The Treasury is responsible for the preparation of a number of Budget documents released today. The Budget 2020 documents have been prepared against the backdrop of the COVID-19 pandemic, which has added a number of challenges.
Ordinarily, to ensure that the Budget documents presented to Parliament on Budget Day reflect all Government decisions, it is common practice for a moratorium to be in place on Government financial decisions. This, ordinarily, is in place from the time Cabinet makes Budget decisions until Budget Day.
The swiftly evolving health-related and economic impact of COVID-19 has, however, meant that the Government has continually needed to make decisions to respond to this crisis. As a result, the Budget documents released today do not capture all Government decisions that have been made by Budget Day. Table 1 below outlines the key close-off dates for Government decisions for inclusion in the main Budget documents.
|2020 Budget Economic and Fiscal Update||6 and 20 April|
|Fiscal Strategy||20 April|
|The Wellbeing Budget 2020: Rebuilding Together||6 April|
|2019/20 Supplementary Estimates of Appropriations||6 April|
|2020/21 Main Estimates of Appropriations||6 April|
In addition, the Wellbeing Outlook has not been published this year. The Government’s primary focus has been on responding to the rapidly changing economic impacts of COVID-19 and its immediate impact on wellbeing. It is planned that the Government will be able to provide the Outlook when circumstances become more stable, enabling more accurate measurement and analysis.
Impact on the Treasury’s forecasts
The Treasury’s fiscal forecasts assume the Government has made available funding of $62.1 billion to support the COVID-19 response and recovery, as do two out of four Treasury economic forecast scenarios. This funding comprises $12.1 billion for the Economic Recovery Package announced on 17 March, and $50 billion announced today for COVID-19 Response and Recovery Funding (CRRF).
Given that the Treasury’s forecasts incorporate the full amount of funding made available by the Government, the individual decisions taken since the finalisation of the forecasts do not significantly alter our overall view of the economic and fiscal outlook presented in the 2020 Budget Economic and Fiscal Update. However, due to the type of spending and phasing of the individual decisions, there is likely to be some minor impact on individual indicators presented in the 2020 Budget Economic and Fiscal Update.
|Year ending 30 June
|Budget Day announcements|
Including the measures announced prior to 20 April, the Government has committed $41.9 billion on the response to and recovery from COVID-19 and there is $20.2 billion of funding remaining in the CRRF.
When finalised, the Treasury’s forecasts assumed that the unallocated portion of the COVID-19 response and recovery funding was operating expenditure and temporary (to conclude by the end of the forecast period in June 2024). The measures announced today include approximately $7.2 billion of net capital expenditure and $1.4 billion of ongoing expenditure expected to continue beyond the forecast period. This will affect measures such as the operating balance before gains and losses, the cyclically adjusted balance, and the long-term projections reported in the Fiscal Strategy section of the Budget document.
Assuming no other changes in policy or economic forecasts, the ongoing expenditure will weaken the long-term projections. This will also affect the Fiscal Strategy Model published on the Treasury’s website.
The individual decisions announced today that have not been captured in the Treasury’s forecasts will be reflected in our next forecast round. This will be the 2020 Pre-Election Economic and Fiscal Update, due to be published between 10 August and 21 August 2020.
Parliamentary appropriation of expenditure
To ensure that any expenditure approved and announced after the early April close-off date for the 2019/20 Supplementary Estimates can be appropriated by Parliament before the end of the 2019/20 financial year, an Addition to the 2019/20 Supplementary Estimates will be presented to the House in June. This was also done in the 2011 and 2012 fiscal years to accommodate expenditure relating to the Canterbury earthquakes. The Addition to the 2019/20 Supplementary Estimates will be made available on the Treasury’s website in mid- June 2020 when it is presented to the House.
Expenditure for the 2020/21 fiscal year that has not been included in the 2020/21 Main Estimates Bill will be put before Parliament for appropriation in the 2020/21 Supplementary Estimates Bill, which will be introduced to the House on Budget Day 2021.
The Treasury will provide a summary of initiatives for the decisions announced today that have not been able to be reflected in the 2019/20 Supplementary Estimates and 2020/21 Main Estimates documents. It is expected that this will be available on the Treasury’s website in the week ending 22 May 2020.
-  The close-off dates for decisions will differ to the forecast finalisation dates referenced in the 2020 Budget Economic and Fiscal Update.
EnquiriesTreasury Communications Team
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