From humble but vital beginnings as the government’s bookkeeper, Treasury has grown to have a major influence on the economic management of New Zealand.
Full story by Malcolm McKinnon
Main image: Philip Combes and Briar Ferguson of the Debt Management Office, 2011
The Short Story
A quick, easy summaryRead the Full Story
Treasury, 1840 to 1935
The New Zealand Treasury was set up in 1840. The treasurer was responsible for overseeing the government’s accounts and preparing an annual financial statement and budget – much like the treasurer of an organisation today.
From 1856 the treasurer was a minister in a cabinet government, and from 1907 was known as the minister of finance. The head of Treasury is called the secretary to the Treasury.
At first Treasury kept the government’s accounts but had little control over other departments. It became more influential after raising £43 million for the First World War.
In the 1920s Treasury worked with other agencies to apply business practices to government departments such as the Post Office and railways. From 1930 Treasury had the right to report on all government proposals for new spending.
1935 to 1980
During the Second World War, Treasury Secretary Bernard Ashwin was one of three members of the economic stabilisation commission, which co-ordinated economic activity. In the 1960s Treasury became the lead agency for managing the economy. From the 1970s it advocated economic liberalisation.
Under the Labour government elected in 1984, the dollar was floated, taxes were lowered, and protection and assistance to industry was reduced. The National government elected in 1990 deregulated the labour market, and cut government spending and benefits.
With strong support from Treasury, the commercial functions of some government departments were split off as state-owned enterprises from 1986. Many state-owned enterprises were then sold to private buyers, from 1988.
The 1999–2008 Labour-led government ignored Treasury advice in some areas. It bought back (into partial or total state ownership) Air New Zealand and the railways, and set up a government-owned bank, Kiwibank.