1.1 This submission on the “Consultation on the Scope of the Treasury's Long-term Insights Briefing” is made by The New Zealand Initiative (the Initiative), a Wellington-based think tank supported primarily by major New Zealand businesses. In combination, our members employ more than 150,000 people.

1.2 The Initiative undertakes research that contributes to the development of sound public policies in New Zealand. We advocate for the creation of a competitive, open and dynamic economy and a free, prosperous, fair and cohesive society.

1.3 The views expressed in this submission are those of the author rather than the New Zealand Initiative's members.

1.4 In summary, we submit:

(a) The proposed topic of 'sustainable and resilient fiscal policy over economic cycles' needs a well-being justification. What is the well-being problem that the pursuit of this topic is to throw light on? What is the optimal long-term fiscal policy from a wellbeing perspective, and is it different?

(b) Treasury’s long-term fiscal projections demonstrate the increasing importance of assessing the value of spending programmes in the light of the deadweight costs of higher taxation. The third aspect Treasury needs to be on top of is the path for a prudent level of public debt.

(c) This submission suggests that Treasury could usefully make advances in each of these three respects. In doing so, it should use a comparative institutional economics framework. Better spending disciplines are needed.

(d) The question of optimal fiscal policy activism, counter-cyclical or not, is of some interest, but it is a different question. One starting point would be to commission overseas experts to examine New Zealand’s fiscal settings in 2020-2022 in order to advise what lessons they think should be drawn.