide range of levers, including the balance sheet, will need to be utilized effectively. This involves making the most of government-owned assets to deliver policy objectives efficiently, investing wisely, actively recycling assets to maximize public benefits, and improving the Crown’s ability to absorb and respond to shocks when they occur.
Key figures and findings:
– Net worth is now $191 billion but projected to fall to $168 billion by 2027.
– Assets rose from 108% to 136% of GDP between 2014 and 2024.
– Liabilities rose from 74% to 90% of GDP between 2014 and 2024.
– The central government owns $571 billion in assets, and owes $380 billion of liabilities.
– Social assets provide important public services like transport, housing and education but we’re not managing these assets well.
o The average age of our hospitals is 45 years old but have a typical life of 50 years.
o A third of our schools are over 50 years old, and there is evidence of varying quality.
– Commercial assets are important but inconsistent performers. We think it would be prudent to clarify the purpose of government ownership for each commercial entity.
– The financial portfolio is well managed, and investment assets have exceeded the expected rate of return, but high rates of return are unlikely to be sustained as global stock market returns normalise.
– Our liabilities are growing rapidly as we continue to take on debt, while financial assets form a significant portion of total assets.
– With the rapid increase in the size of the financial portfolio we need a better understanding not only of the risks around parts of the portfolio, but to also understand our financial risk at a holistic level.
