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The New Zealand Parliament and the Control and Scrutiny of Government Expenditure

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The New Zealand Parliament and the Control and Scrutiny of Government Expenditure Opening and Balancing the Books: the New Zealand Parliament and the Control and Scrutiny of Government Expenditure By Alexander Sylvan Thomas A thesis submitted to Victoria University of Wellington in fulfilment of the requirements for the degree of Master of Arts in Political Science Victoria University of Wellington 2014 Abstract Controlling and scrutinising government expenditure is an important duty of the New Zealand Parliament. There is an on-going debate on the effectiveness of Parliament in undertaking this. The role, inherited from the British Parliament, has been developed upon and refined by the New Zealand Parliament. Parliament holds the government to account for its expenditure through a system consisting of the Finance and Expenditure Committee, other subject select committees, extensive Budget and Estimates documentation, and detailed appropriations. The Controller and Auditor-General, debate in the House, and thorough accounts and accounting are also a part of the process. The New Zealand Parliament can have more than adequate control of government expenditure, but is sometimes deficient at scrutinising its details. Recommendations to improve Parliament’s ability to control and scrutinise government expenditure must centre on Members of Parliament being willing, able and eager to undertake the role. i Acknowledgments I would like to take the opportunity to thank my supervisor, Emeritus Professor Margaret Clark, for her advice, support and assistance throughout the production of this thesis. I cannot stress enough how much I appreciated her wealth of wisdom and experience as well as her patience and assurance. It was comforting knowing that her office door was always open. To my mum and dad, Gail and Neil, thank you for your support. Your reassurance and backing helped drive me along. I would also like to acknowledge the support of my sister, Calypso. It was inspiring to hear of your success throughout the production of this thesis. To my postgraduate cohort, Aaron, Alice, Andrew, David, Finn, Holly and Rebekah, thank you for the encouragement and for helping me to maintain some level of sanity. I would also like to recognise my wider family, friends, and flatmates for their support and tolerance for a mind that was frequently elsewhere. I particularly want to take the opportunity to thank Holly, Pippa, Rebecca, Roy and Tiana for checking over my work. Lastly, I want to acknowledge the Members of Parliament, public servants as well as staff at the Office of the Auditor-General and Office of the Clerk who made themselves available for interviews or provided information. I appreciate how extremely generous they were with their time and knowledge. This thesis simply would not have been the same without their contributions. The extraordinary access that New Zealanders have to the aforementioned, especially the parliamentarians, shows the strength and openness of our democracy. They are of course not responsible for the use I have made of their knowledge. ii Table of Contents Abstract ....................................................................................................................................... i Acknowledgments...................................................................................................................... ii List of Abbreviations and Acronyms ......................................................................................... v List of Figures and Tables......................................................................................................... vi Introduction .............................................................................................................................. 1 Chapter One: Literature Review ............................................................................................ 5 Historical Debate .................................................................................................................... 5 Further Literature ................................................................................................................. 10 Chapter Two: History of Parliamentary Control and Scrutiny of Government Expenditure ............................................................................................................................ 16 British History ...................................................................................................................... 17 New Zealand History ........................................................................................................... 24 Chapter Three: Current Practice and Procedure ............................................................... 42 Central Provisions ................................................................................................................ 42 Appropriations ...................................................................................................................... 45 Budget and Estimates Documentation ................................................................................. 49 Financial Statements and Accounting .................................................................................. 53 Parliamentary Process .......................................................................................................... 57 Controller and Auditor-General ........................................................................................... 70 Finance and Expenditure Committee ................................................................................... 74 Chapter Four: Evaluation ..................................................................................................... 76 General Themes and Central Provisions .............................................................................. 76 Appropriations ...................................................................................................................... 81 Budget and Estimates Documentation ................................................................................. 82 Financial Statements and Accounting .................................................................................. 86 Parliamentary Process .......................................................................................................... 87 Controller and Auditor-General ........................................................................................... 95 Finance and Expenditure Committee ................................................................................... 99 Chapter Five: Recommendations and Conclusion ........................................................... 109 Opportunities for Further Research .................................................................................... 109 Support for and Limitations on Reform ............................................................................. 109 Members of Parliament ...................................................................................................... 110 iii Estimates Documentation ................................................................................................... 112 Financial Statements and Accounting ................................................................................ 114 Parliamentary Process ........................................................................................................ 114 Controller and Auditor-General ......................................................................................... 115 Finance and Expenditure Committee ................................................................................. 116 Spending Cap ..................................................................................................................... 119 Public Finance Amendment Act 2013 and Public Finance (Fiscal Responsibility) Amendment Act 2013 ........................................................................................................ 120 Summary of Recommendations ......................................................................................... 121 Bibliography ......................................................................................................................... 123 iv List of Abbreviations and Acronyms Auditor-General Controller and Auditor-General CEA Crown Entities Act 2004 FEC Finance and Expenditure Committee FPP First Past the Post FRA Fiscal Responsibility Act 1994 GAAP Generally accepted accounting practice House House of Representatives of New Zealand IFRS International financial reporting standards MMP Mixed Member Proportional MP Member of Parliament Member Member of Parliament PAA Public Audit Act 2001 PAC Public Accounts Committee PEC Public Expenditure Committee PFA Public Finance Act 1989 PFA 1989 Public Finance Act 1989 PFA 1977 Public Finance Act 1977 S. Section S.O. Standing Orders of the House of Representatives Standing Orders Standing Orders of the House of Representatives SOE State enterprise Speaker Speaker of the House of Representatives v List of Figures and Tables Figure 3.1: Supply and Financial Review Process Diagram.................................................... 58 Table 3.1: House Debate Time Limits and MPs Speaking Times ........................................... 69 vi Introduction The finance of the country is ultimately associated with the liberties of the country. It is the powerful leverage by which English liberty has been gradually acquired…If the House of Commons
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