Controller update: September 2021


This update explains recent events in Parliament’s authorising of public expenditure and our work in monitoring Government spending and providing assurance to Parliament and the public.

Our role

The Controller and Auditor-General is often referred to as the public “watchdog” on government spending. An important part of the watchdog role is the Controller function.

In this Controller role, we provide assurance to Parliament and New Zealanders that the Government has spent public money in line with the authority provided by Parliament.

The Controller and Auditor-General carries out his Controller role throughout the year and reports more fully to Parliament after the end of the financial year to 30 June.

A critical part of our Controller work is carried out by our auditors. They are currently auditing the Government’s financial records and systems. This includes confirming the extent to which the Government has spent public money without the required authority.

How much did Parliament authorise for 2020/21?

When Parliament passed the Budget Bill for the 2020/21 financial year, it also passed another Bill to allow the Government more flexibility to reprioritise its spending, introduce new spending initiatives between Budgets, and respond to events and other matters that could not be foreseen when the Budget was put together. This is normal practice, and it happens every year.

Figure 1 shows the amount of spending authority available to the Government in the 2020/21 financial year through the two pieces of resulting legislation – the Act that authorises the Budget1 and the second Imprest Supply Act.2

Figure 1
Comparison of initial and updated Budget for 2020/21 ($ billion)

Figure 1 - Comparison of initial and updated Budget for 2020/21 in billions.

The Act that authorised the Budget 2020 spending plans allowed for up to $130.9 billion for the 2020/21 financial year (the dark bar in the first column), and the second Imprest Supply Act provided additional between-Budget spending authority of up to $56.5 billion (the light bar). This took the maximum amount the Government could spend to $187.4 billion.

As is normal practice, the Government updated its Budget later in the financial year and presented the updated Budget to Parliament on Budget Day. In June 2021, Parliament authorised the updated, final Budget (of $151 billion)3 through the Supplementary Estimates Act.4

The total amount of spending authorised by Parliament is the maximum allowable – it does not represent how much the Government has actually spent.

Our Controller work for 2020/21

From October to June each year, we monitor the spending of public money to determine whether the Government has spent it in line with the authority provided by Parliament. As part of this work, our auditors examine the financial records and financial systems of government departments to provide assurance that expenditure has been properly authorised. If it has not, then our auditors check that the nature and amount of unappropriated expenditure is accurately reported to Parliament and the public.

Since 30 June, our auditors have been auditing the financial statements of government departments and the consolidated Financial Statements of the Government for the year ended 30 June 2021. Confirming the nature and amount of any unappropriated expenditure is an important part of this work.

We expect to complete our audit of the Financial Statements of the Government by 30 September 2021. As required by the Public Finance Act 1989, those Statements will include disclosure of any public money spent during 2020/21 without the correct authority in the “Statement of Unappropriated Expenditure”. (We provided our Controller half-year update on unappropriated expenditure in March 2021.)

Covid-19 spending in 2020/21

We have been monitoring Covid-19 spending as part of our monitoring of all government spending. We have given special attention to monitoring Covid-19 spending because, with the scale of this spending, there is considerable public interest in how much of the Covid-19 Response and Recovery Fund (CRRF) has been allocated and how much has been spent.

In June 2021, the Treasury published on its website data on the Government’s Covid-19 response and recovery spending up to 31 March 2021. The Treasury tells us that it intends to update this data in the near future to cover spending up to 30 June 2021.

Government spending so far in 2021/22 and our Controller work

Parliament passed the Budget Bill5 in September 2021, along with an Imprest Supply Bill.6 Both were enacted when they received Royal Assent on 13 September 2021.7

The resulting Act gives legal authority to the Government’s 2021/22 Budget, and the resulting second Imprest Supply Act authorises the Government to spend up to $41 billion in addition to that specified in the Budget (an additional 27%).

Imprest supply gives the Government considerable freedom to spend public money without much restriction8 and without Parliament scrutinising it before it is spent. All changes, including new spending using imprest supply, are later included in the Supplementary Estimates, which effectively update the original Budget (see our Controller update of 2 August 2021 for more on this).

Figure 2 shows that, following the outbreak of Covid-19, the provision of imprest supply increased considerably. Most of the $41 billion of imprest supply available for 2021/22 provides a general contingency for unforeseen increases in appropriations.9,10

Figure 2
Between-Budget imprest supply authority11

Figure 2 shows that, following the outbreak of Covid-19, the provision of imprest supply increased considerably.

The Government has already required spending authority outside the Budget 2021 Estimates to meet expenses relating to the Covid-19 Alert Level 4 lockdown in August and September 2021.

Budget 2021 provided $500 million for the Business Support Subsidy (the Wage Subsidy Scheme) for 2021/22, but $1.8 billion had been paid out by 13 September 2021 because of the most recent Alert Level 4 lockdown. There was no budget for the Covid-19 Resurgence Support Payment for 2021/22, but $531 million had been paid out by 13 September 2021 for this initiative.12 This spending was authorised under the first Imprest Supply Act for the year.13

Other support measures that might result in expenditure in excess of the Budget include the Leave Support Scheme (Budget: $40 million) and the Small Business Cashflow (Loan) Scheme (Budget: $175 million).

In October 2021, we will continue our monthly Controller monitoring of public spending against the legislative authority covering the 2021/22 financial year:

  • We will check a sample of changes made to the Government’s budgeted spending to ensure that the between-Budget changes have been properly approved.
  • We will check that any new spending approved by Cabinet remains within the Imprest Supply limit set by Parliament.
  • After spending approval has been given (either through the initial Budget or through Cabinet’s approval of extra between-Budget spending), we will check that the spending is in line with the approvals given.
  • We will draw any Government spending that is outside the authority provided by Parliament to the attention of the Government, Parliament, and the public.
  • We will continue to monitor the Treasury’s information releases on the Government’s Covid-19 spending.
  • We will assist Parliamentary committees in their scrutiny of government department spending and performance by providing information and advice based on the broader work of our Office.

1: The Appropriation (2020/21 Estimates) Act 2020.

2: The Imprest Supply (Second for 2020/21) Act 2020.

3: It is not unusual for the “final authority” to be less than the “initial authority”. That is because imprest supply represents the upper limit of what Parliament has authorised, whereas the “final authority” more closely aligns to the final estimated spend for the year.

4: The Appropriation (2020/21 Supplementary Estimates) Act 2021. We explain the Supplementary Estimates process in our Controller update of 2 August 2021.

5: The Appropriation (2021/22 Estimates) Bill.

6: The Imprest Supply (Second for 2021/22) Bill.

7: Up to 13 September 2021, public expenditure for 2021/22 was authorised through the Imprest Supply (First for 2021/22) Act 2021.

8: The Explanatory Note for the Imprest Supply Bill specifies the main components of the expected between-Budget spending. The resulting Act does not restrict the spending but specifies spending limits for expenses, capital expenditure, and capital injections.

9: Appropriations are authorities from Parliament that specify what the Crown may incur expenditure on (specific areas of expenditure). Most appropriations specify limits in terms of the type of expenditure (such as operating or capital expenditure), what it can be used for, the maximum amount, and the time period.

10: Explanatory note to the Imprest Supply (Second for 2021/22) Bill.

11: These figures represent the authority provided by the second annual Imprest Supply Act for each year, and the third Imprest Supply Act for 2019/20. These Acts “top up” the spending authority provided by the annual Acts that authorise the main Budgets (that is, the Appropriation (Estimates) Acts).

The first Imprest Supply Act for each year provides the Government with authority to spend public money until the Act that authorises the Budget comes into force.

12: More financial support for businesses |

13: Imprest Supply (First for 2021/22) Act 2021.