It is a basic constitutional principle that the Government can spend public money and incur expenses and capital expenditure only in accordance with appropriations made by an Act of Parliament and in an otherwise lawful manner.

However, Parliament has, in the Public Finance Act 1989 (the Act), conferred limited authority on the Governor-General by Order in Council to vary appropriations made by Parliament and on the Minister of Finance to approve expenditure in excess of an existing appropriation by Parliament. Any other unappropriated expenditure must be validated by an Appropriation Act.

Section 26A of the Act authorises the Governor-General by Order in Council to direct that an amount appropriated in a Vote for an output expense be transferred to another output expense appropriation in that Vote. There are 3 restrictions. First, the transfer must not increase that appropriation for the financial year by more than 5%. Secondly, there must not have been any other transfer under section 26A of the Act to that appropriation during the financial year. Thirdly, the total amount appropriated for all output expense appropriations for that Vote for the financial year must remain unaltered. A clause that confirms those Orders in Council must be included in an Appropriation Bill that applies to that financial year.

This Bill confirms the Public Finance (Transfers Between Outputs) Order 2019, which was made under section 26A of the Act (clause 5).

Section 4 of the Act prohibits the incurring of expenses or capital expenditure, except as expressly authorised by an appropriation, or other authority, by or under an Act. Sections 8 and 9 of the Act require appropriations to be limited to a specified amount and limited to the scope of the appropriation.

Section 26B of the Act authorises the Minister of Finance to approve the incurring of expenses or capital expenditure in the last 3 months of the financial year in excess, but within the scope, of an existing appropriation by Parliament. This is subject to a limit that is the greater of $10,000 and 2% of the total amount appropriated for that appropriation by all Appropriation Acts for that financial year. The approval must be given not later than 3 months after the end of the financial year concerned. Expenses and capital expenditure incurred under the approval must be confirmed in an Appropriation Bill that applies to that financial year.

This Bill confirms expenses incurred for the 2018/19 financial year with the approval of the Minister of Finance under section 26B of the Act (clause 6). Details of this confirmation are set out in Schedule 1.

Section 26C of the Act requires the incurring of expenses or capital expenditure without appropriation, or other authority, by or under an Act to be validated by an Act of Parliament.

For the 2018/19 financial year, certain expenses were incurred that require validation by this Bill in accordance with section 26C of the Act. Clause 7 validates these expenses, the details of which are set out in Schedules 2 to 4, as follows:

• Schedule 2 contains details of expenses incurred in excess, but within the scope, of existing appropriations and without the authority of an Imprest Supply Act:

• Schedule 3 contains details of expenses that were incurred not within the scope of any existing appropriations and without the authority of an Imprest Supply Act:

• Schedule 4 contains details of expenses incurred in advance of appropriation and without the authority of an Imprest Supply Act.

The Bill also validates expenses—

• incurred in the 2014/15, 2015/16, 2016/17, and 2017/18 financial years by the New Zealand Defence Force in respect of Vote Defence Force in excess of existing appropriations (clause 8 and Schedule 5):

• incurred in the 2014/15, 2015/16, 2016/17, and 2017/18 financial years by Ministry of Education in respect of Vote Education without an appropriation (clause 9).

A departmental disclosure statement is not required for this Bill.