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OPINION: ‘Democracy is under threat’

Friday 22 July 2022 | Written by John Scott | Published in Editorials, Opinion

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OPINION: ‘Democracy is under threat’
PHOTO: CI NEWS. 20032507

In this two part column, I would like to put these questions to Government and request an immediate response, writes John Scott, former Clerk of Parliament.

When I began writing this piece it was addressed to the Director of Audit but as we have read he has resigned so I suggest a tripartite input from Audit, MFEM and Crown Law to the response as they are all intrinsically involved in what I would generously describe as public finance mismanagement.

And remember please there is a general election looming and the answers to these questions will, or should, compel thinking voters to reappraise the performance, and qualification, of those that were in government and now seeking re-election. That in itself will probably be seen as sufficient reason to avoid responding before then but that would be a serious miscalculation.

A swift response anyway should not present any difficulty as these questions are fundamental to the oversight of government’s management of the public revenues and compliance with the Constitution and the MFEM Act.

Questions

1. Does the Constitution require the Audit Office to submit a comprehensive audit report to Parliament annually containing information required under the Constitution and other enactments?

2. When that mandatory constitutional requirement under Article 71(2) is that the report be forwarded to the Speaker from the Audit Office for presentation to Parliament then why is what purports to be that audit report absorbed into the Financial Secretary’s Financial Statements and presented by the Minister of Finance? 

3. Given then that what reaches Parliament by this incorrect route differs from what the Constitution requires and does not contain all the information it is supposed to contain, would it be a reasonable conclusion that Article 71 (2) is not being complied with by following this procedure and that there has been a contravention of this very important statutory function and that it has continued for several years?

4. And as such a report is not the Report of the Audit Office as contemplated by Article 71(2) of the Constitution would it therefore be a reasonable conclusion that:

(a) it is not an “independent” report at all as claimed, and

(b) that responsibility for the dispensing of the law and the pretended power of suspending the operation of this Article by the Minister of Finance without the consent of Parliament is an illegal offending prohibited by the Bill of Rights 1688 which applies in the Cook Islands?

5. When was the last time there was a proper independent report containing all the information the law required it to contain, properly presented directly by the Audit Office to the Speaker?

6. As the Constitution is clear and specific would it be correct to conclude that the independence of the Audit Office and its ability to perform its constitutional duty has been compromised?

7. Was the Audit Office a willing participant in this malfeasance?

8. If not, how and when did it register its disapproval? Did it consider addressing its concerns directly to the Speaker and Parliament?

9. Would you agree that the purpose of an annual audit report is to enable Parliamentarians to meaningly fulfill their representative role and intelligently, and responsibly, engage in an informed manner with the examination of the spending and application of the public revenues during the annual budgetary/appropriation process and in order to competently perform that task have a dependency upon current financial information which is constantly denied them?

10. Would you also agree that when financial information does reach Parliament, albeit in a modified form, it should be accurate and complete and that when the Audit Office is denied access to all relevant records and is compelled to register its qualified opinion in no less that each of the last five pseudo reports then the integrity of these reports, and their value, are seriously diminished?

11. Are you aware that the provisions in our laws for parliamentary oversight of the appropriating process are modelled on those of NZ yet the procedures followed here, in almost every respect, defeat and deny the principles, efficacy and integrity inherent in that process?

12. And how can that process be served:

(a) when the pseudo reports accompanying the Government Financial Statements are tabled in Parliament several years in arrears? viz:

Year ended 30 June 2015 tabled 27 November 2020 – five+ years late

Year ended 30 June 2016 tabled 27 November 2020 – four+ years late

Year ended 30 June 2017 tabled 27 November 2020 – three+ years late

Year ended 30 June 2018 tabled 22 March 2021 – nearly three years late

Year ended 30 June 2019 tabled 22 March 2021 – nearly two years late,

and none have since? And rather than serve as a working tool in real time are no better than historical records their utility having long since passed?

(b) when statements of unauthorised expenditure which Article 70(4) of the Constitution require to be included in the accounts are not submitted to Parliament when it is known there has been expenditure pursuant to this provision and none has?

(c) when the MFEM Act at s. 26 requires that the Government Financial Statements and Audit Report be separately prepared and does not authorise them to be merged?

(d) when the MFEM Act at s.27 requires the Financial Statements to include an account to be called “The Appropriation Account” showing the several sums appropriated by Parliament under the Appropriation Act or Acts for the year, and the expenditure thereon during the year, with the amount under-expended or over-expended on each vote severally or expended under the authority of Article  70(3)(b) and such information is all required to accompany the  Estimates and the Appropriation Bill and never has in recent memory and when the re-enactment of that provision in Constitution Amendment (No. 22) Act, and its interpretation, itself needs review?

(e) when the Minister of Finance and Financial Secretary as part of this process are required by s.30 of the MFEM Act and in respect of the financial statements to separately sign statements of responsibility warranting the integrity of the disclosures and consistency with the requirements of the MFEM Act and regularly, and falsely, and misleadingly do so when they can make no such claim and in doing so commit offences against 64(2) of that Act?

(f) when despite these failures the Audit Office in each of the last five pseudo reports includes an identical statement recording these legal obligations of both the Minister and the Financial Secretary but says nothing about their breach when pursuant to s. 14(2)(c) of its PERCA Act it is specifically charged to publicly comment if there is non-compliance by any party?

(g) when Article 70 (3A) of the Constitution requires the Audit Office to forward to the Speaker prior to a general election a separate report on excess unauthorised expenditure above the limits prescribed when that within, or in excess, of the limits has not itself not been reported annually resulting in Parliament again being ill-informed there having been no compliance with s.13,26 and 27 of the MFEM Act?

(h) when even when it is widely known that there has been excess unauthorised expenditure as was the case during the preceding parliamentary term the constitutional obligation under Article 70(3A) and those under the MFEM Act have been ignored and there have been no reports?

(i) when an occasional failing might be excusable, and the deficiency redeemed, repetitive failings, year after year in these several areas, display a total contempt on the part of the executive government for its duties under the law and to the people of the Cook Islands?

(j) when in a mature, properly functioning and responsible democracy such flagrant breaches of the State’s financial reporting responsibilities would not go unpunished, here in the Cook Islands they go unchallenged which sends entirely the wrong signal to a government seemingly slipping into authoritarianism and disregard for the rule of law?

(k) when if circumvention of financial reporting obligations of the kind, and magnitude, we are witnessing here occurred in NZ the consequences would be immediate. A truly independent Auditor-General would be demanding answers from Treasury. If compliance were resisted, he would alert Parliament by reporting to the Speaker. The government would come under some heavy questioning and scrutiny by parties not in government and the media would be all over it. The likely consequences would be at the ballot box and the defeat of the government. Such severe outcomes are effective constraints when they exist. Regrettably, here in the Cook Islands the same checks and balances are inadequate, or muted, and it will be obvious that by allowing its functions to be usurped by the Minister of Finance, the Audit Office has forfeited a vital degree of the independence that the Constitution intended that Parliament, and the people of the Cook Islands, could rely upon.

(l) when the law is compellingly clear, and I have written warnings previously (as far back as 2015) about strict liability, mens rea, and abuse of the rules, the Minister of Finance cannot claim he has not had an abundance of notice that he was breaking the law, yet, confident in the weakness of extant checks and balances he has taken no heed and the abuse of office has just continued. 

(m) when the frequent manipulation of procedure by the government majority to prevent Members of Parliament adequate time to study the annual Appropriation Bill and Estimates coupled with the aforementioned multiple failures and then the truncating of debating time and misuse of the ‘guillotine/closure’ device suggest a calculated design on the part of the Government to ensure that the people’s representatives in Parliament never have the full opportunity parliamentary procedure provides to question the government on its performance during the previous financial year, and where the money is coming from, and where it will be spent in the following one.

(n) when this repeating scenario of keeping Members inadequately informed is assisted immeasurably by a Crown Law supported interpretation of s. 33 of the MFEM Act which is permissive of the introduction of the main Appropriation Bill for any year before the financial year which precedes it has even finished giving false reasoning and support to the belief, which has gained currency and support while Minister of Finance Mark Brown has been in office, that the Bill needs to pass its third reading before the new financial year has begun, in some cases, such as for the 2022/23 Act, even as early as May and, since 2013, on seven other occasions.

(o) when Government may argue that NZ introduces its Appropriation Bill in May which is true but their Act is not passed until well into the new financial year which allows the time for proper scrutiny not available to Members here. NZ also adopts an Imprest Supply Bills procedure providing the necessary spending authority until the main Act passes which, with proper planning, and less deceptive intentions, could easily apply here (and has on at least one occasion).

(p) when the present practice is not only a corruption of a responsible approach to a properly structured budgetary process it is diametrically opposed to the demands of the MFEM Act. That Act requires the financial year to end before an Appropriation Bill can be introduced because until the year ends it is impossible to comply with the compilation of the financial information which must accompany it (s.13).

(q) when the Minister and MFEM either know that the haste with which the annual appropriation is conducted is completely unnecessary but still engage in this charade as it enables the following year’s spending to be approved in the absence of the details of the previous year’s performance or they are unforgivably ignorant of the provisions of Article 70)(3)(a) which sets qualified spending limits in anticipation of an Appropriation Act which, together with unexpended balances from the previous year would, on a pro rata basis, allow lawful spending to continue to the end of September or, even longer, with Imprest Supply

(r) when a combination of Speaker complicity and Government tactics, breaches of the law and manipulation effectively deny the rights of the minority in Parliament to perform its representative role one wonders whether, apart from other infringements, these amount to a human rights breach where not only Members of Parliament, but the people they represent, are denied their expectation, and entitlement to protection of the law as provided by Article 64(1)(b) of the Constitution.

All the above is but a brief snapshot of the growing ills of this society. Democracy is under threat here in the Cook Islands. I have written before that we are poised on the slippery slope of creeping authoritarianism where the democratic values we subscribe to are hijacked by a privileged few pursuing their own interests, are intolerant of attempts to hold them accountable and for whom retaliatory politics is a significant tool in their armoury to silence criticism. My own experience is a classical example of how successful this policy can be.

  • The second part of this column will be published in tomorrow’s edition
  • John Scott, a former Clerk of Parliament, is a poultry farmer and runs Scotts Farm in Muri. He has been critical of Government’s decision to remove import levy on eggs and pork. The views expressed are the author’s and do not necessarily reflect the views of this newspaper.