Glossary for Budget 2024 Documents
Allowances
The amount of new funding available at each Budget is set aside in envelopes called allowances. This is the amount of money available for Budget decisions to be counted against for initiatives that increase expenditure or reduce revenue.
Operating allowance
An operating allowance is the amount of new funding available for the day-to-day operating costs of the government.
Annual review
Scrutiny by the House and its committees of the performance for the previous financial year, and current operations, of Government departments, Offices of Parliament, Crown entities, State-owned enterprises, and public organisations.
Appropriations
Appropriations are legal authorities granted by Parliament to the Crown or an Office of Parliament to use public resources. Most appropriations are set out in Appropriation Acts (see Appropriation Bill below).
Appropriation Bill
A Government bill that seeks authority from Parliament to spend public money and incur liabilities. Details of the Government's spending plans are set out in papers that are presented in association with each Appropriation Bill, which becomes an Appropriation Act when the Bill is passed (See Estimates of Appropriations).
Assets
A resource controlled by an entity. A resource is an item with service potential or the ability to generate economic benefits.
Baselines
The forecast revenues, expenses, assets and liabilities for a vote for the current year, and forecast for the next four financial years.
Baseline expenditure
The level of expenditure in Appropriations for any given area of spending (e.g., Vote Education).
Bill
A proposed law that the House may consider.
Baseline savings
Savings identified through a review of existing agency baseline expenditure and tagged contingencies as part of Budget 2024 decisions, with a particular focus on low value activities, activities that do not align to Government priorities, and non-essential back-office functions including contractor and consultant spend.
Budget
The process for preparing and documenting the Government's economic policies and spending plans each year resulting in the introduction of an Appropriation Bill and the delivery of the Budget statement.
Budget at a Glance
The Budget at a Glance is an overview of the Budget information and contains the main points for the media and public.
Budget Economic and Fiscal Update (BEFU)
The Budget Economic and Fiscal Update includes the Treasury's economic forecasts and the forecast financial statements of the Government incorporating the financial implications of Government decisions and other information relevant to the fiscal and economic outlook. The BEFU also discusses key risks to the economic and fiscal forecasts.
Budget Day
The day identified by the Minister of Finance when the Government will present its Budget and for the delivery of the Budget statement.
Budget Policy Statement
A paper presented by the Minister of Finance in the months before the Budget, foreshadowing the Budget and its policy goals. The Finance and Expenditure Committee examines the Budget Policy Statement and reports to the House.
Budget Speech
The Budget Speech is the statement the Minister of Finance delivers at the start of Parliament's Budget debate. The statement generally focuses on the overall fiscal and economic position, the Government's policy priorities and how those priorities will be funded.
Capital expenditure
The expenditure incurred to acquire or develop assets (including tangible, intangible, or financial assets and any ownership interest in entities).
Consumers Price Index (CPI)
Stats NZ's official index to measure the rate of change in prices of goods and services purchased by households. Core or underlying inflation measures exclude or give little weight to extreme or irregular price movements.
Cost pressures
Additional funding needed because of higher demand under current policy settings, for example, higher population growth or changes in demographics, higher cost of delivering or continuing to deliver services due to external market factors (e.g., inflation) or collective bargaining agreements and wage progression pressures, or to fulfil an already existing regulatory or legislative requirement.
Core Crown
A reporting segment consisting of the Crown, departments, Offices of Parliament, the New Zealand Superannuation Fund and the Reserve Bank.
Core Crown expenses
The day-to-day spending (e.g., welfare benefit payments, public servants' salaries, finance costs and maintaining national defence assets, etc.) that does not include capital expenditure on the construction or purchase of physical assets by the core Crown. This is an accrual measure of expenses and includes non-cash items, such as depreciation on physical assets.
Core Crown revenue
Consists primarily of tax revenue collected by the Government but also includes investment income, sales of goods and services and other revenue of the core Crown.
Economic outlook
A description of what is judged likely to happen in the future of the economy. The outlook includes forecast economic indicators such as gross domestic product (including the major components of GDP), consumer prices, unemployment and employment, and the current account position of the balance of payments.
Estimates of Appropriations
A detailed statement of how the Government proposes its departments and other agencies will spend public money and incur liabilities in a financial year. This spending must be approved through an Appropriation Bill.
Financial year
A year as it is set for public finance, being the period from 1 July of one calendar year to 30 June of the next.
Financial assets
Any asset that is cash, an equity instrument of another entity (shares), a contractual right to receive cash or shares (taxes receivable and Accident Compensation Corporation (ACC) levies), or a right to exchange a financial asset or liability on favourable terms (derivatives in gain).
Financial liabilities
Any liability that is a contractual obligation to pay cash (government stock, accounts payable) or a right to exchange a financial asset or liability on unfavourable terms (derivatives in loss).
Fiscal intentions (short-term)
Indications of the Government's intentions for operating expenses, operating revenues and the impact of its intentions on the operating balance, debt and net worth over at least the next three years. These intentions are required under the Public Finance Act 1989 (PFA).
Fiscal objectives (long-term)
The Government's long-term goals for operating expenses, operating revenue, the operating balance, debt and net worth, as required by the PFA. The objectives must be consistent with the defined principles of responsible fiscal management as outlined in the PFA and must cover a period of at least 10 years.
Fiscal outlook
The Treasury view of the Government's financial performance and financial position over the current financial year and next four years (the forecast period). The outlook includes forecasts of the government's key fiscal indicators, such as core Crown revenue, core Crown expenses, the operating balance, OBEGAL, and net core Crown debt.
Fiscal Sustainability Programme
The Government's multi-year programme of work aimed at driving greater value and results from public expenditure by using improved information to prioritise resources to high value activity, securing a sustainable fiscal outlook by bringing revenue and expenses back into balance, and prioritising fiscal discipline in decision-making.
Gross domestic product (GDP)
A measure of the value-added of all goods and services produced in New Zealand. Changes in GDP measure growth or contraction in economic activity or output. GDP can be measured on either an expenditure or production basis and in either real or nominal terms.
Independent Earner Tax Credit (IETC)
The IETC is a tax credit of up to $10 per week, available to those earning between $24,000 to $70,000 in a tax year (following the changes at Budget 2024). It is available to those who are not eligible for Working for Families tax credits and who are not in receipt of a main benefit, NZ Superannuation, a Veteran's pension or an overseas equivalent.
Initiatives
Proposals with financial impact that are presented to Ministers during the budget process. Initiatives that are accepted and approved by Ministers are reported in the Summary of Initiatives that are included with the Budget documentation released.
In-Work Tax Credit (IWTC)
The IWTC is a payment for families normally in paid work who have children (the size of the payment is dependent on a number of factors). It is part of a broader suite of the Working for Families payments. It is available to those who are not in receipt of an income-tested benefit or student allowance.
Imprest Supply Act
An Act that seeks to give the Government temporary authority to incur expenses and capital expenditure in advance of detailed spending proposals being approved through an Appropriation Bill.
Key fiscal indicators
Indicators used to measure progress towards the Government's fiscal strategy, depending on its long-term fiscal objectives and short-term fiscal intentions.
Labour productivity
Output per unit of labour input (where labour inputs might be measured as hours worked or the number of people employed).
Macroeconomic
Dealing with the performance, structure, behaviour, and decision-making of an economy as a whole.
Minimum Family Tax Credit (MFTC)
The Minimum Family Tax Credit is a payment to ensure low-income families' incomes are topped up to some minimum amount, where the parent or parents work a required number of hours for salary and wages. It is part of a broader suite of the Working for Families payments, and is available to those who are not in receipt of an income-tested benefit, a parent's allowance, or a children's pension from Veteran's Affairs New Zealand.
Multi-year Capital Allowance (MYCA)
A capital allowance is the amount of new funding available to spend on assets that will increase the value of the Crown's balance sheet, for example investment into infrastructure like schools and hospitals. The MYCA is a four-year rolling notional envelope for new capital investment.
Multi-year funding
Multi-year funding approaches to allocating funding mean that some of the allowance impact of Budget decisions is pre-committed against future Budgets' operating allowances. This reduces these future Budgets' available operating allowances to reflect that some funding decisions have already been made.
Net core Crown debt
Net core Crown debt provides information about the sustainability of the Government's finances and is used by some international rating agencies when determining the credit worthiness of a country. It represents gross sovereign-issued debt less core Crown financial assets (excluding advances and financial assets held by the NZ Superannuation Fund). Advance and financial assets held by the NZ Superannuation Fund are excluded as these assets are less liquid and/or they are made for public policy reasons rather than for the purposes associated with government financing.
Net debt
Net debt provides information about the sustainability of the Government's finances. Net debt represents core Crown and Crown entity borrowings (excluding Kiwi Group Capital Limited) less core Crown financial assets (including advances). It includes the financial assets and borrowings of the NZ Superannuation Fund.
Net worth attributable to the Crown
Represents the Crown's share of total assets less liabilities of the Government. It excludes minority interests’ share of those assets and liabilities.
Operating allowance
An operating allowance is the amount of new funding available for the day-to-day operating costs of the government.
Operating balance
Represents OBEGAL (refer below) plus gains and less losses. The operating balance includes gains and losses not reported directly as a movement against net worth. The impact of gains and losses on the operating balance can be subject to short-term market volatility and revaluations of long-term liabilities.
Operating balance before gains and losses (OBEGAL)
Represents total Crown revenue less total Crown expenses, excluding minority interest share. OBEGAL can provide a more useful measure of underlying stewardship than the operating balance as short-term market fluctuations are not included in the calculation.
Operating expenditure
The day-to-day spending (e.g., welfare benefit payments, public servants' salaries, finance costs and maintaining national defence assets, etc.) that does not include capital expenditure on the construction or purchase of physical assets. This includes non-cash items, such as depreciation on physical assets.
Projections
Projections relate to the period beyond the five-year forecast period and are based on long‑run economic and fiscal assumptions. For example, the projections assume no economic cycle and constant long-run interest, inflation and unemployment rates.
Public Finance Act
The Public Finance Act is the statute that provides the core legislative framework within which the Government can borrow money or spend public money. It contains reporting requirements to ensure the Crown is transparent and accountable for its actions impacting on public finance.
Reprioritisation
In the Budget process, this is the reassignment of existing funding from one area to another.
Savings
A reduction in cost or expenditure from baselines and tagged contingencies.
Select committee
A committee whose membership is confined to a limited number of members. Most of the committees are subject select committees, each of which deals with a particular subject area.
Supplementary Estimates
A statement of further amounts to be spent by Government departments, Offices of Parliament, Crown entities, State-owned Enterprises, and public organisations in the current financial year in addition to the details of spending contained in the Estimates. This spending must be approved by an Appropriation Bill.
Tagged contingency
Tagged contingency relates to funding that is ring-fenced for a particular purpose and held in the centre, i.e., not appropriated into baselines. Treasury may use tagged contingencies as a policy tool where an initiative is commercially sensitive and final costs are subject to negotiation, or if the initiative is likely to be funded but needs further work before funding can be appropriated.
Further savings and revenue measures
Specific policies or programmes reviewed with a view of ending and/or scaling back. Some were identified by the Government for review ahead of Budget 2024 and some were raised by agencies through the Budget 2024 initiative submission process.
Tax at a Glance
The Tax at a Glance is an overview of tax changes agreed through Budget 2024 and contains the main points for the media and the public.
Tax revenue
The accrual, rather than the cash measure of taxation. It is a measure of tax over a given period in time, regardless of whether or not it has actually been paid.
Total Crown
Includes the core Crown (defined above) plus Crown entities, State-owned Entities and other entities controlled by the Government Reporting Entity (as defined in BEFU).
Votes
When Parliament considers legislation relating to appropriations, the appropriations are grouped within ‘Votes'. Generally, a ‘Vote' will group similar or related appropriations together (e.g., Vote Health includes all health-related appropriations that are the responsibility of the Minister of Health).
Vote (Estimates)
Part of an Appropriation Bill containing details of the authority to spend public money or incur expenses in a particular area (e.g., Vote Health).
Year-ended
Graphs and tables within this document use different expressions of the timeframe. While some tables may refer to the end of the tax year (31 March), others will refer to the end of the Government's financial year (30 June). Unless otherwise stated references to 2023/24 or 2024 will mean the year ended 30 June.