Capital asset management for TEIs
Te whakahaere rawa o ngā Pūtahi Mātauranga Matua
This section sets out the Government’s, and our, expectations and requirements for how manage capital assets. It provides TEIs with tools, templates, and advice to help them better manage their capital assets, the supporting systems, and processes.
This section sets out the Government’s, and our, expectations and requirements for how manage capital assets. It provides TEIs with tools, templates, and advice to help them better manage their capital assets, the supporting systems, and processes.
Why is the Government interested in the asset management of TEIs?
The tertiary education sector collectively manages around $15 billion of assets with land and buildings accounting for nearly $14 billion (as of 31 December 2021). This makes it one of the largest social asset portfolios across the most capital intensive government agencies.
The Government has an interest in these assets being effectively managed. This includes:
- owning the right assets
- managing the assets
- funding the assets
- managing risks to the Crown balance sheet.
These are all critical ingredients to the ongoing provision of high-quality and cost-effective public services.
What is capital asset management?
Capital asset management (CAM) involves meeting required levels of customer service while ensuring individual investments and long-term priorities are aligned in the most cost-effective way. It requires the active stewardship of resources for present and future customers.
TEIs with capital Crown assets must currently: Assessing the asset management capability of tertiary education institutions Every independent assessment will include an assessment report by an accredited consultant, which includes a performance improvement plan that TEIs are expected to implement. We review these assessments to ensure that asset management standards are being maintained and/or improved. The assessments also let us know the level of maturity of each TEI’s asset management capability. In 2010, Government set out its expectations for the approval of, and assurances relating to, major capital projects, and for the management of capital assets used in the delivery of government services by public service and non-public service departments, and Crown entities. These expectations allowed TEIs to set their own sensible and aspirational targets for capital asset management based on the scale of assets under the TEI’s management and their criticality to the delivery of essential services. The Treasury was tasked with monitoring and reporting of these expectations to Cabinet. These expectations were updated in 2015 to give effect to Cabinet’s intention to ensure active stewardship of government resources, and strong alignment between individual investments and the government’s long-term priorities. The policy focused on capital expenditure, asset disposals, lease arrangements, “as a service” investments and asset performance. The Government further updated its expectations in 2019 to optimise value from new and existing investments and assets, for current and future generations of New Zealanders. Since 2010, we have introduced various elements of good capital asset management for TEIs including: The Treasury has taken these initiatives into account and decided that TEIs will be exempt from the requirement for an Investor Confidence Rating (ICR), specified in 2015 and re-confirmed in 2019 for Tier 1 and Tier 2 Investment-intensive agencies. The TEC on behalf of the TEI sector is classified as Tier 2. However, the Treasury has identified six areas for improvement (set out in the table below), of which four have been implemented as of October 2022. The TEC will address the remaining improvements, including continually updating and improving those already implemented. Areas for Improvement Progress Comments Asset Management maturity assessment Implemented Independent and self-assessments being done biennially. Long Term Investment plan (LTIP) reporting Implemented 10-year Capital Investment Plans (CIP) being completed and reported annually, including disposal programmes. Asset Performance measurement Implemented Reported in CIP annually. Quality improvements being worked on. Use of Better Business Case (BBC) framework Implemented BBC Single Stage template, developed for TEIs and rolled out to the sector for use. Portfolio, Programme and Project (P3M3) maturity measurement To be addressed Used in the Treasury’s ICR calculation, which TEIs are exempted from. Assessment of benefits delivery performance across the investment portfolio To be addressed Used in Treasury’s ICR calculation, which TEIs are exempted from. If you have any questions on CAM, please send them to: camenquiries@tec.govt.nz.What must TEIs do?
These two plans give the TEC a long-term view of the capital and near-capital investments of TEIs and an indication of effective planning and decision-making. Having a view of this investment pipeline also lets us understand capital sustainability in the sector.
This assessment alternates between an independent assessment performed by an accredited consultant and a self-assessment every alternate year.Cabinet’s expectations for capital asset management
Our initiatives and next steps to meet the Treasury’s requirements