Abstract:
The recent Greek debt crisis highlighted the need for a robust fiscal policy regime. New Zealand's Public Finance Act 1989 establishes principles the government must take into account when setting its fiscal strategy, and imposes reporting requirements. These provisions are discussed, and analysed from the perspective of accountability theory. In particular, I use an accountability framework developed by Mark Bovens to consider the adequacy of six potential accountability forums. These forums are Parliament, the courts, the Treasury, the media, business groups, and the public via elections. It is concluded that each is relatively weak as a forum providing accountability for fiscal policy. Three possible amendments to New Zealand's fiscal responsibility regime are then considered. The first is to establish a new accountability forum: an independent fiscal commission, to provide fiscal reports and commentary. The second and third are amendments to the Act which may enhance existing accountability arrangements: a principle requiring consideration of intergenerational equity, and a fixed numerical target or limit for debt or spending. It is argued that the first two amendments should be adopted, while the last should not. This is primarily because a fixed target or limit would be bad policy. The paper concludes with further discussion of the related concept of transparency. It is argued that the Act is best viewed as an aide to transparency, rather than accountability, for fiscal policy. While Bovens' accountability framework is a useful exercise, the political and policy-focused nature of this area of the law makes rigid accountability inappropriate.
