Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


John Whitehead's Speech On NZ's Fiscal Policy

Secretary To The Treasury Highlights The Importance Of Integrated, Coherent Fiscal Policy Which Is Clear About Trade-Offs

Secretary to the Treasury John Whitehead underscored in a speech yesterday the importance of open and informed debate about fiscal policy choices – and the importance of being transparent about the trade-offs implicit in those choices.

According to Mr Whitehead, "A number of fiscal strategies are possible, and reasonable - but it's not as simple as 'spend the surplus'”.

Mr Whitehead set out three areas for assessing fiscal policy options:

Sustainability – the ability to keep doing what we're doing as time passes, including in the face of an ageing population. Maintaining current policy settings would imply big increases in government spending over time. Avoiding high debt levels will require difficult choices about taxes and spending in the future, notwithstanding existing pre-funding. But small changes made earlier will be felt less severely.
Structure – choices about how we raise money, and how we spend it. Structuring policies in ways that support growth will give us greater choices in the future.
Stability – the extent to which fiscal policy affects broader economic conditions. The government is a significant player in the economy, and the interaction between fiscal and monetary policy is an important consideration –- particularly when inflation is high. But it's only one factor, and there will be times when the benefits from making changes to spending and taxes justify some short term discomfort in terms of interest rates and the exchange rate being higher for longer.

Mr Whitehead acknowledged that in recent years, surpluses have been higher than they needed to be to meet the level of pre-funding set out in the government’s fiscal strategy. But it’s really forecasts of future spending and taxes which matter when debating options open to governments.

And choices about the size of the future surplus and other fiscal policy settings such as debt levels should be made in the context of a strategy that recognises future fiscal pressures and the trade-offs we will inevitably be faced with.

Mr Whitehead went on to outline possible characteristics of a coherent strategy.

“It would see ongoing operating surpluses, but at levels lower than we’ve seen recently – and the adjustment would be spread over several years. It would see changes in spending and taxes contribute effectively to the government’s objectives, and in particular, support growth. It would see ongoing efforts to improve value for money in the public sector, and see government net financial assets as a share of GDP continuing to rise over the next few decades. And it would see us start to debate the sorts of changes we need to make to address the growth in spending as our population ages and gets richer.

“But this is only one scenario. The point is that those decisions should be made and debated in the context of an integrated, coherent strategy. This will make it easier for people to make the long term decisions needed to deliver higher living standards.”

Mr Whitehead's speech is available on the Treasury's new-look website at www.treasury.govt.nz/publications/media-speeches/speeches/fiscalpolicychoices/.


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Peters/Ardern Triumph

There are a lot of good reasons to feel joyful about this outcome. It is what so many young voters – the best hope for the country’s future – wanted.

Far more important than the implications for the Economy Gods ( is the dollar up or down? ) last night’s outcome will also mean many, many vulnerable New Zealanders will have a better life over the next three years at least.

Yet the desire for change was in the majority, across the country..>>>More


Labour on its agreement |Peters: Post-Election Announcement Speech | Greenpeace “cautiously hopeful” about new Government | ACT - Madman on the loose | E tū ecstatic | Chamber welcomes the outcome | Greens on their joining Govt | EDS welcomes new govt | Immigrant groups worry | Feds ready to engage new coalition government | Labour Ministers of the Crown announced


Climate: Increasing Greenhouse Emissions Hit NZ

New Zealand is seeing impacts of excess greenhouse gas emissions in our climate and oceans, according to the latest national report from the Ministry for the Environment and Stats NZ about the state of the atmosphere and climate…More>>


Wellington.Scoop: Arrests At Blockade Of "Weapons Expo"

“We encourage people in Wellington to get down to the Westpac Stadium now for a day of awesome peace action. There will be plenty of food, music and activities to keep us sustained through the day.” More>>


Rorschach Restructuring: PSA Taking Inland Revenue To Court Over Psychometrics

The Public Service Association will be seeing Inland Revenue in Employment Court over its intention to psychometrically test employees reapplying for their roles at the department as part of its controversial Business Transformation restructuring plan. More>>


Nuclear Disarmament: Nobel Peace Prize 2017 Awarded To ICAN

Congratulations from iCAN Aotearoa New Zealand to international iCAN, the other iCAN national campaigns and partner organisations, and the countless organisations and individuals who have worked so hard for a nuclear weapons-free world since 1945. More>>


Expenses: Waikato DHB CEO Resigns

An independent inquiry has identified that Dr Murray had spent more than the agreed $25K allocated for relocation costs, and other unauthorized expenses involving potential financial breaches of the chief executive’s obligations. More>>


Wellington.Scoop: Sad About The Trolley Buses?

The Regional Council’s MetLink is today spending money to tell us that it really loves Wellington’s trolley buses, even though they’re all being taken off our roads by the end of this month. More>>


Post-Election: Preliminary Coalition Talks Begin

New Zealand First will hold post-election preliminary discussions in Wellington with the National Party tomorrow morning and the Labour Party tomorrow afternoon. More>>




Featured InfoPages

Opening the Election