Comment from the Capital

Press, 11 October 1976, Page 16

Comment from the Capital

March 31, 1975 the authorised limit of expenditure was exceeded for the first time since 1953. Legislation was passed subsequently by the Labour Government to validate this extra amount, which totalled $119,800,000.

Apparently no significant curb was applied, in what was admittedly a difficult economic situation. After the General Election of November 29, 1975, the new Minister of Finance (Mr Muldoon) quickly became aware of the position and began to move against its continuation, but he could do nothing to control the position for the year ending March 31 last. The amount of Government over-expenditure in that year, as revealed by the A u d i t o r-General, was $176,000,000 — a record in New Zealand history. Reaction has been immediate. The president of the Associated Chambers of Commerce of New Zealand (Mr F. T. Croft) has expressed his concern, and later the Associated Chambers called for a public inquiry into accounting and control methods in the Treasury and the Public Service generally. Replying to this letter, Mr Muldoon expressed his own deep concern at the position, and detailed the steps already taken to correct the situation resulting from what he termed “a gross disregard of Parliamentary authority.” Soon after coming into office, he called a Cabinet committee on expenditure, and set its members forking. Then he convened a meeting of permanent heads of departments. There was also a wide extension of the powers of the Public ‘Expenditure Committee — a purely Parliamentary body, on which both sides .awe represented. - There have been ; ’several other moves. One was to develop, through the Minister of State (Sir Keith Holyoake) a closer link between departments and the Government, and a closer interest in what individual departments were doing and how they were doing it. Considering all these matters, Mr Muldoon decided that no public inquiry was necessary. A firm Government hand has been placed on departmental planning, and there has been a closer relationship between it and the funds available. It is true, nevertheless, that the over-spending of the last two financial years, amounting to $295,800,000, has added greatly to the difficulties faced by the present Government. The funds for unauthorised overexpenditure would have to be provided mostly from overseas borrowing at the ruinously high interst rates existing over the last two years.

Parliament’s strongest link with the departments is undoubtedly the Public Expenditure Committee, the work of which is best calculated to remove the expenditure question from party politics and place it fimrly on a non-party basis. Firsty, after being reconstituted after the General Election, the committee seems well-suited to do its job* Second* it has been

meeting regularly: since early this year, has been working hard on departmental expenditures, and has made use of its new powers to call key Government servants before it to explain aspects of departmental planning. The chairman of this committee is Mr W F. Birch (Nat., Franklin) a consultant surveyor, aged 41, with a background of consultant work in surveying and engineering, with special reference to floor protection, reading and development projects. The Government members are Messrs E. G. Latter (Marlborough), R. Walls (Dunedin North) and R. L. Bell (Gisborne), and Misses C. E. Dewe (Lyttelton) and M. J. Waring (Raglan). Mr Latter is a farmer, Mr Walls a business and marketing manager, and Mr Bell a valuer and farm management consultant. Miss Dewe is a chartered accountant and Miss Waring a research assistant. The four Opposition members are all former Ministers, whose combined fields have included finance, works, police, broadcasting, housing and transport. They

are: Messrs R. J. Tizard (Otahuhu), M. A. Connelly (Wigram), R. O. Douglas (Manukau), and R. L. Bailey (Heretaunga).

Mr Birch was recently nonplussed when a Wellington newspaper editorial called for the “resuscitation” of the Public Expenditure Committee "which several years ago was a vigorous and watchful body. “I know we do our work without self-publicity,” he commented, “but we are in no need of resuscitation.” The Controller and Audi-tor-General is well aware of its effectiveness. His report records that it has expanded its role to make it a more effective instrument for the review of departmental expenditure. “This has led to officers from several departments appearing before it to explain over-expenditure and under-expenditure.” Mr Birch reports that the committee has also appointed several sub-com-mittees to examine specific problem areas in Government spending. It is, perhaps, indictative of this body’s work that two of these sub-committees have Opposition members as chairmen. “There is no doubt that this Select Committee has a role and indeed a responsibility to contain unauthorised spending,” Mr Birch commented. “Resuscitation of this committee in that respect was necessary, but it took place much earlier this year.”

The underlying thought is that public expenditure committees have been part of the New Zealand Parliamentary scene for many years, but have meant vastly different things to different Governments. The results of this one’s work will be known only when Government financial figures for the year ended March 31, 1977, are published.