Part 2: About our 2015/16 theme – Investment and asset management

The theme for our 2015/16 work programme is Investment and asset management.

Sound management of our public investments and assets is critical to New Zealand's future. Financial assets such as cash, shares, and other marketable securities, have been a growing proportion of the public sector's balance sheet and are currently worth about $130 billion. Central government holds the most financial assets, the value of which now exceeds the value of all central government physical assets. The Treasury's long-term fiscal model, indicates that this situation is expected to continue.

The public sector (central and local government together) also has significant physical assets (for example, land and buildings, roads, and water systems), valued at about $230 billion. Public entities need good information about these assets and future asset needs so that they can continue to deliver services now and in the future.

In our May 2014 report, Reflections from our audits: Our future needs – is the public sector ready?, we highlighted the need to protect these physical and financial investments for future generations, and noted the challenges ahead for the public sector.

Why is this theme an area of interest?

The New Zealand public sector manages significant investments and assets that are critical to providing public services. Public entities are accountable to Parliament for the public money they invest in financial and physical assets. It is important that public resources are used wisely, and that public assets continue to support long-term service delivery of public services. Through our work, we intend to examine whether New Zealand is getting the best from its public assets.

For some years now, we have been noting concerns about aspects of public sector investment and asset management. In our June 2013 report, Managing public assets, we highlighted the need for decision-makers to understand the risks in managing physical assets and ensure that these risks are actively managed. Decision-makers need robust information about their assets and future asset needs. This is particularly important in some sectors, such as schools, which manage a significant property portfolio.

There are significant infrastructure renewal challenges facing the local government sector. Collectively, local authorities are responsible for more than $100 billion of community assets, which provide essential everyday services. Our November 2014 report, Water and Roads: Funding and management challenges, highlighted the need for local authorities to "step up" in managing their infrastructure assets.

Our focus in 2015/16

We have drawn on all our previous work and knowledge from across the public sector, to select a range and mix of topics that will examine how the public sector plans for, funds, manages, and maintains infrastructure and other assets to optimise services for New Zealanders over the long term.

In Part 3, we provide a brief description of each performance audit and other work we intend to carry out. In 2015/16, we will also:

• prepare follow-up reports on how public entities have implemented the recommendations of our performance audits, inquiries, and other work;
• prepare an annual review of Defence major projects;
• prepare a report on recent changes to accounting standards affecting the public sector; and
• publish sector reports covering the results of our 2014/15 audits in the following sectors:
  • central government;
  • local government;
  • energy;
  • health; and
  • education (service performance reporting by tertiary education institutions).

Inquiry reports

Our inquiries work is reactive. Therefore, we cannot plan the number of inquiries or the topics in advance. Sometimes, we need to reprioritise or stop other work so that we can resource unplanned work, such as major inquiries.

Concluding work on our 2014/15 theme – Governance and accountability

We will complete our work on our Governance and accountability theme in 2015/16, and present an overview report on the results of that work. Figure 2 lists the work under the Governance and accountability theme that we started in 2014/15 and expect to finish in 2015/16.

Figure 2
Governance and accountability performance audits started in 2014/15 and due to be finished in 2015/16

Looking ahead to our 2016/17 theme – Information

Our proposed theme for 2016/17 is Information. We are interested in whether public entities make the most of the value of the information they hold. We are currently considering the scope of our work under this theme.

Integrated reporting

In line with our aim to promote integrated reporting in the public sector, we intend to explore moving to annual integrated reporting for our Office. Integrated reporting allows an organisation to communicate its strategy, governance, and performance, and show the links between its financial performance and its wider social, environmental, and economic context.