Policy Advice and Management: Macroeconomic

Scope of Appropriation

Provision of macroeconomic policy advice and management including budget management; macroeconomic, tax and fiscal forecasting; advice on fiscal policy and strategy; and fiscal reporting and departmental financial management controls including the development and application of generally accepted accounting practice to the Crown.

Output Class Description

This class of outputs involves the provision of policy advice and services related to helping the Government maintain a stable and sustainable macroeconomic environment. Such an environment allows individuals, businesses and the Government to plan more effectively for the longer term, contributing to higher economic growth and higher living standards for New Zealanders.

By creating an appropriate environment for sustainable growth, macroeconomic performance is fundamental to all of the Government's policy objectives. Through the Budget process, the Treasury plays a key role in helping Ministers prioritise initiatives, ensuring that additional government spending is oriented towards achieving priorities through fiscally sustainable, value-for-money initiatives.

The Treasury focuses on areas where work is likely to have the greatest impact on the performance of the macroeconomy, and on supporting Ministers in their priority outcome areas. The performance of the State sector is also fundamental to achieving this outcome as public sector productivity and the spending path in key sectors such as health, education and welfare have significant impacts on the macroeconomic environment.

Significant Work Completed During 2008/09

• The support and advice that the Treasury provided to the Minister of Finance assisted him to deliver a Budget $300 million less than the allowance in the 2008 BPS.
• An improved process was adopted to capture and report fiscal risks in Economic and Fiscal Updates.
• Delivered the BPS and FSR, including advice on the Government's response to the significantly deteriorating outlook.
• Developed the Government's response to the FEC inquiry into the future monetary policy framework.
• Completed the implementation of NZ IFRS, the basis for preparing the Financial Statements of the Government of New Zealand. In October 2008 we published the first set of audited annual financial statements under NZ IFRS and this has increased the quality and usefulness of government fiscal reporting.
• Produced the economic, tax and fiscal forecasts for the 2008 PREFU, December 2008 Economic and Fiscal Forecasts (EFF) and 2009 Budget Economic and Fiscal Update.We provided sufficient commentary to aid decision-making and enable stakeholders to understand the forecasts.
• Provided input into international and domestic accounting standard setting boards with new Treasury appointments to both the International Public Sector Accounting Standards Board (IPSASB) and the New Zealand Financial Reporting Standards Board (FRSB). These appointments support these boards in producing reporting standards that are “fit for purpose” (with particular regard to public benefit entities).
• Provided monthly and weekly Economic Updates for the Minister of Finance.
• Provided commentaries and previews on key data releases for the Minister of Finance.
• Organised and hosted the IMF Article IV visit to New Zealand, and contributed to the IMF's Article IV report on New Zealand.
• Provided macro and fiscal input into the annual visits of Moody's Investor Services, Standard & Poor's and Fitch rating agencies which saw New Zealand's sovereign ratings remain unchanged for Moody's and Standard & Poors, but put on negative outlook for Fitch.

Actual 2008/09 output class expenditure was $381,000 or 3% under Supplementary Estimates budgets owing to vacancies.

The appropriation for this output class was increased by $1,000 in the Supplementary Estimates owing to minor forecasting changes