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Budget 2008 Home Page Budget Policy Statement 2008

Budget Policy Statement 2008

The Public Finance Act 1989 specifies principles of responsible fiscal management and sets out 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.  It 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. 

The reporting requirements on the Treasury include the publication of economic and fiscal forecasts (Economic and Fiscal Update) twice each financial year: at the time of the Budget and again before the end of the calendar year.  The Treasury must also publish an Update prior to a general election.  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 to the BPS, the FSR, and the Updates, as it extends across the terms of many more governments, with potentially many different policy regimes.

The following table summarises the legislated requirements for each document*.

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

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:

  • State broad strategic priorities for the forthcoming Budget.
  • State any changes to long-term objectives.
  • State any changes to short-term intentions.
  • Explain how the changes in objectives and short-term intentions accord with the principles of responsible fiscal management.

Requirements:

  • State long-term objectives for fiscal policy.
  • Explain how the objectives accord with the principles of responsible fiscal management.
  • Provide projections over at least 10 years showing likely progress against long-term fiscal objectives.
  • State short-term intentions (three or more years) and their consistency with long-term objectives and the Economic and Fiscal pdate (EFU).

Requirements:

  • Prepare a statement on the long-term fiscal position relating to a period of at least 40 years.
  • Disclose significant assumptions.
  • The Treasury to use its best professional judgements about the risks and the outlook.
Economic and Fiscal Updates
Budget (published with the Budget). Half-Year (published between 1 November and 31 December, usually in conjunction with the BPS). Pre-election (published not earlier than 30 or later than 20 working days before polling day).

Requirements:

  • Economic and fiscal forecasts for the current financial year and each of the next two financial years.  The economic forecasts must include forecasts of major economic aggregates (output, inflation, employment, current account) and a statement of significant assumptions.  The fiscal forecasts must include: forecast financial statements; a statement of specific fiscal risks relating to Government decisions and any other contingent liabilities; and a statement of significant accounting policies and changes in policies. The Budget Economic and Fiscal Update (BEFU) must include a statement of tax policy changes.   
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