Fiscal Strategy
Report 2025

Managing assets and liabilities

The Crown's balance sheet records what it owns - its assets - and what it owes - its liabilities. The Crown's assets include physical infrastructure (such as hospitals, schools and roads), financial assets (such as the NZSF) and commercial entities. Its liabilities mostly consist of debt issued by the Crown.

The most recent year-end results show the Crown owns $571 billion of assets and has $380 billion of liabilities. The difference between these two numbers represents the Crown's net worth. The Crown's balance sheet is large relative to the economy. Its assets have more than doubled over the past decade, while also becoming riskier and more complex.

Better balance sheet management can support productivity in the economy and help the Government meet its fiscal objectives. Balance sheet management involves capital allocation (ensuring the Crown owns the right assets), capital performance, risk and liability management, and operational excellence. The Government has either completed or started several initiatives that will improve the management of the balance sheet, including:

• a review of the Crown's ownership purpose for commercial entities
• performance reviews of Kāinga Ora and ACC, and
• involving the private sector where it can provide better outcomes, for example through public private partnerships, a potential capital raising by Kiwibank, or greater provision of social housing by Community Housing Providers.

Further gains can be made by improving asset management and applying greater commercial discipline to Crown investment, in line with the Government's new Funding and Financing Framework.[8]

On the liability side of the balance sheet, NZGBs account for most core Crown gross debt and are the Government's primary funding instrument.

The debt funding strategy implemented by New Zealand Debt Management is designed to minimise the Crown's borrowing costs over the long-term while managing risk. It aims to be cost-effective while also protecting the Crown balance sheet against risks under different scenarios, to capture and stimulate investor demand, and promote a well-functioning and liquid NZGB market. To reduce uncertainty or illiquidity premiums associated with NZGBs, a strategic rather than a short-term tactical approach is taken to NZGB funding activities, with future actions communicated well in advance.