Completeness of Budget estimates information

2 November 2021

Mr Andrew Bayly MP and Hon Michael Woodhouse MP

Tēnā kōrua Mr Bayly and Mr Woodhouse

COMPLETENESS OF BUDGET ESTIMATES INFORMATION

Thank you for your letter dated 27 August 2021. In that letter, you raised concerns about the quality of reporting on public expenditure and the ability of the Estimates of Appropriations to serve their wider purpose as a key accountability mechanism.

You have questioned expenditure that you consider ought to have been reported as new policy initiatives or as current and past policy initiatives in the Estimates of Appropriations and supporting documentation. You also told us you have found it difficult to reconcile the Government’s policy funding announcements with the Estimates of Appropriations. Included in your concerns are that:

• $100 million of funding for jobs to help control wilding conifers was not disclosed in the New Policy Initiatives or Current and Past Policy Initiativestables in the 2021/22 Estimates of Appropriations for Vote Agriculture, Biosecurity, Fisheries and Food Safety in the Biosecurity: Border and Domestic Biosecurity Risk Management Multi-Category Appropriation (MCA);
• the $40 million Land Information New Zealand Biosecurity Programme for Immediate and Sustained Job Creation to Remove Pests and Weeds was not listed as a new, current, or past policy initiative;
• current and past policy initiatives for the Crown Land multi-category appropriation accounts for only $11.5 million of the $68.9 million appropriation for 2021/22; and
• you found it difficult to locate the $300 million announced by the Minister for the homelessness action plan package in Vote Health.

Overall, you are concerned that not specifically documenting these matters as either new policy initiatives or current and past policy initiatives means that it is difficult to make sense of movements in appropriations year to year, and to tie movements in appropriations to government policy announcements.

You sought our view of the completeness of the Estimates documents and whether details of key policy initiatives have been omitted.

To respond to the issues you raised, we have reviewed the Ministers’ announcements, the Estimates of Appropriations, the Supplementary Estimates of Appropriations, and the Treasury’s technical guidance on Estimates, Supplementary Estimates and their Supporting Information. We also sought further information from the Treasury. This is because the Treasury is responsible for setting and providing technical guidance to departments and providing overall co-ordination of the Budget process.

Our response is structured in two parts. First, we respond to the specific appropriation issues you have raised. Secondly, we make some general observations about the appropriation management system.

Initiative: National Wilding Conifer Control Programme to Boost Regional Economies and Employment

You told us you are concerned that this initiative and the proposed funding were not disclosed in the 2021/22 Estimates of Appropriations in the New Policy Initiatives for Vote Agriculture, Biosecurity, Fisheries and Food Safety and within the Current and Past Policy Initiatives for the MCA, Biosecurity: Border and Domestic Biosecurity Risk Management.

In our view, this initiative should have been included in the New Policy Initiatives and Current and Past Policy Initiatives tables but has been omitted.

We have contacted the Ministry for Primary Industries about this, and the Ministry acknowledges that there was an oversight in providing information on this initiative. We discussed and clarified with the Ministry the Treasury’s requirements for what information should be included in the Vote Estimates documents.

The disclosure of information on new, current, and past policy initiatives is not a legal requirement and, as such, the absence of this information does not affect compliance with the Budget Act,¹ or the amount and type of expenditure authorised under Vote Agriculture, Biosecurity, Fisheries and Food Safety. However, as you note, the Treasury requires these disclosures, and they provide important information that helps people to understand how Budget announcements affect the Vote.

Initiative: Land Information New Zealand Biosecurity Programme for Immediate and Sustained Job Creation to Remove Pests and Weeds

You told us you are concerned that this initiative and the proposed funding was not disclosed in the 2021/22 Estimates of Appropriations within the New Policy Initiatives for Vote Lands and within the Current and Past Policy Initiatives for the MCA, Crown Land.

In our view, this initiative should have been included in the New Policy Initiatives and the Current and Past Policy Initiatives tables but has been omitted.

We have contacted Land Information New Zealand about this, and the department acknowledges that there was an oversight in providing information on this initiative. As mentioned above, the disclosure is not a legal requirement and, as such, the absence of this information does not affect compliance with the Budget Act or the amount and type of expenditure authorised under Vote Lands. However, as you note, the Treasury requires these disclosures, and they provide important information that helps people to understand how Budget announcements affect the Vote.

Aotearoa New Zealand Homelessness Action Plan package

You told us you are concerned that it is hard to identify in the Estimates of Appropriations where the “mental health plank” of the $300 million Homelessness Action Plan is located. The items relating to mental health, as listed in the 13 February 2020 announcement,² are:

• $25.6 million additional funding to the Sustaining Tenancies programme to help those at risk of losing their rental with practical support, including budget advice, property maintenance, and mental health and addiction support; and
• $16.3 million to help acute mental health and addiction inpatients transition into the community with housing and other wrap-around support.

We have noted that the announcement does not identify which Votes or appropriations will provide for this expenditure, nor does it indicate the number of years over which the funding will be allocated. Also, we were unable to identify any specific references in the Budget documents that correspond to this specific funding announcement.

The Treasury has informed us that appropriate disclosures have been made in the relevant Votes’ New Policy Initiatives and Current and Past Policy Initiatives tables. We provide a breakdown of funding relating to the Homelessness Action Plan and where it can be located across Vote Health, Vote Social Development, and Vote Housing and Urban Development in the Appendix to this letter.

A complicating factor with this announcement is that the titles of the initiatives announced by the Minister differ from the titles used in the Budget documents. This meant it was not possible to identify in the Estimates documents the initiatives described in the announcement.

Current and Past Policy Initiatives in relation to the total of the relevant appropriation

You also expressed concern about the proportion of the total appropriation that was reported in the Current and Past Policy Initiatives tables, specifically that:

• the entire Current and Past Policy Initiatives table for the Crown Land MCA in Vote Lands accounts for only $11.5 million of the $68.9 million appropriation for 2021/22; and
• the Current and Past Policy Initiatives table for the National Mental Health Services appropriation in Vote Health does not account for approximately $57 million (that is, it accounts for only $186 million) of the $243 million 2021/22 appropriation.

The Current and Past Policy Initiatives table aims to provide useful supporting information about recent funding decisions for the relevant appropriation. It is not designed to be a reconciliation to the current limit of the appropriation. It does not include policy decisions from more than four years ago and does not include technical changes to appropriations that Joint Ministers can make under delegated authority from Cabinet. For those reasons we would not expect the sum of the Current and Past Policy Initiatives for any given appropriation to equal the total amount of the appropriation.

Concluding comments

On the first matter, the Conifer Control Programme and the Pest and Weeds initiative, the Ministry for Primary Industries and Land Information New Zealand did not include the required disclosures within the Estimates information for Budget 2021 for these policy initiatives. We understand that this was inadvertent, and we have brought this to their attention.

The primary purpose of the Estimates of Appropriations is to provide information and a framework, for Parliament’s authorisation and control of public expenditure. The absence of these two policy initiative disclosures does not affect compliance with the Budget legislation or the lawfulness of expenditure on these initiatives. However, the New Policy Initiatives table is designed to provide important context for the Vote and helps to link the appropriation changes to Budget policy announcements. It is also, as you have noted, required by the Treasury’s technical guidance.

Department Chief Executives and their staff are responsible for providing accurate and complete Estimates documents. I have brought this matter to the attention of the Secretary to the Treasury. The Treasury has undertaken to follow this up with the two departments and the wider community of department finance professionals.

On the second matter, the funding referred to in the Minister’s announcement was included in the Estimates information for Budget 2021, but it was not possible to identify it because of inconsistency in the terminology used.

It is often difficult to track, from publicly available documents, the funding of policy initiatives in Budget announcements through to the formal Budget documents and, ultimately, to department annual reports. This is made more difficult when the funding relates to an array of inter-related initiatives, funds, programmes, and packages. It is complicated when funding flows through various Votes administered by various departments. It is further complicated when descriptors used in policy announcements differ from those used in the Budget documents, which is what happened with the Homelessness Action Plan package.

In my view, members of Parliament and the public should be able to track funding for major policy initiatives as announced by Ministers through to the appropriations that authorise them, the expenditure incurred under the appropriations, and the relevant performance information about what has been achieved with that public money.

Last year, I expressed similar concerns about the transparency of the Provincial Growth Fund, which was described, announced, and presented as a single “Fund” but allocated to various Votes administered by several government agencies. One of the key messages in my report on the Fund is that the basis on which public money is allocated and spent, and the value obtained from that expenditure, should be transparent to the public whose taxes are being spent.

I have also recently drawn attention to the difficulty reconciling (from publicly available information) funding allocated to Covid-19 Response and Recovery Fund initiatives in general to Vote and appropriation information in the Budget Estimates. It is often challenging, and sometimes not possible, to do this on the basis of publicly available information.

In my view, for Parliament and the public to hold the Government accountable for its publicly announced spending and associated funding decisions, the information in those announcements needs to be easily identifiable within, and reconcilable to, Budget and other accountability documents. Accountability to Parliament and the public for major Government policy initiatives cannot be discharged simply through public announcements of those initiatives.

As your letter raises matters of broader public interest, I will also publish this response on our website.

Nāku noa, nā

John Ryan
Controller and Auditor-General

Appendix

Initiative: National Wilding Conifer Control Programme to Boost Regional Economies and Employment

On 14 May 2020, the Government announced this initiative as part of a $315 million biosecurity package, including weed and pest control. That package includes $100 million for jobs to help control wilding pines.

The new Conifer Control Programme announced in 2020 was included in the initiatives under the Covid-19 Response and Recovery Fund (CRRF) Foundation Package, 29 May 2020, under Vote Agriculture, Biosecurity, Fisheries and Food Safety. Planned funding as set out in the CRRF is 2020/21: $32.5 million, 2021/22: $32.5 million, 2022/23: $25 million, and 2023/24: $10 million.

Joint Ministers approved the use of imprest supply on 9 August 2020 for the $32.5 million allocated to 2020/21, in advance of increasing the appropriation, Biosecurity: Border and Domestic Biosecurity Risk Management MCA through the 2020/21 Supplementary Estimates. The Budget 2021 Supplementary Estimates of Appropriation for Vote Agriculture, Biosecurity, Fisheries and Food Safety confirm that one of the factors in the appropriation increase for 2020/21 is a $32.5 million increase for the response to wilding conifers.

In our view, the Ministry for Primary Industries should have included this initiative and the proposed funding in the 2021/22 Estimates of Appropriations, within the New Policy Initiatives for the Vote and within the Current and Past Policy Initiatives tables for the MCA, Biosecurity: Border and Domestic Biosecurity Risk Management.

Initiative: Land Information New Zealand Biosecurity Programme for Immediate and Sustained Job Creation to Remove Pests and Weeds

On 14 May 2020, the Government announced this initiative (which we refer to as the “Pests and Weeds” initiative) as part of a $315 million package biosecurity package. That package includes $40 million for Land Information New Zealand to carry out pest and weed control in rivers on Crown land.

The new Pests and Weeds initiative announced on 14 May 2020 was included in the initiatives under the CRRF Foundation Package, 29 May 2020, under Vote Lands. Planned funding as set out in the CRRF is for $10 million each year for four years, 2020/21 to 2023/24.

Cabinet approved the use of imprest supply on 11 May 2020 for the $10 million allocated to 2020/21, before increasing the appropriation Crown Land MCA (specifically the departmental output category, “Crown Land Management Expenses”) through the 2020/21 Supplementary Estimates. However, the policy decision was too late for inclusion in the Budget 2020 documents.

In our view, Land Information New Zealand should have included this funding and the proposed funding in the 2021/22 Estimates of Appropriations within the New Policy Initiatives table for Vote Lands and within the Current and Past Policy Initiatives table for the MCA, Crown Land.

Aotearoa New Zealand Homelessness Action Plan package

On 13 February 2020, the Government announced additional funding to prevent homelessness. The announcement stated that more than $300 million of extra funding would be made under the Aotearoa New Zealand Homelessness Action Plan package (Homelessness Action Plan). The items relating to mental health, as listed in the 13 February 2020 announcement, are:

• $25.6 million additional funding to the Sustaining Tenancies programme to help those at risk of losing their rental with practical support including budget advice, property maintenance, and mental health and addiction support; and
• $16.3 million to help acute mental health and addiction inpatients transition into the community with housing and other wrap-around support.

We were unable to identify any specific references in the relevant official documents that correspond to the 13 February 2020 funding announcement of $25.6 million to the Sustainable Tenancies programme and $16.3 million to help acute mental health and addiction inpatients under the Homelessness Action Plan. We asked the Treasury for an explanation.

The Treasury has informed us that in Budget 2019 the Government set up two tagged contingencies: Progressing and Expanding Transitional Housing and Transitional Housing – Funding for the Provision of Additional Places to Reduce Homelessness (which were subsequently combined). Together these come to $413.430 million (a mix of operating and capital contingency). This was known as the Homelessness contingency.

In November 2019, Joint Ministers approved the drawdown of $296.080 million from the Homelessness contingency. One of the initiatives funded was Improve transitions from acute mental health and addiction inpatient units. This cost $16.268 million and funding was allocated to Votes Health, Social Development, and Housing and Urban Development as follows:

The Vote Housing and Urban Development funding was disclosed in Volume 10 of the 2020/21 Estimates on page 52, under the title Preventing and Reducing Homelessness. The Ministry of Housing and Urban Development aggregated several initiatives in this disclosure, which follows the Treasury guidance.

The Vote Health funding was disclosed in Volume 6 of the 2020/21 Estimates on page 11, under the title Preventing and Reducing Homelessness – Funding a balanced approach.

The Vote Social Development funding was disclosed in Volume 10 of the 2020/21 Estimates on page 155, under the title Preventing and Reducing Homelessness – Funding a Balanced Approach and Initiatives for Implementation in 2020.

In June 2020, Joint Ministers approved the drawdown of $25.62 million from the contingency for Accelerating the Sustainable Tenancies Expansion in Response to COVID-19. This funding was allocated to Vote Housing and Urban Development as follows:

This is disclosed on page 67 of Volume 10 of the 2021/22 Estimates for Vote Housing and Urban Development Estimates, under the title Sustaining Tenancies and Rapid Rehousing Implementation Plan.

These initiatives are both funded from a tagged contingency and they should have been, and were, included in the relevant Votes’ New Policy Initiatives tables. They were also included in the relevant Current and Past Policy Initiatives tables.

The Aotearoa New Zealand Homelessness Action Plan announcement contained a mix of funding already appropriated (Transitions) and funding that was appropriated after the announcement (Sustainable Tenancies). The complicating issue is that the titles of these initiatives were different from the titles in the announcement. This inconsistency in terminology meant that it was not possible to identify these initiatives in the Estimates documents.

1: The Appropriation (Estimates 2021/22) Act 2021.

1: See 13 February 2020 release “Government steps up action to prevent homelessness” at beehive.govt.nz.