Saturday, December 10, 2022

Bryce Wilkinson: Three cheers for the auditor-general

The Auditor-General is deeply concerned “about a lack of transparency and accountability over the spending of public money”.

On 14 November, he took the extraordinary step of writing to Parliament's Speaker, Adrian Rurawhe and the chairs of two select committees about the problem.

His letter warned that “the links between spending of public money and the difference being made through that spending are too often tenuous, lack transparency, and are focused on the short term.”

He also cited a recent report by the Parliamentary Commissioner for the Environment, Simon Upton. Its central theme is the need for greater public accountability for the outcomes of government environmental decisions.

The Commissioner pointed out that “spending more money on a problem [does not] mean we are fixing it”. That he felt compelled to say so shows the scale of the problem.

Upton made another self-evident point: “for there to be accountability, there has to be clarity and transparency about what it is we are trying to achieve.” (“We” is official speak for “the government”.)

I cannot think of any senior ex-Treasury person who would disagree with these laments.

Certainly not me. In 2004 I reviewed the first decade of government spending under the Fiscal Responsibility Act 1993. Chronic fiscal deficits had been turned into sustained surpluses. Public debt was under control at last.

The weak point even then was the increasing quantum of ill-justified spending.

Taxpayers fund government spending, so giving them more voice seemed the best hope for improving spending quality. I proposed a Taxpayer Bill of Rights for New Zealand for this reason.

The problem with this was that greater spending discipline was not likely to be in the interests of either the public service or an incumbent government. ACT took up this proposal, but not National.

Taxation by stealth through ongoing inflation and progressive income tax rates proved to be a more attractive option politically.

In 2013, the New Zealand Initiative proposed an institutional option – a Fiscal Council reporting to Parliament. That Council would use independent cost-benefit analysis to better inform parliamentarians and the public about poor-quality spending programmes. That would complement and strengthen the watchdog A-G’s role.

Again, as always, the problem is intense opposition from all those benefiting from poor quality programmes. The deeper the rot, the harder it is to reverse. Poor quality spending is soft corruption.

The Auditor-General needs broad-based support on this issue.

Dr Bryce Wilkinson is a Senior Fellow at The New Zealand Initiative, Director of Capital Economics, and former Director of the New Zealand Treasury. His articles can be seen HERE.


Anonymous said...

Each spending programme should be treated as any project would be.
Nominate an expected outcome and completion date, allocate suitable human, other resources and a budget. Approve expenditure and evaluate and report on the outcomes.
Procurement rules should include a project template to set out all of the above.
This government acts like a crazy lottery winner on a binge but at least the lottery winner owns the money they are throwing away.

EP said...

Thank you for telling me that there are still honest public officials in this country. I feel I have been living in a fool's paradise as I learn of 'activists' in the judiciary, as i hear for myself that Race Relations and Human Rights commissioners are anything but objective.

Anonymous said...

(1). And three cheers for the Taxpayers’ Union too please.
(2). I have often wondered how much of the billion dollars given to Maori in each of the last 3 budgets was paid in bulk to Maori organisations which were not Public Entities under the Public Audit Act, and were thus outside the purview of the Auditor-General.

Don said...

Many Maori seem to think that when they get control of public funds they have ownership rights and can use some of it for their own purposes. Not that this is solely a maori tendency, many non-maori have done the same thing, white-collar crime is not a maori monopoly. However maori seem more resentful when called to account as if they are entitled to put their fingers in the till. One hopes that when auditors reveal these actions they are not accused of being racist.