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Our Outcome Performance for 2010/11

Overview

Our vision is to be a world class Treasury working towards higher living standards for New Zealanders.

We take account of both current and future living standards to ensure resources are managed efficiently and sustainably. We also consider how key factors influencing living standards are distributed across the population, and how opportunities can be promoted for those who are most disadvantaged.

Over the past year we have reviewed the three key Treasury outcomes that support the Government's priorities whilst contributing to that vision. We have also reassessed the intermediate outcomes that complement the Treasury's primary outcomes, a process that has resulted in a change to how we have articulated the Treasury's intermediate outcomes.

Outcome performance is provided against the measures and indicators agreed in the 2011/12 Statement of Intent (SOI) as the Treasury improved the basis for reviewing performance during the development of the document. In comparison, the statement of service performance, starting on page 27, includes reporting against the measures agreed to in the 2010/11 Information Supporting the Estimates documents as well as some of those contained in the 2011/12 Information Supporting the Estimates documents. The outcomes are: Improved Economic Performance; a High-performing State Sector that Supports New Zealand's International Competitiveness; and A Stable and Sustainable Macroeconomic Environment. These are interconnected and mutually reinforcing. The New Zealand economy strengthened further in the 2010/11 financial year, building on the post-global financial crisis recovery that had commenced in June 2009.

For the Treasury, 2010/11 was a productive year in which we assisted the Government to roll out policies designed to both raise New Zealand's relative economic performance while assisting the necessarily gradual process to unwind large macroeconomic imbalances that have afflicted our economy for decades.

The global financial crisis of 2008/09, and developments in international markets since, have highlighted to New Zealanders that we need to reduce our vulnerability to any future changes in investor sentiment. In particular, households' high levels of debt and the country's high net external liabilities with the world represent a potential future risk to the economy's equilibrium, and therefore a degree of ongoing risk also to New Zealanders' future living standards.

The Treasury's view is that large macroeconomic imbalances will continue to present risks to the economy until they are materially unwound, and that the appropriate Crown response is to strengthen its own balance sheet and fiscal management framework, to adopt measures that further enhance our monetary, regulatory and fiscal frameworks and to progress evidence-based policies that will strengthen the national savings rate.

Decisions announced in Budget 2011, which built on measures adopted in Budget 2010, are designed to facilitate a path toward stronger national productivity performance and faster economic growth, underpinned by a credible fiscal consolidation plan.

Initial indicators of success are beginning to be evidenced through:

  • an improvement in growth in tradable sector output compared to the growth in the non-tradable sector
  • a forecasted reduction in core Crown expenses as a proportion of GDP, and
  • a forecasted reduction in Crown net debt projections.

Budget decisions to better manage Crown spending will, over time, assist to free up resources for more productive uses, which will be a key ongoing mechanism to drive both a strengthening in our economic fundamentals and a reduction in our vulnerability as a society to any unforeseen future external shocks to our economy.

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