Appropriation (2007/08 Financial Review) Bill

  • enacted

Appropriation (2007/08 Financial Review) Bill

Government Bill

21—1

Explanatory note

General policy statement

It is a basic constitutional principle that the Government can spend public money and incur expenses and capital expenditure only in accordance with appropriations made by an Act of Parliament and in an otherwise lawful manner.

However, Parliament has, in the Public Finance Act 1989, conferred limited authority on the Governor-General by Order in Council to vary appropriations made by Parliament, and on the Minister of Finance to approve expenditure in excess of appropriation by Parliament.

Section 26A of the Public Finance Act 1989 authorises the Governor-General by Order in Council to direct that an amount appropriated in a Vote for an output expense be transferred to another output expense appropriation in that Vote. There are 3 restrictions. First, the transfer must not increase that appropriation for the financial year by more than 5%. Secondly, there must have been no other transfer under section 26A of the Public Finance Act 1989 to that appropriation during the financial year. Thirdly, the total amount appropriated for all output expense appropriations for that Vote for the financial year must remain unaltered. A clause that confirms these Orders in Council must be included in an Appropriation Bill that applies to that financial year.

Section 26B of the Public Finance Act 1989 authorises the Minister of Finance to approve the incurring of expenses or capital expenditure in the last 3 months of the financial year in excess, but within the scope, of an existing appropriation by Parliament. This is subject to a limit that is the greater of $10,000 or 2% of the total amount appropriated for that appropriation by all Appropriation Acts for that financial year. The approval must be given not later than 3 months after the end of the financial year concerned. Expenses and capital expenditure incurred under the approval must be confirmed in an Appropriation Bill that applies to that financial year.

Sections 8 and 9 of the Public Finance Act 1989 require appropriations to be limited to a specified amount and limited to the scope of the appropriation.

Section 26C of the Public Finance Act 1989 requires the incurring of expenses or capital expenditure without appropriation, or other authority, by or under an Act to be validated by an Act of Parliament.

During the 2007/08 financial year some expenses and capital expenditure were incurred that were in excess, or outside the scope, of the relevant appropriation or were incurred without appropriation, or other authority, by or under an Act of Parliament.

During the 2006/07 financial year the Ministry of Justice incurred some expenses outside the scope of an appropriation.

During or at the end of the 2007/08 financial year, the net asset holdings in some departments exceeded the most recent projected balance of net assets for those departments as set out in an Appropriation Act. Those excess net asset holdings require validation.

This Appropriation Bill—

  • confirms the Public Finance (Transfers Between Outputs) Order 2008, which was made under section 26A of the Public Finance Act 1989 (clause 5):

  • confirms expenses and capital expenditure incurred for the 2007/08 financial year in excess, but within the scope, of an existing appropriation in accordance with the approval of the Minister of Finance under section 26B of the Public Finance Act 1989 (clause 6). Details of these confirmations are set out in Schedule 1:

  • validates unappropriated expenses and capital expenditure incurred for the 2007/08 financial year that were in excess of an existing appropriation, or without appropriation, or other authority, by or under an Act of Parliament (clause 7). Details of these validations are set out in Schedules 2 and 3:

  • validates expenses incurred for the 2006/07 financial year by the Ministry of Justice outside the scope of the existing appropriation Personal Property Protection Rights Costs in Vote Courts (clause 8):

  • validates excess net asset holdings in 9 departments during or at the end of the 2007/08 financial year (clause 9). Details of these validations are set out in Schedule 4.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 is the commencement clause. The Bill comes into force on the day after the date on which it receives the Royal assent.

Clause 3 states the purposes of the Bill, which are—

  • to confirm financial matters relating to the financial year ended 30 June 2008; and

  • to validate other financial matters relating to the financial year ended 30 June 2008 and the previous financial year.

Clause 4 is an interpretation clause.

Clause 5 confirms the Public Finance (Transfers Between Outputs) Order 2008. That order, which came into force on 30 June 2008, directed that fiscally neutral transfers be made decreasing the amounts appropriated for 15 output expense appropriations in 6 Votes and increasing the amounts appropriated for 15 other output expense appropriations in the same 6 Votes.

Clause 6 confirms the incurring of expenses and capital expenditure for the 2007/08 financial year in excess, but within the scope, of an existing appropriation in accordance with the approval of the Minister of Finance under section 26B of the Public Finance Act 1989. There are 21 instances in 11 Votes administered by 9 departments or Offices of Parliament of approved unappropriated expenses or capital expenditure. These are set out in Schedule 1.

Clause 7 validates expenses and capital expenditure that were incurred by departments in the financial year ended 30 June 2008 in excess of existing appropriations or without appropriation, or other authority, by or under an Act.

The expenses that were incurred in excess of an existing appropriation are set out in Schedule 2. There are 32 instances in 12 Votes administered by 11 departments.

The expenses and capital expenditure that were incurred without appropriation, or other authority, by or under an Act are set out in Schedule 3. There are 8 instances in 5 Votes administered by 4 departments.

Clause 8 validates expenses incurred in the 2006/07 financial year by the Ministry of Justice outside the scope of the existing appropriation Personal Property Protection Rights Costs in Vote Courts.

Clause 9 validates the amount of net asset holding in 9 departments that exceeded the most recent projected balance of net assets for those departments. The relevant departments and their net asset holdings are set out in Schedule 4.

Hon Simon William English

Appropriation (2007/08 Financial Review) Bill

Government Bill

21—1

The Parliament of New Zealand enacts as follows:

1 Title

  • This Act is the Appropriation (2007/08 Financial Review) Act 2009.

2 Commencement

  • This Act comes into force on the day after the date on which it receives the Royal assent.

3 Purposes

  • The purposes of this Act are to—

    • (a) confirm financial matters relating to the financial year ended 30 June 2008; and

    • (b) validate other financial matters relating to the financial year ended 30 June 2008 and the previous financial year.

4 Interpretation

  • In this Act, unless the context otherwise requires, the terms capital expenditure, department, expenses, financial year, Office of Parliament, other expenses, output expenses, and Vote have the meanings given to them by section 2(1) of the Public Finance Act 1989.

5 Confirmation of Order in Council directing transfer of amounts between output expense appropriations

  • The Public Finance (Transfers Between Outputs) Order 2008 is confirmed.

6 Confirmation of expenses and capital expenditure incurred in excess of existing appropriations and approved by Minister of Finance

  • (1) The incurring of expenses and capital expenditure approved by the Minister of Finance under section 26B of the Public Finance Act 1989 for the financial year ended 30 June 2008 and described in subsections (2) and (3) is confirmed.

    (2) The expenses and capital expenditure are the expenses and capital expenditure incurred in excess, but within the scope, of the existing appropriations set out in column 3 of Schedule 1.

    (3) The approved expenses and capital expenditure are shown in each case in column 4 of Schedule 1 alongside the existing appropriation for which the approval was given.

7 Validation of unappropriated expenses and capital expenditure

  • (1) The incurring of expenses and capital expenditure by a department in the circumstances set out in subsection (2) is validated.

    (2) The circumstances are that for the financial year ended 30 June 2008, the department incurred—

    • (a) expenses in excess of the existing appropriations set out in column 3 of Schedule 2 alongside that department; or

    • (b) expenses or capital expenditure without appropriation, or other authority, by or under an Act (as specified in column 4 of Schedule 3 alongside the department) against the categories of expenses or capital expenditure set out in column 3 of Schedule 3 alongside that department.

    (3) In this section,—

    capital expenditure means the capital expenditure set out in column 5 of Schedule 3 alongside the relevant department

    department means a department set out in column 1 of, as appropriate, Schedule 2 or 3

    expenses means the expenses set out in, as appropriate, column 4 of Schedule 2 or column 5 of Schedule 3 alongside the relevant department.

8 Validation of expenses incurred in respect of Vote Courts in financial year ended 30 June 2007

  • (1) The incurring of expenses by the Ministry of Justice in the circumstances set out in subsection (2) is validated.

    (2) The circumstances are that for the financial year ended 30 June 2007, the Ministry of Justice incurred expenses of $104,000 outside the scope of the existing appropriation Personal Property Protection Rights Costs in Vote Courts.

9 Validation of departmental net asset holding

  • (1) The excess amount of net asset holding described in subsection (2) in a department is validated.

    (2) The excess amount of net asset holding is the amount of net asset holding, as set out in column 3 of Schedule 4, in the department that, during or at the end of the 2007/08 financial year, exceeded the most recent projected balance of net assets for that department.

    (3) In this section,—

    department means a department set out in column 1 of Schedule 4

    most recent projected balance of net assets means the most recent projected balance of net assets for a department at the end of the 2007/08 financial year—

    • (a) at the time when that projected balance was exceeded; and

    • (b) as set out in column 2 of Schedule 4.

Schedule  1
Expenses and capital expenditure incurred in excess of existing appropriation during year ended 30 June 2008 and approved by Minister of Finance confirmed

s 6

Column 1 Column 2 Column 3 Column 4
Administering department or Office of Parliament Vote Appropriation 
Expenses or capital expenditure approved in excess of appropriation
$(000)
       
Building and Housing, Department of Housing Benefits and other unrequited expenses  
   Income Related Rental Subsidy 1,802
       
Corrections, Department of Corrections Departmental output expenses  
   Community-Based Sentences and Orders 584
    Custody of Remand Prisoners 591
    Information Services 194
    Prisoner Employment 84
    Rehabilitative Programmes and Reintegrative Services 273
       
Crown Law Office  Attorney-General Departmental output expenses  
   Supervision and Conduct of Crown Prosecutions 168
       
Government Communications Security Bureau Communications Security and Intelligence Intelligence and security department expenses and capital expenditure  
   Communications Security and Intelligence 788
       
Internal Affairs, Department of  Ministerial Services Other expenses to be incurred by the Crown  
   Ministers' Internal and External Travel 156
       
Labour, Department of Immigration Departmental output expenses  
   Services to Position New Zealand as an International Citizen with Immigration-Related Interests and Obligations 46
       
  Labour Departmental output expenses  
    Services to Promote and Support the Safe Management of Hazardous Substances in the Workplace and Amusement Devices 5
       
Ombudsmen, Office of the Ombudsmen Departmental output expenses  
   Investigation and Resolution of Complaints about Government Administration 56
       
Parliamentary Commissioner for the Environment Parliamentary Commissioner for the Environment Departmental output expenses  
   Reports and Advice 12
       
Social Development, Ministry of Social Development Benefits and other unrequited expenses  
   Orphans'/Unsupported Child's Benefit 6
    Sickness Benefit 511
    Special Benefit 129
    Temporary Additional Support 692
    Unemployment Benefit 986
       
    Capital expenditure to be incurred by the Crown  
    Recoverable Assistance 876
       
  Veterans' Affairs - Social Development Benefits and other unrequited expenses  
   Medical Treatment 340
   War Disablement Pensions 1,076
       

Schedule  2
Expenses incurred in excess of appropriation during year ended 30 June 2008 validated

s 7(2)(a), (3)

Column 1 Column 2 Column 3 Column 4
Administering department Vote Appropriation 
Expenses in excess of appropriation
$(000)
       
Economic Development, Ministry of Energy Non-departmental output expenses  
   Maintenance and Operation of Whirinaki 16,763
       
Education, Ministry of  Education Other expenses to be incurred by the Crown  
   Early Childhood Education 21,647
    Interest Subsidy for Schools 116
       
Health, Ministry of Health Departmental output expenses  
   Administration of Legislation and Regulations 3,012
    Funding and Performance of Crown Entities 1,235
    Information Services 1,139
    Servicing of Ministers and Ministerial Committees 474
       
    Non-departmental output expenses  
    National Maternity Services 15,048
       
Inland Revenue Department Revenue Benefits and other unrequited expenses  
   Kiwi Saver: Kickstart payment 43,662
    KiwiSaver Member Tax Credit 80,731
    KiwiSaver: Fee Subsidy 9,815
    KiwiSaver: Interest 252
    Payroll Subsidy 142
       
    Other expenses to be incurred by the Crown  
    Impairment of Debt Relating to Child Support 62,044
    Impairment of Debt Relating to General Tax and Family Support 95,239
       
Justice, Ministry of Courts Other expenses to be incurred by the Crown  
    Costs in Criminal Cases 301
    Family Court Professional Services 771
    MVDT Adjudicator Remuneration and Assessors Costs 13
       
  Treaty Negotiations Departmental output expenses  
    Policy Advice - Treaty Negotiations 1,391
       
Labour, Department of  Labour Non-departmental output expenses  
   Employment Relations Education Contestable Fund 242
       
New Zealand Defence Force Defence Force Departmental output expenses  
   Fixed Wing Transport Forces 408
    Land Combat Forces 98
    Land Combat Service Support Forces 224
    Maritime Patrol Forces 2,023
    Rotary Wing Transport Forces 302
       
New Zealand Food Safety Authority  Food Safety Departmental output expenses  
   Response to Food Safety Emergencies 288
       
New Zealand Police Police Departmental output expenses  
   Case Resolution and Support to Judicial Process 18,768
    Investigations 9,846
    Policy Advice and Ministerial Servicing  940
       
State Services Commission State Services Departmental output expenses  
   Government Shared Network 8,491
       
Transport, Ministry of Transport Departmental output expenses  
   Next Steps Review Implementation 343
    Sector Leadership and Support 258
       

Schedule  3
Expenses and capital expenditure incurred without appropriation or other authority during year ended 30 June 2008 validated

s 7(2)(b), (3)

Column 1 Column 2 Column 3 Column 4 Column 5
Administering department Vote Category of expenses or capital expenditure Nature of breach 
Expenses or capital expenditure
$(000)
         
Conservation, Department of Conservation Capital expenditure to be incurred by the Crown    
   Crown Land Acquisitions Without appropriation  44,988
         
Inland Revenue Department Revenue Non-departmental output expenses    
   Retirement Commissioner Without appropriation  380
         
    Other expenses to be incurred by the Crown    
    General Tax and Family Support Bad Debt Write-offs Without appropriation  123,897
         
         
Justice, Ministry of Courts Other expenses to be incurred by the Crown    
    Personal Property Protection Rights Costs Outside scope  467
         
  Treaty Negotiations Other expenses to be incurred by the Crown    
    Historical Treaty of Waitangi Settlements Outside scope 1,026
         
Treasury, The Finance Other expenses to be incurred by the Crown    
    Atihau-Whanganui Incorporation Ex-Gratia Payment Without appropriation 23,000
    Write-off of Capital Charge Receivable Without appropriation  3,180
         
         
    Capital expenditure to be incurred by the Crown    
    Landcorp Protected Land Agreement Without appropriation  64,200
         

Schedule 4
Excess departmental net asset holding during year ended 30 June 2008 validated

s 9

Column 1 Column 2 Column 3
Department Most recent projected balance of net assets at 30 June 2008 at time when exceeded
$(000)		 Amount of net assets in excess of projected balance
$(000)
 
     
Agriculture and Forestry, Ministry of 28,733 193
     
Archives New Zealand 64,749 4
     
Clerk of the House of Representatives, Office of the 4,529 237
     
Economic Development, Ministry of 20,939 584
     
Environment, Ministry for the 4,887 371
     
Foreign Affairs and Trade, Ministry of 348,156 2,300
     
Internal Affairs, Department of 42,267 2,425
     
Justice, Ministry of 634,635 183
     
National Library of New Zealand 105,410 397