Refreshing Fiscal Responsibility With No Cap

by Editor on Tuesday, December 4, 2012 — 10:05 PM

The Government’s refresh of the Fiscal Responsibility Act has received its first airing in Parliament minus the once proposed “fiscal cap’’ on spending.

The idea of a limit on Government spending increases was proposed by the ACT party and was watered down over time until the final bill introduced to Parliament contained no reference to it.

Finance Minister Bill English said the Public Finance (Fiscal Responsibility) Amendment Bill intended to make sure the Act remained fit for purpose especially when Government returned to a surplus position.

There was room to strengthen the Act which would be done with amending the current principles, creating new principles and codifing current practice.

The new principles would require the Government to be explicit about the interaction between monetary and fiscal policy, outline any intergenerational impacts of policies and explicitly state the Government’s priority for resource allocations, he said.

Governments would have to report their performance against their stated fiscal policy.

English said he had constructive talks with other parties about the changes which were due to the experience learnt that the Fiscal Responsibility Act was more useful when Governments were under economic pressure and not relevant enough when they were working with surpluses.

Labour’s David Parker said they would be supporting the bill, which he said had been changed a lot since the original consultation draft.

Most notably the idea of a fiscal cap had been removed and if it had remained Labour would not have supported the bill.

NZ First and Mana Party opposed the bill which was sent to the Finance and Expenditure Committee by 112 to 8.

The Criminal Procedure Legislation Bill passed its first reading on a voice vote and was sent to the Justice and Electoral Committee for consideration.

The bill makes “technical’’ changes to reforms passed last year to ensure the rewritten law worked the way that Parliament intended it to.

Debate on the Human Rights Amendment Bill’s first reading was interrupted when the House rose at 10pm.

It will sit tomorrow morning at 9am

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