Managing our assets and liabilities
Net worth has cushioned the impact of COVID‑19
COVID-19 and the Government's response to it in investing in schemes such as the Wage Subsidy Scheme to support New Zealanders wellbeing has had a substantial impact on the Crown's net worth. The Crown's liabilities and borrowings in particular have increased during this period in order to provide support to businesses and individuals during the COVID‑19 pandemic.
The Crown's net worth is stronger than forecast at Budget 2021 with the OBEGAL results for the June 2021 year coming in stronger than previously forecast. The most recent year-end results show the Crown owned $438.3 billion of assets and had $281.4 billion of liabilities at 30 June 2021, with the Crown's share of the net worth being $151.2 billion.
Figure 18 - Net worth attributable to the Crown as percent of GDP
Source: The Treasury
By the end of the forecast period, gross debt, which mostly consists of New Zealand Government Bonds less Reserve Bank settlement cash and Reserve Bank bills, is expected to be $167.6 billion (36.1 percent of GDP), compared to $154.6 billion (37.3 percent of GDP) forecast for 2024/25 at Budget 2021.
Our investments will improve the wellbeing of New Zealanders
As stated in our long-term objectives for fiscal policy, the Government has introduced a ceiling on net debt of 30 percent of GDP (equivalent to a ceiling of 50 percent of GDP based on the old net debt measure). This will allow borrowing for long-term investments that will spread the cost across generations.
Figure 19 - Crown infrastructure investment
Source: The Treasury
Note: This excludes infrastructure investment by State-owned Enterprises (apart from KiwiRail) and Mixed Ownership Companies as this investment is not generally funded by the Crown.
However, we are currently operating in a challenging environment with inflationary pressures increasing prices amidst global supply chain and labour market constraints.
We are therefore focusing our capital investment on projects that are highest priority and value in improving the wellbeing of New Zealanders. We are also continuing to develop a pipeline of investments to provide certainty for the market, to enable it to build and invest in capacity and capability.
Significant capital investments we are funding in Budget 2022 include:
- $1.3 billion for investment in assets for the health sector
- $349 million to replace and modernise our rail assets
- $385 million for building and refurbishing new classrooms.