Part 2: The support provided to Ministers

How the Department of Internal Affairs manages spending that could give personal benefit to Ministers.

In this Part, we provide some background information on the system for providing support to Ministers by answering the following questions:

  • What is Ministerial Services?
  • What does a typical ministerial office look like?
  • Who is responsible for ministerial spending?
  • What are the rules for ministerial spending?
  • What are the financial management processes for ministerial spending?

What is Ministerial Services?

The Department of Internal Affairs (the Department) is the agency responsible for providing administrative and financial support to Ministers and their offices. For many years, the support was funded as part of the Department's general activities through Vote Internal Affairs. In practice, a senior Minister (often the Deputy Prime Minister) helped oversee the services that were provided to Ministers (for example, by helping to allocate residences and offices).

In the late 1980s, after a review by the State Services Commission, the Department created a separate internal business unit, Ministerial Services, to manage this part of its work. A distinct ministerial portfolio with its own Vote was created after the 1999 general election, and the Prime Minister took on the role of Minister responsible for Vote Ministerial Services.

The Department continues to administer the funding provided through Vote Ministerial Services, and reports to the Minister responsible for Vote Ministerial Services on these issues. The Ministerial Services unit is now part of the Executive Government Support group within the Department.

Ministerial Services provides the following support to Ministers:

  • staff for ministerial offices;
  • office space, equipment, and related support services;
  • support for all administrative and financial matters, and information and communication technology.

Until late 2009, Ministerial Services also provided residential accommodation for Ministers. After concerns were raised about the way in which those services were provided, the Minister responsible for Ministerial Services (the Prime Minister) changed the entitlement to one that provided a standard financial contribution to accommodation costs. The Department had previously either owned or leased accommodation for use by Ministers. Most Ministers are now responsible for arranging their own accommodation, and Ministerial Services is responsible only for the residences with heritage value (such as Premier House and Vogel House) and for some leases that have not yet been phased out.

Other parts of the Executive Government Support group:

  • provide chauffeur-driven and self-drive vehicles (VIP Transport); and
  • facilitate visits to New Zealand by official guests of government, airport and reception services for Ministers and the Governor-General, and the management of commemorative events and state functions.

The 2010/11 budget provided the following funding:

  • $27.26 million for the direct support services to Ministers provided by Ministerial Services;
  • $11.44 million for internal and external travel by Ministers; and
  • $8.30 million for ministerial salaries and allowances.

What does a typical ministerial office look like?

The main support for a Minister will be provided by the government department or departments in the Minister's portfolio/s. The Minister's office is typically a small unit servicing the Minister's immediate and daily needs, including diary management, correspondence, media liaison, travel arrangements, interaction with the House of Representatives, Cabinet and its committees, and caucus, and managing the flow of departmental and other government business.

A Minister's office is usually extremely busy, and focused on the immediate and practical tasks that will enable the Minister to manage the full range of political and media issues arising in the course of a day. Managing the office spending is a small part of the work.

The number of staff in a ministerial office varies from about 6 to 12, depending on the size and complexity of the Minister's portfolio responsibilities. The main roles are described in Figure 3.

Figure 3
Main roles of ministerial office staff

Who works in a ministerial office?
The office is usually headed by a senior private secretary, who has overall management responsibility for the office and for the support provided to the Minister. The senior private secretary is usually responsible for the Minister's diary, including House, Cabinet, and electorate commitments, travel, and attendance at public and other events. A senior private secretary must have a close working relationship with the Minister. In practice, they will be helping the Minister prioritise and juggle a wide range of competing demands, including personal and family commitments.
The portfolio private secretaries are usually seconded into the office from the relevant government department to support the Minister on activities relating to that portfolio. They manage the flow of business between the Minister and the department, including correspondence, briefings, policy papers, Cabinet papers, and any other matters requiring follow-up or liaison.
A ministerial adviser provides general policy and political support to the Minister by maintaining a strategic overview of portfolio activities, providing advice on policy issues and options, liaising with other advisers, Ministers, and select committees, consulting with other political parties, groups, and individuals, and managing the flow of answers to written and oral parliamentary questions and Official Information Act requests.
The press secretary provides public relations, publicity, and information services for the Minister, including advice on public relations matters, preparing speeches and media releases, and liaison with media and other media advisers.
The office will also include a small number of secretarial and administrative support staff, who will be the first point of contact for people dealing with the office, manage travel bookings and office supplies, provide word processing, data, and information management services, and carry out a wide range of other administrative tasks.

Who is responsible for ministerial spending?

Under the Public Finance Act 1989, the Department administers the Vote. It must be able to account to the Vote Minister and to Parliament on the use of those funds, including providing assurance that all spending is within the terms of the appropriation and any other legal rules. To meet those responsibilities, the Department must have financial management and accountability processes in place that can provide assurance that spending is appropriate.

Although the Department formally incurs expenditure on behalf of the Crown, and must be able to account for the use of funds, Ministers and ministerial office staff are able to make decisions about spending and enter into contracts and binding commitments on behalf of the Department.

Staff in ministerial offices are employees of the Department and are directly accountable to the Department for their spending decisions. They must be able to demonstrate to those centrally overseeing the financial management processes that expenses they incur are within the rules.

Ministers are not accountable to the Department in the same way. However, they must provide information to the Department to enable it to assure itself that expenses are appropriately incurred under the Vote. For its part, the Department needs to have the ability to seek such supporting information to enable it to discharge its responsibilities.

All those involved in spending public money are accountable for their part in the use of those funds, whether they are the administering department, a staff member, or a Minister. The nature of that accountability will vary to match the type of decision and level of responsibility.

What are the rules for ministerial spending?

Legal rules

Historically, there have been no specific legal rules controlling the way in which the Department provides support to Ministers. It has simply been part of the administrative function of running a government. It does not need legislative backing. The primary legal constraint on what funds can be used for is provided by the appropriation system, because the appropriations set limits on the amount that can be spent and define the broad purposes for which money can be spent.

Aspects of the system changed in 2002 and 2003, as part of more general changes to the overall support arrangements for managing remuneration and allowances and support for MPs and Ministers. Until these changes, the Higher Salaries Commission (as the Remuneration Authority then was) set a range of allowances for public office holders that mixed business expenses and remuneration. The 2002 amendments to the Civil List Act 1979 and the Remuneration Authority Act 1977 created three different areas of responsibility:

  • The Remuneration Authority was given responsibility for setting the salary and allowances for MPs and Ministers.
  • The Speaker was required to determine the travel, accommodation, attendance, and communications services to be provided to MPs (the Parliamentary Determination).
  • The Minister responsible for Ministerial Services was given authority to determine, for members of the Executive, any additional or alternative services for Executive travel, accommodation, attendance, and communications (the Executive Determination).

The first Executive Determination was made under the new Civil List Act provision on 1 November 2003. It set out the travel, accommodation, attendance, and communications services to be provided to Ministers and their families. It is not a comprehensive description of the support that can be provided, because it sits on top of the pre-existing general ability of the Department to provide support to Ministers.

Ministerial Services reviewed the Executive Determination in 2008, and the responsible Minister issued an updated Executive Determination in May 2009. The main changes were the inclusion of contextual and purpose statements and guiding principles to match the equivalent Parliamentary Determination. Schedules giving examples of what would be paid for under "operational resources", and making clear what services were provided with a ministerial residence, were also included.

A number of definitions were updated, and other aspects of the entitlements were clarified or modified in minor ways. As we noted in our report on the first part of this inquiry, the matters listed in the schedule on what is covered by "operational resources" are also included in the guidance provided by the Remuneration Authority on what the parliamentary allowance is designed to cover.

The Executive Determination was changed again in October 2009, to implement the decision to change the way in which accommodation support would be provided to Ministers.

Ministerial Services has told us that it intends to review the Executive Determination every three years from now on, to coincide with the general election cycle.

Administrative rules

The Handbook describes itself as the authoritative guide for Ministers and ministerial office staff on administrative and support services. A revised edition was produced in July 2008 and the Handbook was made available on the Ministerial Office intranet in 2009. The intention is that the Handbook will be updated electronically from time to time.

Among other things, the Handbook outlines financial policies and procedures for ministerial office spending. It describes the responsibilities of ministerial office staff involved in spending, the particular types of spending they can incur, the principles guiding them, and the available methods of payment. It also sets out procedures for arranging ministerial travel.

The Department's financial delegations govern the spending under Vote Ministerial Services. Both the General Manager of the Executive Government Support group and the Assistant General Manager, Ministerial Services have delegated authority to approve a wide range of spending up to specified limits. Senior private secretaries do not have delegated authority to approve spending, but are able to commit to and certify some types of spending, without prior approval, up to specified limits. For example, they can place a stationery order and send the documentation for that transaction to the Assistant General Manager for approval. These spending limits are set out in the Handbook.

The Department's general departmental policies also apply to much of the ordinary business of running a ministerial office. This includes the Department's Code of Conduct, as well as policies on employment matters, business spending, credit cards, probity, and koha.

In practice, there is also a steady stream of working-level decisions that create a substantial body of institutional knowledge, operating a little like an informal precedent system. Ministerial Services administrative staff build up a substantial body of knowledge, and individual senior private secretaries also accumulate their own experience and understanding of how the rules apply. Ministerial Services communicates new or significant decisions that apply broadly to office staff through formal meetings with all senior private secretaries, and through email correspondence.

What are the financial management processes for ministerial spending?

Spending by Ministers and their ministerial offices can occur in three ways:

  • through the Department's invoice payment process (which can include reimbursing Ministers and their ministerial office staff for work-related expenditure);
  • by credit card (provided for Ministers and selected office staff); or
  • through an office imprest account (which can also include reimbursing people).

Ministerial Services provides each ministerial office with a cheque account called an imprest account (if requested), which is used when a payment needs to be made directly to a supplier rather than through the Department's standard processes. The Minister's senior private secretary is authorised to operate the account. The float balance of the imprest account is small – the Handbook says that it is about $2,000. The senior private secretary must complete a reconciliation form documenting all the transactions before Ministerial Services will reimburse the account to maintain the float.

As noted above, a senior private secretary is able to commit to routine spending up to certain limits, as set out in the Handbook. Figure 4 sets out some examples of what a senior private secretary can authorise.

Figure 4
Examples of what the senior private secretary can authorise

Cost code Description Activity A senior private secretary can certify…
5041 Internal travel and accommodation Staff travelling without the Minister, and koha short-notice travel, up to $1,000.
5054 Printing and photocopying Includes printing of stationery (for example, business cards, letterhead) up to $700 for each order.
5104 Entertainment Covers non-allowance meal costs, office internal functions (for example, staff farewells), and non-portfolio related events up to $300 for each function, and alcohol purchases up to $100.
5111 Gifts All official gifts given within New Zealand. Overseas gifts are included in the travel authority for the trip up to $250 for each order.
5265 Government hospitality Portfolio-related ministerial functions up to $1,000 for each function.

Anything above the specified approval levels or outside the approvals listed must be approved in advance by the Assistant General Manager. This is usually done by email.

The senior private secretary must certify that all spending is correct before forwarding it to Ministerial Services for checking, approval, and payment. This requires the senior private secretary to check that the spending is for a valid ministerial purpose and is within the rules, that there is appropriate support for the spending (usually a tax invoice or receipt and any other relevant documentation), that the correct signatures are there to show that the spending was properly incurred, and that personal cheques are attached for any personal spending.

Usually, the ministerial office will receive an invoice for the spending. The invoice, along with evidence of any pre-approval, will make up the supporting documentation. Sometimes there will not be an invoice. Koha is a common example. In these instances, the policy will generally require the person who spent the funds (usually the Minister) to certify that the payment was made and provide some supporting information (such as the date, location, and recipient).

The same applies for spending on credit cards, reimbursement claims, and reconciliations of travel expenses. The senior private secretary must collate all the relevant supporting documentation, check the purpose and authorisations, and ensure that it is all correct before forwarding it to Ministerial Services.

The Administration and Finance Team (the finance team) in Ministerial Services provides assistance to ministerial offices on spending matters, and is available to answer any questions that staff might have. The finance team is responsible for:

  • assigning cost codes to invoices before forwarding them to the Assistant General Manager for approval and payment;
  • assessing any reconciliations and the adequacy of the supporting documentation, using the legal and administrative rules and the spending principles; and
  • questioning and seeking further information about any spending where they identify an issue or do not have adequate support for the expense.

As the person with the delegated authority to approve payments, the Assistant General Manager must then review each transaction and decide whether to approve it. The Assistant General Manager will question a transaction and seek further information if necessary. Once approved, the transaction is processed for payment.

The financial management processes are now largely electronic (with the exception of credit card transactions). Hard copy invoices and other documentation are scanned into electronic files that can then be easily circulated to the various offices for review and approval.

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