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Introduction

A series of reforms in the New Zealand public sector, between 1984 and 1994, radically changed how the financial management framework operated. The most visible changes resulted from the Public Finance Act 1989 (PFA) and the Fiscal Responsibility Act 1994 (FRA). The reforms have been widely publicised and are not discussed here.[1]

This paper will review how fiscal and budget management has evolved over the last ten years, in response to the financial management framework. We focus on the top-down management of spending aggregates. Specifically our two key tools for baseline management are:

  • fixed nominal baselines for departmental spending; and
  • the fiscal provisions framework.

Notes

  • [1]* We wish to acknowledge the review and comments provided by members of the Budget & Macroeconomic Branch, including Mark Ahern, Andrew Crisp, Kirsten Jensen and John Janssen. We also thank participants at the Australasian Treasury Officers Conference, October 2000, for comments on an earlier version of the paper. This paper is a companion paper to Treasury Working Paper 01/25 by John Janssen.
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