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 and changes contained in The Supplementary Estimates of Appropriations for the Government of New Zealand and Supporting Information for the year ending 30 June 2012 (B.7) (the Supplementary Estimates) presented to the House of Representatives on 24 May 2012.

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 Supplementary 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 9 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.

Clause 6 provides that—

• the appropriations sought in clauses 7 and 8 are additional to, or in reduction of, those authorised by the Appropriation (2011/12 Estimates) Act 2011; and

• the appropriations sought in clause 9 are additional to, or in reduction of, those authorised by any Appropriation Act passed in relation to a financial year to which the appropriations in clause 9 apply.

Clauses 7, 8, and 9 are the principal appropriation clauses of the Bill.

Clause 7 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 8 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 9 and Schedule 3 seek new multi-year appropriations for—

• the period of 2 years and 6 months from 1 January 2012 to 30 June 2014 for Going Digital targeted assistance package (Vote Arts, Culture and Heritage); and

• the period of 3 years, 3 months, and 24 days from 7 March 2012 to 30 June 2015 for Rena long-term environment recovery (Vote Environment); and

• the period of 3 years, 6 months, and 16 days from 15 December 2011 to 30 June 2015 for—

  • implementation of Mixed Ownership Model (Vote Finance); and

  • direct sale costs for implementing the Mixed Ownership Model (Vote Finance); and

• the period of 3 years and 9 months from 1 October 2011 to 30 June 2015 for 2013 Census of Population and Dwellings (Vote Statistics); and

• the period of 4 years and 1 day from 30 June 2012 to 30 June 2016 for historical Treaty of Waitangi settlements 2012–2016 (Vote Treaty Negotiations); and

• the period of 4 years, 10 months, and 9 days from 22 August 2011 to 30 June 2016 for broadband investment (Crown Fibre Holdings capital costs) (Vote Communications).

Clause 9 and Schedule 3 also seek reductions in the existing multi-year appropriations for—

• the balance of the period of 3 financial years from 2010/11 to 2012/13 for—

  • occupational licensing (Vote Housing); and

  • residential tenancy and unit title services (Vote Housing); and

• the balance of the period of 3 financial years from 2009/10 to 2011/12 for—

  • global development assistance (Vote Official Development Assistance); and

  • the National Cycleway Fund (Vote Tourism); and

• the period of 3 financial years from 2011/12 to 2013/14 for inter-parliamentary relations (Vote Office of the Clerk); and

• the balance of the period of 4 financial years from 2008/09 to 2011/12 for Crown asset management (Vote Parliamentary Service); and

• the balance of the period of 4 financial years from 2010/11 to 2013/14 for land use and carbon analysis system (Vote Climate Change); and

• the balance of the period of 4 years and 4 months from 1 March 2009 to 30 June 2013 for the Transformational Initiatives Fund (Vote Economic Development); and

• the balance of the period of 4 years and 6 months from 1 January 2010 to 30 June 2014 for Warm Up New Zealand (Vote Energy) (the expiry of which is extended by section 9(4)); and

• the balance of the period of 5 financial years from 2007/08 to 2011/12 for—

  • reserve energy and emergency measures - variable (Vote Energy); and

  • 2011 Census of Population and Dwellings (Vote Statistics); and

• the balance of the period of 5 financial years from 2009/10 to 2013/14 for Auckland rail development (Vote Transport); and

• the balance of the period of 5 financial years from 2010/11 to 2014/15 for Weathertight Services: guarantee fee subsidy (Vote Housing); and

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

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

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

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

Clause 9 and Schedule 3 also seek additions to the existing multi-year appropriations for—

• the balance of the period of 3 financial years from 2010/11 to 2012/13 for building regulation and control (Vote Housing); and

• the period of 3 financial years from 2011/12 to 2013/14 for land tenure reform acquisitions (Vote Lands); and

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

• the balance of the period of 5 financial years from 2010/11 to 2014/15 for Cultural Diplomacy International Programme (Vote Arts, Culture and Heritage).

Finally, clause 9 revokes, with effect from the close of 30 June 2012, the existing multi-year appropriations authorised by—

• section 8 of the Appropriation (2010/11 Estimates) Act 2010 for Vote Climate Change for the category of output expenses “Land Use and Carbon Analysis System”, as varied by section 9 of the Appropriation (2010/11 Supplementary Estimates) Act 2011:

• section 9 of the Appropriation (2010/11 Supplementary Estimates) Act 2011 for Vote Treaty Negotiations for the category of other expenses “Historical Treaty of Waitangi Settlements 2011-2015”:

• section 8 of the Appropriation (2011/12 Estimates) Act 2011 for Vote Agriculture and Forestry for the category of other expenses “Global Research Alliance on Agricultural Greenhouse Gases”:

• section 8 of the Appropriation (2011/12 Estimates) Act 2011 for Vote Agriculture and Forestry for the category of other expenses “Water Storage and Irrigation Investment Proposals”.

In relation to clause 9, 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 7, 8, and 9 (when read together with the definition of scope shown in the Supplementary 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 Supplementary Estimates) part of the legal appropriation.

Clause 10 and Schedule 4 specifies an appropriation 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 11 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.

Clause 12 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 and are in addition to the appropriations and classes of outputs listed in Schedule 6 of the Appropriation (2011/12 Estimates) Act 2011.