Shane Jones, Minister of Regional Economic Development. Photo / File
Public sector watchdog the Auditor-General says it's satisfied grants from the Government's $3 billion Provincial Growth Fund have been properly accounted for - but a closer look at the way the fund operates is under way.
The three year fund, created as part of the Labour Party's coalition deal with the New Zealand First party in 2017, has been the subject of controversy with NZ First's Minister of Regional Economic Development, Shane Jones accused of using the fund to advance the party's electoral interests with an enthusiastic investment in regional economic initiatives.
To date $2.5b of the fund is committed, according to the MBIE unit which administers the fund.
The Auditor-General's office, in releasing its audit of the Government financial statements for 2018-2019, said it had reviewed grants based on the evaluation of MBIE's unit.
It had reviewed the criteria and accounting treatment of a sample of grants made during the year to confirm the accounting treatment matched the contracts with successful funding recipients.
"We are satisfied that, at a whole-of-government level, the Provincial Growth Fund has been appropriately accounted for during the financial year, but we have more detailed work under way on the operation of this fund."
MBIE administers the fund, but the Auditor-General noted several public organisations are involved in managing its projects, including the Ministry of Transport, Ministry for Primary Industries and the Conservation Department.
Dry as dust as the report of an audit of the Government's financial statements might sound, it holds other nuggets of interest to taxpayers concerned that the Government's fiscal statements accurately reflect its financial performance and position.
The report finds the Government's net worth at June 30 was $146.3b, compared to $135.6b in 2018.
In 2005 it was a tad over $50b, rising to a little over $100b in 2008 before plunging to around $60b in 2012. Since then government net worth has climbed.
The report finds - no surprise - that the largest source of Government tax revenue was direct income tax which generated $56.4b. Individual taxpayers contributed $38.6b of this, corporate taxpayers $15.1b and GST $21.8b.
The Government's physical assets, including the state highway network, electricity generation and rail, totalled $178b at June 30.
The highway network excluding land was valued at $37.2b by an independent valuer. The Auditor-General's report said there continued to be uncertainties over the valuation of the state highway network because of various moving parts in the equation and the NZ Transport Agency was working to improve the quality of data underpinning the valuation.
Electricity generation assets, 51 per cent owned by the Government, were valued at $17.2b by specialist valuers using different assumptions. Not entirely comfortable with this, the Auditor-General said its assessment work continued and it recommended the Treasury work on standardising the valuations of different assets.
Rail network assets were valued at $6.4b - this included freight and city rail and was based on the network's public benefit nature.
Changes in accounting standards, which meant it was no longer appropriate for the Government to value the rail freight network on a commercial basis given its broader objectives for rail, and revaluations, increased the network's carrying value by a net $5.2b from the previous year.
The Government is currently reviewing rail to determine its appropriate structure and capital investment needs and how to fund it. The report said the valuation was appropriate.
It said the Government had financial assets of $145.1b, of which $89.6b was measured at fair value and $55.5b at amortised cost.
It had financial liabilities of $128.7b, of which $8.4b was measured at fair value and $120.3b at amortised cost.
The fair value of some assets and liabilities could not be measured using quoted market prices and instead were estimated by applying an appropriate valuation model, the report said.