Advertising expenditure incurred by the Parliamentary Service in the three months before the 2005 General Election – Report of the Controller and Auditor-General
The Parliamentary Service respects the process followed by the Controller and Auditor-General under the Public Finance Act 1989 and the Public Audit Act 2001, and his right to form an opinion and report accordingly. The Parliamentary Service disagrees, however, with many aspects of the Controller and Auditor-General’s report.
The Parliamentary Service is required to administer, in accordance with directions given by the Speaker, the payment of funding entitlements for “parliamentary purposes”. In respect of advertising by members and parties, a distinction has been drawn between two types of expenditure. Expenditure on advertising for communicating policy and communicating with other communities of interest is allowed. Advertising that solicits party membership or other financial support for a political party or a candidate at an election, and promotional or electioneering material for the purpose of supporting the election of any person or party is not allowed. The Parliamentary Service considers that a broad interpretation of the term "parliamentary purposes” is applicable under the relevant legislation and rules, in order to meet the legislative intent to provide support and services to members and the House.
The Controller and Auditor-General and the Solicitor-General, however, apply a much broader interpretation of “electioneering purposes” that examines the overall intent of a publication or other activity. In particular, a “bright-line” test is applied in respect of “electioneering purposes” and “parliamentary purposes”. As a result of applying such a test, an advertisement or other activity that has a valid parliamentary purpose may be inappropriate expenditure, if it is tainted by the presence of some material or purpose broadly interpreted as “electioneering”. The legal advice that we have received does not consider that the “bright line” test adopted by the Controller and Auditor-General, on the advice of the Solicitor-General, provides a fair approach to expenditure involving a mixture of electioneering and parliamentary purposes.
The Parliamentary Service is of the view that the application of a “bright-line” test is not appropriate in instances of mixed-purpose expenditure. The tainting of a valid parliamentary purpose is also not appropriate in a parliamentary context, as there is an element of promotion in most parliamentary and political activity. While the Controller and Auditor-General's report focuses on externally-sourced advertising, the principles and tests applied now throw into question most other aspects of communication and other expenditure by members and parliamentary parties.
Since 1985, the Parliamentary Service has been required by its legislation to operate under the directions of the Parliamentary Service Commission or the Speaker. The Parliamentary Service has applied financial management processes that have enabled it to carry out its functions under those directions. From 1994, responsibility for decisions in respect of Members’ Support funding was transferred from the Parliamentary Service to the members themselves. With the advent of MMP in 1996, parliamentary parties (as well as members) were responsible for decisions in respect of Party and Member Support funding.
The Parliamentary Service has provided accounting and advisory services for expenditure incurred by members of Parliament. The Parliamentary Service has not been responsible for approving expenditure that has been authorised by members and parliamentary parties. The Controller and Auditor-General has now expressed concern that the Parliamentary Service does not satisfy itself, before expenditure is incurred, that advertising proposed by members and parties is for purposes consistent with the appropriations.
The Controller and Auditor-General’s report presents principles and recommendations that will have a profound and widespread impact on the approval and administration of all expenditure from Vote Parliamentary Service that is currently incurred on the direct authority of members of Parliament and parliamentary parties.
The Parliamentary Service will provide initial advice on the implications of the Controller and Auditor-General’s report to the Parliamentary Service Commission at the Commission’s meeting on Wednesday 18 October 2006. We will work with the Speaker and the Parliamentary Service Commission to address the recommendations of the report, and to undertake a systematic review of the authorisation, approval, and administrative processes applying to all other areas of expenditure on support services provided to members of Parliament and parliamentary parties.
Joel George
General Manager
