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Treasury’s Central Role

John WhiteheadSecretary to the Treasury

(Kaitohutohu Kaupapa Rawa: “the people who advise on everything to do with the resources”)

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What I’ll cover

• Scene setting

• Constitutional setting and public sector

management Legislative framework and principles

Public sector (financial) management

Treasury and other “central agencies”

• Some personal reflections

Scene setting

Treasury – 160 years in the making

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Treasury and the Secretary: roles and functions

Treasury, Secretary:

• No establishing legislation

• Relevant Acts (esp Public Finance Act

1989, Fiscal Responsibility Act 1994)

• Fulfils Finance Ministers & Cabinet

demands

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Treasury analysts – no normal life?

No normal life?Tom Scott

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Treasury roles cont’d

Treasury roles include:

• Lead economic and fiscal advisor

• Manages, monitors Crown financial affairs

– incl budget

• “Second-opinion” advice – all Cabinet proposals

• “Central agency” leadership – State sector

performance

New Zealand’s GDP 1860 – 2004

Year

0

20,000

40,000

60,000

80,000

100,000

120,000

1860 1872 1884 1896 1908 1920 1932 1944 1956 1968 1980 1992

$ M

illi

on

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Treasury sees storm clouds

Treasury officials always saw a cloud somewhere. Bob Brockie, National Business Review

Net and gross public debt (% GDP)

(1972- 2004)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1972 1977 1982 1987 1992 1997 2002

Year ended 30 June

% o

f G

DP

Gross debt - % of GDP Net Debt - % of GDP

Constitutional setting and public sector

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Constitutional setting

Parliament controls public finances: appropriates funding to government

Treasury advises:

Select Committees: budgeting, reporting, performance

Finance Ministers and Cabinet: all fiscal and economic implications and results

Treasury’s outcome priorities

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Legislative framework

• No expenditure without appropriationPublic Finance Act 1989

• Devolved accountabilityState Sector Act 1988

• Fiscal responsibility Fiscal Responsibility Act 1994

• Enterprise governanceState-Owned Enterprises Act 1986

• The Public Finance (State Sector Management) Bill

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Public sector financial management

• Supports constitutional structure and

actors

• Provides accountability and Parliamentary

scrutiny

• Encompasses different organisational

forms

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Public management system: building blocks

• Design of State sector

• Decision making system

• Resource allocation system

• Accountability system

• Leadership, values, culture across system

• Relationship between community, politicians and State sector

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Public management system:Central agency engagement

SSC/Treasury:State sector agencies improve social, economic and environmental outcomes

DPMC & SSC with Treasury:CEs understand and translate government direction and decisions for State sector

DPMC/SSC/Treasury:public management system supports high performing State sector

DPMC/Treasury:Government strategy and priorities coordinated and appropriately resourced

SSC

D PM C

Treasury

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Personal Reflections

• It’s a big role

• It’s a complex role

• It can be difficult

• It’s not necessarily popular

• But it’s incredibly rewarding