Nicola Willis opposes calls for a unit to monitor government finances as concerns arise about the credibility of budgets

“We’ve had a series of ‘bow wave’ fiscal forecasts… every year the bow wave pushes the return (to surplus) by another year,” Gill said.

“Having an independent fiscal institution (IFI) would reduce the risk of losing fiscal credibility.”

Willis said she was open to considering advice on creating a parliamentary budget office, which would cost party politics. She was also happy to consider strengthening the powers of the Auditor General.

However, she saw no need to create a larger unit that would provide additional control over government finances.

“The Ministry of Finance does a good job of ensuring robust and transparent budget processes in which citizens can participate,” she said.

In 2022, while in opposition, Willis wrote to then-Finance Minister Grant Robertson asking him to reconsider setting up a body to set the costs of party politics.

But it was not a priority for Robertson, who accused the National Party of previously opposing the idea.

Like Gill, economist Cameron Bagrie believed that New Zealand needed a serious International Financial Fund.

IN Business office In his column, he illustrated how the country’s finances would look different if productivity growth did not return to its 30-year moving average of 1% per year, as the Treasury assumed in the budget.

Using Treasury Department models, Bagrie calculated that productivity growth of 0.5% per year would cause net debt (excluding Super Fund assets) to reach 33% of GDP in 2038, up from 26% if productivity grew at 1% per year.

Bagrie said that if productivity growth remains as low as it has been over the past decade – at around 0.2% per year – we should forget about recovering the book surplus.

“Deficits may now occur more regularly than irregularly,” he said.

“This is where the need for IFI is strong. We need robust independent analysis of policy choices so that the public is fully aware of the trade-offs, the pros and cons, and what the numbers look like, using credible assumptions.

“Maybe they are (credible). But we should back them up with independent verification and best practices around the world.”

Although the Treasury’s assumptions and models are public, allowing experts like Bagrie to criticise them, Gill still believed New Zealand needed an international financial institution.

“In most OECD countries, international financial institutions are small – half of them have fewer than 20 employees,” he said.

“It’s a small price to pay for increased fiscal responsibility and credibility.”

Gill, who has held senior positions at the Ministry of Social Development, the National Services Commission and the Treasury and is a senior research fellow at Victoria University’s School of Government, noted that international financial institutions around the world have different mandates but typically monitor finances and policy costs.

“Consider the failure of the last election because the opposition did not have access to credible, independent advice on setting the costs of politics,” Gill said.

“What we saw was an indecent debate about the soundness of the costs of proposed tax cuts. The real debate should be about the merits of the policy – ​​not the costs.

“Society deserves better – especially since election promises have become a permanent part of collective agreements.”

The biggest spending increase in the 2023 election was on transportation.

New Zealand Transport Agency Waka Kotahi document leaked to Herald showed that delivering the roads and public transport advocated by the National Party could end up costing twice as much as the party claimed, leaving a potential budget shortfall of $24 billion.

The OECD, in a report on New Zealand published earlier this year, expressed concern about the imprecise estimation of the costs of election promises.

“Inaccuracies in the costs of the main political parties’ proposals risk suboptimal policies and further fiscal slippage, especially since such cost calculations are currently often provided by consultants who do not always have access to all the necessary fiscal information,” the OECD report reads.

She also expressed concern that Robertson had routinely spent more than he had declared in his fiscal policy statements.

The OECD said New Zealand’s fiscal framework has “shortcomings” and “requires strengthening”.

The original version of this article has been updated after Nicola Willis added to her original statement that she did in fact support the establishment of a costs unit, but not a wider body to oversee the government’s finances.

Jenée Tibshraeny is HeraldWellington Business Editor, based in the Parliament House Press Gallery. She specialises in government and Reserve Bank policy, economics and banking.