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Budget 2007 Home Page Budget Policy Statement 2007

Budget Policy Statement 2007

The Public Finance Act (1989) specifies principles of responsible fiscal management and imposes reporting requirements on the Minister of Finance and the Treasury. The reporting requirements on the Minister include two fiscal responsibility documents: the Budget Policy Statement (BPS) and the Fiscal Strategy Report (FSR). These documents focus on different aspects of the Government’s fiscal policy. The BPS has a shorter-term focus. The BPS sets out the overarching policy goals that will guide the Government’s Budget decisions and the Government’s priorities for the forthcoming Budget. The FSR sets out the Government’s long-term fiscal strategy and explains how that strategy accords with the principles of responsible fiscal management.

In addition, the Treasury is required to publish, at least every four years, a Statement on the Long-term Fiscal Position looking out at least 40 years. The first Statement was presented to Parliament in June 2006. The horizon covered by the Statement means that it has a different character from the BPS and the FSR, as it will extend across the terms of many more governments, with potentially many different policy regimes.

The table summarises the legislated requirements for each document*.

* For full information see Public Finance Act 1989 Part 2 sections 26F-26N.

Budget Policy Statement Fiscal Strategy Report Statement on the Long-term Fiscal Position
Produced annually before the end of March. Produced annually with the Budget. Produced at least every four years.
Requirements: Requirements: Requirements:
state broad strategic priorities for the forthcoming Budget state long-term objectives for fiscal policy  prepare a statement on the long-term fiscal position relating to a period of at least 40 years
state any changes to long-term objectives explain how the objectives accord with  the principles of responsible fiscal management
state any changes to short-term intentions provide projections of likely progress against long-term fiscal objectives disclose significant assumptions
explain how the changes in objectives and short-term intentions accord with the principles of responsible fiscal management. state short-term intentions (three or more years) and their consistency with long-term objectives and the Economic and Fiscal Update (EFU). the Treasury to use its best professional judgements about the risks and the outlook.
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