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Policy Advice – Finance

What is Intended to be Achieved with this Appropriation

This appropriation is intended to enable and facilitate ministerial decision-making that achieves for New Zealand improved economic performance, a high performing State sector and a stable and sustainable macroeconomic environment.

Scope of Appropriation

This appropriation is limited to the provision of advice (including second opinion advice and contributions to policy advice led by other agencies) to support decision-making by Ministers on government policy matters relating to Finance.

Significant Work Completed

During 2013/14, the Treasury provided advice on:

Social policy

  • Social housing reform, including securing Cabinet approval to set up the Social Housing Establishment Unit to lead work on commercial options, fiscal implications, policy issues and implications for HNZC of making HNZC assets and capital investment contestable. We worked closely with MSD to develop a work programme for social housing purchasing which includes reform of financial assistance and a contestable trial. We also supported the smooth and successful transfer of functions, including the administration of Income Related Rents, from HNZC to MSD in April 2014.
  • The affordability and supply of housing, including delivering the first report of three planned into availability and timeliness of infrastructure for freeing up land for housing. We developed a framework to think about the incentives on councils and are embedding this into other parts of our work. We continued to support MBIE in implementing/developing other parts of the formal work programme and associated advice. We also supported a successful project post-Budget with DPMC and MBIE stocktaking progress and assessing policy options, and had input into RBNZ's amendments to Loan Value Ratio (LVR) policy.
  • The implementation of the investment approach for welfare policy, with the aim of reducing the level of long-term welfare dependency. The formal components are now largely in place; we have base information for future monitoring of Work and Income's performance and have been working with MSD on the 2014/15 targets and on the proposed focus of 2014/15 investments. The Multi-category Appropriation is now in place and operational.
  • The financial sustainability of the Justice sector and the options to manage both and short- and long-term cost pressures whilst delivering better services. The Treasury has worked with the Justice sector to advise Ministers on the delivery options for the Justice and Emergency Services Precinct in Christchurch.
  • The health system and its performance, including working on health papers associated with Affording Our Future and the Treasury's 2013 Statement on the Long-term Fiscal Position.
  • A government policy direction for ACC funding policy in collaboration with ACC and MBIE.
  • Improving education system outcomes; for example, by working closely with MOE on advice to establish a new professional body for the teaching profession and Investing in Educational Success. We also focused on the effectiveness of education system expenditure and resource management, including undertaking a joint review of institutional arrangements for the management of school property, and working with TEC to improve the quality of capital business cases for Canterbury Tertiary Education Institutions. The business case for expansion of the trade facilities at the Christchurch Polytechnic and Institute of Technology has been completed and construction is underway.

Christchurch development

  • Implementing whole-of-government procurement arrangements forChristchurch based on joint advice from Canterbury Earthquake Recovery Authority (CERA), MBIE and the Treasury. The Treasury also provided advice, jointly with other agencies, on a delivery vehicle for central city capital projects in Christchurch, the implementation of the Cost Sharing Agreement and the finances of the Christchurch City Council. We have also supported CERA and other agencies in the development of business cases for major capital projects in Christchurch.

Resource management

  • Cross-agency work on resource management including building the evidence base and developing policy options on freshwater, which led to a National Policy Statement underpinned by a National Objectives Framework.
  • Proposed Resource Management Act 1991 reforms, including sections 6 and 7 and a tool for greater direction from central Government. The decision to transition to a domestic only ETS from 2015, which will yield significant savings.
  • The options for reforming resource management through the Resource Management Bill 2012 and Resource Management Reform Act 2013. This included clarifying the national direction and tools; simplifying and reducing the requirements for resource consent, introducing a time limit for consents for medium-sized projects, considering Māori interests in resource management earlier in the planning process and streamlining the process for Auckland's first unitary plan.

Infrastructure

  • The infrastructure evidence base, including the 10-year Capital Intentions Plan, which are important steps in laying down the foundations for achieving the country's infrastructure objectives. We had a strong focus on supporting and briefing on key government engagements with local government, specifically the Central Government/Local Government annual forum and the Central Government/Auckland annual forum. We also provided advice on transport policy issues including the Auckland Transport package.

Budgeting and financial management

  • New Zealand's fiscal outlook and risks to support the fiscal decisions that were taken in Budget 2014 and the associated BPS and FSR. This included advice on Budget and fiscal strategy incorporating macroeconomic, growth, State sector and balance sheet perspectives.
  • Capital allocation via the use of a Capital Investment Panel. The Panel assessed the relative attractiveness of capital proposals considered in Budget 2014 from an all-of-government perspective, identifying a portfolio of capital investments that appeared most likely to provide best value to Government over the near to medium term, taking account of their potential impact on living standards, and recognising the constraints of the Future Investment Fund.

Regulatory reform

  • Provided advice on changes to the statutory disclosure regime for government-initiated legislation. The Legislation Amendment Bill was introduced into the House of Representatives in May and now awaits its first reading debate.

International relationships and external engagement

  • Advancing regional economic integration and the Government's Business Growth Agendas through the TPP negotiations, and arrangements to allow the direct conversion of the New Zealand Dollar and Chinese Renminbi.
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