When I was the Treasury Solicitor (also known as the chief legal adviser at the Treasury) an Auckland lawyer asked me “what possible need could the Treasury have for lawyers?” I will leave it for another time to explain the multitude of responsibilities the Treasury has to grapple with, but of course most recently what most of us know as “the Budget” is in fact a piece of legislation – The Appropriation (2012/13 Estimates) Bill-under which legislative authority is given for public money to be spent. And as for any legislation in respect of which the Treasury is the responsible department, the legal team would rightly expect to be involved.
The need for any spending of public money to be authorised stems from section 22 of the Constitution Act 1986 which states that “it shall not be lawful for the Crown, except by or under an Act of Parliament to… spend any public money” and from the Public Finance Act 1989 which provides the framework within which the government can borrow or spend public money (in essence, our taxes). Section 4 of the Public Finance Act, provides that “the Crown or an Office of Parliament must not incur expenses or capital expenditure unless expressly authorised by an appropriation, or other authority, by or under an Act.” It is the Appropriations (Estimates) Bill in each year – which (together with the Estimates tabled as part of the Budget) in effect signals what the government says it will spend money on in the following year – which gives that authority. So, in a nutshell, the government cannot spend any money unless Parliament has approved that expenditure; Parliament formally approves that through appropriation legislation.
That said, there are various timing issues which end up being dealt with through the fiction of Imprest Supply, the Supplementary Estimates legislation and the Financial Review Bill, particularly as the government’s financial year ends on 30 June – usually before the Appropriations (Estimates) Bill for any particular year is passed into law.
The Estimates themselves are often long and complex, reflecting the fact that the description of what money is to be spent on must be accurate – see sections 8, 9 and 10 of the Public Finance Act – but a review of them can provide valuable insights into the work of a department or entity. Likewise, the Public Finance Act (which although not that long is reasonably complex) is a frequently overlooked piece of legislation which it is crucial for public entities to comply with and for those dealing with them to understand.