Hon Nicola Willis
Minister of Finance

The Government is amending the Public Finance Act to prevent future governments concealing the extent of fiscal risks in government accounts, Finance Minister Nicola Willis says.

The change is included in legislation introduced to Parliament on Saturday evening to enhance the transparency and accountability of the public finance system.

“The Public Finance Act requires that fiscal forecasts, which are prepared by the Treasury, include a statement of specific fiscal risks.

“But, when I became Finance Minister I was alerted to a number of risks that were not clear in the statements I had read previously.

“I found that the statement of fiscal risks could be somewhat opaque. That did not support public understanding of risks that have the potential to impact the government’s books or the provision of public services.

“Since then, the Treasury has done a good job of categorising and transparently describing fiscal risks. This includes explicitly identifying time-limited funding and capital cost escalations.

“The Public Finance Amendment Bill makes such categorisation a requirement.”

The bill also dispenses with the requirement for governments to articulate the wellbeing objectives that guide Budget decisions and for the Treasury to produce a Wellbeing Report every four years.

“The previous government thought it was the first government ever to consider the wellbeing of its citizens. And that it was the first government to realise that people’s wellbeing was the ultimate purpose of the Budget.

“That is not the case. The purpose of building a stronger economy and delivering better public services is to improve the long-term social, economic, environmental and cultural wellbeing of peoplep

“While Treasury should, and does, have a broad perspective, I would like the bright and talented minds at the Treasury to focus on economic and financial advice, rather than preparing reports on whether people have friends and whether their life has meaning and purpose,” Nicola Willis says.

Other changes introduced by the amendment bill include:

• requiring better information on tax expenditures to be provided to the public
• bringing the publication window of the Pre-election Economic and Fiscal Update forward five days so that the public is better informed before elections; and
• allowing the Government to express its fiscal strategy using alternative fiscal variables (so long as it explains its choice of variables).

“These changes complement the non-legislative actions being taken to strengthen fiscal responsibility, including introducing agency performance plans to help governments better plan for spending over the medium-term, and improving reporting on investments and major Budget decisions,” Nicola Willis says.

The bill passed its first reading on Saturday evening and has been referred to the finance and expenditure committee for consideration.

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