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55: Professor Ian Ball

Professor of Practice - Public Financial Management - School of Accounting and Commercial Law -Victoria University 
With a debt level that was deemed unacceptable by the New Zealand government, it set about improving the performance of government agencies and the fiscal management system.
31 July 2020

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CIARAN RYAN: I am the editor of Accounting Weekly and I am very happy to be talking today to Ian Ball. Ian is a Professor of Practice - Public Financial Management at the School of Accounting and Commercial Law at Victoria University in Wellington. The reason we asked him to come on is because he was one of the architects of the Public Finance Act in New Zealand and was a senior treasury official between 1987 and 1994, and we really wanted to go over this Public Finance Act, it's had an amazing effect on the fiscus in New Zealand, so I thought Ian would be perfectly placed to guide us, given the difficulties that we're having in South Africa. First of all, Ian, welcome, I know it's very late where you are in New Zealand but how are you today?
IAN BALL: I'm well, thanks, it's good to be with you.
CIARAN RYAN: Great, can you give us a little bit of background to the Public Finance Act.
IAN BALL: Sure, the Public Finance Act in New Zealand was really one component of a wide-ranging set of fairly radical and fundamental reforms to New Zealand's economic policy setting. So it wasn't really a one-off, it was done in the context of much wider economic reforms and wider state sector reforms. They were all really brough about because New Zealand had got to a point where first of all we had a fiscal crisis and we had a very, very regulated economy and this set of reforms, they didn't start with the public sector reforms, they started with other reforms such as changing the tax system, removing subsidies, removing import licencing, fighting the dollar, a whole range of economic reforms, and really at the back end of that reform programme the government of the day decided that it was also necessary to get better performance out of the state sector, that they had seen that there was scope for much greater efficiency, much higher performance out of organisations in New Zealand. The first of the public sector reforms that they did was the State-Owned Enterprise Act, that demonstrated that there was a need for reform in the public sector. So they then went into the core state sector and through the Public Finance Act and a State Sector Act they set about really radically transforming the way the government did its business and it was primarily with the purpose of improving the performance of government agencies and improving the fiscal management system of the government as a whole.
CIARAN RYAN: Can you give us some idea of the success of the Public Finance Act and are you aware of any countries implementing similar legislation?
IAN BALL: Well, I think its success can be probably judged in a number of ways but there are two ways that to me are most important, when the act was first passed New Zealand had had two decades of deficit and it was building up debt to a level that at the time we regarded here as being unacceptable, I think by international standards now it would be regarded as quite modest, but at the time it was seen as being too high. So one of the first tests really was what's happened to level off the deficit and the government's fiscal position since the act was passed, and the reforms were fully implemented by 1994/1995 and in the period since then the New Zealand government's net worth, which I regard as the best measure of its fiscal position, that is total assets versus total liabilities, it's net worth has increased pretty much every year, except for four years and they were the four years immediately following the financial crisis. So net worth declined, and declined quite significantly for four years, but then it turned around and it's been increasing every year since, through until 2019. Now, it's very clear that it's going to take a big hit again this year but, essentially, after a couple of decades of poor fiscal performance that was really turned around by the Public Finance Act and an associated piece of legislation called the Fiscal Responsibility Act, which put in place some rules that the government needed to operate within. So that's one test of success, I think the other one, and in a way, the one that to me is more compelling is just to look at how the New Zealand government's fiscal position has moved since the financial crisis. So if you go back to 2008 and then look forward to 2018/2019 what you'll see, I was mentioning a moment ago, the New Zealand government's net worth, that's really the most comprehensive measure of fiscal position, it's net worth declined for four years and then it's been increasing every year since. If you compare that with the other countries that you would normally compare New Zealand with, if you like, some of the developed Anglo-Saxon countries like the United States, Canada, the United Kingdom and Australia, what you see in comparison is that all of these countries their net worth started declining with the financial crisis and has continued to decline through the whole decade, they really haven't started to rebuild their positions from the financial crisis. Whereas, as I said, in New Zealand we took a hit for four years but then the position started to rebuild. I guess in the current context one of the things that I think is quite notable is that both the Prime Minister and the Minister of Finance have both asserted that one of the things that enabled them to, as they put it, go early and go strong, in the fight against Covid was the fiscal position. So we were back in a strong fiscal position with significantly positive net worth when the crisis hit. So we had built up a rainy day fund and we've used it and I think that at least until this point in time the action to contain Covid has been very effective in New Zealand and there are no new cases of internal transmission currently. We are picking up cases at the border but they're in quarantine. So life is pretty much back to normal and right at the moment that feels like a significant success for the Public Finance Act, as well, of course, the policies that the government had pursued to address the virus.

New Zealand's strategy to eliminate COVID-19

CIARAN RYAN: There are a few things to unpack there, just before we go on back to the finances again, just give us a sense of what impact Covid has had there, you said there's no internal transmissions happening, so is the pandemic under control in New Zealand right now?
IAN BALL: Well, we would see it as being essentially under control. Life is really completely back to normal, except the borders are still effectively closed. We have no tourists coming, for example, and New Zealand has a significant number of tourists visiting every year. So the border is still shut but within the border it's life as normal. You go to a restaurant and there's no social distancing, there's no wearing of masks, it's literally back to how it was.
CIARAN RYAN: Wow, okay, so the only change is that the border is closed, no tourism coming in, but you can go to restaurants and pubs and that sort of thing?
IAN BALL: Yes, completely.
CIARAN RYAN: How many deaths did you have in New Zealand, do you have any idea of that?
IAN BALL: I think the final number was 21, it's about 20.
CIARAN RYAN: Wow, that is unbelievable.
IAN BALL: The government's strategy from the beginning was to eliminate Covid from New Zealand, it wasn't to contain it, it wasn't to flatten the curve, it was to eliminate the virus in this country and, as I say, at the moment it appears to be successful. We went into a very strict set of lockdown arrangements and then we have progressively moved out of them. We are back to level one, which is essentially normal except for the borders.
CIARAN RYAN: Wow, that is astonishing and just remind us what is the population of New Zealand?
IAN BALL: Five million, we are a small country and we've got a very big moat, as they say.

CIARAN RYAN: A lot of sea, yes. Okay, let's just go back to finance issue, you're talking about the net worth of New Zealand. Now, that's an interesting term that I haven't seen or heard much used of in respect of a country. I guess one of the first things that you have to do if you're calculating net worth is you have to have a balance sheet, so you've got to calculate what are the net assets or what does the state actually own. This is something that has been discussed in South Africa, there's a very, very vague and rough idea, the state owns all of this property and it's got all of these state-owned enterprises but it's not a reliable balance sheet. Is this one of the first things that New Zealand did was to put together a proper balance sheet and we're going to value it properly?
IAN BALL: Sure, yes that was absolutely part of the initial reforms back in the early 1990's and, as you can imagine, and as many other governments have found in the time since, putting together that first balance sheet is a difficult task and it's difficult for all of the reasons we need these sorts of reforms. It's difficult because governments by and large don't have good information on what assets they own, and they don't know what they're worth. So they don't manage them very well and they don't even necessarily know what their liabilities are all the time. So they're operating very complex organisations with the most basic set of information. So one of the things that the Public Finance Act did was basically mandate accrual accounting for the whole public sector and for the government as a whole. Just to go back for a moment to the question of net worth, if you look at the New Zealand government's balance sheet for the last financial year, which ended June 30 2019, and you look at what debtors is as a component of that balance sheet, what we hear when we talk about fiscal position normally is debt-to-GDP, everybody knows debt-to-GDP, the problem is debt can be a very small part of a government's balance sheet. So at the end of 2019 on the New Zealand government's balance sheet if you add together the total assets and the total liabilities of the New Zealand government and those are the things which the government needs to be managing, debt was 20% of the balance sheet, it's not a big part of the balance sheet. So when you talk about your fiscal position, if all you are talking about is debt you are ignoring, first of all you are ignoring all of the asset side and you are also ignoring what can be some very large non-debt liabilities. If I could just use one example of that, the United Kingdom government has quite a significant level of debt but the pension obligations to its public servants is a bigger liability that its debt, so the borrowing of the UK government is less than half the liability side of its balance sheet. That's the case for many governments, so, for example, you can see at the state level of government in the United States, a lot of states and a lot of local governments getting into serious fiscal difficulties because they've got such significant pension obligations like public service liabilities effectively and it's those that are getting them into trouble more than their debt. So net worth is really important but there's one other thing I have to really emphasise in what was done in New Zealand, it wasn't just a move to a full accrual-based set up of financial statements with a proper balance sheet and audited and all of that, it was that those accrual numbers became the basis for the whole public financial management system. So the fiscal rules that the government is constrained by in the act are expressed in accrual terms. When the government produces its annual budget, it includes a forecast set of financial statements for the next four years. When it does its fiscal strategy, it lays that out in terms of the accrual numbers. The appropriations from Parliament to government agencies are in accrual terms, so if you're a manager in a government department you're managing a level of expenses that you can incur in the delivery of certain outputs or objectives. That's what you're monitoring against, that's what you are managing, and that includes depreciation, cost of capital and so on. So those accrual numbers are not just appearing in the financial statements, they are at the heart of the whole system. One of the things that I skipped over a moment or two ago was that a lot of other countries have adopted accrual reporting and, in fact, amongst OECD countries, for example, something like 75% have adopted accrual reporting but only about 25% have also moved to accrual budgeting, and virtually no other country has moved to accrual appropriations. So you've got a lot of governments that have emulated what New Zealand did in terms of the reporting but they haven't been prepared to take it fully into their public financial management system, they still operate a cash budget, they still monitor within year on cash flows rather than expenses. If you ask me as an accountant why has it been successful, I think part of the reason is the whole system is run off the same numbers. What you see in some countries is that they do the budget on cash, so all year managers throughout the government are operating on a cash basis and then at the end of the year they have got to turn around and produce an accrual-based set of financial statements, which has nothing to do with day-to-day operations, and it's really unpopular in countries that do that. It's not linked to the incentives that operate on those managers, which are around the budget and the appropriations.

The benefits of accrual accounting in the public sector

CIARAN RYAN: Can I just pause you there for a second, I think as accountants we understand accrual accounting but I think what some of us might be missing when you're talking about budgeting for an entire country is maybe give us a practical example of how that would change when you go from cash accounting to accrual accounting if one was to take, for example, you mentioned pensions earlier, are governments correctly accounting for liabilities that are running 20, 30 years into the future. Can you maybe just break that down in a fairly simple way so that we can understand how that works at the fiscal treasury level.
IAN BALL: If you think about it from the perspective of a line department for a moment and under a cash-based system what the government would get is an appropriation and a budget to spend a certain amount of money during the course of the year but probably also in that kind of system get told that they can spend this amount on personnel, this amount on capital expenditure, this amount on consultants, this amount on travel and so on. The way the budget is structured in New Zealand is a bit different to that in the sense that it says this is what you've got to produce during the course of the year and in order to produce that you have legal authority to incur expenses up to a certain amount, and it's left to a significant degree to the department to determine how much they want to spend on the different types of inputs. But the proviso is that they have got to deliver the services. Then the question is, well, what are the expenses and how do they differ from cash. Well, they include, for example, a cost of capital, which is a charge from the treasury to the department for the use of capital that's on its balance sheet, so there's a capital charge applied to the net worth of the department and that's part of their expenses for the year. Depreciation of assets is part of their expenses, accrued leave is part of the expenses. Now, we've done away with a defined benefit pension scheme for public servants in New Zealand, that was one of the first things that happened around the time when we moved to accrual numbers, it was realised that the government's super liability was very large and would just keep growing, so the scheme was effectively closed. But if we had a defined benefit pension scheme then we would be incurring as an expense in the year the full cost of that employee's service, which is not only what we would pay them this year but what they would also accrue by way of a pension right. So the sort of expenses that you would see on in the statement of financial performance of a government department are essentially the same as you'd see in the financial statements of a company. In fact, the organisation of expenses are pretty much the same, except that in the government we also do a breakdown for the whole of government by sectors, if you like, so we breakdown the total government expenses into education, health, industry and so on. I don't know whether that answers your question, but it is very much like producing a set of budgets on an accrual basis as you would do in the private sector. It means that what you end up with is a forecast set of financial statements, which include a forecast statement of financial performance which includes projections of your revenue and expenses, plus forecast cash flow statements, plus a forecast statement of financial position. We do that as part of the budget for each of the next four years so that we can see what the outlook is in accrual and including balance sheet terms.

The Uberisation of state assets
CIARAN RYAN: This is very fascinating stuff, it's the commercialisation, from what I am gathering, of state finances, you're applying the same standards you would in the corporate world to the treasury. One of the things that you mentioned in this article that you wrote, you were talking about the Uberisation, now let's just break that down, the Uberisation of state assets, in other words the state has got this balance sheet and you've gone through this great exercise of actually working out what is it that the state owns, in other words you have now settled on what is the asset side of the balance sheet but now you are also proposing that these assets are not being fully utilised, so you're talking about adopting the Uber model and renting out these state assets, therefore, improving the balance sheets, improving their valuations and also improving their revenues. This is quite a radical idea, maybe it's not that radical but you're the first person who I've come across who's actually mentioned this in any serious way. Can you just talk about that and as a model for other countries to follow, is this something that they should be doing and are state assets being underutilised?
IAN BALL: Well, I think the short answer to that is yes, they are being underutilised. I wouldn't really hold us out as…we've made a lot of progress in the area of asset management, but I would argue that it's still one of the weaker areas in our overall financial management system. It's actually something which has been getting increasing attention in recent years and I guess it's about 15 months ago now, the IMF did a very big study on public sector balance sheets and it basically was looking at what can be gained from having a better idea of what assets you've got and managing them better. Just one of the things that came out of it was that the IMF estimate was that if countries managed their assets better, they would generate additional revenues from those assets, equivalent to about 3% of GDP. Now, 3% of GDP was quite a lot of money back in September 2018 when they published this work but it's certainly going to be a lot of money in a post-Covid world. If you've got assets sitting around not being well utilised that's just a lost opportunity. The way that the balance sheet is being managed in New Zealand is essentially it's not trying to make government departments into companies, that's not what we're trying to do, we're just trying to say that you want to have some incentives and encourage people to use assets well, and you want to make sure that the people with the right skills are managing the assets. For example, one of the things that's happened as New Zealand has built up its net worth, it has moved to a balance sheet position where a lot of the assets now, about half of the assets on the balance sheet are actually financial assets, they're not the roads, the hospitals or schools, they are all on the balance sheet but about half the balance sheet is now financial assets and a lot of those assets are managed by what's called the New Zealand Super Fund, it's basically a national wealth fund and the arrangements for managing that are very like the arrangements for managing a fund in the private sector, where there is a very clear commercial objective to manage those assets well and to generate a return from those investments. I did mention earlier the capital charge, which is applied to the capital of departments, again that was one way of encouraging departments to think about the assets that they have on their balance sheet and make sure that they are using them well. So one of the things that a department can do is it can change its business model in a way that enables it to produce the same services but with less assets involved, then if they get rid of the assets they return the capital to the crown and then to the government, to the treasury but then they can keep the capital charge associated with that to spend that on, if you like, current revenue items. So they've got an incentive to think about what are the assets that they have on their balance sheet, do they have assets that simply aren't generating any value and think about how can they use those better. Going back to your question in a way, they can't do any of that unless they know what the assets are and that's where having a balance sheet that's audited, a set of reliable information to start with is critical. Again, it's really critical across the whole of government management, you really can't manage any organisation well unless you know what the assets and liabilities are. So accrual accounting is simply a means of ensuring that managers have the information they need in order to manage their position.

Zero-based budgeting is hugely expensive

CIARAN RYAN: New Zealand does seem to have become a model of good governance and we've been hearing about the strength of the economy there for some years. In South Africa our Finance Minister, Tito Mboweni, has spoken about the need to introduce zero-based budgeting at a national level and he's also talking about this at provincial level. So government here is basically structured around three tiers, you've got national, you've got provincial and then you've got local. What do you think of this idea of zero-based budgeting? In other words, you start the year with a clean piece of paper, you don't simply apply a percentage increase to every line item that you find on your budget from last year. Given the fact that we have a public debt-to-GDP level heading towards 86% in this country, it really has rocketed up in recent years, what's your feeling about zero-based budgeting at a national level?
IAN BALL: Zero-based budgeting is an idea that's actually been around for a very long time and I'm trying to think about when it was first popular but it was probably in the 1970s and it's had a bit of resurgence recently. I guess my view is that if you try and implement it as a really pure zero-based budgeting system that's hugely expensive to do and I mean expensive in terms of the time, the budgetary effort involved. If you really are starting each budget from scratch, if you think about the operations of a government there is a whole lot of stuff that it does that is budgeted, that is agreed and it's been agreed through a difficult process of negotiation and legislation. Those things are not set in stone but they are agreed and there's simply no way that you can actually renegotiate those all in the context of an annual budget, there's no way you would want to, it's just too demanding to do that. But on the other hand you've got what could be called incremental budgeting, where you just take last year's and you add a percent and say, okay, this is this year's budget and nobody really reconsiders the base. Now, really the trick is to find a middle ground, where you're not leaving programmes or expenses exactly the same year after year and never going back and reconsidering them but there are different ways that you can do that. You can do that through something like a zero-based budgeting system where you try and force managers to justify their expenditure every year or you can do it through…which is one of the things that the current government in New Zealand is trying to do, is to do in-depth reviews of particular sectors periodically. For example, you wouldn't review the defence forces down to the last dollar every year. So what they are proposing is to do a series of major reviews of different sectors within the government, putting a lot of effort into those but not doing them every year for every sector. So it's kind of a rolling programme of zero-based type reviews. In a sense it's just a way of finding a compromise between giving people some stability in what they're managing, recognising that you can't rebudget everything every year but at the same time you don't want the complacency that comes with just the annual increments of whatever the rate of inflation is or however you do it. Just to be clear, this is another area where we did a very much more rigorous budget in the early years in the programme of the Public Finance Act and then we moved more towards a baseline approach, where essentially government agencies were given a baseline budget, which they could rely on getting next year to produce the same set of services but we knocked a percentage or two off last year's budget rather than added it on, on the basis that you would expect organisations to progressively improve their efficiency through technology and so on. So the expectation was that there would be a baseline but it would be diminishing rather than increasing. That I think is part of why the finances have been well controlled, it means that the government then has a bit of room to…the 1% or 2% becomes something the government can play with without – and by play with I mean introduce new policies – but it can use that for new initiatives and a little more if revenues allow it, without breaching the fiscal rules. So zero-base budgeting, the idea of reevaluation is important within any budget system, it's just a matter of how you can do it in any one year.

‘There's nothing written in stone that you have to have a surplus every year'
CIARAN RYAN: Right, if I can just go back to the Public Finance Act and you did say that there was some associated legislation with that but is there any obligation on the government in New Zealand to run budget surpluses. Clearly it can't be an obligation because you mentioned already that after 2008, the financial crisis, there were four years there where that wasn't achieved, and also during the current crisis that's also probably not going to happen. So how does that actually work, is this an aspirational thing that we're going to try and reach a budget, which, of course, is always dangerous if you have an aspiration rather than obligation, how does that work in practice?
IAN BALL: We had a big debate about what sort of fiscal rules we would put in place in New Zealand and this was done just after the Public Finance Act was passed and, as I said earlier, those rules have now become part of the Public Finance Act. But the thinking was that you want to state fairly clearly what you want the government to do but you'll undermine the rules if you say you've got to run a budget surplus every year because, as you say, and as we've seen, there are circumstances where you just can't do that or you don't want to do that, it would be bad government to do it. There's nothing written in stone that you have to have a surplus every year. Just as an aside, the strong net worth position that the government built up has been referred to by the Minister of Finance and others as a kind of rainy day fund, and we have got a rainy day at the moment. So you're going to be using that position you've built up during these kinds of periods. Going back to the rules, so what was decided was that the rules would be expressed in a way that was not intended to be binding but it was a bit more than aspirational too, in particular it required the government to be very clear about what specific fiscal targets it was going to aim for. For example, one of the fiscal rules is around debt and one of them is around net worth and others are around revenues and expenses, it requires the government to say what it means by a prudent level of debt and if it says it's 20%, if the government chooses to say our objective is 20% net debt, for example, then that's what it reports against and essentially the mechanism is transparency really. It's got to say what it's aiming for and then it's got to report against that. If at any time it's not complying with either the principles or what it said it will do, then it's got to explain why it hasn't and how it's getting back there. So the incentives around this regime are not about breaking the law because you're running a deficit, it's about the public can see that you said you were going to get it down to 20% and you haven't succeeded. Somehow culture has become, and this is within New Zealand as well as within the political system, the culture is one of expecting finances to be well managed and one thing in particular helps generate that and that is that the New Zealand government doesn't produce just annual financial statements on an accrual basis, it produces monthly financial statements on an accrual basis. So you get a full set of financial statements every month about a month after month end, so you can track how the government is going and analysts and commentators will discuss what's happening on a monthly basis, and that all helps to generate this culture that there's an expectation that the government will be fiscally well managed. In fact, in the election immediately after the financial crisis there was a an election just after the financial crisis and then a survey taken straight after it, a random survey of the New Zealand population, people were asked what was the number one objective for the new government, and 60% had as their number one objective returning the government to surplus. So it's clearly something which has become embedded in the culture of the country that government should be fiscally responsible.

New Zealand's quick economic recovery after lockdown

CIARAN RYAN: That does also indicate a highly aware, awake, enlightened or informed population, where you get 60% of the people saying that they want the government to behave fiscally responsible. We're just running out of time here, Ian, but a quick couple of questions if we can, just give us a sense of the business and general conditions in New Zealand at the moment, you've already mentioned that businesses are able to open, what's the projection for the economy, are you going to see some contraction, I guess, like most countries in the world this year but is it going to be severe?
IAN BALL: The treasury and a number of other agencies have just produced a new index, which is basically designed to track overall economic activity and what it shows is that during the period of a lockdown things contracted quite sharply but they have come back very quickly, they are not back to where they were for sure and in a way there is no way that can be the case until we get tourists back into the country but the recovery looks at this stage as if it's going to be relatively quick. I live in a tourist town and I was surprised the other day when I went into town and I was going to have a cup of coffee at a place I often go to, it was full, I went somewhere else because it was just too busy. So tourism remains a big unknown factor and I think the general population is pretty clear that they don't want tourism back up and running until we are really sure that it's safe and that presently doesn't look like being for quite a while. So I think we are recovering back to a normal New Zealand operating within its own borders, which I think will be less than where we were for sure but I think it will be manageable. I think for us the really big question is how soon can people start coming in from overseas. One of the things we have noticed and, again, this is because I live in a tourist town is that a lot of people are taking holidays within New Zealand and spending money here that they otherwise would have spent in Australia or South Africa or the United Kingdom. So there's obviously a lot of pain associated with this, particularly small businesses and even some large businesses, Air New Zealand has suffered really quite badly from this, as you can imagine. So there is a lot of pain around, I wouldn't want to underestimate that but I think now that we're back to normal I think it's going to improve, well, so far it does appear to be improving relatively quickly.

Transparency is key in a time of uncertainty

CIARAN RYAN: Right, as an architect of the Public Finance Act and as a professor of accounting what advice would you have for lawmakers in South Africa, maybe in addition to what you have already said, which I have got to admit is quite fascinating, these are fairly unusual times and I think accountants are finding that they are not just offering the usual bookkeeping services and compliance-related services, they are now having to be turnaround artists, if you like, they're having to sit with their clients and advise them on the roadmap out of this particular crisis. Any particular advice you have for them?
IAN BALL: Well, that's a bit of a difficult question really, I suppose for lawmakers to start with, one of the lessons that I think you can take from the New Zealand experience is that you cannot seriously run a government well unless you've got good financial information. If there's one thing that I would take from it is that the idea of running an organisation as complex as a modern government on cash-based information is just ludicrous really. I don't think there are silver bullets in this. For a government that wants to be managing its finances well, this is a bit of a marathon rather than a sprint in getting those financial systems in place. But I do think that's really important and I think the transparency that comes with it and the information that comes with it is good for citizen confidence as well. Just as an aside, I was looking at an article this morning in the Financial Times, which was written by Martin Wolf, a crisis of faith in democracy, and it was really interesting in that again I was comparing New Zealand with some of those other Anglo-Saxon countries like the US, Australia, the UK and Canada, and one of the things that I think is notable about New Zealand is that the dissatisfaction with democracy in New Zealand is still below zero, we're basically the only country of those five that is satisfied, and some of them are seriously dissatisfied. So good information and the knowledge that your public services are being well run and responsibly run is really important to having public confidence not just in the government but in the public services more generally. So, I guess, my advice to lawmakers was just and it's a hard road but that's the road that we're trying to go down. For companies, government and government agencies are in the middle here at the moment of preparing their financial statements for the June 30 year end and they're experiencing pretty much exactly the same problems that a lot of companies are facing, except that in most cases they don't have the same kind of revenue problems and they don't have the same kind of going concern issues but on most other matters they have got a lot of the same kinds of issues about how do you value Air New Zealand's planes that are sitting on the runway at the moment. So if there was one piece of advice, I think you're right that they need to become turnaround artists in how do you manage this situation but I think particularly in terms of the financial reporting side of this, the auditing and reporting side is quite problematic for a lot of organisations, I guess the one message I would have is just be transparent, transparency is your friend, people will understand why the estimates are more difficult to get together this year, why there might be less certainty around certain numbers. Be upfront about it, don't pretend that you've got levels of certainty that you don't have because, truthfully, most companies, most government departments don't have a lot of certainty about some of these numbers. Again, a lot of accounting I believe ultimately comes down to reputation and this is a time when organisations can enhance their reputation or they can damage it, and you enhance it by being as open and as transparent as you can. The incentives to hide stuff in this kind of environment are really strong but it's not the way to go, it's not the long-term solution, you need the trust of your stakeholders in the long term, don't squander it.
CIARAN RYAN: This is a fascinating discussion, there's a lot to take away from that. By the way, are you a rugby fan?
IAN BALL: I am, I'm the sort of rugby fan that when I was a kid the Springboks used to be our archenemy and it seemed to be quite not so much the case for a few years but I have to say that right at the moment it is again, we're ranked number two and you are unfortunately ranked number one.
CIARAN RYAN: Isn't that great [laughing].
IAN BALL: Well, I'm sure it is for you. No, it's good, you had a great year last year.
CIARAN RYAN: We did. Look, in my mind New Zealand is on a consistency basis it has been unbeatable for decades, just looking at the track record over time. South Africa, the Springboks, their track record has been all over the place. Yes, last year was a good year but what really needs to be studied, in my opinion, is how New Zealand and the All Blacks have achieved that level of consistency and I think there is no easy answer, I think there is some magic there.
IAN BALL: I think it's a management issue as much as anything, I think the All Blacks are managed in a very serious way and yet the other night I was hearing how the manager of Liverpool Football Club was saying how he learnt from the All Blacks from a management perspective. So I think there is something there but I must admit I liked that old All Blacks versus Springboks as the thing to wait years for type of game, so I hope we are back in that era.
CIARAN RYAN: Yes, it certainly makes the game internationally a lot more exciting. Ian, let's leave it at that. Just one final thing, I do notice in this article that you wrote on www.stuff.co.nz that there was going to be a conference about the success of the Public Finance Act, has that conference actually happened and are there papers that were produced for that or that you produced for that?
IAN BALL: Yes, it has happened, there are some papers but at the moment what you can see if you go onto the university website and search for PFA you'll see the programme and you'll see the slides, who spoke and what their slides were if they used PowerPoint, and that will give you a pretty good idea of how it went. It was an excellent event really, both in looking back but also in looking forward at what needs to be done next, there's nothing set in stone and that includes the Public Finance Act.
CIARAN RYAN: I will definitely check that out. Ian, I really want to thank you for coming on and talking to us. I just find this fascinating, New Zealand is such an interesting country from so many different perspectives, and I think there's a lot that we can learn there. Let's check in again with you in a few months and see how the country is doing in coming out of the Covid crisis and how public finance is doing, I'd like to stay on top of it, if you don't mind?
IAN BALL: That will be fine, it's been a pleasure.
CIARAN RYAN: Thanks so much. That was Professor Ian Ball from the School of Accounting and Commercial Law at Victoria University in Wellington, New Zealand. Thank you so much, Ian, keep well.
IAN BALL: Thank you.

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