Finance Minister Bill English today introduced the Public Finance (Fiscal Responsibility) Amendment Bill to Parliament, which sets out improvements to fiscal policy and management of taxpayers’ resources.
“The changes aim to ensure that the fiscal responsibility provisions of the Public Finance Act 1989 remain a sound guide for fiscal policy, now and into the future,” he says.
“There is no question that the public reporting and transparency provisions of the Act have served New Zealanders well in keeping the focus on maintaining low Crown debt levels.
“But there is now scope to make further improvements as we learn lessons from the Global Financial Crisis and events preceding it.”
The Bill proposes three new principles of responsible fiscal management, which would require governments to:
- Formulate fiscal strategy recognising its interaction with monetary policy.
- Formulate fiscal strategy recognising its likely impact on current and future generations.
- Ensure that the Crown’s resources are managed effectively and efficiently.
The Bill also extends the existing principle relating to the tax system by including reference to efficiency and fairness.
It includes some new reporting requirements, which in some cases codify existing practices.
“Given the constitutional significance of the fiscal responsibility provisions, it was important that we discussed the changes with other parliamentary parties before introducing them to Parliament,” Mr English said.
“I received feedback from a number of parties, which I took into account when the Bill was drafted.
“For example, it was initially envisaged that the changes might include a legislative spending limit, as set out in the National-ACT confidence and supply agreement.
“We said in the Budget we would consult other political parties about this.
The decision has now been made to introduce the spending limit as a standalone Bill later this term.
“This will allow for further consultation and more policy work to be completed.”
Mr English hopes the Public Finance (Fiscal Responsibility) Amendment Bill receives cross-party support.