IV. NEW ZEALAND

●Adoption of a new Crown Entity Act including: building a basis for strategic engagement between ministers and Crown entity boards so as to establish performance expectations and report performance; clarify the relationship between ministers and individual Crown entities with clear and consistent roles and relationships; strengthen integration of Crown entities with the State sector; and provide for whole-of-government information.

Finally, in an effort to strengthen the role of Parliament – in particular the Financial and Economic Committee (FEC) – the Standing Orders of the House of Representatives were amended in December 2003. Although the FEC’s oversight of Crown entities and State-owned enterprises was enhanced, Parliament’s role in the budget process will continue to be weak so long as the “financial veto” is retained – this is the government’s power to reject any proposals by Parliament to amend the government’s draft budget (apart from in very minor ways).

2. Principles underlying budget system laws

The budget system laws include all the main classical principles (authoritativeness, annual basis, universality, unity, and specificity) as well as the modern principles (accountability, transparency, stability, and performance).

One of the fundamental principles for the budget system law, the principle of authoritativeness is embodied in the Constitution Act 1986 and the PFA. The Constitution Act clearly states that no expenditure of public money is to be made other than in accordance with appropriation by an act of Parliament (s. 22). The PFA provides that expenditure may only be made to settle appropriated expenses or the costs incurred in acquiring or developing assets or in the repayment of Crown liabilities. Parliamentary appropriations are therefore on an accrual basis giving the legislature authority not only over the disbursement of public money, but also over the incurrence of obligations relating to expenses and capital items.

Other classical principles are also specified in the PFA. The budget estimates are provided for a 12-month period from 1st July to 30 June (annual basis, s. 2, PFA). The principles of universality and unity require the budget to include all revenues and expenditures on a gross basis and in the same document. However, there are some exceptions, as net appropriations are also allowed. The budget estimates are prepared in accordance with types of appropriations under the departments or agencies (principle of specificity, s. 4, PFA).

The PFA and FRA were adopted to include modern budget principles including fiscal sustainability, efficiency and the effectiveness of public expenditure. The FRA requires the government to keep to sound public financial