The Reality of Budgetary Reform in OECD Nations

The Reality of Budgetary Reform in OECD Nations

Trajectories and Consequences

Edited by John Wanna, Lotte Jensen and Jouke de Vries

The Reality of Budgetary Reform in OECD Nations investigates the impacts and consequences of budgetary reform through a comparative assessment of advanced Organisation for Economic Co-operation and Development (OECD) democracies that have undertaken budget reforms over the past two to three decades.

Chapter 6: Budgeting in New Zealand After the Reforms: From Radical Revolutionary to Cautious Consolidator

Richard Norman and Derek Gill

Subjects: economics and finance, public finance, public sector economics


Richard Norman and Derek Gill* TRAJECTORY OF REFORM New Zealand’s public sector reforms in the 1980s have been compared by a senior UK official to a ‘shooting star busting onto the firmament, lighting up the night sky’ of public administration and management. This chapter will explore what has happened to that shooting star. New Zealand conforms to the old adage: ‘Communist at 20, Conservative by 30’. The practice of budgeting has moved from the youthful phase of radical revolution to the middle age of consolidation and planning for retirement. New Zealand’s budget reforms starting in the late 1980s were wideranging, and notable initially for the medium-term focus on net worth and transparency and subsequently for being the first country to introduce accrual accounting and output budgeting. After a decade of rapid and radical reforms until the mid-1990s, the pace of change has been steady and incremental as New Zealand has become a cautious consolidator. What is striking about the last 15 years is that, while priorities and policy content have changed with different administrations, the budget system has been remarkably stable. The emphasis on debt reduction during these 15 years has proved to be important preparation for the international financial crisis of late 2008. In November 2008, a newly elected centreright government led by the National Party was able to face the effects of this financial crisis with almost no government debt and was able to offer tax reductions, a sharp contrast from the election of 1984, which prompted the...

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