A law change will require the Government to assess the impact of its fiscal policy on future generations.
The Public Finance (Fiscal Responsibility) Amendment Bill was passed by 85 votes to 36 in Parliament today. It was supported by National, the Greens, Act, New Zealand First and United Future, but opposed by Labour, Mana and independent MP Brendan Horan.
The amendments update the fiscal responsibility provisions of the Public Finance Act 1989 by adding new principles which would require governments to consider monetary policy and the impact on future generations when setting fiscal strategy.
Governments face no legal sanctions for breaching the Public Finance Act, but the law does encourage transparency by requiring governments to explain deviations from the fiscal responsibility principles.
Finance Minister Bill English said today's amendments would make the Government more transparent about the interaction between monetary and fiscal policy.