Public Finance Act Submission
Key points of our submission
WEAll Aotearoa opposes the proposed Public Finance Act Amendments 2025 on the grounds that removal of wellbeing frameworks is a significant step backward for inclusive and forward-looking governance.
The existing requirement for the Treasury to prepare a Wellbeing Report and for the governments to articulate wellbeing objectives in the Budget Policy Statement and Reporting should be retained.
Substantive points
The Amendment Bill shifts focus away from wellbeing-centered public finance toward more traditional fiscal management, focussed on risk disclosure and tax transparency. While these are valuable in ensuring fiscal discipline and clarity for incoming governments and would bring NZ closer to OECD standards, this value is enhanced when fiscal decisions are made and monitored within clear frameworks that define purpose in terms of wellbeing outcomes, including social, cultural, environmental and ecological impacts.
The reforms appear underpinned by an ideological distinction: Is wellbeing the goal of economic policy, or a byproduct of economic growth? This "means vs. ends" question has significant implications. We caution against a pendulum swing approach, especially in a small, remote nation like Aotearoa New Zealand, where consistent long-term planning is essential for resilience.
The importance of purpose has long been recognised in economics. The founder of neoclassical economics, Alfred Marshall, defined economics as the study of how we produce the material requisites for wellbeing. In the private sector, the Institute of Directors emphasises the primary importance of defining an enterprise’s purpose. Similarly, a key responsibility of the Minister of Finance is to articulate the purpose of economic policy by defining its long-term contributions to wellbeing goals.
This articulation of purpose is important not only for the public sector, but also for the private sector making long-term investment decisions for their own purposes. A generic commitment to ‘growth’ is not sufficient to provide a solid foundation for private sector confidence in the face of major geopolitical, economic, social, cultural, environmental and ecological challenges. A robust framework defining public purpose is therefore needed to support private enterprise.
Consequently, we strongly oppose the proposals to: a) ‘repeal the requirement to articulate wellbeing objectives in the Budget Policy Statement’ and b) ‘repeal the requirement to prepare a wellbeing report’. Retaining these mechanisms ensures that economic decisions are assessed not only for their fiscal impacts but also for their long-term contribution to the public good; that is, for their purpose.
Repealing these requirements risks narrowing fiscal policy to short-term metrics such as GDP and net debt, at the cost of overlooking investments in human, social, and environmental capital. It could discourage spending on preventive health, community resilience, and nature-based solutions that provide substantial long-term returns.
A return to short-term economic framing risks undermining broader prosperity. A strong economy circulates resources toward desirable outcomes, enabling meaningful economic participation. Research and history consistently show that wealth accumulation at the top does not equate to inclusive or widespread wellbeing.
Like the proposed Regulatory Standards Bill, this Amendment may implicitly prioritise private interests over public and ecological commons. It overlooks power imbalances and assumes equal access to opportunity—assumptions not borne out in real-world conditions.
A narrowly scoped Act focuses the Treasury primarily on cost and efficiency and may be left poorly positioned to advise on complex, interdependent systems that shape wellbeing and resilience. In 2023, MBIE examined the utility of broader decision-making tools suited for transformative, systemic change. These findings should inform the Treasury's mandate.
As the Committee anticipates the second tranche of reforms, we encourage openness to diverse performance reporting and accountability mechanisms, particularly those that incorporate social, ecological, and cultural wellbeing. Poor outcomes in these domains do not disappear by excluding them from fiscal reporting frameworks.
Segmenting reforms into tranches risks policy incoherence or fragmentation. It is not yet clear whether future stages will restore, replace, or further erode wellbeing-based accountability.
WEALL Aotearoa acknowledges the potential value of enhanced transparency around fiscal risks. However, the current definition of fiscal risk is too narrow. It must also capture risks of not investing in human and ecological wellbeing. These indirect and systemic risks—already documented in New Zealand’s National Risk and Resilience Register—can become significant fiscal burdens if unaddressed.
The principles of responsible fiscal management should evolve to reflect the sovereign currency-issuing status of the government, distinguishing its spending capacity from that of households. A broader understanding of this is essential to modern public finance discourse and transparent management.
The purpose of currency issuance is critical to its impact. What money is used for—whether infrastructure, public health, or speculative subsidies—shapes inflation risks, economic multipliers, social equity, and long-term wellbeing. Public finance should be guided by clear, accountable purposes aligned with collective wellbeing and environmental sustainability. Fiscal policy is not neutral—its objectives define its legitimacy and its value to current and future generations. Even traditional institutions (like the IMF and OECD) now stress transparency on how fiscal policy is used, not just how much.
The proposal to ‘introduce more specific disclosure requirements for the statement of specific fiscal risks’ could improve clarity about the financial state of the nation and its exposure to potential shocks. However, it should also include the risks of not investing in non-monetary outcomes. Ignoring indirect or systemic risks could lead to the material risks listed in the National Risk and Resilience Register.
Publishing a tax expenditure statement is a welcome step toward greater fiscal accountability, especially after the Repeal of the Taxation Principles Reporting Act but it must also provide a comprehensive view, including:
Revenue foregone through tax breaks and incentives,
Inclusion of indicators aligned with the spending on non-monetary public goods, per the System of Environmental-Economic Accounting (SEEA); a satellite account to the SNA.
New Zealand has been recognised internationally for its early leadership in wellbeing economics—especially through the Living Standards Framework developed under the Key Government in 2010 and He Ara Waiora in 2018. Removing such frameworks from the Public Finance Act and the Local Government Act risks abandoning this leadership and undermining long-term, evidence-informed fiscal strategy and associated prosperity, including sought-after trade and fiscal benefits.
Amending the publication window for the pre-election economic and fiscal update could improve democratic engagement—provided the update includes the full spectrum of short- and long-term information needed to assess trade-offs and future resilience.
Summary of Recommendations
Reject or significantly revise the Public Finance Amendment Bill 2025 to:
Retain wellbeing objectives in the Budget Policy Statement.
Retain the requirement for the Treasury to prepare a regular Wellbeing Report.
Broaden the definition of fiscal risk to include social, ecological, and cultural risks.
Maintain and enhance the Treasury’s capacity to use systems-based, long-term, and outcome-oriented decision-support tools.
Ensure tax expenditure reporting includes non-monetary and public good dimensions aligned with international best practice.
Approach further reforms holistically, ensuring coherence and continuity across tranches.
WEAll Aotearoa appreciates the opportunity to make a submission and requests the chance to make an oral submission.
We would be happy to answer any questions about any aspect of our submission.
