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Policy Advice - Fiscal and Macroeconomic

Scope of Appropriation

This output expense is limited to the provision of fiscal and macroeconomic policy advice.

Significant Work Completed During 2010/11

  • The fiscal position has been in substantial deficit since 2008/09 in the wake of a domestic recession, the global financial crisis and prior year spending and tax decisions. The economy and fiscal position were further impacted by the Canterbury earthquakes. The Treasury provided advice on how to advance the return to surplus and prudent debt levels, while also providing the necessary resources for the rebuilding of Christchurch.
  • Published the Budget Policy Statement (BPS) in December 2010 and the FSR in May 2011. These included an increased focus on Crown risk reporting and uncertainty.
  • Provided advice and implemented changes to the Fiscal Management Approach for Budget 2011 that broadened the net of spending captured in the annual operating allowance.
  • Provided advice on the Spending Cap (People's Veto) Bill, including fiscal and economic implications, along with a Regulatory Impact Statement for Cabinet consideration. The Spending Cap Bill was approved by Cabinet and introduced to Parliament in August 2011.
  • The Treasury, along with RBNZ and Victoria University, organised a high-level policy forum on New Zealand's economic imbalances. The forum generated extensive media coverage and raised the quality of public debate. The Treasury delivered a paper on options for managing the fiscal position in extended upturns in order to avoid procyclicality.
  • The Treasury provided advice to help clarify a balance sheet policy framework and support the development of a forward-looking balance sheet strategy. The purpose of this work was to facilitate understanding of the benefits of increasing the Crown's net worth.
  • Published a Supplement to the inaugural Investment Statement alongside Budget 2011, allowing for greater scrutiny of the Crown's management of its assets and liabilities and updating the Government's medium-term investment intentions and balance sheet strategy.
  • Quarterly report on CFIs was redesigned to improve the assessment information on CFI performance.
  • Mixed ownership model decisions announced in Budget 2011 and phase 2 now proceeding with appointment of advisors underway; Financial Analysis Unit up and running and making early progress (eg, migration to CFISnet, dividend and comparable company analysis); SOE business planning completed; comprehensive advice on Electricity Industry Act 2010/EQC/KiwiRail.
Statement of Service Performance for Output Class - Policy Advice - Fiscal and Macroeconomic
Performance Dimensions for 2010/11 Target Performance for 2010/11
Production of advice that provides options which allow the Government to deliver a credible fiscal strategy consistent with the fiscal prudence provisions of the Public Finance Act 1989. Where this advice is underpinned by modelling, the models are externally quality assured and, where appropriate, assumptions are tested with suitably qualified external experts. Achieved.

Achieved.

Fiscal and other macroeconomic advice was underpinned by monitoring and analysis of domestic and international developments and past performance, including via the publication of a number of working papers and Monthly Economic Indicators.  Preliminary forecasts were also reviewed by an external panel of experts.

Cost - Policy Advice - Fiscal and Macroeconomic
2010
Actual
$000
Policy Advice Fiscal and Macroeconomic 2011
Actual
$000
2011
Main Estimates
$000
2011
Supp. Estimates
$000
4,268 Expenses 5,203 4,801 5,407
 

Funded by:

     
4,190 Revenue Crown 5,090 4,729 5,315
78 Other revenue 113 72 92

For the 2011/12 year, the outputs produced under this appropriation have been integrated into a broader appropriation, Policy Advice - Finance. That combined appropriation includes policy advice outputs relating to economic performance, State sector performance and macroeconomic performance.

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