Guide to New Zealand Budgeting Practices

Contingencies and between-Budget spending

To ensure consistent prioritisation, it is preferable that all proposals seeking new funding are considered through the Budget process. However, in practice Cabinet frequently considers proposals requiring new funding between Budgets. With this in mind, contingencies are established at Budget to provide for between-Budget decisions.

The Between-Budget Contingency (BBC) is a general operating contingency that provides for operating proposals that arise between Budgets. A call on the BBC should only be made if the proposal cannot be delayed until the following Budget and requires funding urgently. The total funding available in the BBC is decided at each Budget for the forthcoming year.

Tagged contingencies

Tagged contingencies are set aside at Budget for specific initiatives where further work is required before Cabinet will agree to appropriate the funding. Tagged contingencies are also used in circumstances where an initiative is commercially sensitive or negotiations have yet to take place, e.g., public sector wage negotiations. As with the BBC, tagged contingencies are charged against the operating allowance and included in the fiscal forecasts when they are established, so drawing the funding down does not impact the fiscal indicators or future Budget allocations. Unless otherwise agreed, tagged contingencies expire on 1 February the year after they were established.