Audit Office “Worried” By Government Spending

Press, Volume XCIX, Issue 29240, 25 June 1960, Page 14

Audit Office “Worried” By Government Spending

(New Zealand Press Association)

WELLINGTON, June 24. Government spending wasso far ahead of revenue at the end of the financial year that the Auditor-General had to seek special assurances from the Treasury that finance would be available to meet day-to-day payments and

cover the overdraft on the Public Account, said the Auditor-General (Mr A. D. Burns) *in his annual report tabled in Parliament today.

Mr Burns also criticised Government action late last year when it reduced the tax on petrol, cigarettes and beer without reference to Parliament.

“If Customs duty can be altered by Order-in-Council solely for the purpose of increasing or reducing the amount of taxation to be produced, the cardinal principle on which the whole British Constitution is based—the supreme right of Parliament to control taxation—is avoided." said the report. The Auditor - General states that he passed Government payments towards the end of the financial year only after obtaining a statement from the Treasury which satisfied him ’ that sufficient money would be borrowed from the Reserve Bank to liquidate the overdraft in the Public Account and provide a small working cash balance. Handicap

The serious run-down of the cash in the Public Account from £23.681.337 to £4,359.449 resulting from the year’s workings indicated that the Government began a new year under a considerable handicap in its available cash resources, said Mr Bums. In addition to ever-increas-ing expenditure, which was difficult to curb, there was the possibility that many millions would be required to finance the additional expenditure of the social security fund and to repay loans if conversion offers were not substantially accepted in respect of loans aggregating £60,446.882 falling due during the year. Unless sufficient money was available to meet these payments, further audit difficulties in the control of expenditure could ensue, said Mr Burns.

During the year the question arose as to the power of the Government to alter taxation without the sanction of Parliajnent. “Should it be in order to reduce taxes the danger cannot be overlooked that, when circumstances dictate, rates of taxation could be increased without consulting Parliament.”

The matter was therefore taken Up immediately by the Audit Off.ce with the Customs Department. which had promoted the Orders-in-Council authorising the alterations.

Discussions also took place with the Treasury and the question va; then referred by the Audit Office tc the Crown Law Office. The reply received was to the effect that the words used in section 12 of the Customs Amendment Act. 1921, were wide enough

to enable either increases or reductions to be made.

In view of that opinion no fufther action was taken but the principle involved was of such importance that it was felt Parliament’s attention should <e drawn to it, said Mr Burns. The Audit Office considered it a duty to draw attention to anything that may tend to weaken Parliamentary control over either the levying of taxation or the expenditure of money. A generally-accepted principle was that Parliament—and Parliament alone—had the right to impose taxation or to reduce it. “From a perusal of Section 12 of the 1921 Act and of the reports on the discussions in Parliament when the act was passed, it would appear that the section was intended to operate only in certain special circumstances and not to enable general reductions in taxation to be made without consulting Parliament.” said the report. “As far as the Audit Office is aware, this, is the first instance where the 1921 legislation has been so used. The question arises whether the 1921 legislation should be amended or repealed.”