CHAPTER 33 The Process of Supply - New Zealand … · CHAPTER 33 The Process of Supply The financial year runs from 1 July to the following 30 June. Supply—the ... unappropriated

CHAPTER 33

The Process of Supply

The financial year runs from 1 July to the following 30 June. Supply—the appropriation or authorisation by Parliament of the sums of money required to carry on the government of the country—is made for a specified financial year. Some of this supply is established on a permanently recurring basis under permanent legislative authority, but the greater part needs to be authorised on an annual basis through the House’s supply procedures. The process of granting supply involves the House taking action before, during and after the financial year to which the appropriations relate. So in any financial year the House is dealing with residual supply issues relating to the previous financial year, supply issues relating to the current financial year and preparatory supply issues relating to the forthcoming financial year.

OUTLINE OF THE SUPPLY PROCESSIn outline, the supply process involves consideration of the Government’s budget strategy for the coming year; an interim supply authority being given before the financial year opens; presentation, examination and approval of the Government’s Budget and main Estimates of expenditure; further temporary supply authorities being granted, approval of any Supplementary Estimates presented by the Government; and, after the year ends, confirmation or validation of any unappropriated expenses or capital expenditure that were incurred.

The timetable for these processes as they relate to a particular financial year is set out below.

Before the financial year commencesAugust–September Government’s Budget preparations begin

November–December The Treasury’s Economic and Fiscal Update published (contains forecasts on which Budget decisions will be based)

December–March Budget Policy Statement presented (sets out the Government’s Budget strategy)

May onwards Budget and Estimates of Appropriations presented (Government’s main economic and fiscal policy proposals)

June Imprest supply approved (interim spending authority to apply from 1 July)

Parl.Prac.pp04.indd 544 9/01/17 8:54 am

545The Process of Supply

During the financial yearJuly–September Budget and Estimates of Appropriations approved. Further imprest supply approved.

May–June Supplementary Estimates of Appropriations presented and approved (additions and variations to the main Estimates approvals)

after the financial year endsFebruary–March Excess expenditure, or other expenditure not approved in the Estimates or Supplementary Estimates, confirmed or validated.

(This is the standard timeframe for the process of supply, but it is always liable to disruption by a dissolution of Parliament.)

This timetable means that parliamentary consideration and authorisation of the supply required for each financial year commences before that particular financial year opens and does not conclude until well after that financial year has ended, thus occupying a period of 18 months or more. This chapter examines the procedures employed to discharge the tasks involved in the process of supply. The House’s confirmation or validation of excess expenditure or other unappropriated expenditure is integrated with the procedures under which the Crown and departments report to the House on their financial and operational performance. (See Chapters 34 and 35, where Crown and departmental reporting is dealt with in detail.)

BUDGET PREPARATIONSThe Budget is the collective name for a compendium of economic and fiscal measures announced annually by the Minister of Finance. It is a process rather than an event or a document, involving the making of decisions, the preparation of documentation relating to the decisions, and its release on “Budget day”. In so far as a single event signifies the Budget, it is the Budget statement delivered to the House by the Minister in moving the second reading of the main Appropriation Bill,1 in which the principal components of the Budget are described.

The preparation of a Budget before its presentation to the House is almost exclusively a matter for the executive rather than the legislature. Rarely has the House itself been actively involved in making the public expenditure decisions involved in Budget planning, as distinct from endorsing Budget proposals.2 Few statutory or Standing Orders obligations impinge on the process that a Government follows in deciding what proposals are to be included in a Budget and in the executive’s proposals for public expenditure, which the Government presents to the legislature. Only in respect of the Offices of Parliament is the House involved in devising estimates of expenditure itself. Statute imposes some obligations regarding the conveying of a Government’s intentions to the House (for example, in the Budget Policy Statement) but the process followed in preparing a Budget is largely an internal matter for the Government to determine. Thus it is recorded that as late as 1935 it was rare for the Treasury even to report on Ministers’ spending proposals, which were usually put before the Cabinet ad hoc and informally.3 The arrangements followed by modern Governments have become increasingly sophisticated, and take account of the overall economic and fiscal implications of individual spending proposals. The outline that follows

1 Public Finance Act 1989, s 2(1). 2 Though see, for example: (1931) 229 NZPD 468 and Michael Bassett Coates of Kaipara (Auckland

University Press, Auckland, 1995) at 167–168 (special economy committee set up to adjust public expenditure).

3 Michael Bassett and Michael King Tomorrow Comes the Song: A Life of Peter Fraser (Penguin Books (NZ), Auckland, 2000) at 159.


Parliamentary Practice in New Zealand546

represents the process recently employed, and includes the few extant statutory or House procedural requirements.4

Strategic phaseFormal preparations for a Budget begin as early as August in the preceding year, when Ministers start to consider the objectives of the Budget’s strategy. For this purpose, planning proceeds on the basis of objectives for the next three years. The Cabinet ultimately determines (usually by November) the relative importance of the outcomes the Government wishes to achieve, and agrees on what is to be included in the next Budget.

Half Year Economic and Fiscal UpdateAn Economic and Fiscal Update must be published in the November–December period (unless a pre-election update has been published in the last three months of the year). This update is required to contain economic and fiscal forecasts for the current and the next two financial years, but customarily includes such forecasts for the next four financial years.5 This information is critical to the preparation of the Budget. The update stands referred to the Finance and Expenditure Committee,6 though the committee is not obliged to report on it.

Budget Policy StatementDecisions taken during the strategic phase are embodied in a Budget Policy Statement (which has been a statutory obligation since 1994), which the Minister of Finance must issue by 31 March each financial year if Parliament is in session (which, unless an election is called at that time, it almost invariably will be).7 This means that, if the statement is ready, it can be released at the same time as the Half Year Economic and Fiscal Update is published. The Budget Policy Statement specifies the overarching policy goals that will guide the Government’s Budget decisions, the policy areas the Government will focus on, and how the Budget will accord with the short-term intentions referred to in the most recent Fiscal Strategy Report.8

The Budget Policy Statement stands referred to the Finance and Expenditure Committee.9 The committee must report to the House on it within 40 working days of its presentation to the House.10 The Minister of Finance, if requested, is expected to attend the committee for the purposes of its examination of the statement.11 It is the invariable practice for this examination to be recorded and transcribed.

In place of the first general debate scheduled after the committee’s report on the statement has been presented, a dedicated debate considering the statement and the report is held. The chairperson of the Finance and Expenditure Committee (or, in the chairperson’s absence, some other member of the committee) begins the debate.12 There may be 12 speeches of up to 10 minutes each,13 in contrast to the usual one-hour general debate. But the debate is not a full Budget debate. Members must speak relevantly to the statement and the committee’s report on it.14

4 This summary is drawn from Putting It Together: An Explanatory Guide to New Zealand’s State Sector Financial Management System (15 September 2011) published by the Treasury (note, however, that due to the 2013 amendments to the Public Finance Act 1989, the State Sector Act 1988 and the Crown Entities Act 2004, this document is under review).

5 Public Finance Act 1989, s 26S. 6 SO 336(1)(c). 7 Public Finance Act 1989, s 26M(1). 8 Public Finance Act 1989, s 26M(2). 9 SO 332(1). 10 SO 332(2). 11 SO 332(3). 12 SO 332(4). 13 SOs, App A. 14 (1995) 547 NZPD 6714 Gerard (Deputy Speaker).



The objective of issuing a Budget Policy Statement is to make transparent the bases on which Governments make their Budget decisions. This purpose is undermined when new initiatives with important fiscal impacts are introduced late in the financial year, by way of the Supplementary Estimates. This can happen, for example, where the Government changes after a Budget has been delivered.15

Strategic intentionsUntil 2014 departments were required to prepare annual statements of intent setting out their operating intentions into the future. They provided information on the nature and scope of the department’s functions, and on what it planned to achieve in the next three years in terms of the Government’s intended outcomes.

The changes made in 2013 to the Public Finance Act 1989 now require departments to provide information on their strategic intentions for the forthcoming year and the next three financial years, consistently with the policy and performance expectations of the Government, as part of a longer-term Budget planning cycle.16 The information must be provided to Ministers at least once in every three-year period and must be published and presented to the House.17 The strategic intentions must set out the objectives the department intends to achieve or contribute to the achievement of, and provide information to:18

o explain the nature and scope of the department’s functions and intended operations

o identify any departmental agencies hosted by the department o explain how the department intends to manage its functions and operations

to carry out its strategic intentions o cover other matters relating to departmental capability and that may be

specified by the Minister.

The strategic intentions provide background for the consideration of the annual appropriations. The requirement to produce regular information on their strategic intentions applies also to Offices of Parliament, each office being required to have regard to any matters specified by the Speaker.19

Crown entities and State enterprises are still obliged to prepare and publish statements of intent. (See Chapter 34.)

Preparation of the EstimatesPriorities specified in the Budget strategy guide Ministers and departments in the preparation of submissions on matters to be included in the Budget. This involves preparing draft departmental budgets for the next three years, supplemented by concise explanations of what each appropriation is intended to achieve and how performance against this intention will be assessed.

Ministers and departments also prepare submissions on new policy initiatives that they wish to see included in the Budget that will have an impact on revenue and expense levels. These policy proposals are considered by the Cabinet for consistency with the Government’s overall strategy, particularly as set out in the Budget Policy Statement.

In preparing the Estimates, the levels of expenditure so far on existing outputs and activities funded from each vote are updated. These levels (or “baselines”) are agreed for the current and the next four financial years, giving the Government and departments some assurance about the expenditure for which they will be funded over a five-year period. Baseline updates take place twice each year, typically in

15 Controller and Auditor-General Central government: results of the 1999/2000 audits (20 December 2000) NZPP B.29[00c] at [3.710].

16 Public Finance Act 1989, s 38. 17 Public Finance Act 1989, ss 38(4)(a) and 39. 18 Public Finance Act 1989, s 40. 19 Public Finance Act 1980, ss 40 and 45F.



March (before the Estimates and the Budget Economic and Fiscal Update) and October (before the Half Year Economic and Fiscal Update). The baseline levels can be changed if Cabinet approves, but this will be done only in defined circumstances—for example, if forecasts suggest that demand-driven expenditure is likely to change significantly. Failure to carry out a baseline update of a vote before preparing the Estimates increases the likelihood that alterations to that vote will be needed later in the financial year through Supplementary Estimates. In these circumstances the main Estimates are less reliable as an indication of likely expenditure. This is considered an unsatisfactory basis on which to present Estimates to the House.20

The decisions made as a result of these activities are consolidated into the Estimates and the ancillary information to be presented to the House at the time of the Budget.

Format of the EstimatesThe form in which the Estimates are prepared results partly from the information that statute requires to be included in them. But, subject to these requirements, their format is largely in the hands of the Minister of Finance as the Minister responsible for their preparation and presentation to the House.

It has been the practice for the Treasury to discuss significant changes to the format of the Estimates with the Finance and Expenditure Committee in advance of their adoption. (See p 521.) There is now also a statutory duty of consultation with the House over changes to the format of the Estimates (including Supplementary Estimates) and the supporting information that must accompany each Appropriation Bill. The Minister must submit any proposed change to the Speaker, who presents it to the House.21 The proposal is referred to the Finance and Expenditure Committee, which disseminates it to the other subject select committees and co-ordinates their responses. The Finance and Expenditure Committee then communicates its own views on the proposal and those of the other committees directly to the Minister.22

The Minister, in finalising any changes to the format of the Estimates, must take into account any comments made by the Speaker and the select committees.23

For the 2008 to 2013 Budgets, a single volume of Estimates was published with supporting information divided into 10 volumes by sector. Since the 2014 Budget, the Estimates and key supporting information have been published as 10 separate publications. The 10 sectors currently distinguished are the Economic Development and Infrastructure Sector; the Education Sector; the Environment Sector; the External Sector; the Finance and Government Administration Sector; the Health Sector; the Justice Sector; the Maori, Other Populations and Cultural Sector; the Primary Sector; and the Social Development and Housing Sector.

Funding for Offices of ParliamentThe Officers of Parliament are subject to a special process for the pre-Budget approval of appropriations for their offices. It involves a parliamentary committee determining their budgets before their Estimates are formally presented to the House.

The Officers of Parliament must submit to the House each year an estimate of expenses and capital expenditure to be incurred by their offices, together with a description of the classes of outputs to be produced, the revenue to be earned and other financial information.24 In the case of the Auditor-General this information

20 Justice and Law Reform Committee, report on 1997/98 Estimates (Vote Police) (22 August 1997) [1996–1999] AJHR I.19A at 247.

21 Public Finance Act 1989, s 18(1), (2)(a). 22 Standing Orders Committee Review of Standing Orders (23 June 2005) [2002–2005] AJHR I.18C at 8–9. 23 Public Finance Act 1989, s 18(2)(b). 24 Public Finance Act 1989, s 26E(1).



is incorporated in the draft annual plan prepared for submission to the House.25 The information is forwarded directly to the Officers of Parliament Committee. It is the committee’s duty to recommend to the House an estimate of the expenditure of each Office of Parliament for inclusion in a vote in an Appropriation Bill.26 For this purpose the committee hears evidence from the officers themselves, and calls for comment from officials of the Treasury. In determining what Estimates to recommend, the committee is mindful of the criteria used by the Cabinet in considering departmental budget submissions.27 Once it has decided on its recommendations, the committee reports to the House.

The House, in turn, recommends to the Governor-General, by way of an address, the Estimates that are to be included for the Offices of Parliament in the Appropriation Bill to be presented to the House for that year.28 The House is not bound to follow the Officers of Parliament Committee’s recommendations in making its recommendations for inclusion in the Appropriation Bill, but it invariably does so. Similarly, the Crown is not legally bound to include the recommended amounts in the Appropriation Bill, although it is an established convention that it will do so since Ministers have been a party to the address from the House recommending those amounts in the first place. On one occasion when the amount for an Office of Parliament included in an Appropriation Bill differed from that recommended by the House, the Officers of Parliament Committee drew the discrepancy to the attention of the Prime Minister and the Minister of Finance, expressing its concern at the variation. The Ministers assured the committee that it was the result of an administrative error, and that there was no intention to infringe the rights of the House.29

Any alteration during the course of the financial year to the Estimates so approved is subject to a similar procedure of recommendation by the Officers of Parliament Committee30 and commendation by the House to the Governor-General by way of address.31 Such altered Estimates are included in the Appropriation Bill setting out the Supplementary Estimates of expenditure.

The appropriations for outputs supplied by the Offices of Parliament are included in separate votes administered respectively by the offices. The Speaker rather than a Minister is responsible for these votes.32 Each vote is examined by a subject select committee in the Estimates examination, in the same way as any other vote.

Budget secrecyA constitutional convention of secrecy has been acknowledged to protect Budget-related information from being required to be disclosed during the preparation phase of the coming Budget. The three-year cycle that has been adopted for expenditure projections may extend this convention of secrecy over an even longer period.33 Certainly, any premature disclosure of the Budget has important political implications, though it is not a question of privilege.34 A British Chancellor of the Exchequer resigned after he personally disclosed the contents of the Budget to a journalist before delivering the Budget statement in the House.35 In New Zealand

25 Public Audit Act 2001, s 36. 26 SO 395(1)(a). 27 Officers of Parliament Committee, report on alterations to the 1999/2000 appropriations and 2000/01

draft budgets for Vote Audit, Vote Ombudsmen and Vote Parliamentary Commissioner for the Environment (5 April 2000) [1999–2002] AJHR I.22A at 834–835.

28 Public Finance Act 1989, s 26E(3), (4). 29 Officers of Parliament Committee, special report on alterations to the 1991/92 appropriations for

Vote Audit (4 June 1992) [1991–1993] AJHR I.21 at 36–45. 30 SO 395(1)(a). 31 Public Finance Act 1989, s 26E(6). 32 Public Finance Act 1989, ss 2(1) and 7C(4). 33 Ombudsmen Quarterly Review (December 2001); Official Information Act 1982, s 9(2)(f). 34 (1977) 412 NZPD 1587 Jack. 35 Hugh Dalton High Tide and After: Memoirs 1945–1960 (Frederick Muller, London, 1962) at 276–286.



the premature release of copies of the 1986 Budget (an error that the Minister did not make personally) led the Minister to offer his resignation. It was not accepted.36 In 1977, allegations that Budget decisions had been disclosed to journalists before their presentation to the House resulted in a select committee inquiry being held. The committee could not determine whether a leak had occurred.37 An individual department’s forecast report has been inadvertently released before the Budget, drawing strong criticism from the select committee examining the relevant vote.38

Although secrecy is accepted as applying to the preparation of a Budget, an assessment of any request for Budget information still has to be made as to whether its disclosure would prejudice the Budget’s effective preparation, and whether any countervailing public-interest considerations favour disclosure.39 In general, however, the firm constitutional practice of Budget decisions being announced first in the House (subject to an embargoed Budget briefing or “lock-up” earlier that day) supports the constitutional convention that Budget decisions and information closely related to them are protected from disclosure until this announcement.

It is now standard practice for the Government to release papers that it considered in developing the Budget approximately a month after Budget day.

FIRST IMPREST SUPPLY BILLTo start spending money or incurring expenses or capital expenditure in a new financial year, the Government must obtain express parliamentary approval in the form of legislation before the year in question opens. The Government’s final demands for supply for the new financial year will not have been approved by the House by this time and, indeed, may not yet have been framed. Therefore, the Government asks for a general interim authority to spend public money and to incur expenses and capital expenditure. The request for interim authority is included in an Imprest Supply Bill.

The moneys to be spent and the expenses and capital expenditure to be incurred under the authority of an Imprest Supply Act are charged in the way subsequently specified in the Estimates, which will show how the total financial authorities voted to the Government (including those under imprest supply) are to be used. In the meantime the expenses and capital expenditure are charged as if such an Act had been passed.40

The Imprest Supply Act gives the Government financial authority for the new financial year. How long this authority lasts depends upon the amount the House grants, the rate at which the Government uses it, and the time it takes the House to pass an Appropriation Act making appropriations for the year. The first Appropriation Act for the year is passed within three months of the delivery of the Budget.41 Therefore the first Imprest Supply Bill is designed to give at least sufficient supply from 1 July (the opening of the financial year) to the end of this period.

Introduction and passingAn Imprest Supply Bill is subject to specially prescribed procedures for its introduction and passing, which differ from those for other Government bills.42 In the first place, it may be introduced at any time during a sitting except during the course of a debate.43

36 (1986) 473 NZPD 3776–3778. 37 (3 August 1977) [1977] JHR 157. 38 Government Administration Committee, report on 1996/97 Estimates (Vote Youth Affairs)

(22 July 1996) [1993–1996] AJHR I.19D at 332. 39 Ombudsmen Quarterly Review (December 2001). 40 Archives and Records Association of New Zealand v Blakeley [2000] 1 NZLR 607 (CA) at [75] and [77]. 41 SO 340(1). 42 SO 270. 43 SO 284.



Secondly, an Imprest Supply Bill is usually, but does not have to be, taken through all its stages at one sitting. The Standing Orders provide that this may be done, and urgency is not necessary to permit it.44 But a sitting is not automatically extended for the passing of an Imprest Supply Bill, so if there is not enough time remaining in the sitting day to pass the bill (two hours), it is necessary to take urgency so that the sitting can be extended, otherwise passage of the bill will be interrupted and resumed on a future day. Whether urgency is taken or not, an Imprest Supply Bill does not stand referred to a select committee.45

Following the bill’s introduction, it is read a first time without any amendment or debate.46 The Minister in charge of the bill (who may be, but is not necessarily, the Minister of Finance) then moves the second reading. As in the Address in Reply and Budget debates, in practice there are virtually no limitations to this debate on the grounds of relevancy. The question for the second reading is open to amendment in the same way as other public bills and also to a “public affairs” amendment, by means of which a question of confidence in the Government can be raised.47

Each member may speak for up to 10 minutes on the second reading or on any amendment to that question, and the total debate is limited to two hours.48

The subsequent proceedings on the bill are then telescoped. The House does not resolve itself into committee except in the unlikely event that the Minister in charge of the bill wishes to propose amendments to it.49 If this is the case, the House resolves itself into a committee of the whole House automatically. Where a committee stage is held, only the Minister’s amendments (and any amendments to them) are considered. When amendments to a part or schedule have been disposed of, the question is put that that part or schedule as amended stand part.

It is extremely rare for an Imprest Supply Bill to be amended. In the normal course, the House passes over the committee stage altogether and proceeds to the third reading, the question on which is put without any amendment or debate.50

The debate on the second reading of an Imprest Supply Bill may be taken together with the second reading of the Appropriation Bill dealing with the Supplementary Estimates.51 It has become common practice for these two second readings to be taken together in a combined two-hour debate. In practice, this allows the first Imprest Supply Bill for the new financial year to be debated along with the Supplementary Estimates for the current year, as both bills need to be dealt with by 30 June.

THE BUDGETThe Budget statement is the Minister of Finance’s speech in moving the second reading of the main Appropriation Bill.

The Budget statement has, since 1996, been delivered at 2 pm on a Thursday. (It was formerly delivered at 7.30 pm, after the financial markets had closed.) The time for delivery of the statement is prescribed in the Standing Orders.52 The Budget must, by law, be delivered within one month of the opening of the financial year—that is, by 31 July—unless the House specifically resolves to the contrary.53 In fact the Budget has tended to be introduced much earlier than this statutory deadline; indeed it is normally introduced before the financial year to which it

44 SO 331(1). 45 SO 288(2). 46 SO 331(2). 47 SO 331(3). 48 SOs, App A. 49 SO 331(4). 50 SO 331(5). 51 SO 342(2). 52 SO 333(1). 53 Public Finance Act 1989, s 12.



relates has opened. Since the commencement of the financial year was shifted from 1 April to 1 July in 1989, the earliest Budget was delivered on 14 May in 1998 and the latest on 27 July in 1989. Governments tend to aim to present their Budgets to the House during May.

The main Appropriation BillThe main or first Appropriation Bill of each financial year contains the Govern-ment’s comprehensive annual appropriation proposals. As with any Appropriation Bill, special procedures apply to its passing.54 In particular, its second reading debate gives rise to the Budget debate, and its committee stage gives rise to the Estimates debate.

The main Appropriation Bill is introduced on a Thursday after the announce-ment of the presentation of any petitions, papers and select committee reports and of the introduction of any other bills. The day of the Budget and thus of the introduction of the main Appropriation Bill must be notified in advance to the House by the Government.55 This is usually done formally by means of the Leader of the House’s weekly business statement, though the Leader is likely to have previously advised the Business Committee. It is also common for the Budget date to be publicly announced months in advance by the Minister of Finance, often at the Finance and Expenditure Committee’s hearing on the Budget Policy Statement.

The bill’s introduction is announced by the Clerk and then the Minister moves that it be read a first time. There is no amendment or debate on this question.56 At this point the Minister traditionally gives copies of the Budget statement to the Speaker, the Prime Minister, the Leader of the Opposition, other party leaders, the Clerk and the Hansard staff seated in the Chamber. Only one copy of the statement is given to each recipient.57

Budget papersBefore delivering the Budget statement, the Minister presents to the House a copy of the statement, the annual Estimates and other supporting information,58 a Fiscal Strategy Report,59 and an Economic and Fiscal Update.60

The Fiscal Strategy Report states the Government’s long-term objectives for fiscal policy. It must explain how those objectives accord with the principles of responsible fiscal management. If the Government intends to pay less than the required annual capital contribution to the New Zealand Superannuation Fund, it must state this and the reasons for doing so in this report.61

The Economic and Fiscal Update makes economic and fiscal forecasts for the financial year to which the Appropriation Bill relates and the two following years (although in practice the forecasts are for the financial year to which the Appropriation Bill relates and the three following years). It must include the annual capital contributions that are to be made to the New Zealand Superannuation Fund in those years.62

The Fiscal Strategy Report and the Economic and Fiscal Update stand referred to the Finance and Expenditure Committee,63 which must report on them to the House within two months of the delivery of the Budget.64 The Finance and Expenditure Committee’s practice is to examine the Minister on the fiscal

54 SO 270. 55 SO 333(1). 56 SO 333(2). 57 (1992) 526 NZPD 9717 Gray. 58 Public Finance Act 1989, s 13(1), (2); SO 335. 59 Public Finance Act 1989, s 26I; SO 335. 60 Public Finance Act 1989, s 26O; SO 335. 61 New Zealand Superannuation and Retirement Income Act 2001, s 44. 62 New Zealand Superannuation and Retirement Income Act 2001, s 42(2), (3). 63 SO 336(1)(a), (b). 64 SO 336(2).



documents and to combine this examination with its consideration of the vote administered by the Treasury. In this way it considers the economic and fiscal outlook together with the economic advice provided by the Treasury during the financial year, and reports to the House accordingly.65

These documents and reports are available for debate on the third reading of the Appropriation Bill.66

Budget statementThe House proceeds immediately to the second reading of the bill.67

The Minister moves the second reading of the Appropriation Bill and in speaking to that motion delivers the Budget statement.68 This is not like any other second reading speech. It is the delivery of a prepared statement. Consequently, there is a strong convention against interjections because it is impossible for the Minister to reply to them. Similar courtesies of restraint are expected to be accorded the leaders of other parties who speak immediately after the Minister.69

In the speech the Minister reviews the international economic outlook, the performance of the New Zealand economy and the effectiveness of the Govern-ment’s policies over the past year, and sets out the Government’s proposed economic and fiscal measures to deal with the situation of the country as assessed. The Budget, therefore, obviously includes a number of announcements of economic and fiscal policy. But it may also include announcements falling into the category of social policy changes. Among the more dramatic Budget announcements are the introduction or announcement of a new tax and, on one occasion, the revaluation of the currency,70 but there are few such announcements in modern Budgets. Many of the proposed measures may be announced only in outline in the Budget statement. Details of the proposed changes are then given in statements released by the responsible Ministers shortly after the statement has been delivered, and in due course legislation may need to be introduced to give effect to them. The Budget is concerned with much more than the expenditure proposals set out in the Estimates and embodied in the main Appropriation Bill; it is concerned with the whole range of the Government’s financial, economic and social policies.

In delivering the Budget statement the Minister is unrestricted as to the length of the speech.71 A Budget occasionally has a sobriquet applied to it by which it subsequently becomes known—as in the “black Budget” (1958) and the “mother of all Budgets” (1991).

The Budget debateThe Budget debate opens with the Leader of the Opposition or the official Opposition’s finance spokesperson speaking in response to the statement. Party leaders, in order of party size, are entitled to be called to speak first in the debate, so the Leader of the Opposition is followed by the Prime Minister and other party leaders.

The leaders of parties with six or more members are entitled to speak for up to 20 minutes. All other members are limited to 10 minutes.72 Thus if the Opposition’s finance spokesperson speaks first in the debate, he or she is limited to a 10-minute call, and the Leader of the Opposition takes the 20-minute call later in the debate. The debate takes precedence over all other Government orders of the day until

65 Finance and Expenditure Committee, Fiscal Strategy Report, Budget Economic and Fiscal Update 2000 and 2000/01 Estimates (Vote Finance) (14 August 2000) [1999–2002] AJHR I.22A at 293.

66 SO 340(2). 67 SO 333(2). 68 SO 333(3). 69 (2000) 584 NZPD 2852–2853 Hunt. 70 Keith Sinclair Walter Nash (Auckland University Press, Auckland, 1976) at 272–273. 71 SOs, App A. 72 SOs, App A.



it is completed.73 While the debate must appear as the first Government order of the day on the Order Paper, this does not prevent it being adjourned after it is reached and other business transacted.74 The total time allowed for the debate, excluding the Budget statement itself, is 15 hours.75 This means that the debate ought to conclude by the end of the week following the delivery of the Budget if it is not otherwise adjourned. No Wednesday general debate is held while the Budget debate is in progress.76

As with an Imprest Supply Bill, an amendment relating to public affairs may be moved on the question for the second reading of the main Appropriation Bill.77 This gives the Opposition parties an opportunity to move a widely framed amendment attacking the Government’s policies. It also gives an opportunity for an express “no-confidence” motion to be moved. An amendment relating to public affairs does not need to be strictly relevant to the motion for the second reading of the bill. As relevancy is not a consideration regarding this type of amendment, an amendment is always treated as involving consideration and decision of the main question.

The Budget debate is unusual in that the Minister of Finance has a right to speak in reply to the debate for up to 10 minutes.78 The Speaker therefore interrupts the debate 10 minutes before the 15 hours have expired and calls the Minister in reply. Only the Minister of Finance can exercise this right of reply; no other Minister may speak in reply. The Minister is not obliged to use this right. If the Minister of Finance were not present in the Chamber to exercise this right of reply, the Speaker would let the debate run until its conclusion.

Defeat of the main Appropriation Bill and therefore of the Budget would be a matter of extreme constitutional and political significance. It has even been suggested that the failure to pass an Appropriation Bill would cause all imprest supply authority to lapse unconditionally.79 While this may not be the effect in law of the defeat of a Budget,80 it indicates how important such an event would be considered. If an amendment expressly declaring no confidence in the Government were carried or the question for the second reading of the bill were defeated, a lack of confidence in the Government would have been demonstrated.

THE MAIN ESTIMATESEstimates must be prepared for the main Appropriation Bill.81 The Estimates describe and support the appropriation proposals that the bill contains.82 They specify the votes to which each appropriation relates, the Minister responsible for each appropriation in a vote, the department that administers it, and the type, amount, scope and (if a multi-year appropriation is involved) the period of the appropriation. The Estimates must also state the single overarching purpose of any multi-category appropriations, and the amount of any capital injections authorised to be made to a department (other than an intelligence and security department) for the financial year to which the Estimates relate.83 (A Minister responsible for an appropriation in a vote may be a different Minister from the Minister responsible for the department administering the vote.) The Estimates may also set out other kinds of information about the appropriations.84 The information in the Estimates

73 SO 334(1). 74 (16 August 1990) [1990] JHR 538. 75 SOs, App A. 76 SO 392(3). 77 SO 334(2). 78 SOs, App A. 79 Garfield Barwick A Radical Tory (The Federation Press, Sydney, 1995) at 296–297. 80 See, for example: New South Wales v Bardolph (1934) 52 CLR 455 at 479; Archives and Records

Association of New Zealand v Blakeley [2000] 1 NZLR 607 (CA) at [78]. 81 Public Finance Act 1989, s 13(1). 82 Public Finance Act 1989, s 2(1). 83 Public Finance Act 1989, s 14(1), (3). 84 Public Finance Act 1989, s 14(4).



helps to determine the extent of the activities that may be lawfully funded out of the appropriations that Parliament makes.85 In the case of the Budget and the main Appropriation Bill, the Estimates (Estimates of Appropriations for the Government of New Zealand), known as the main Estimates, are presented to the House by the Minister before or immediately after the Budget statement has been delivered.86

Along with the Estimates the Minister must present information supporting the main Appropriation Bill. This information gives additional information about what is intended to be achieved with each appropriation and how performance will be assessed, and includes more comparative and forecast information about the proposed expenses and capital expenditure.87

In its schedules the Appropriation Bill specifies the title, type, amount and period for all appropriations, including multi-year appropriations. The only dimension of an appropriation not specified directly in the Appropriation Bill is its scope, which is cross-referenced to the Estimates by the expression “scope shown in the (Supplementary) Estimates”, and is defined in the interpretation clause of each Appropriation Bill.88

The appropriations for the Offices of Parliament are included in the Appro-priation Bill and in the Estimates, according to the address made by the House commending them to the Governor-General. (See pp 548–549.)

Examination of the main EstimatesThe task of carrying out an examination of the main Estimates in detail falls to the House’s select committees. An Appropriation Bill is not itself referred to a select committee, but the Estimates are referred for scrutiny. The Estimates stand referred to the Finance and Expenditure Committee immediately following the delivery of the Budget.89

Allocation of votes and appropriationsIt is the task of the Finance and Expenditure Committee to examine a vote itself or to allocate it to one of the other subject committees for examination90—that is, to one of the 13 select committees with subject area jurisdictions.91 In recognition of the fact that different Ministers may be responsible for different appropriations in a vote and that appropriations may be made for different types of expenditure, the Finance and Expenditure Committee is empowered to divide a vote for the purposes of Estimates examination. Thus it may decide to allocate only some of the appropriations in a vote to another committee for examination.92 For example, during the consideration of the 2015/16 Estimates, the Finance and Expenditure Committee separated specific science and innovation appropriations out from Vote Business, Science and Innovation; the science and innovation appropriations were allocated to the Education and Science Committee, while the remainder of the Vote was allocated to the Commerce Committee.

In determining what to allocate and to which committees, the Finance and Expenditure Committee is guided by its own workload, the significance of particular votes for the overall financial management of the Government and the subject areas of responsibility of the other committees. The committee is not obliged to consult the other committees about the allocations it makes, though other committees have asked for an opportunity to comment when it is proposed

85 Controller and Auditor-General Third report for 1999 (29 June 1999) [1996–1999] AJHR B.29[99c] at [5.010].

86 Public Finance Act 1989, s 13(1). 87 Public Finance Act 1989, ss 15–15F. 88 See, for example: Appropriation (2015/16 Estimates) Act 2015, s 5. 89 SO 337(1). 90 SO 337(2). 91 SOs 188 and 189. 92 SO 337(2)(c).



to withhold from them a vote falling within their subject area.93 The votes allocated include those relating to Offices of Parliament, which will have been subject to pre-Budget approval by the Officers of Parliament Committee. In the 2015/16 financial year, the Finance and Expenditure Committee examined four votes itself and allocated 39 votes to other committees for examination.

The Finance and Expenditure Committee resolves upon the allocations as soon as practicable after the Budget is delivered. It issues letters to all the committees formally advising them of its decisions.

Standard Estimates questionnaireAs a routine preliminary action, the Finance and Expenditure Committee draws up a standard Estimates questionnaire, which it forwards to vote Ministers as the initial step in the Estimates examinations. Such a questionnaire was first used in 1991, when the Estimates examination was separated from the review of financial performance (now annual review). The committee receives advice on the form of the questionnaire from the Auditor-General.94 The questionnaire focuses on the vote rather than departmental matters (which will be examined as part of the annual review). It seeks information at a high level, to supplement that contained in the Estimates and supporting information presented with the Budget. It asks about critical issues affecting the vote and significant changes affecting appropriations within it, and for an elaboration on the mechanisms for evaluating the effect of the funded outputs on outcomes. It may seek to elicit matters that Ministers may be asked to elaborate on at the oral examination of the vote, or to help the committee target its examination. It is designed not to be burdensome.95

Committees to which votes are allocated are free to supplement the standard questionnaire with questions of their own devising, but they tend to follow it as the basis for their examinations.

Some six weeks before Budget day, the Finance and Expenditure Committee sends the standard questionnaire to Ministers in respect of each vote containing appropriations for which they are responsible, requesting them to respond to the committee immediately after the delivery of the Budget statement—that is, before the vote’s examination. In addition to the questionnaire, other written questions on the Estimates may be sent to the Minister or the department by the committee that is to examine the vote, before the oral hearings on it. Such questions must be adopted by the committee in order to be transmitted for prior departmental response; individual members of the committee cannot send questions directly to the Minister or the department and make them part of the formal Estimates process.96

Other Estimates documentationThe Estimates questionnaire has requested copies of purchase agreements with Ministers and departmental output plans, but these are not strict requirements, having been largely replaced from 2014 by statements of strategic intentions, four-year Budget plans, and the Estimates and their supporting information. The supporting information for each vote includes actual, comparative and projected expenses and capital expenditure data, and for each appropriation a concise explanation of what it is intended to achieve and how performance will be

93 See, for example: Commerce Committee, report on 2000/01 Estimates (Vote Commerce) (14 August 2000) [1999–2000] AJHR I.19A at 102.

94 Officers of Parliament Committee Code of practice for the provision of assistance by the Auditor-General to select committees and members of Parliament (6 May 2002) [1999–2002] AJHR I.15A at [4.1]–[4.3].

95 Finance and Expenditure Committee, report on the Standard Estimates Questionnaire 2005/06 (7 April 2005) [2002–2005] AJHR I.22D at 190.

96 Justice and Law Reform Committee, report on 1988/89 Estimates (Vote Justice) (23 August 1988) [1987–1990] AJHR I.19A at 188.



assessed.97 Whether committees find these sources adequate for their scrutiny is something that they will consider and may report upon.

Officials and briefingOfficials from the Office of the Auditor-General and committee staff are available to assist committees with their examinations of the Estimates. The Auditor-General consults the Finance and Expenditure Committee each year to determine the general nature and extent of the assistance the office will provide on Estimates examinations. Unless specific alternative arrangements are made, the assistance given to committees is as discussed with the Finance and Expenditure Committee and in accordance with the protocol in force for such assistance. The Auditor-General’s assistance to each committee can extend to help in determining questions for each examination, reviewing evidence and compiling the report.98 Unlike the advice provided for the annual reviews, it cannot be based on reporting for the recently completed audit, because the Estimates look forward to spending plans in the forthcoming financial year. Committee staff will work closely with the Office of the Auditor-General to facilitate the committee’s requirements and co-ordinate the delivery of advice. Before the oral examination commences, the committee will receive a written briefing from the office on the vote it is to examine, and may also have an oral briefing on the vote. These briefings will endeavour to draw the committee’s attention to any unusual or unexplained features in the appropriations. Briefings constitute advice to the committee and are confidential to the committee until it reports, unless the committee decides to reveal their contents to the Minister or department concerned to assist with the examination. An official from the Office of the Auditor-General may also be present during the committee’s examination to assist the committee with any technical issues that may arise.

Other officials may also be appointed to assist the committee. For example, the office of the Parliamentary Commissioner for the Environment may act as an adviser to committees on votes dealing with conservation and the environment.99

HearingsOral hearings will be scheduled as soon as practicable after Budget day. They may even start while the Budget debate is in progress.

Estimates hearings are conducted in public, like the hearing of evidence on any other matter. A committee may, by leave, decide to hear some of the evidence in private, for instance if commercially sensitive information is to be disclosed.100

Formerly Estimates examinations were almost exclusively directed to officials, with Ministers appearing only rarely. Now, to reflect the fact that appropriations are made to Ministers, the Minister(s) responsible for appropriations in the vote under examination is expected to attend and front the oral examination by the committee. However, the Minister will be accompanied by the chief executive of the department concerned, and other officials who will also participate in the examination as required. Indeed, the fact that a chief executive did not appear even when the Minister did has drawn complaint from a committee.101

An area of possible difficulty is the question of responsibility for appropriations for classes of outputs to be supplied by other entities than the department being

97 Public Finance Act 1989, ss 15, 15A, 15B and 15C. 98 Officers of Parliament Committee Code of practice for the provision of assistance by the Auditor-

General to select committees and members of Parliament (6 May 2002) [1999–2002] AJHR I.15A at [4.1]–[5.11].

99 See: Planning and Development Committee, report on 1996/97 Estimates (Vote Conservation) (19 July 1996) [1993–1996] AJHR I.19D at 32.

100 Government Administration Committee, report on 1988/89 Estimates (Vote Capital and Participation in Crown and Other Organisations) (7 September 1988) [1987–1990] AJHR I.19A at 47.

101 Commerce Committee, report on 2000/01 Estimates (Vote Commerce) (14 August 2000) [1999–2002] AJHR I.19A at 101.



examined. Chief executives of departments are responsible for a number of matters, including the financial management of, and reporting on, appropriations for non-departmental expenses and non-departmental capital expenditure administered by the department, and advising the responsible appropriation Minister on the efficiency and effectiveness of expenditure under those appropriations.102 So that the Estimates examination is not stymied when a vote includes payments to Crown entities for non-departmental outputs, representatives of the Crown entity concerned may be invited to participate in the examination. (As comparatively few outputs are purchased from State enterprises the examination rarely involves them.)

As well as asking questions orally of the officials appearing before the committee, committee members may ask the officials to prepare detailed information in writing on matters that arise from the questioning. Indeed, in some cases this may be the only practicable means by which a reply can be given. These written replies to matters raised at the examination are delivered to committee members within a reasonable time after the conclusion of the examination.

Given the time constraints on the Estimates examination, allowing responses to be given later in writing as a condition of the committee processing the vote referred to it is a convenient mode of proceeding for all concerned. It is then incumbent on departments to provide the follow-up responses to members, preferably in time for the committee to consider the information before reporting to the House, or at least in time for the Estimates debate in the House, though this is not obligatory.103

Reports on votesThe Finance and Expenditure Committee and the other select committees examine the various votes to determine whether to recommend to the House that the appropriations in the vote be accepted.104 The task of actually passing the Estimates will fall to the committee of the whole House. At the conclusion of its examination of a vote, the select committee resolves whether to recommend the acceptance of the appropriations in the vote and draws up a report on it to the House. The committee may recommend that the House make changes to the appropriations in the vote.105 But the amounts set out in the Estimates do not change as a direct result of select committee scrutiny.

Committees are required to report back to the House within two months of the delivery of the Budget.106 (The House has extended this time when consideration of the Estimates was disrupted by an early election, and the Business Committee also now has the authority to do so.107) A committee has recommended that a vote be referred back to it where information that it had sought was not available by the time that it was obliged to report. The House subsequently referred the vote back to the committee for further examination.108 A committee may report on a number of votes in the same report. These reports are expected to be concise, summarising the material provided in response to the written questionnaire and other significant written replies, and supplemented by material elicited during the oral examination.109 A report on Estimates is presented to the Clerk in the same way as any other select committee report.

102 Public Finance Act 1989, s 35. 103 (1979) 424 NZPD 1831–1832 Harrison. 104 SO 338(1)(a). 105 SO 338(1)(b). 106 SO 338(2). 107 SO 248; (2002) 602 NZPD 308–309. 108 Local Government and Environment Committee, report on 2000/01 Estimates (Vote Conservation)

(14 August 2000) [1999–2002] AJHR I.19A at 39–40; (2000) 586 NZPD 4895. 109 Standing Orders Committee First report (19 July 1985) [1984–1985] AJHR I.14 at 26.



Intelligence and security departmentsIntelligence and security departments (the New Zealand Security Intelligence Service and the Government Communications Security Bureau) are in a special position regarding their Estimates. The statutory Intelligence and Security Committee may consider any matter in relation to an agency referred to it by the House.110 Accordingly, votes relating to these departments are, by sessional resolutions of the House, examined by the Intelligence and Security Committee and are not subject to examination by a select committee.111

The committee’s reports on its Estimates examinations are presented to the House and dealt with as if they were select committee reports.

The Estimates debateThe committee stage of the Appropriation Bill, the stage at which the main Estimates are passed, is known as the Estimates debate. The Estimates debate is the House’s consideration of the appropriations being sought by the Government in the votes set out in the main Appropriation Bill.112

The committee of the whole House may consider each vote listed in the schedules to the bill along with the elaboration of the vote in the main Estimates and supporting information. The Minister responsible for the appropriations in the vote sits at the Table on the Chairperson’s right, and deals with questions that arise during the discussion. The Minister is assisted by officials who are seated in the Chamber on seats to the right of the Speaker’s Chair. One of the factors that set the Appropriation Bill apart from other Government bills is that more than one Minister is answerable for its contents. The Minister of Finance is the Minister in charge of the bill, but as its provisions cover the whole gamut of Government activity, the House requires every Minister to be potentially answerable to it for the spending to be undertaken from appropriations for which that Minister has responsibility. Eleven hours are allocated to the Estimates debate.113

Committee stage of the main Appropriation BillThe order in which the committee of the whole House transacts its business when considering an Appropriation Bill is different from the order of business in committee on other bills. The committee stage is entirely devoted to the Estimates debate rather than to a consideration of the clauses and schedules of the bill. At the end of the total time permitted for the debate, any remaining votes, the provisions of the bill, and any amendments will be put as one question without further debate.114

The Government has the right to select any day except members’ Wednesdays for the Estimates debate. On such a day the Appropriation Bill is set down for consideration in committee.115 The Government can also determine which votes are available for consideration each day and how long in total is to be spent on the Estimates debate each day. A note setting out this information must be printed on each day’s Order Paper.116

Scheduling of the Estimates debateExamination by a select committee and report by it on a vote is a prerequisite for that vote to be available for consideration during the Estimates debate.117 As committees have two months from the Budget to make their reports on votes

110 Intelligence and Security Committee Act 1996, s 6(1)(b). 111 See, for example: (20 March 2012) 678 NZPD 1089–1094; (11 March 2009) 652 NZPD 1861–1867. 112 SO 339(1). 113 SOs, App A. 114 SO 339(4). 115 SO 350(1). 116 SO 350(2). 117 (1979) 424 NZPD 1831–1832 Harrison.



referred to them, the maximum time that a Government has to wait after the Budget before scheduling an Estimates debate is two months. To accommodate 11 hours of debate, the Estimates debate will occupy part of two or three sitting days. It has not been regarded as obligatory for written material called for by the select committee during its examination of a vote to have been delivered into the hands of members before the Estimates debate on that vote is held.118 But where the committee has accepted a vote on the basis of an assurance that further material will be provided to members in time for the debate in the House, it is incumbent on Ministers and departments to ensure that such an assurance is honoured. Estimates debates scheduled for votes have been postponed when it has been realised that written material asked for during the select committee examination has not been made available.

The Government’s determination of which votes are available for debate is also dependent on the availability of Ministers. As one Minister is often responsible for appropriations in more than one vote, an attempt will be made to have all votes containing appropriations for which a Minister is responsible available for debate on the same occasion. A vote can be scheduled for the Estimates debate while an acting Minister is in charge of the department.119 The Speaker is responsible for votes relating to the Auditor-General, the Office of the Clerk of the House of Representatives, the Office of the Ombudsmen, the Parliamentary Commissioner for the Environment and the Parliamentary Service.120 While the Government determines which votes are available each day and how long in total is to be spent on them, the Business Committee determines the order in which they are to be considered and how long will be spent on each vote.121

Consideration of the votesAs each vote is reached, the Chairperson proposes the question “That Vote … stand part of the schedule”.122 The Minister responsible for appropriations in a vote under discussion must, if present in the Chamber, sit at the Table on the Chairperson’s right.123 But another Minister may act for the responsible Minister in the latter’s absence. However, as the scheduling of the debate is in the Government’s hands, the responsible Minister is expected to attend the debate as part of the House’s accountability process.124 Where another Minister has responsibility for aspects of a vote, he or she may also participate in the Estimates debate from the Table. Members are entitled to make up to two five-minute speeches on each vote. The Minister at the Table is not limited in the number of calls he or she may take. But the Minister is not normally allowed more than two consecutive calls (it is, in fact, entirely up to the Chairperson whether the Minister is allowed even this number consecutively).125 In practice, the whips’ agreement on speeches in the Estimates debate will determine how many contributions are made by members on each vote.

RelevancyUntil 1972 the debate on the Estimates was subject to a most important restriction: reference to policy was not allowed. This restriction was not imposed by a Standing Order; it was a rule developed by successive Chairpersons (supported by Speakers) exercising their inherent power to rule on relevancy in debate. In 1972 the Standing Orders Committee recommended that references to policy should be permitted

118 Ibid. 119 (1970) 367 NZPD 2059 Allen (Chairman); (1978) 418 NZPD 1336 Harrison. 120 Public Finance Act 1989, ss 2(1) and 7C(3), (4). 121 SO 350(3). 122 SO 339(2). 123 (1988) 492 NZPD 7118 Burke. 124 (2001) 594 NZPD 10825, 10829–10830 Braybrooke (Chairperson). 125 SOs, App A.



at any time in debate on the Estimates.126 This recommendation was immediately adopted by the Chairperson at the time, and the discussion of policy as it relates to the vote under consideration has since then been freely permitted.127 The debate, which was previously directed principally to examining the administration and expenditure of each department, became one in which Government policy may be debated; the 1979 Standing Orders Committee remarked that this had “changed the whole character of the Estimates debate”.128

The 1985 Standing Orders Committee adopted the following statement of the scope of the debate.129

The normal rules of debate apply to consideration of the estimates; the main principle is that debate should be relevant to the matter which is contained in the estimate currently under discussion. On a main estimate it is in order to discuss the general policy which lies behind the demand for that particular sum of money … The purpose … is not to permit discussions of general policy … but to focus attention on the need to grant, reduce or refuse to grant particular items of expenditure.

The Estimates debate is confined to the current spending plans as contained in the Budget papers, and must relate to a matter for which an appropriation is proposed in the Estimates. It is no longer a vehicle for scrutinising and debating past performance; that is the purpose of the annual review debate.130

The rule of relevancy, that debate must be confined to the items in the vote under discussion, can be difficult to apply to departments with control functions that extend over other areas of Government, particularly the Treasury and the Office of the Auditor-General. All ministerial spending proposals that are made to Cabinet are reported on by the Treasury, and the Treasury’s functions in respect of the control of public expenditure and the formulation of economic policy can involve it intimately in the work of all other departments. This detailed involvement may be discussed when another department’s vote is being considered, but not on the vote relating to the Treasury. The Minister on this vote can be asked general questions, and there can be a general debate on policies with which the Treasury has been involved, but specific questioning on another department’s activities must be directed to the Minister for that department.131 Similarly, issues relating to the policies and administration of a department must be raised when the vote relating to that department is being debated and not during debate on Vote Audit, even if such matters are referred to in an Auditor-General’s report.132

Changes to the voteDuring the Estimates debate on a vote any member may move to change a specified appropriation within the vote by a particular amount.133 This is not an amendment to the question then before the committee; it is an independent motion moved during the course of the consideration of that question, though it is a proposed amendment to an appropriation within the vote, and if it is carried it takes effect accordingly.

Traditionally, proposals to change a vote have taken the form of motions to reduce the vote as a means of expressing displeasure in the Minister or the

126 Standing Orders Committee, report (8 June 1972) [1972] AJHR I.19 at 11. 127 (1972) 379 NZPD 1400 Harrison (Chairman). 128 Standing Orders Committee Final report (7 November 1979) [1979] AJHR I.14 at 10. 129 Standing Orders Committee First report (19 July 1985) [1984–1985] AJHR I.14 at 24–25. 130 (1993) 537 NZPD 17435 Anderson (Deputy Chairman); 1993 538 NZPD 18105–18106, 18161 Anderson

(Deputy Chairman); (1996) 556 NZPD 13745 Gerard (Chairperson); (22 July 2003) 610 NZPD 7149 Robertson (Chairperson).

131 (1970) 367 NZPD 2581 Allen (Chairman). 132 (1972) 379 NZPD 1531–1537 Harrison (Chairman). 133 SO 339(3).



department concerned. Token reductions of votes have been made from time to time.134 The Government has itself agreed to or initiated the reduction of a vote.135 Occasionally the select committee that has reported on the vote will recommend or indicate that it contemplated recommending a change in the vote.136

A motion to change a vote is debated along with the original question, that the vote stand part, as if it were an amendment, and it uses part of any overall time allocated for debate on that vote. If a closure motion is moved and accepted it relates to the original question; and if it is agreed, the question will be put on both the motion to change the vote and the original question on the vote.137

While most proposals for changes to a vote take the form of a reduction, they can (since 1996) also take the form of an increase. Any proposal for a change is subject to the Government’s financial veto. (See pp 515–519.) If the financial veto is exercised in respect of a proposal to change a vote, the proposed change may be debated but no question is put on it at the end of the debate and it is ruled out of order.138 A motion to change a vote is out of order if 24 hours’ notice of it has not been given before the House meets on the day it is to be moved. But if the select committee has recommended the proposed change, notice is not required.139

A proposal to change a vote must specify the sum by which an appropriation in the vote is to be altered. Furthermore, since each output expense (or other type of appropriation) within a vote is a separate appropriation, a motion to change a vote must specify which output expense (or other type of appropriation) is to bear the reduction.140

When moving to change a vote, members often wish to give reasons for the proposal. Such reasons are not part of the motion and are not stated by the Chairperson or recorded in the Journals.141 But, provided they are relevant to the vote under discussion, they may be added by the mover and can be debated. A member cannot open up a discussion on a matter outside the limits of the vote by adducing wide-ranging reasons for a change. The Chairperson does not state the reasons advanced by a member moving a change to the vote, and does not usually comment on them; but if they could lead to discussion straying outside the vote before the committee, the Chairperson might require the member to restate them more narrowly. For this reason a general statement of no confidence in the Government would not be acceptable as a reason for a reduction in a vote, but a statement of no confidence in the Minister then at the Table would be.

If a change to a vote is made, the Minister of Finance will present to the House an addendum to the Estimates to reflect it. This is so that the Estimates documents accord with the legal appropriations that are made by Parliament through the Appropriation Acts. As the Estimates are an elaboration of those appropriations, it is critically important that there be no suggestion that they differ from the appropriations actually made by Parliament.

Adjusting EstimatesOccasionally the Government itself will initiate changes to the votes and will prepare a Supplementary Order Paper to amend the Appropriation Bill.

Where there are proposed amendments to the appropriations in the bill, they must be preceded by the tabling of further Estimates adjusting the main Estimates. In the case of proposals to adjust Estimates relating to an Office of Parliament, the

134 KJ Scott The New Zealand Constitution (Oxford University Press, Oxford, 1962) at 56–57. 135 (1890) 69 NZPD 919. 136 See, for example: Education and Science Committee, report on 2010/11 Estimates (Vote Education

and Vote Education Review Office) (2 July 2010) at 4 ([2008–2011] AJHR I.19B at 136). 137 (1991) 520 NZPD 5203–5204 Gray. 138 SO 329(2). 139 SO 330(1), (2). 140 (1991) 514 NZPD 1743 Anderson (Deputy Chairman). 141 Standing Orders Committee Review of Standing Orders (13 December 1995) [1993–1996] AJHR I.18A

at 69.



proposal must first have been examined by the Officers of Parliament Committee and commended to the Governor-General by way of an address from the House.

Adjusting of Estimates may be examined by the Finance and Expenditure Committee. It is up to the committee as to whether it combines examinations of the main estimate with an adjusting estimate or reports separately on each. If it has already reported on the main estimate, a second, separate report on the adjusting estimate will be necessary.

Termination of the Estimates debateAt the conclusion of the 11 hours allotted for consideration of the Estimates, there are likely to be votes that have not yet been passed by the committee. The Standing Orders provide that in this case any remaining votes, together with the provisions of the bill and any amendments to the bill proposed by the Minister on a Supplementary Order Paper, are to be proposed by the Chairperson as one question and this question is to be decided immediately, without amendment or debate.142 There is no provision for dealing with amendments from other members that have not been proposed within the 11 hours allowed for the debate.

Organising the Estimates debateIn its 2014 review of Standing Orders, the Standing Orders Committee noted that recent amendments to the Public Finance Act 1989 had improved financial flexibility and performance reporting, and acknowledged that it is difficult to ensure that the many reports of committees are adequately reflected in financial scrutiny debates.

In response to these comments, the Business Committee used its powers to arrange debate in the committee of the whole House to trial a new approach to the Estimates debate for the Appropriation (2015/16 Estimates) Bill, based on that used for the annual review debate earlier in 2015, where entities were grouped by themes and debated together.143 (See Chapter 35.) The Estimates debate was divided into 10 separate debates relating to the 10 sectors distinguished in the Estimates of Appropriations. Each sector debate was led off by the chairperson of a select committee with a relevant subject area. Calls in the debate were divided into primary and supplementary calls, and allocated to parties on the same basis as oral questions are allocated (that is, proportionally without including Ministers). Primary calls were allocated for each sector debate while the supplementary calls were taken by parties as they saw fit during the debates. At the end of each sector debate the committee voted on one question, that all of the relevant votes in the sector stand part. At the conclusion of the 11 hours for the Estimates debate, the provisions of the main Appropriation Bill were put as one question. This sectoral approach to the Estimates debate allowed for a wider discussion of the Government’s spending intentions for the whole sector, and of connections between the policies covered by multiple votes and the Government’s goals for the sector.

PASSING OF THE MAIN APPROPRIATION BILLThe third reading of the main Appropriation Bill granting comprehensive annual appropriations must be completed within three months of the delivery of the Budget.144 (This time limit has been extended when an early election dislocated examination of the Estimates by committees.145) Effectively, given that the Budget must have been delivered by 31 July, this means the bill will be passed at the latest by 31 October, four months into the financial year. In practice, it has tended to be

142 SO 339(4). 143 SOs 301 and 350; Business Committee determination for 3 June 2015. 144 SO 340(1). 145 (2002) 602 NZPD 308–309.



passed much sooner. This is a big improvement on the situation that obtained until the 1990/91 financial year; in the absence of a Standing Orders requirement, the main Appropriation Bill tended not to be passed until shortly before the end of the financial year to which it related.146

The normal rules of relevancy apply to the third reading debate. It is solely an expenditure bill, not a taxation bill, and a detailed discussion of economic policy is not permitted.147 The debate may, however, include reference to the content of the Fiscal Strategy Report and the Economic and Fiscal Update (presented at the time of the Budget) and the Finance and Expenditure Committee’s report on these documents.148 The question for the third reading is open to amendment, but not to an amendment that would postpone the third reading beyond three months of the Budget, which would contravene the Standing Orders. The debate may not exceed three hours and members can speak for up to 10 minutes each.149 The debate may be taken together with the second reading of an Imprest Supply Bill,150 and it is the invariable practice to do so.

SECOND AND SUBSEQUENT IMPREST SUPPLY BILLSWhen the main Appropriation Bill has been passed, the appropriation authority conferred by the first Imprest Supply Act is repealed.151 The Government now has its principal, detailed appropriations as set out in the main Appropriation Act and the Estimates. However, there will still be at least eight months of the financial year to run. Supplementary Estimates adding to and adjusting the appropriations that have already been made will be presented later in the financial year. But, in order to give the Government a general authority to deal with expenditure relating to the current year that may have arisen since the main Estimates were prepared and before the presentation of the Supplementary Estimates, a second Imprest Supply Act is enacted immediately after the main Appropriation Act.

This second tranche of imprest supply is passed in tandem with the third reading of the Appropriation Bill. For this purpose the debate on its second reading may be taken together with the third reading of that bill.152 The rules for the introduction and passing of the second Imprest Supply Bill are identical with those for the first bill. (See pp 550–551.) However, as the third reading of the Appropriation Bill is a three-hour debate, this is a longer debate than the debates on other Imprest Supply Bills. This second imprest supply authority is repealed when the House enacts the Appropriation Act incorporating the Supplementary Estimates.153

Normally there are two grants of imprest supply each financial year: the first given before the financial year opens, which is repealed by the passing of the main Appropriation Act, and the second given in association with that Act and repealed at the time of the Supplementary Estimates. But if an unexpected need for further spending authority arises before the Supplementary Estimates, a third Imprest Supply Bill will be necessary.154 The rules for the introduction and passing of such a bill are identical with those for other Imprest Supply bills, but as there is no Appropriation Bill with which it can be linked for the purposes of debate, it is debated as a stand-alone piece of legislation with a two-hour time limit for the debate.

146 Controller and Auditor-General, audit of the Crown and Government departments (11 December 1990) [1990–1991] AJHR B.1[Pt.II] at 12–13; Controller and Auditor-General, audit of the Crown and Government departments (17 October 1991) [1991–1993] AJHR B.1[Pt.II] at 16–17.

147 (1979) 427 NZPD 4287–4299 Harrison. 148 SO 340(2). 149 SOs, App A. 150 SO 340(3). 151 Imprest Supply (First for 2015/16) Act 2015, s 3. 152 SO 340(3). 153 Imprest Supply (Second for 2015/16) Act 2015, s 3. 154 See, for example: Imprest Supply (Third for 2001/02) Act 2001 (capital injection for Air New Zealand).



SUPPLEMENTARY APPROPRIATIONSThe main Appropriation Act, appropriating the amounts set out in the main Estimates, is the Government’s chief financial authority for the year. However, the main Estimates are presented to the House before or shortly after the start of the financial year and are passed within four months of its opening. During and after this time the Government may decide that the sums it has requested to be voted to it in the main Estimates need to be altered. It is now generally expected that there will be a need for supplementary appropriations by the end of the financial year. Indeed, this may be contemplated in the main Estimates.155 Normally Supplementary Estimates do not have much overall fiscal impact, but if the Government changes between the delivery of the Budget and the presentation of the Supplementary Estimates, the expenditure initiatives authorised by the Supplementary Estimates can be very large. In considering Supplementary Estimates, select committees expect to have drawn to their attention changes in governmental priorities from those reflected in the main Estimates, as distinct from merely technical adjustments.156

Supplementary appropriations are made by way of an Appropriation Bill introduced on the same day that Supplementary Estimates are presented to the House, which in practice is on Budget day.157

Supplementary EstimatesSupplementary Estimates must be prepared for each Appropriation Bill that seeks supplementary appropriations. They set out how the amounts proposed to be appropriated are to be charged to each vote. For appropriations that were not in the main Estimates, Supplementary Estimates are required to supply full details and supporting information; for appropriations for which supporting information was provided with the main Estimates, only any changes to that information need be given.158 The Auditor-General has in the past criticised some of the information given with the Supplementary Estimates as not describing clearly and understandably the purposes of and reasons for the changes proposed to the main Estimates.159

Just as the main Estimates are an elaboration of the main Appropriation Bill, the Supplementary Estimates are an elaboration of the Appropriation Bill to which they relate.

Introduction of Appropriation BillSupplementary Estimates are presented to the House on the day that an Appropriation Bill containing Supplementary Estimates is to be introduced. The bill may be introduced at any time as long as it does not interrupt a debate.160 Alternatively, it may be introduced in the same way as any other bill. Although not invariable, the practice has been to introduce the supplementary Appropriation Bill on the same day as the Budget for the next financial year (that is, in May or June). There is no debate on the first reading of the bill.161

155 Estimates of annual appropriations and departmental budgets (24 July 1990) [1987–1990] AJHR B.7 at 356.

156 Local Government and Environment Committee, report on 2000/01 Supplementary Estimates (Vote Conservation) (21 June 2001) [1999–2002] AJHR I.22B at 1087; MaoriAffairs Committee, report on 2000/01 Supplementary Estimates (Vote Maori Affairs) (21 June 2001) [1999–2002] AJHR I.22B at 1219.

157 Public Finance Act 1989, s 16. 158 Public Finance Act 1989, ss 17–17B. 159 Controller and Auditor-General Central government: results of the 2000/01 audits (14 December 2001)

NZPP B.29[01b] at [8.4]. 160 SO 284. 161 SO 342(1).



Examination of Supplementary EstimatesNo Appropriation Bill is referred to a select committee,162 but any Supplementary Estimates relating to the bill stand referred to the Finance and Expenditure Committee after the bill’s introduction.163 The committee can examine a vote in the Supplementary Estimates itself or refer it to any other subject select committee for examination.164 It cannot divide a vote for examination in the Supplementary Estimates as it can for the examination of the main Estimates. Any Supplementary Estimates for the two votes administered by the intelligence and security departments are examined by the Intelligence and Security Committee.

Although no report time is prescribed, in practice the Supplementary Estimates examination is even more time-confined than the Estimates examination because the bill has to be passed by the end of the financial year on 30 June. For this reason the Finance and Expenditure Committee in recent years has not used its power to refer Supplementary Estimates to other committees. (Supplementary Estimates were last referred to other committees for the 2000/01 year.) The Finance and Expenditure Committee usually carries out the examination itself, relying on Treasury officials to explain the supplementary appropriations and requiring the appearance before the committee of officials from other departments where necessary.165

Any committee involved in examining Supplementary Estimates resolves whether to recommend to the House the appropriations in the vote before it. Committees may also recommend changes to the votes.166

Further Supplementary EstimatesJust as the main Appropriation Bill may be amended by the presentation of adjusting Estimates, an Appropriation Bill containing supplementary appropriations may be amended by the presentation of further Supplementary Estimates. (The amendments to the bill are set out on a Supplementary Order Paper in the name of the Minister.) Indeed, a succession of further Supplementary Estimates may be presented.167 Further Supplementary Estimates stand referred to the Finance and Expenditure Committee; it could refer them to another committee but, in practice, is likely to deal with them itself. An alternative to amending the Appropriation Bill is to introduce another Appropriation Bill and present Supplementary Estimates in respect of it.

Supplementary Estimates debateAn Appropriation Bill containing Supplementary Estimates remains on the Order Paper until the Supplementary Estimates and any further Supplementary Estimates related to it have been reported to the House. When they have been reported to the House the Supplementary Estimates debate can be held.

The debate on the Supplementary Estimates in the House occurs on the second reading of the bill. Two hours are allowed for this debate, in which each member can speak for up to 10 minutes.168

The debate must be relevant to the bill’s provisions and deal with the appropriations that the Government seeks to supplement or vary; it is not another Budget debate. As it is the winding-up debate of the financial year, it may include an overview of the policies for which the Government has sought appropriations

162 SO 288(2). 163 SO 341(1). 164 SO 341(1). 165 Finance and Expenditure Committee, reports on final Supplementary Estimates and additional

final Supplementary Estimates of annual appropriations and departmental budgets (21 June 1990) [1987–1990] AJHR I.19 at 73, 79.

166 SO 341(2). 167 (1990) 508 NZPD 2384. 168 SOs, App A.



in the financial year, and of the Government’s financial position at the end of the year.169 There can be no “public affairs” amendment moved on the second reading of this bill. But the second reading of an Appropriation Bill containing the Supplementary Estimates may be taken together with an Imprest Supply Bill.170 It is the invariable practice to combine this debate with the debate on the first Imprest Supply Bill for the following year, which is likely to be ready for introduction at this time. A public affairs amendment can be moved on the second reading of an Imprest Supply Bill.171

Passing of Appropriation BillAfter the second reading of the bill the House proceeds immediately to its third reading unless the Minister wishes to propose amendments to the bill or a select committee has recommended a change to a vote and the change has not itself been the subject of a financial veto.172 In either case a committee stage is held, in which only the Minister’s amendments (and any amendments to them) or the amendment to the appropriation recommended by the committee, as the case may be, are considered. When amendments to a part or schedule have been disposed of, the question is put that that part or schedule as amended stand part.

There is no debate on the third reading and no opportunity to move any amendment to the question.173

CONFIRMATION OR VALIDATION OF ExPENSES, CAPITAL ExPENDITURE AND CAPITAL INJECTIONSPermanent legislative authority and the Appropriation Acts passed before the end of the financial year to which they relate, together with any transfers of appropriations made by Order in Council,174 constitute the final appropriations and authorisations for a particular year. But some of those appropriations or authorisations contemplate that they are partly provisional in that they must be reported to the House and steps taken to seek parliamentary confirmation of them.

Emergency expenses or capital expenditure incurred under a state of emergency or civil defence emergency, or capital injections to a department, must be included in an Appropriation Bill for confirmation by Parliament.175 Expenses or capital expenditure approved by the Minister of Finance in excess of existing appropriations must be included in an Appropriation Bill for the next financial year, for confirmation by Parliament.176 In the case of Orders in Council transferring appropriations within a vote, a clause confirming the transfers must be included in an Appropriation Bill for the next financial year.177 (See p 533.) In no case is parliamentary validation of such expenses or capital expenditure required, since the statute under which it is incurred provides legal authority for it. Thus the provision requiring the Government to seek confirmation of expenditure acknowledges that this does not affect the validity of the expenditure, of any Order in Council, or of any transfer.178 But the requirement at least to seek subsequent parliamentary confirmation ensures that the House is apprised of the spending authority used by the Government under these provisions.

169 (1992) 526 NZPD 9061 Gerard (Acting Speaker). 170 SO 342(2). 171 SO 331(3). 172 SO 342(3). 173 SO 342(4). 174 Public Finance Act 1989, s 26A. 175 Public Finance Act 1989, s 25(5). 176 Public Finance Act 1989, s 26B(4). 177 Public Finance Act 1989, s 26A(2). 178 Public Finance Act 1989, ss 25(6), 26A(3) and 26B(5); Archives and Records Association

of New Zealand v Blakeley [2000] 1 NZLR 607 (CA) at [80].



It is possible that expenses or capital expenditure may have been incurred without any appropriation or legal authority at all. If so, unlawful expenditure has been incurred and, if the illegality is to be remedied, parliamentary validation must be sought. (See Chapter 31.)

For all of these matters an Appropriation (Confirmation and Validation) Bill may be used as the legislative vehicle. An Appropriation (Confirmation and Validation) Bill is concerned solely with confirming or validating expenditure incurred in the previous financial year.179 (The procedures for considering an Appropriation (Confirmation and Validation) Bill are described in Chapter 35.) From time to time unlawful expenditure may also be validated by a Finance Bill180 or other legislation.181

179 SO 346(1). 180 See, for example: Finance Act 1976, s 2. 181 See, for example: Education Standards Act 2001, s 84 (capital accommodation grants); Appropriation

(Parliamentary Expenditure Validation) Act 2006, s 5 (Parliamentary Service expenditure).


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CHAPTER 33 The Process of Supply - New Zealand … · CHAPTER 33 The Process of Supply The financial year runs from 1 July to the following 30 June. Supply—the ... unappropriated