Fiscal Strategy Model
Page updated 16 May 2013
The Fiscal Strategy Model (FSM) projects the financial performance and the financial position of the government over a medium-term horizon and is normally published with the latest Economic and Fiscal Update.
Note: Previously these medium-term projections were done by the Long Term Fiscal Model (LTFM) however the LTFM is now used solely for longer-term projections (minimum of 40 years).
Fiscal Strategy Model Projections
The principal purpose of the FSM is to produce the post-forecast fiscal projections. The Budget Economic and Fiscal Update 2013 updated version of the FSM is published here on the Treasury's website.
- begin from the end of the five-year forecasts in Economic and Fiscal Updates (EFUs) and normally cover a period of ten years beyond that
- are strongly influenced by the EFU forecasts
- are consistent with Government's approach to fiscal management in that new initiatives are modelled through assumed operating and capital allowances
- rely on long-term assumptions such as future population growth and economic growth
- include some degree of recovery to these long-term assumptions in the early years of the projections, if the long-term rates or levels have not been reached at the end of the forecast period, and
- are required to be published annually, as part of the Fiscal Strategy Report, under the Public Finance Act (1989).
Download the Fiscal Strategy Model
Using MS Excel Files
|16 May 2013
||Fiscal Strategy Model - BEFU 2013 Update||fsm-befu13.xls (1,449 KB)|
Notes for this Version of the Fiscal Strategy Model
- Scenarios for different levels of operating expenses and revenue can be tested using the Forecast Adjuster sheet of the FSM. The output of the Forecast Adjuster is in the Option worksheet.
- The FSM has been updated to incorporate the latest economic and fiscal forecasts contained in the BEFU. Assumptions underpinning the BEFU FSM are outlined in detail in the Projection Assumptions section of the Fiscal Strategy Report (16 May 2013).
Other Treasury Models
The Long-Term Fiscal Model
Treasury produces another model that projects fiscal and economic variables beyond the forecasts. It is called the Long-Term Fiscal Model (LTFM).
The LTFM differs from the FSM in that:
- modelling for the LTFM extends at least as far as the year ending June 2050;
- the LTFM's projections are not intended to assess the Government's fiscal strategy;
- in regard to the last point, the LTFM projects individual operating and capital expenditure classes with their own particular cost drivers, such as changes in the recipient population and expense growth factors based on historical averages, rather than restricting their growth to a share of projected operating or capital allowances; and
- the LTFM has more modelling capability so that it can, for example, produce scenarios where debt is constrained and some other fiscal variable, such as expenditure or tax revenue, becomes the balancing output.
New Zealand Superannuation (NZS) Fund Contribution Rate Model
The projected required contributions track from the Treasury's New Zealand Superannuation (NZS) Fund Contribution Rate Model is an input into the LTFM and the FSM.