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Policy Advice - Economic Performance

Scope of Appropriation

Policy advice on the Government's economic strategy and policy settings and their effect on New Zealand's economic growth.

Significant Work Completed During 2010/11

  • The Treasury developed a narrative intended to inform and integrate the Treasury's advice on stable and sustainable growth and has begun to quantify the potential impact of possible reforms on growth. This narrative provides the basis for consistent and coherent policy proposals to government and external engagement.

Taxation

  • Legislation giving effect to Budget 2010 decisions were enacted - GST/taxation changes in place in October.
  • The Treasury investigated, and provided advice on, taxation changes, including options to improve the efficiency and fairness of the tax system for consideration in Budget 2011. A programme for considering capital tax reform is under way.

Implementing the regulatory system

  • The Treasury provided advice on, and support for, the introduction of the Regulatory Standards Bill and supported the enactment of the New Zealand Productivity Commission Act 2010, which established the Productivity Commission.
  • By year-end the Treasury was focused on the delivery of advice on systems for managing the stock of regulations, including systems for scanning regulations and planning for improvements and assessing the regulatory stock against principles for best practice regulation.

Financial regulation and review of the Securities Act 1978

  • The Treasury worked with Ministry of Economic Development (MED) and other agencies to provide guidance on the review of the Securities Act 1978 and proposed changes to financial sector regulation. Key changes agreed to include the establishment of the Financial Markets Authority and changes to disclosure and liability regimes aimed at building investor confidence in New Zealand's securities markets.

Improving advice on management of natural resources

  • The Treasury contributed to the development of economic frameworks used by agencies in the natural resource sector. We advised on New Zealand's climate change commitments, ensuring that the economic implications of options were understood, and contributed to the secretariat of the Emissions Trading Schemes led by the Hon David Caygill. We also contributed to the development of interagency advice on water policy leading up to and following the Land and Water Forum's Report of the Land and Water Forum: A Fresh Start for Freshwater.
  • We also provided advice on the natural resource aspects of individual Treaty of Waitangi settlements.

Supporting effective international engagement

  • The Treasury worked with the Ministry of Foreign Affairs and Trade (MFAT) and MED to enhance New Zealand's international connections. In particular, the Treasury:
    • completed a review of the Overseas Investment Act 2005
    • completed negotiation of the CER Investment Protocol with Australia, supported ongoing work to progress a Single Economic Market with Australia and contributed to the development of the NZ Inc strategy for Australia
    • supported ongoing negotiations of the Trans-Pacific Partnership Free Trade Agreement, particularly in relation to the investment chapter, and
    • supported a range of ministerial international engagement, including with Asia-Pacific Economic Cooperation (APEC), the International Monetary Fund (IMF) and the World Bank.

Supporting the Welfare Working Group

  • The Treasury assisted the Welfare Working Group to undertake a comprehensive review of the benefit system and to deliver its findings and recommendations to the Government in February 2011. Since the Government received the report, the Treasury has been working with the Ministry of Social Development (MSD) on a comprehensive programme of work in response to the Welfare Working Group's recommendations.

Develop policy options supporting savings and investment

  • The Treasury authored the discussion document Savings in New Zealand: Issues and Options to help set the scene for the Savings Working Group. We also provided analytical and technical support to the Savings Working Group. The Treasury and IRD advised on, and implemented reforms to, KiwiSaver's subsidy structure in Budget 2011. In 2011/12 we will focus on building on our understanding of the drivers of savings behaviour in New Zealand and on considering some other recommendations of the Savings Working Group in the areas of capital taxation, KiwiSaver default providers and asset decumulation.

Supporting improvement in secondary education and youth transitions

  • In 2010/11 the Treasury provided advice on the Youth Guarantee Scheme, led by the Ministry of Education (MOE), and the Youth Pipeline, led by MSD. The Youth Guarantee provides fully subsidised tuition and support to 16- and 17-year-olds who are not in education, to increase educational attainment and to improve transitions between school, tertiary and work. The Youth Pipeline is aimed at better identification of and intervention for at-risk young people. The focus of this work for 2010/11 and continuing next year is that proposals are cost-effective, evidence-based and likely to deliver high-quality educational outcomes.
  • In June 2011 Cabinet noted the progress to date regarding the implementation of the Youth Guarantee, agreed to expand the Youth Guarantee scheme and agreed to the next stages of implementation. The Treasury has been working closely with MOE on a medium-term Schooling Strategy.

Supporting innovation and the public science system

  • The Treasury assisted with implementing changes in the science sector, including the science agencies' merger into the new Ministry of Science and Innovation (MSI), the recommendations of the CRI Taskforce and initiatives to support business R&D/technology transfer. The Treasury has worked with other agencies to provide advice on key proposed science and innovation initiatives, including the review of R&D support for the high-value manufacturing and services sector. The Treasury's work aims to deliver more effective taxpayer support for business innovation and a more commercial focus of Crown R&D expenditure to deliver greater economic dividends for New Zealand.

Competition

  • The Treasury has worked with other agencies to assess competition within the dairy sector.
Statement of Service Performance for Output Class - Policy Advice - Economic Performance
Performance Dimensions for 2010/11 Target Performance in 2010/11
Regulatory Impact Analysis: Number of significant Regulatory Impact Statements assessed.  40.

50. 

Of all proposals requiring a Regulatory Impact Statements, 66% met all or most of the Regulatory Impact Analysis requirements.

Cost - Policy Advice - Economic Performance
2010
Actual
$000
Policy Advice - Economic Performance 2011
Actual
$000
2011
Main Estimates
$000
2011
Supp. Estimates
$000
15,242 Expenses 15,442 14,875 15,845
 

Funded by:

     
14,951 Revenue Crown 15,112 14,623 15,582
291 Other revenue 330 252 263

Expenditure is $403,000 (3%) under Supplementary estimates as a number of projects designed to increase the Treasury's impact on economic performance were delayed. An amount of $400,000 will be transferred into 2011/12.

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