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 2016 (B.5) (the Estimates) presented to the House of Representatives as part of the 2015 Budget documentation.

In this Bill, the individual appropriations in summarised form are set out in Schedules 1 and 2. The provisions of the Bill ensure that the scope of each appropriation as set out in the Estimates forms part of the legal appropriation. The Public Finance Act 1989 requires separate appropriations for—

• each category of output expenses; and

• each category of benefits or related expenses; and

• each category of borrowing expenses; and

• each category of other expenses; and

• each category of capital expenditure; and

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

• each multi-category appropriation.

Section 6 of the Public Finance Act 1989 provides ongoing authority for public money to be spent for the purpose 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 that capital expenditure, the repayment of debt, and the settlement of liabilities.

This Bill also seeks parliamentary authorisation for the capital injections contained in the Estimates. Section 12A of the Public Finance Act 1989 provides that the Crown must not make a capital injection to a department (other than an intelligence and security department) or an Office of Parliament unless the capital injection is authorised under an Appropriation Act. By requiring capital injections to be authorised, Parliament retains control over the level of net assets that departments and Offices of Parliament may hold.

A capital injection—

• is an injection, by the Crown, of additional cash or other assets into a department (other than an intelligence and security department) or an Office of Parliament to increase the amount of net assets on its balance sheet; but

• does not form part of a Vote; and

• is not an appropriation.

In contrast, capital expenditure by a department or an Office of Parliament—

• does form part of a Vote; and

• for an intelligence and security department, requires an annual appropriation; but

• for other departments and for Offices of Parliament, does not require an annual appropriation because there is a permanent legislative authority for departments (other than intelligence and security departments) and Offices of Parliament to incur capital expenditure (see sections 24(1) and 26E of the Public Finance Act 1989); and

• does not increase the amount of net assets on the balance sheet of the department or Office of Parliament.

A departmental disclosure statement is not required for this Bill.