Careful management more important as assets near a quarter of a trillion dollars, says Investment Statement.
As the Crown's balance sheet approaches a quarter of a trillion dollars, managing those assets and the risks is becoming more important, says the Treasury.
And when the Investment Statement released yesterday outlines what "efficient management" means it says public ownership should not be seen as the default setting, but rather assessed against the ability to deliver desired outcomes and value for money.
The Treasury should "explore how capital could be recycled", it says. And it has a discussion of what projects would make good private public partnerships.
But Treasury Secretary Gabriel Makhlouf denied any ideological agenda.
"What we are absolutely focused on here is making sure we get value from the balance sheet and from the massive investment the Crown has made over the years and is planning to make in the future," he said.
He cited the Wiri prison private public partnership. "The fact that it is outcomes-focused private public partnership looking ultimately to reduce recidivism - nobody else in the world is trying to do that. It is not ideological. It is about looking at ways to get best value ... based around outcomes."
A growing share of the Crown's balance sheet consists of financial assets, chiefly those of the Superannuation Fund and the Accident Compensation Corporation, about $22 billion and $21 billion respectively. Of their corresponding liabilities only the net present value of existing ACC claims is included on the balance sheet.
These Crown financial institutions are expected to generate nearly half of the expected $35 billion increase in the Government's assets over the next five years, even with a continuing freeze on contributions to the Super Fund.
Investment in physical assets such as roads, school buildings, hospitals and military hardware is forecast to range between $6.4 billion and $7.9 billion a year over the next five years.
See the latest Treasury Investment Statement here:
The statement reflects a strong focus on the condition of various asset classes and how well they are meeting their purposes, for example how much of the social housing stock is overcrowded, how much is under-utilised and where.
"Increased urbanisation has led to the Crown having assets that are surplus to needs and resources could be more effectively used if the asset base is rationalised," it says.
Similarly, capital spending driven by the post-war baby boom has left us with many ageing assets, and decisions will need to be made on whether they need to be maintained or replaced.
Agencies may need to consider alternative methods to achieve outcomes, it says, including considering arrangements other than asset ownership. It points out that although the Crown owns primary and secondary schools it tends to deliver early childhood eduction through contracts with providers.
As at June 30 this year the Crown's assets are forecast to be $248.5 billion, up from $244.4 billion a year earlier, offset by $173.7 billion of debt and other liabilities, leaving net equity of $74.9 billion, up from $70 billion last June.