English BillAPPROPRIATION (2015/16 SUPPLEMENTARY ESTIMATES) BILLIMPREST SUPPLY (FIRST FOR 2016/17) BILLSecond ReadingsHon BILL ENGLISH (Minister of Finance): I move That the Appropriation (2015/16 Supplementary Estimates) Bill and the Imprest Supply (First for 2016/17) Bill be now read a second time. Just to explain the technical role of this bill the Appropriation (2015/16 Supplementary Estimates) Bill relates to the financial year that ends on 30 June 2016—that is this week. It seeks parliamentary authority for variations to appropriations authorised by the Estimates bill and for new appropriations that were not in the Appropriation (2015/16 Estimates) Act 2015. I want to thank the Finance and Expenditure Committee and the Intelligence and Security Committee for considering the report back so promptly. The Imprest Supply bill relates to the new financial year starting 1 July 2016. This is a bill that enables spending authority for Government expenditure during the first 2 months of the financial year before the Estimates bill is passed—that is the bill that was introduced on Budget day and is the vehicle for the Budget. I know that appropriations may not be the most politically discussed topic but working with the appropriations system and improving how we work with it is at the heart of the Government's view on fiscal control. These bills which alter the appropriations are the constitutional underpinning for Government spending.Through the Public Finance Act of the late 1980s and its variations in the early 1990s New Zealand developed what was at the time one of the more progressive and well-defined public finance systems in the developed world. At that stage it helped to clarify the way that money flowed through the system but we are now in the process of evolving that system further. There are a couple of things that appropriations do pretty well. One is that they legally limit the amount of money that a Government department can spend on any particular activity described by the appropriation. Secondly it enables the Parliament to track an individual dollar all the way through the system to where it was actually spent. This has served us pretty well as a means of fundamental accountability. It has underpinned a high-quality Public Service and at various times it has enabled Governments to exert fairly good fiscal control just through the processes of government and exercising those processes thoroughly. However it does not tell us much about whether those dollars are effective—it is not a management system. In the past unfortunately it has to some extent been regarded as the way of managing public expenditure. Well it is a useful tool for Parliament to look for accountability for a dollar but it does not tell us much at all about what actually happens when a service is delivered to a New Zealand citizen. So what the Government is trying to do is to bring a much more focused way of showing that the dollars appropriated by Parliament actually achieve results.That is not how things have always been done. Too often Parliament and Governments have indicated that they are getting results simply by spending a lot more money through these appropriations—simply by enlarging the appropriations. Well we have learnt having had big surges of spending particularly from about 1997 through to 2008—a huge surge in Government spending—that there was no appreciable impact on the problems that spending was addressing. Not because I say so; it is because the Salvation Army in 2008—[Interruption] Oh now they are getting excited. The Salvation Army in 2008 essentially said that despite spending all this money in what must have been a bit of a nirvana for those who believed in Government spending it could not see any improvement in social statistics.So the Government has set about a very thorough programme of focusing on getting results. When the Parliament votes on these bits of legislation it is going to be achieving something more than it used to—that is it is voting for appropriations that mean it can increasingly but certainly not yet comprehensively track whether a dollar makes a difference where it is meant to make a difference. For instance if we are spending $100000 per prisoner in prisons are we having any impact on recidivism? Well we are because we are measuring it. We are measuring it and taking action while we have people in prison to reduce the likelihood that they will have to come back. There is not much point in appropriating more money for education if you are not making a difference to the New Zealanders who most need the benefits of public education. And we are. These appropriations are going to be underpinning what has been a successful effort to lift National Certificate of Educational Achievement (NCEA) pass rates. Why does that matter? Not because of the statistic but because it puts young New Zealanders on the doorstep of further training and further skills. What is fascinating is that the increase in performance around NCEA level 2 is disproportionately in the Māori and Pacific population where thousands more of these young New Zealanders are getting to that threshold and we are doing a better job of supporting them to do it. They have always had the potential but the system is now backing them up. The appropriation on its own does not tell us that but the Government's results framework and its social investment framework do tell us that.In fact what we found is that focusing on results helps everyone to understand that the solutions to some of our most intractable social problems are not just about money. More money is often needed—some money—but more often what is needed is a much better knowledge of who our customer is. Who are the people we are trying to help? This is not just in general but it is about which particular people and where. If we are appropriating for another social welfare programme or for social workers or Whānau Ora which people and where is this actually happening? That is a good question to have to answer. Can we connect with them? As we are finding with some of these issues around homelessness sometimes we just cannot connect with people who really need help. For instance families who are scared that their children will be taken from them do not approach Government agencies. Families who may for various reasons have benefit debt do not approach public agencies. It does not mean that they do not need help; it just means that our system is too intimidating to be able to deliver it.A third question is whether or not when the money is spent we actually made any difference because too often we can spend a lot of money with good intentions for the people it is aimed at but we cannot tell if we have changed a life. That is something that is not expressed in the Appropriation Bill but which matters a lot to the Governments that are focused on spending the money. Are we changing lives? This is particularly so for those people where bad outcomes are so predictable. Our data analysis and use of big data means that we can now have a pretty good idea of the probability that a person with certain characteristics is going to end up on welfare or in prison and this enables us to take more action.When we pass these bills it is a technical exercise for Parliament—an important constitutional one—but it is less and less the case that the appropriations bills and the Estimates bills and the Imprest Supply bills capture the Government's fiscal control. Of course the Government has built up a bit of a record of being able to achieve better results without spending a lot more money. If I could just give you an indication of that from 1998 to 2006 Governments were spending $2 billion to $3 billion extra every year. This Government is spending about $1.5 billion extra but getting better results. We look forward to the support of the House for these bills.