What are we seeking to achieve?

Our focus is on the institutional frameworks that promote macro stability, and the sound operation of fiscal policy.  We have specific responsibilities in terms of fiscal policy, and give effect to this through the Budget. 

We are seeking to achieve:

• government spending, tax and investment decisions that lead to a sustainable long-term fiscal position, which aids economic growth through keeping the cost of government debt low and stable, and providing a reasonable degree of certainty to individuals as to the future path of government spending and taxes
• fiscal policy decisions that have due regard for their effect on short-term movements in inflation, interest rates and the exchange rate
• regulatory and tax policy settings that support the smooth adjustment of the economy to domestic and international shocks and do not unnecessarily raise the costs of smoothing fluctuations in the economy
• Treasury forecasts that support decision-making by stakeholders.

In doing this, the Treasury works closely with agencies such as the Reserve Bank. It also engages with all government agencies. International relationships include the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF).

What will we do to achieve this outcome?

How will we demonstrate success in achieving this?

The Treasury contributes to a stable and sustainable macroeconomic environment primarily by:

• advising on the underlying fiscal and macroeconomic policies and frameworks
• monitoring and advising on macroeconomic developments, and providing tax, expenditure and macroeconomic forecasts
• reporting on the fiscal position
• managing the Budget process
• providing advice on the best mix of spending and tax needed to achieve Government objectives, and macroeconomic stability, and deliver better State sector performance
• advising on regulatory and tax policy settings that impinge on macroeconomic stability
• managing and issuing Crown debt and contributing to financial asset management by maximising the long-term net return on the Crown's financial asset and debt portfolio, within an appropriate risk management framework
• contributing to debt and financial asset management so that debt issuing and repayment are more closely linked with Budget and fiscal strategies.

Long-term fiscal sustainability –

• promoting understanding of long-term fiscal issues within the broader public sector and among the public
• providing advice on options for managing long-term fiscal challenges using a mix of aggregate expenditure and taxation that is the best possible in terms of growth and value for money.

The success of the Treasury's strategy will be demonstrated when:

• New Zealand remains one of the better-performing OECD economies with respect to GDP and inflation variability
• government maintains a sustainable fiscal position (as measured by fiscal indicators including levels of debt, net worth and stability in tax rates)
• the tax system reflects a level and structure that are sustainable, taking appropriate account of equity and efficiency concerns
• we achieve and maintain a record of accurate and unbiased macroeconomic and tax forecasts, and accurate Crown accounts.

Specifically we will:

• assist the Minister of Finance to produce annual Budget Policy Statements and Fiscal Strategy Reports
• produce six-monthly Economic and Fiscal Updates.

Long term fiscal sustainability –

• Successive annual projections of the 10-year fiscal outlook show a strong fiscal position under credible and reasonable assumptions.
• Decisions are taken that help stabilise debt-to-GDP in 40 years under credible and reasonable assumptions.

Specifically we will:

• produce a Statement of the Long Term Fiscal Position by June 2010 as required under the Public Finance Act 1989.

Cost-effectiveness measures for NZDMO and NZECO operations are presented in this Statement of Intent in the section on Cost-effectiveness.

What are we seeking to achieve?

Our primary concern is with ensuring that State services are delivered in the most efficient and effective way (both to meet the Government's priorities and to generate the maximum possible benefit for taxpayers for a given level of expenditure).

Central agencies have a key leadership role to play in aligning the activities of the State sector with Government's priorities and making sure that Ministers receive the best possible advice before making decisions. Each central agency has its own key responsibilities, but they also require contributions from the other two agencies.

What will we do to achieve this outcome?

How will we demonstrate success in achieving this?

The Treasury, working with other central agencies and departments, is responsible for providing advice and analysis in all of these areas:

• Improving overall performance in the following fiscally significant areas:
  • Health
  • Education
  • Maintaining the revenue base
  • The benefit system
  • Roading/transport.
• Improving the performance of agencies that significantly impact on the priorities as reflected in our economic performance, or macro performance outcomes:
  • Firms/economic transformation
  • Skills/social mobility (early childhood education and skills for 15-19 age group)
  • Transport
  • Auckland
  • Climate change.
• Improving capital and asset management system-wide, with a particular focus on the capital intensive agencies (CAM).
• The Review of Accountability Documents (RoADs) is intended to provide Ministers, Select Committee and the general public with better performance information about the State sector.

We are also developing a consistent and coordinated approach to managing State sector remuneration pressures. All other areas will be streamlined to enable the Treasury to achieve its outcomes for State sector performance.

In the next two-to-five year period we will measure our progress on activities towards achievement of:

• a health funding track that is consistent with its fiscal strategy and pressures in other spending areas
• education funding path forecasts that interpret demographic changes and give up-to-date projections on future education expenditure
• success with development of a wider understanding about the long-term implications of New Zealand Superannuation policy changes and eligibility pressures.

The expected result of the CAM process is:

• better value for government from its increasingly large asset base, and particularly from its new capital investments. There should be fewer fiscal and operational “surprises”, more reliable fiscal projections, a more sustainable asset base and, over time, improved service delivery.

The RoADs project will over time:

• provide more accessible information that assists Ministers, MPs  and select committees
• improve the quality of performance information, allowing for better assessment of the performance of the public sector
• encourage collaboration between departments and the emergence of more cross-government/sector-based thinking.  

The central agencies have identified the following priority areas for their work together over the next three to five years:

Policy outcomes – to better coordinate resources and support multi-agency initiatives to gain traction on the Government's highest priority policy areas.

Agency engagement – to improve the effectiveness and efficiency of our engagement with senior leaders in the Public Service to support them in lifting the performance of their agencies and the State Services as a whole. 

Public management system improvements – to better coordinate our work to transform the State services through our joint leadership of the Development Goals for the State Services and our efforts to enhance performance information and reporting across the system.

The central agency outcomes are measured by reporting to Cabinet on:

• priority policy outcomes
• the development goals; including capital asset management (CAM) and IT investment
• New Zealanders' satisfaction with the public service (Kiwis Count)
• industrial relations
• agencies' work focuses on relationships rather than performance reporting (except where this is specifically required by Cabinet, such as on Crown entity performance).

The measurement of whether central agencies are adding value to State sector performance will be done through an annual survey of State sector agency leaders, and feedback from central agency Ministers.