"They also reflect the Government's concern to achieve inter-generational fairness both now and into the future.
"A central theme of the first BPS to be published by the Labour-Alliance Government is the need to partially prefund the costs of supporting the baby boom generation in their retirement.
"We know these costs are coming. Unless we begin to make provision for them now, the workers of the future will be hit with much higher taxes. The only other option would be to reduce the value and availability of New Zealand Superannuation as the baby boomers begin to retire.
"Neither of these options is acceptable to the Government because neither of them is fair.
"Inter-generational fairness also demands that we are fiscally prudent and do not pile up debt for our children and grandchildren," Dr Cullen said.
"This concern is reflected in the new Government's fiscal objectives. These are:
- Running operating surpluses so that revenue exceeds expenses on average to enable ongoing contributions to pre-fund future New Zealand Superannuation [NZS] costs.
- Keeping net Crown debt below 20 percent of gross domestic product on average.
- Accumulating financial assets to assist with the funding of future NZS costs.
- Keeping expenses around current levels of about 35 percent of GDP.
"The Government will also take some of the pressure off monetary policy by maintaining spending and tax at even levels through the economic cycle. This compares with the experience in recent years when governments have amplified the cyclic effect by cutting taxes in the economic upturn and cutting spending in the economic downturn," Dr Cullen said.
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