Parliament is supposed to be the sovereign body in our government. So, how come the Executive has an unchallengeable power to veto any legislation it chooses? As I/S explains, the roots of the financial veto go back to when Parliament was a servant of the Crown, but its legislative justification has been repealed. Time to drop the archaic, undemocratic financial veto.
The prospect of Labour passing its Parental Leave and Employment Protection (Six Months Paid Leave) Amendment Bill over the top of the government has raised the threat of a Crown Financial Veto [now confirmed], of the government disallowing a bill even though there is a Parliamentary majority supporting it. So what is this veto, and where does it come from?
The answer, of course, is Britain. Our Parliament descends from the English Parliament, which began not as an independent, elected, representative body, but as the King’s Parliament. It existed basically for one purpose: to approve taxes to pay for the monarch’s hobbies (such as drinking, buying palaces, and waging war against his fellow monarchs).
Of course, it grew into something a little different from that. But the underlying feudal mindset remained (and remains to this day in the UK). So when the British drafted our first constitution in 1852, they included a clause saying that Parliament (or the Legislative Assembly as it was then called) could not appropriate money except as recommended by the Governor. When we took control of our constitution in 1986, this clause was re-enacted:
The House of Representatives shall not pass any Bill providing for the appropriation of public money or for the imposition of any charge upon the public revenue unless the making of that appropriation or the imposition of that charge has been recommended to the House of Representatives by the Crown.
In other words, Parliament was (still) simply the financial rubber-stamp of the executive.
But our Parliament grew again, with MMP shifting power from the executive to the legislature. In recognition of this – and the fact that the government no longer had an inbuilt majority to vote down spending – the Standing Orders were changed, introducing the “financial veto”. This reflected the law at the time. But then, in 2005, the law was repealed. So now we have a financial veto with no underlying statutory authority.
How does this fit with a country where supreme power is vested in a democratically elected, sovereign Parliament? The short answer is that it doesn’t. In modern New Zealand, it is Parliament which rules, not the executive. Oh, Ministers make the day-to-day decisions, and generally shape the laws, but it is Parliament which has the final say. And if Parliament refuses their legislation, or passes something they don’t like, the government just has to lump it. We accept that principle for ordinary laws, and we should accept it for financial matters too. The financial veto should be abolished.
But wouldn’t this make it difficult for the government to govern? Firstly, arguably if the government has lost control of its spending, then they have lost the confidence of the House (confidence and supply being all about who controls the money). But this also points at the solution: the government, by definition, has a majority on confidence issues. If it really doesn’t like Parliament appropriating money for something, it can make it a matter of confidence, and stand or fall on the result. That would be the democratic solution. Sadly, I don’t expect autocratic National to take it.