Involving the Treasury and the Minister of Finance#
The Treasury should be consulted on all proposals which have, or are likely to have, economic implications, financial or fiscal (expenditure or revenue) implications, implications for the Public Finance Act 1989, or regulatory implications. The Minister of Finance must also be consulted on financial proposals, particularly where approval for policy or expenditure proposals needs to be sought outside the Budget round, and the appropriation Minister considers that the proposal cannot be resourced from within existing baselines. More information about these requirements is below, and in the guidance on consultation with Government agencies and consultation with Ministers.
As outlined in the Cabinet Office circular Proposals with Financial Implications and Financial Authorities [CO (18) 2], Cabinet papers which include proposals for new or changes to existing appropriations or departmental capital injections cannot be submitted for consideration during the Budget moratorium. This is the period beginning on the day Cabinet approves the Budget package, and ending after the Minister of Finance has delivered the Budget (sometime in May), during which proposals for changes to appropriations or departmental capital injections cannot be submitted for consideration. Consult the Treasury if proposals are likely to be submitted to Cabinet during the Budget moratorium that may have financial implications.
Writing financial recommendations#
The correct drafting of financial recommendations is essential to record accurately Cabinet’s financial decisions. These decisions provide Cabinet’s authority for changes to appropriations, expenditure, and the use of Imprest Supply. The circular Proposals with Financial Implications and Financial Authorities [CO (18) 2] contains further guidance.
For guidance on drafting financial recommendations and the format of tables, see the Treasury’s guide, entitled Writing Financial Recommendations for Cabinet and Joint Minister Papers. The relevant Treasury Vote analyst can assist in ensuring that the financial recommendations are technically correct.
Recommendations that propose a change in appropriation or expenses should include details of:
- the action to be taken (i.e. approve/agree)
- the substance of the change being proposed
- the name of the affected Votes
- the type of appropriation/revenue (e.g. departmental output expense)
- appropriation/revenue name
- if a new appropriation is being proposed, its scope
- changes to appropriation (both the direction and amount of the changes)
- monetary units – numbers should be stated in terms of $million (e.g. $0.010 million)
- changes to revenue or funding mix
- GST status, if appropriate (in accordance with the Public Finance Amendment Act 2004, appropriations should be exclusive of GST)
- the years affected, including outyear impact
- whether the changes need to be included in Supplementary Estimates and met under Imprest Supply
- the impact on the operating balance and/or debt.
In general, tables should be used to present the information contained in financial recommendations.
When and how to consult the Minister of Finance#
The relevant portfolio or appropriation Minister (the "appropriation Minister") must personally consult the Minister of Finance before submitting a Cabinet paper in cases where approval for policy or expenditure proposals needs to be sought outside the Budget round, and the appropriation Minister considers that the proposal cannot be resourced from within existing baselines.
This requirement also applies to proposals that were identified during the Budget round as contingency items that may require funding approval later in the year. The requirement for the appropriation Minister to consult the Minister of Finance personally is additional to the requirement for departments to consult the Treasury.
The procedures for consultation with the Minister of Finance are:
- the appropriation Minister should forward a copy of the draft paper to the Minister of Finance before the submission of the paper to Cabinet or a Cabinet committee (this should occur at least five days before the deadline for submitting the paper)
- the Minister of Finance will review the paper and, if necessary, arrange a meeting with the appropriation Minister to discuss the appropriate course of action, taking into account Cabinet office circular CO (18) 2: Proposals with Financial Implications and Financial Authorities.
- consultation with the Minister of Finance should be reflected by filling in the appropriate consultation information when uploading a submission to CabNet.
Chief executives should ensure that:
- their agency does not forward papers seeking approval for additional resources to their Minister for submission to Cabinet or a Cabinet committee without advising the Minister that consultation is required with the Minister of Finance (the Treasury can provide advice on this)
- they provide advice to the Minister, including a copy of the draft paper, on the need for consultation with the Minister of Finance (this needs to be done in sufficient time to allow consultation to occur, and for the paper to be submitted on time)
- the requirement for Ministers to consult the Minister of Finance on proposals seeking additional resources is reflected in their agency's planning and quality assurance processes for the development of proposals and the preparation and submission of Cabinet and Cabinet committee papers.
The Treasury will, when consulted on proposals to increase baselines, advise the department concerned that the appropriation Minister should consult the Minister of Finance. The Treasury will also advise the Minister of Finance’s office of the proposal, and of the need for consultation to occur at Ministerial level.