The Treasury publishes a summary of its advice on the new fiscal rules
The Treasury has released a position paper outlining its advice on the new fiscal rules announced by the Minister of Finance, the Honorable Grant Robertson.
In a speech
Today the Hon. Grant Robertson said the government will introduce two new fiscal rules: an operating balance before gains and losses (OBEGAL) rule and a net debt ceiling.
The OBEGAL rule focuses on targeting a small surplus over time (on the order of 0-2% of GDP) as the main fiscal rule to inform fiscal strategy decisions. This will be coupled with a net debt cap of 30% of GDP based on a new measure of debt which includes borrowing from Crown entities, financial advances (such as student loans) and the New Zealand Superannuation Fund. This net debt ceiling is equivalent to 50% of GDP based on the net debt measure used so far.
The summary paper Treasury analysis and recommendations for fiscal rules sets out the main recommendations that the Treasury has made to the Minister of Finance on these new rules. It also provides a summary of the analysis carried out by the Treasury in late 2021 and early 2022 to support advice to the Minister of Finance. Overall, the analytical note covers:
– criteria for good budgetary rules
– the recommendations of the Treasury on the indicators to be targeted and the design of the budgetary rules
– Treasury analysis and a framework for the calibration of fiscal rules
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