State property: volume and value

Volume and value
The 2010 state balance sheet puts the total value of state property at €80 billion. In our opinion, however, the view presented by the state balance sheet and the notes to this item is not reliable.

We conclude that the government has only limited insight into both the volume and the value of state property. The regulations issued by the Ministry of Finance do not provide adequate guidance on the preparation of reliable records and a government-wide overview of state property.

Weak incentives
We conclude that the ministries do not have an accurate understanding of the volume of property that could be disposed of because they do not systematically and periodically consider whether state property is vacant and/or no longer in use. On balance, the incentives to dispose of surplus property are weak. In consequence, the state may own more property than strictly necessary to implement government policy. The government may therefore be missing opportunities to save money.

We recommend that the Minister of Finance clarify the guidelines on the recognition and valuation of the property disclosed in the state balance sheet. Such guidelines would improve the reliability of the view presented of state property. We also recommend that the minister introduce guidelines on the audit of property. 

We recommend that the Minister of Finance include the improved insights in the ministries' annual reports. After the figures have been audited by the ministry audit departments, the minister could include them in the central government annual financial report and the state balance sheet.

To improve the timely identification of surplus state property, we recommend that all ministers take stock of their properties as a matter of course when reorganisations are carried out and consider the consequences of reorganisations for their property portfolios.

If there is no concrete reason to take stock of the property, we recommend in general that ministers review the buildings and land in their property portfolios at least once every four years to determine whether they are necessary to achieve the ministries' policy objectives. We recommend that the Land Management Service (BBL) also periodically review the state property that it manages.

The Ministry of Finance will include clearer criteria in the new manual on the European System of Accounts (ESA). He will also investigate differences and will improve the provision of information. 

Ministries will prepare an annual strategy for their property portfolios. They will submit the strategy to the Ministry of Finance before the budget preparation. The property strategy will include a periodic review the buildings and parcels of land in the property portfolio. The agreements made on the strategy will also apply to the Land Management Service. The minister does not yet want to commit himself to a four-year cycle.