General policy statement

Appropriation is the statutory mechanism by which Parliament authorises the Government to incur expenses and capital expenditure. Other than permanent appropriations provided for in other legislation, appropriations are provided by Appropriation (Estimates) and Appropriation (Supplementary Estimates) Bills.

This Bill seeks parliamentary authorisation of the individual appropriations contained in The Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2012 (B.5) (the Estimates) presented to the House of Representatives as part of the 2011 Budget documentation.

In this Bill, the individual appropriations in summarised form are set out in Schedules 1 to 3. The provisions of the Bill ensure that the scope of each appropriation as set out in the Estimates forms part of the legal appropriation.

In accordance with the Public Finance Act 1989, separate appropriations are required for—

• each category of output expenses; and

• each category of benefits or other unrequited expenses; and

• each category of other expenses; and

• each category of capital expenditure; and

• expenses and capital expenditure to be incurred by each intelligence and security department.

Approval to spend public money is not required in Appropriation Acts because section 6 of the Public Finance Act 1989 provides ongoing authority for public money to be spent for the purposes of meeting expenses or capital expenditure incurred in accordance with an appropriation, the payment of goods and services tax in relation to those expenses or capital expenditure, the repayment of debt, and the settlement of liabilities.

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 provides that the Bill (except clause 8 and Schedule 3) relates to the financial year ending with 30 June 2012.

Clause 4 is the purpose clause.

Clause 5 is an interpretation provision.

Clauses 6, 7, and 8 are the principal appropriation clauses of the Bill.

Clause 6 seeks appropriations for the following expenses and capital expenditure, as set out in Schedule 1:

• each category of output expenses:

• each category of benefits or other unrequited expenses:

• each category of other expenses:

• each category of capital expenditure.

Clause 7 seeks appropriations for expenses and capital expenditure incurred by the New Zealand Security Intelligence Service and the Government Communications Security Bureau, as set out in Schedule 2.

Clause 8 and Schedule 3 seek multi-year appropriations for—

• the 3 financial years from 2011/12 to 2013/14 for—

  • Tui mine remediation (Vote Environment); and

  • land tenure reform acquisitions (Vote Lands); and

  • inter-parliamentary relations (Vote Office of the Clerk); and

• the 4 financial years from 2011/12 to 2014/15 for joint venture airports – Crown contribution (Vote Transport); and

• the 5 financial years from 2011/12 to 2015/16 for—

  • the Global Research Alliance on Agricultural Greenhouse Gases (Vote Agriculture and Forestry); and

  • water storage and irrigation investment proposals (Vote Agriculture and Forestry); and

  • a contestable fund for deployment of marine energy devices (Vote Energy).

In relation to clause 8, section 10 of the Public Finance Act 1989 provides that an Appropriation Act may authorise expenses or capital expenditure to be incurred for more than 1 financial year as long as the authority (which lapses at the end of the period specified in the Appropriation Act) is not for more than 5 financial years.

Section 9 of the Public Finance Act 1989 concerns the scope of appropriations. Clauses 6, 7, and 8 (when read together with the definition of scope shown in the Estimates in clause 5(1)) each describe where the scope of each appropriation authorised under those clauses is set out, making the scope of each appropriation (as set out in the Estimates) part of the legal appropriation.

Clause 9 and Schedule 4 specify the appropriations to which output expenses may be charged under section 21 of the Public Finance Act 1989. This means that, provided the other requirements in section 21 of the Public Finance Act 1989 are met, output expenses may be incurred up to the amount of third-party revenue expected to be earned by the relevant class of outputs during the 2011/12 financial year.

Clause 10 and Schedule 5 set out the projected net assets for each department (other than an intelligence and security department) and Office of Parliament for the purposes of section 22, and in accordance with sections 23 and 26E(1)(b), of the Public Finance Act 1989.

The Ministry of Fisheries will merge into the Ministry of Agriculture and Forestry on 1 July 2011. Accordingly, the Ministry of Fisheries has a projected zero balance of net assets at 30 June 2012, which appears in the summary table Balances of Net Assets of Departments in the Estimates. The details of the projected movements in net assets for the Ministry of Fisheries, which appear in Schedule 5, were provided by the Treasury but do not appear in the Estimates.

Clause 11 and Schedule 6 specify appropriations and classes of outputs for which—

• expenses or capital expenditure are to be incurred other than by departments or Offices of Parliament; and

• the Minister responsible for each of those appropriations or classes of outputs is required, under section 32A of the Public Finance Act 1989, to prepare and present a report to the House of Representatives within 3 months of the end of the 2011/12 financial year.

The report must include a statement of service performance, or a statement of the results produced or achieved, for the relevant appropriation or class of outputs. The appropriations and classes of outputs listed in Schedule 6 are primarily those under which expenses and capital expenditure are predominantly to be incurred by agencies that are not already required to prepare reports that include a statement of service performance for presentation to the House of Representatives.

Clause 12 and Schedule 7 repeal spent Appropriation Acts.