11 August, 2010
New measures to improve asset management
The Government is taking steps to improve how it invests in infrastructure and manages its $220 billion asset base, Finance Minister Bill English says.
"This Government is determined to improve the management of its assets - both the existing stock and the way decisions are made about future investment," Mr English said in a speech to the New Zealand Council for Infrastructure Development Symposium in Auckland today.
"The Government holds about $220 billion of assets and that is forecast to grow by another $30 billion over the next four years. Despite those large sums, Government knowledge and performance in this area has been poor.
"At a time when our finances are constrained, even small improvements in this area could yield substantial gains to reinvest in vital public services and assets like schools, housing and hospitals."
"So while our opponents are obsessed with the subject of asset sales, we're getting on with the unglamorous, but far more important task of improving the public sector's management of the Government's large asset base."
Changes announced today include:
- Plans to regularly publish a Government Investment Statement - as signalled in the Budget - which will clearly set out the Crown's assets and liabilities, identify any emerging issues and state how the Government plans to manage its large and growing investment in taxpayers' assets.
- A package of measures to enhance public sector decision making around infrastructure investment including a requirement that agencies proposing projects with a whole-of-life cost over $25 million consider and evaluate alternative procurement options, including a PPP.
"We intend to release the first Investment Statement before the end of the year. This step will bring this important aspect of the Government's financial management into line with other regular fiscal reporting.
"We believe this level of transparent information will allow the public to demand a much greater level of accountability from the Government and lead to significantly better decision-making across the public sector.
"In regard to the other measures, PPPs will be appropriate only for some projects, but we believe putting this to the test will increase price competition and ensure that taxpayers get the best possible value for money.
"We are also giving chief executives greater discretion to commit to projects with a whole-of-life cost of less than $15 million but there will be a tighter focus on getting results.
"Agencies will have to take a more consistent approach to the development of their business case with a focus on clearly displaying the economic and financial rationale for any investment.
"In addition, they will be required to explicitly report back to Cabinet on the results of major investments so the Government can ensure it is getting the expected benefits.
"We are confident the combination of all of these measures will help lift infrastructure investment and asset management practices across the public sector," Mr English says.