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4  Authority from Parliament

Appropriation is the constitutional process whereby Parliament authorises the Government to use public resources for specified purposes

Introduction

Under a Westminster-style of government, no expenditure of public money can take place without the prior approval of Parliament. The Constitution Act 1986 and Public Finance Act 1989 reflect this requirement.

The requirement for appropriation ensures that Parliament, on behalf of taxpayers, scrutinises how public resources are to be used and ensures that the Government is held accountable for how resources entrusted to it are used. Appropriation limits what Ministers can spend on, limits how much can be spent, and is supported by information on the performance expected in return for the resources appropriated.

The Estimates of Appropriations lay out for each Vote or appropriation the:

  • purpose for which each appropriation can be used (type and scope)
  • maximum amount of expenses or capital expenditure to be incurred
  • period in which resources remain available to a Minister
  • net assets of each department at the start and end of the year.

Information Supporting the Estimates is laid out by sector and gives information on expected performance to support Parliament's review of spending intentions and, in retrospect, its review of actual performance. It includes Ministers' and chief executives' statements of responsibility.

The Information Supporting the Estimates include Statements of Intent, forecast service performance and forecast financial statements for each department.

The Supplementary Estimates information relates to the financial year about to end, not the upcoming Budget year. They outline the additional expenses and capital expenditure sought, ie, over and above the amounts Parliament had appropriated after the last Budget was presented.

Appropriation Acts

An Appropriation Act is the means by which Parliament approves funding for the Government for the coming year. The Government's proposals are submitted in the Estimates presented to Parliament at the time the Minister of Finance delivers the Budget.

Key features of New Zealand's appropriation process are that:

  • each appropriation is made to a specific Minister and is in a Vote administered by a specified department
  • each appropriation must be one of six types and have a clear type, scope, maximum amount and period
  • all appropriations are accrual-based, that is they specify the full cost of resources required to produce outputs, make transfer payments, etc (not just the cash outlays), and count expenditure in the period the activity occurred/will occur
  • appropriation and statutory authority from Parliament gives a government authority to spend public money.

Without authority from Parliament to spend, the Government cannot continue to govern. It is for this reason that votes on Appropriation and Imprest Supply Bills are votes of confidence.

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