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.
They would also make the Government more transparent about the impact on future generations, with Mr English saying relatively small short-term decisions could have significant long-term outcomes.
"It takes us further along a track which has been good for New Zealand - it's got broad support."
Labour finance spokesman David Parker said he agreed there needed to be fiscal responsibility, but the bill was "window-dressing" and Labour's proposed amendments should have been adopted, including the introduction of a reference to national savings.
Greens' co-leader Russel Norman said it was a good bill, and commended the principle requiring the Government to look at the impact on future generations. But he said the amended principle of fairness when setting revenue strategy was at odds with National's own fiscal policy.
New Zealand First MP Andrew Williams said the party had opposed the bill as a waste of time, but now supported it because it could do no harm.