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Treasury’s Central Role

John Whitehead Secretary to the Treasury (Kaitohutohu Kaupapa Rawa: “the people who advise on everything to do with the resources”). Treasury’s Central Role. What I’ll cover. Scene setting Constitutional setting and public sector management Legislative framework and principles

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Treasury’s Central Role

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  1. John Whitehead Secretary to the Treasury (Kaitohutohu Kaupapa Rawa: “the people who advise on everything to do with the resources”) Treasury’s Central Role

  2. 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

  3. Scene settingTreasury – 160 years in the making

  4. 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

  5. Treasury analysts – no normal life? No normal life? Tom Scott

  6. 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

  7. 120,000 100,000 80,000 $ Million 60,000 40,000 20,000 0 1860 1872 1884 1896 1908 1920 1932 1944 1956 1968 1980 1992 Year New Zealand’s GDP 1860 – 2004

  8. Treasury sees storm clouds Treasury officials always saw a cloud somewhere. Bob Brockie, National Business Review

  9. Net and gross public debt (% GDP) (1972- 2004) 80.0 70.0 60.0 50.0 % of GDP 40.0 30.0 20.0 10.0 0.0 1972 1977 1982 1987 1992 1997 2002 Year ended 30 June Gross debt - % of GDP Net Debt - % of GDP

  10. Constitutional setting and public sector

  11. 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

  12. Treasury’s outcome priorities

  13. 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

  14. Public sector financial management • Supports constitutional structure and actors • Provides accountability and Parliamentary scrutiny • Encompasses different organisational forms

  15. 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

  16. Public management system:Central agency engagement DPMC/SSC/Treasury: public management system supports high performing State sector SSC/Treasury: State sector agencies improve social, economic and environmental outcomes DPMC/Treasury:Government strategy and priorities coordinated and appropriately resourced DPMC & SSC with Treasury: CEs understand and translate government direction and decisions for State sector

  17. 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

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