Transparency International (NZ) calls for action in two important areas to improve budget transparency

19 February 2009

While NZ scores highly on budget transparency in an 85-country international study, there are two areas where we fail to meet basic international standards, and the Board of TINZ urges early action to remedy these deficiencies.

The survey, organised by the Center on Budget and Policy Priorities (CBPP) in Washington D.C., is based on 123 detailed questions covering all stages of budget preparation and execution. Most of the 85 countries in the sample are developing countries, and New Zealand is rated as one of only five countries that provide extensive information to the public.

However, the NZ survey, conducted by TINZ, identifies two important areas where NZ does not meet international standards.

First, the OBI survey asks whether the executive makes available to the public a report on what steps it has taken to address audit recommendations or findings that indicate a need for remedial action; and also asks whether the National Audit Body or the legislature publishes a report that tracks actions taken by the executive to address audit recommendations. On both of these questions NZ scores a 'D'.

Many countries have formal mechanisms to publicly monitor follow-up action in response to audit findings. The Board of TINZ urges early action to strengthen the functioning of this extremely important watch-dog over potential abuse of the public purse.

Secondly, there is a serious lack of transparency in NZ about tax expenditures - special tax incentives or concessions for favoured activities that result in less tax revenue being levied than would be the case from the application of the normal tax code. While since 2004 there has been a requirement for the cost of any new tax expenditures to be disclosed when they are introduced, the government has not disclosed to the NZ public for decades how many of these provisions there are in the tax code, nor what they might cost the taxpayer each year in foregone revenue. While there are likely to be few tax expenditures at present in NZ, regular publication of information on them is an important principle of accountability, and is the practice in many OECD countries. Regular disclosure would also help to ensure they are not used in future to channel public resources to politically favoured groups in a way that escapes full public scrutiny.

Contact for additional comment: Murray Petrie, 021 150 3475

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