A New Zealand acquaintance (NZ) casually commented that he had tickets to a rugby match this week, where more than 25,000 spectators are expected to attend. Life there is more or less back to normal. While the NBA season, less viewer, starts in a “bubble” here in the United States, I can only wonder how NZ controlled to beat covid-19. I am sure that many epidemiological and social aspects point to its success, but I must focus on one key factor: the world of New Zealand is beyond the control of public finances that has created a disciplined, data-driven executive and legislative power.
New Zealand is one of 14 countries in the world that publishes a national review. It is perhaps the only country in the world that relies entirely on accrued accounting, the popular gold of the personal sector, where entities will have to anticipate long-term departures due to commitments made today as pensions and social security.
How can countries have balance sheets? Well, for the record, the members of the G7, Germany, Italy and Japan don’t. But if you look at New Zealand as an example, it operates as an industry company by reporting assets worth NS$390 billion ($257 billion) and liabilities of N.N. 274 billion ($181 billion).
The maximum assets on NZ’s books are tangible assets, jointly valued at NZ$182 billion ($120 billion) and comprising land, buildings, national roads and electricity generation assets. The number of liabilities is determined through New Zealand loans $149 billion ($98 billion), adding a New Zealand government-backed government debt of $106 billion ($70 billion).
The maximum attractive figure is the difference between New Zealand’s assets and liabilities or net worth. New Zealand’s net worth increased from NZ$143 billion ($94 billion) in June 2019 to NZ$116 billion ($77 billion) in May 2020 as a result of Covid-19 stimulus programs. However, the net worth held by its 4.88 million citizens, also known as citizen wealth, is still at N.C. $23,770, or about $15,463.
How does the United States compare? Not very well. As through Paul B. $45,000 consistent with the user in NZ.
So what’s the link between NZ’s record and your good luck Covid-19? Tracking the government’s net worth in line with the citizen allows New Zealand to focus on strategic fiscal objectives rather than losing itself in short-term decision-making. The New Zealand government’s first assessment under its Reformed Public Finance Act of 1993 showed negative net worth of $14 billion from New Zealand ($9.2 billion). The monetary field induced through the balance sheet that followed generated a strong, proactive, coordinated and scientifically-based reaction to the federal point of crisis management, adding the Covid-19 pandemic.
And feel this: New Zealand’s monthly reporting cycle ensures that the electorate can compare the difference between actual spending and fiancé on government activities before the election.
In the United States, will we ever see a review of the monetary functionality of our outgoing administration before he leaves office? Will we ever see the U.S. government’s net projections for a better sense of the expected consequences of its actions?
I’m Professor Kester and Byrnes at Columbia Business School. I rev. to bring studies and educational concepts on problems of interest for CFOs and values.
I’m Professor Kester and Byrnes at Columbia Business School. I am looking to conduct studies and educational concepts on disorders of interest to CFOs and securities regulators. I grew up in Mumbai, India, but spent most of my adult life in the United States at various educational institutions, adding the University of Washington, Emory University and Duke University. Beyond my greater fondness for crossing educational theory with practice and politics, I love to travel, a dark game called cricket, find new restaurants and cook with my family. In particular, I am interested in how other societies find answers to the usual disorders that afflict us all.