Intermediate Outcome: A Stable Macroeconomic Environment
The Treasury's work aims to help keep economic activity close to full employment levels, keep economic variability to a minimum and avoid abrupt negative economic adjustments when hit by shocks. The May 2012 RBNZ Financial Stability Report showed decreased risk to the New Zealand financial system relative to earlier in 2011/12 (see graph below) and for the 10 years ended 2011 New Zealand's variability in real GDP was ranked 12th out of 34 OECD countries.
- Financial stability cobweb
We provided advice on macroeconomic policy settings and frameworks; fiscal policy and strategy; and with RBNZ, advice on financial stability. This included advice to the Government on the impact of government policy on the macroeconomic environment. This advice enabled the Government to operate fiscal policy in a way that contributes to macroeconomic stability, balancing short- and medium-term requirements. We reviewed the Public Finance Act 1989 and provided advice to supplement the principles of responsible fiscal management. We helped strengthen the "rules of the game" in areas like fiscal and financial policy drawing on the experience of the past decade.
We participated in a trans-Tasman banking crisis exercise, working collaboratively with our trans-Tasman colleagues to help determine the scope for refinements to our cross-border financial crisis management arrangements. We continued to provide economic and fiscal monitoring, reporting and forecasting. The Treasury remains amongst the top two forecasters of the New Zealand economy; maintaining our reputation as a credible and trusted advisor.
