This section outlines the authority under which transactions are entered into and the statutory and contractual basis of the management of the New Zealand’s debt and the conduct of personnel.
Legal authority to borrow and service debt
Nearly all the functions of New Zealand Debt Management are fulfilled through the exercise of statutory powers contained in the Public Finance Act 1989. In general, those powers are vested in the Minister of Finance, but many of them have been delegated to the Secretary to the Treasury, with further sub-delegation to specified personnel within New Zealand Debt Management.
The Public Finance Act establishes the legal framework for the use of public financial resources. That includes authorities and controls relating to:
- the operation of bank accounts;
- the investment of public money;
- the raising, repayment, and conversion of loans and the issuing of securities;
- the giving of guarantees and indemnities;
- the entering into of swaps and other financial arrangements;
- the Public Finance Act gives the Minister of Finance the power to borrow in the name of the Crown. The power to borrow cannot be delegated.
The Public Finance Act contains a permanent appropriation for the payment of all principal and interest in respect of any loan to the Crown. It also contains a permanent appropriation for the payment of expenses associated with the raising and management of loans and the issuing and management of securities. The payment of principal and interest in respect of any debt that is assumed by the Crown, but is not in the Crown's name, must be authorised through the appropriation procedures contained in the Public Finance Act.
Delegation of responsibility
The Minister of Finance may delegate to the Secretary to the Treasury, pursuant to the State Sector Act 1988, all the Minister’s functions or powers under any Act, except the power to raise a loan under the Public Finance Act. Pursuant to the State Sector Act, those delegated powers may be sub-delegated, with the Minister’s consent, to specified personnel of the Treasury and exercised in accordance with any policies approved by the Minister, the Secretary to the Treasury, or the Head of New Zealand Debt Management.
The State Sector Act establishes the minimum standards and general obligations that apply to Treasury employees. Specific terms and conditions of employment are outlined in Treasury’s personnel policies and individual employment agreements. All Treasury employees are required to sign a declaration of confidentiality and avoidance of conflicts of interest.
The State Sector Act, Treasury's corporate policies and New Zealand Debt Management's guidelines for ethical behaviour provide the framework for New Zealand Debt Management's behaviour in the market place.