The basic underpinning of Parliamentary Democracy, and Westminster Democracy in Particular, is that the Government, from the lowliest junior policy advisor, through the various ranks of the police, and other enforcement agencies, and all the way up to departmental CEOs, Ministers, and even the Prime Minister, can only do what Parliament allows them to do. In particular, the government can't levy taxes without parliamentary permission, and can only spend money in the amounts, and on the things, the Parliament allows them (usually by passing a budget). And it's been this way since at least 1688.
This is why – to a lawyer like me anyway – the abuse of ministerial credit cards is a big deal. Parliament has given ministers permission to spend money in the operation of their offices. These appropriations of taxpayer funds follow the same basic rules of all appropriations – their amount, scope (what the money may be spent on), and period (when the money may be spent), is regulated by the rules set down by Parliament in the budget – for ministerial expenses, these are the Estimates for Vote Ministerial Services.
There are a few bits of law it is useful to appreciate. An excerpt from the Bill of Rights 1688:
Levying money—That levying money for or to the use of the Crowne by pretence of prerogative without grant of Parlyament for longer time or in other manner then the same is or shall be granted is illegall.
And a more recent statement to the same effect – section 4(1) of the Public Finance Act 1989:
(1) The Crown or an Office of Parliament must not incur expenses or capital expenditure, except as expressly authorised by an appropriation, or other authority, by or under an Act.
And section 5:
The Crown or an Office of Parliament must not spend public money, except as expressly authorised by or under an Act (including this Act).
The scope of Vote Ministerial Services is contained in the budget (I'm using 2010, but there hasn't been substantial change):
This appropriation is limited to providing support services for Members of the Executive including office administration; accounting, personnel, information and communication technology; facilities management; media and other advisory services; and provision of residential accommodation services.
There's a separate appropriation for travel, which covers:
Payments for civil purposes for Members of the Executive's internal and external travel, pursuant to section 20A of the Civil List Act 1979.
They're both pretty broad, so the real detail is included in the Executive Travel, Accommodation, Attendance and Communications Services Determination, and a document entitled “Travel, Accommodation, Attendance, and Communication Services Available to Members of the Executive”. This last document is the one those interested in the real detail should focus on; among other things it sets out various principles (in clause 1.6) that govern the spending of money by Ministers, including:
Ultimately, members of the Executive are personally responsible for the way they use the public resources entrusted to them.
This personal responsibility cannot be avoided, even though delegations may exist for others to incur costs on a member of the Executive’s behalf.
...
Expenditure must only be incurred in respect of ministerial business.
These principles underlie the spending of all the money ministers get through Vote Ministerial Services. So, for example, even though specific travel allowances are included, if that spending is not “incurred in respect of ministerial business”, it will be outside the scope of the appropriation, and illegal. The catch-all comes near the end of the document – Ministers are entitled to publicly-funded operational resources, helpfully defined:
Operational resources means resources that are provided to assist members of the Executive to carry out ministerial business, including establishing and operating a ministerial office.
And right at the end, there are examples of operational resources:
1. Examples of goods and services that will generally be paid for:
(a) entertainment of visitors, staff and officials in their ministerial portfolio capacity
(b) memberships, sponsorships and fees
(c) koha
(d) ministerial gifts and wrapping
(e) flowers (including wreaths)
(f) passport photos
(g) briefcases and luggage for ministerial use
(h) stationery, printing, photocopying and couriers
(i) media transcripts
(j) postage
(k) kitchen supplies
(l) catering costs for portfolio related functions
(m) office staff farewell functions
(n) subscriptions and newspapers
(o) books relevant to the portfolio
(p) taxis relevant to ministerial portfolio business, where not otherwise covered by clause 3.5
(q) cellphone equipment, where not otherwise covered by clause 5.3.
2. Examples of goods and services that will generally not be paid for:
(a) haircuts and hairstyling
(b) groceries for personal use
(c) meals with family members
(d) everyday meals
(e) gifts for staff
(f) office staff Christmas functions where the amount exceeds $30 per person
(g) Dry cleaning except when travelling on official business
(h) Gym membership
(i) Alcohol unless it relates to a portfolio/ministerial function
(j) Cabinet morning tea and lunch
(k) Wine for wine auctions.
But, there's still the caveat, in clause 7.4, that:
Operational resources are not provided and may not be used-
(a) for personal or private benefit
...
And the overarching principles, including one I didn't mention earlier:
The principle that expenditure must be reasonable for the circumstances and able to withstand tax-payers’ scrutiny
There's scope for debate about some things, but it's pretty clear overall: if its personal, it's out. There are a couple of other things, pertinent to any discussion of ministerial credit cards. First this, noted in an article in the Dominion Post:
In a memo in March 2006, Ministerial Services assistant general manager Richard McDonald wrote to ministers' secretaries about the use of credit cards.
"There is a single issue which has come up again, use of credit cards for personal expenditure," Mr McDonald wrote.
"The policy is unarguable! Departmental credit cards are NOT to be used for personal expenditure regardless that the user pays back the sum after the fact."
Why this must be so, is pretty obvious: Parliament hasn't given permission for it. It could if it wanted to, but it hasn't. Even on a “I'll pay you back Monday” basis, personal spending of taxpayer money via ministerial credit cards is illegal.
But there's one final bit of law that is necessary to underscore the seriousness of this whole affair – if the Bill of Rights 1688 wasn't enough – back to the Public Finance Act:
76 Offences
...
(2) Every person commits an offence against this Act who—
...
(d) Does any act for the purpose of procuring for that person or for any other person or organisation—
(i) The improper payment of any public money or trust money; or
(ii) The improper use of any public financial resource.77 Penalties for offences
(2) Every person who commits an offence against subsection (2) of section 76 of this Act is liable on summary conviction,—
(a) In the case of an individual, to imprisonment for a term not exceeding 12 months, or to a fine not exceeding $5,000:
...
That's why this is this a big deal. It's illegal. And not only is it illegal, those involved can face criminal consequences: even if they intended to – and did – pay it back immediately.
If they intended to pay it back, it's not theft; if they erroneously thought they were entitled to it, it's not theft; but section 76 of the Public Finance Act remains. Most of the culprits are just lucky that there's also a section 78:
78 Time for commencing proceedings
Notwithstanding section 14 of the Summary Proceedings Act 1957, any information in respect of any offence against this Act may be laid at any time within 2 years from the time when the matter of the information arose.
I'm not particularly inclined to give any of them the benefit of the doubt: “It wasn't clear I was entitled to it, so I took it anyway” is a pathetic excuse. We're probably too late for the most egregious abuses, but ministers and MPs should consider themselves on notice. It doesn't just look bad on the front page of the newspaper: improper use of a ministerial credit card is illegal, and it is an offence punishable by imprisonment.