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The New Zealand Fiscal Management Approach: An Explanation Of Recent Changes
New Zealand Fiscal Management Approach - An Explanation of Recent Changes

Publication Details

  • New Zealand Fiscal Management Approach - An Explanation of Recent Changes
  • Published: 15 Jan 2003
  • Status: Current
  • Author: The Treasury
 

The New Zealand Fiscal Management Approach -  An Explanation Of Recent Changes

Published 1 Jan 2003

An Outline of the Changes Made to Further Integrate the Annual Budget Process with the Government's Fiscal Policy Approach

This paper builds on Treasury working paper 2001/24, Budget Management that Counts: Recent Developments in Budget and Fiscal Management in New Zealand (Barnes and Leith), which outlined the evolution of the New Zealand's fiscal management until 2001. 2001/24 noted the use of "fiscal provisions" as a tool for setting limits and allocating resources for budget management purposes, and (along with subsequent papers, including 2001/25) posed challenges for further development of the Government's fiscal management approach.

This paper and its annexes:

  • outline the changes that have since been made to the New Zealand fiscal management approach (see Table 1 for a useful summary)
  • explain how these changes fit within New Zealand's wider fiscal management framework
  • provide the rationale behind these changes
  • provide further detail on how the budget process will be managed
  • discuss the risks and challenges with the new approach respectively.
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Introduction

New Zealand's fiscal management approach - the changes

  • The wider fiscal management picture
  • The changes
  • Concluding remarks

Annex 1 Evolution of the Fiscal Provisions, and issues prompting revisions

  • Evolution of the Fiscal Provisions
    • "Fiscal provisions" developed at a time when the government needed to establish its fiscal credibility
    • Fiscal provisions provided a tangible budgeting constraint

Issues Prompting Revisions

  • Economic and fiscal pressures constantly change
  • Provisions sometimes resulted on over-focus upon one aspect of fiscal policy
  • Calculation and rules around managing the fiscal provisions limit
  • Room for improvement

Annex 2 Further detail on how Budget Packages will manage wider impacts

  • There is still a nominal spending amount, but it will manage a wider range of impacts
  • Spending intentions not altered for some pre-specified volatilities
  • A wider spending amount will involve wider management, and wider information flows
  • Final qualitative assessment just a "road-check"

Annex 3 Risks and challenges

List of Tables

  • Table 1 - comparison between the previous fiscal provisions and the revised fiscal management approach
  • Table 2 - Managing the forecast new operating spending amount
  • Table 3 - Managing the forecast new capital spending amount

List of Figures

  • Figure 1 - New Zealand's fiscal management approach: the context
  • Figure 2 - Expense increase components 2001/02 to 2005/06
  • Figure 3 - The Government's fiscal provisions 9
fmapproach.pdf(196 KB) pp. 18

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