Public Net Worth
Accounting, Government and Democracy
“This important book…..is a call for sensible change. It should be answered” – Martin Wolf
An opportunity to improve long-term public finances
without cutting public services or increasing taxes.
Through better asset and liability management, government revenues can be increased significantly – by several per cent of GDP per annum
Accrual-based metrics also enable and encourage reduced costs, such as reduced interest costs through better debtor and creditor management.
“Just as a company or a household would look at their balance sheet when making investment decisions, so should a government.” – Andy Haldane
What is the opportunity?
1. Adopting accounting-driven, Net Worth-based fiscal rules/targets creates major opportunities to improve long-term public finances without cutting public services or increasing taxes.
2. With a focus solely on debt and cash metrics, governments overlook the value of public assets and the full extent of liabilities. This narrow perspective leaves politicians without the necessary insight or accountability, leading to suboptimal use of resources and potential unfairness across generations.
Foreword by Martin Wolf
Chief Economics Commentator, Financial Times
“An excessively narrow focus on deficits can lead to bad decisions” ….
“The invention of modern accounting is among the most important advances in human history. Without it, today’s complex economies would be impossible.”
….”Government is a complex activity.”
Order the book here! or read the first chapter
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Five Tips to Maximize the Impact of Assets and Liabilities on Public Financial Management
While liabilities, including debt – usually attract attention, they do not represent the totality of a government’s financial position. Recognizing the interplay between assets and liabilities in public financial management (PFM) can contribute to a stronger and more stable financial position.
Government Balance Sheets for better management of assets and liabilities
Government balance sheets allow governments and citizens to understand the fiscal impact of government policies in the immediate and long term. They help inform how decisions made today may have an impact on inter-generational equity
How accountants can help save public finances
Debt-based fiscal rules as employed by most G7 countries do little to describe the problem, and even less to manage it. Understanding the true state of public finances requires a full balance sheet, driven by accrual-based accounting. This in turn will open up opportunities for better management of assets and liabilities, which will greatly assist in meeting the challenges faced by graying G7 countries and their overstretched public finances.
Meet the authors
Ian Ball
Willem Buiter
John Crompton
Dag Detter
