A Policy Perspectives Paper released by the Treasury today explains the methodologies and modelling techniques that will be used in preparing the first Statement of the Long-term Fiscal Position, which is due before Parliament by the end of June.
In 2004, Parliament amended the Public Finance Act to require the Treasury to publish every four years or so a statement on the long-term fiscal position of the central government, looking out at least 40 years.
Entitled Modelling New Zealand's Long-term Fiscal Position, the Paper discloses the working judgements and assumptions that the Treasury will use in preparing the new Statement.
The purpose of the Paper's release is to elicit comments and discussion on the proposed methodology for the upcoming Statement.
Modelling New Zealand's Long-term Fiscal Position canvasses the approaches taken in Australia, the United Kingdom and the United States of America, where long-term fiscal position statements are periodically published, and outlines how New Zealand's approach compares.
It also discusses the risks and uncertainty inherent in developing a set of long-term fiscal projections, highlights the sensitivity of final fiscal outcomes to even small changes in some key assumptions and provides four examples in which it models government spending over 40 years: New Zealand Superannuation, education, core government services and health.
Modelling New Zealand's Long-term Fiscal Position is available on the Treasury website.