The independent External Panel established to test and challenge the Treasury's long-term fiscal analysis will convene in Wellington tomorrow for its second session.
The agenda for the session, now available online, will focus on how the Treasury should utilise its Living Standards Framework to assess the costs and benefits of different policy reform options available to future governments as they take steps to protect the Crown's finances.
"The first Panel session last month highlighted that policy adjustments will likely be necessary in the decades ahead to ensure that governments continue to achieve the types of budget balances that will be needed to maintain prudent levels of public debt over the long-term," says Professor Bob Buckle, Dean of Victoria University Business School and chair of the External Panel.
"The first session agreed that healthy government finances are an important ingredient for good-performing economies, and that targeting low public debt levels is appropriate to ensure that future governments continue to be positioned to cope with the types of adverse shocks that all economies experience from time to time," he said.
Other themes to emerge out of the first panel session were that:
- The profound change occurring in the structure of New Zealand's population is a permanent phenomenon;
- Governments may need to consider adopting a lower net debt target than the 20%-to-GDP ratio which is Treasury's working assumption average over the long-term;
- The older population structure, combined with other factors such as health technology advances, imply potentially significant upward cost pressures on public funded health care and superannuation and this implies that policy settings in the years ahead will most likely need to change in order to safeguard the Crown's financial position over the long-term;
- Projections over the long-term are subject to considerable uncertainty and the External Panel suggested the Treasury explore more deeply several of its initial assumptions including those around future labour force participation, immigration, and sources of tax revenue from investment income, and explore the potential implications of delaying decisions about policy adjustments;
- Greater emphasis should be placed on considering and evaluating alternative policy options for addressing the potential impact of population ageing and income growth on the future fiscal outlook. This will be taken forward at the second session this week when the Panel will discuss and evaluate the suitability of Treasury's Living Standards Framework for evaluating options for fiscal policy changes and the likely trade-offs that would be involved in different options.
A summary of the first session and background research papers have been made available.
The agenda for the second session being held tomorrow is also available on this website.
Note to Chief Reporters
A summary of the second session, together with draft research papers discussed at the session, will be published on-line prior to the External Panel's third meeting in Wellington in late October.
A media statement will be issued once this summary and background papers are publicly available.
Journalists interested in talking to Professor Buckle, please in the first instance contact the [Communications team]