Guide to the Budget process

Overview of the New Zealand government's Budget process and its key process.

Introduction

The Budget process allows the government to:

  • set its fiscal objectives in respect of revenue, expenditure, debt repayment and investment;
  • maintain effective fiscal control and plan for the coming year and beyond;
  • allocate the available resources, consistent with the government's strategic objectives and priorities;
  • fulfil the legislative requirements for the Budget; and
  • seek authority from parliament for spending.

All ministers have a key role in the Budget process. Together, they agree on the Budget strategy and priorities for spending, which in turn informs departmental Budget initiatives. Ministers drive the development, fine-tuning and negotiation of Budget initiatives and packages in their portfolios or focus areas as part of the Government's overall Budget package.

Specific phases of the Budget

The Budget process can be divided into distinct phases:

Strategic phase

The strategic phase generally occurs from June to December. This involves the development of an overall strategy for the Budget, including strategic priorities and targets for spending, revenue, the projected fiscal surplus and public debt intentions.

Decisions taken during the strategic phase are reflected in the government's Budget Policy Statement (BPS) which is required to be tabled in parliament by no later than 31 March. The BPS is usually published alongside the Half Year Economic and Fiscal Update in December.

Decision phase

The decision phase generally occurs from January to April. Ministers put forward Budget initiatives for consideration and then the Treasury assesses them and prepares recommendations on which initiatives Ministers should support.

This advice is then collated, shared with various ministerial groups and considered by Budget ministers (the Prime Minister, the Deputy Prime Minister, Minister of Finance and two Associate Ministers of Finance) who put forward a Budget package to Cabinet for a final decision.

Budget production phase

Following decisions by Cabinet on the Budget package, the Treasury and agencies prepare all the required documents for presentation on Budget day. This includes the Estimates of Appropriations, the Budget Economic and Fiscal Update, the Fiscal Strategy and Child Poverty Reports, as well as a media kit containing the Minister of Finance's Budget day speech, and any other discretionary products such as the Budget at a Glance, press releases, and the Summary of Initiatives.

Legislative phase

The final phase of the Budget process involves obtaining parliamentary support for the government's Budget package (all spending for the year ahead). This includes examination of the Estimates for each Vote by the appropriate select committee.

Implementation phase

The implementation phase covers any subsequent amendments to the Budget. Where additional appropriations are needed during the course of the year, spending is authorised by Parliament before the end of the financial year, via the Appropriation (Supplementary Estimates) Bill. In the interim, authority for additional spending is provided by an Imprest Supply Act.

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