Public Trust pays back $25 mill

The Public Trust has paid $25 million out of its reserves back to the Crown.

The payment, out of its $84 million in reserves that has built up over its 127 years, is essentially a surplus, chief executive Tim Sole told Parliament’s finance and expenditure committee.

The committee’s report on the Public Trust, gave the office a guarded thumbs up, in marked contrast to last year’s controversy.

Then MPs were highly critical of the PTO, both over its business performance and its candor with MPs.

That mood has now dissipated, even though the office is still running at a loss.

The office reported a loss of $5.6 million in the last financial year, and an unaudited loss for the six months to December of $1.7 million.

New chief executive Tim Sole said the $25 million payment into Treasury coffers was "a significant amount".

"But if it was a private company I would hand it back to shareholders because it just boosts the return on equity that Public Trust is expected to make," he told MPs. "I think $25 million is quite reasonable."

Sole gave three reasons for the losses since the 1999-2000 year, which came after running an average profit of more than $12 million for the first nine years of the past decade.

The office changed its accounting policy as it moved its common fund to market – a move that precipitated a writedown of $3.2 million.

Secondly, the delay in modernisation legislation meant that the compensation from the government for provision of the free wills service and other "public good" work, which the office had budgeted on, was not paid.

The government will pay the office $4 million a year to provide those services – services which the Public Trust has previously paid for out of revenue. This will be offset by the loss of about $1.25 million interest on the $25 million just paid to the government.

"Thirdly, Public Trust was overdue for a strategic review, which had been put to one side while the modernisation legislation was being worked on. I am pleased to say that the work on the strategic review is now well advanced and based on the progress with that, I am personally optimistic for Public Trust’s financial future."

The office is hoping to increase its profitability by reducing fees on some of its services.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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