When Power Goes Wrong · Who Pays? · Part 16

Who actually authorises a government settlement payment?

New Zealand's Cabinet financial-authority framework sets approval levels for compensation and damages settlements. The amount determines whether approval sits with the departmental chief executive, appropriation Minister or Cabinet.

Settlement authority is not simply “the department agrees to pay”. Government departments operate within Cabinet's financial-authority framework and the Public Finance Act.

Cabinet Office Circular CO (18) 2 sets current approval thresholds for compensation or damages in settlement of claims. Up to $150,000 may be approved by the chief executive or delegate. More than $150,000 and up to $750,000 requires the appropriation Minister. More than $750,000 requires Cabinet.

Legal endorsement is built into the process.Claims at the lower level require specified legal certification or Crown Law endorsement, and larger settlements require Crown Law endorsement or a court judgment; Cabinet considers Crown Law advice for settlements above the Cabinet threshold.

Up to $150,000Chief executive or delegate, subject to the circular's legal-assurance requirements.

$150,000–$750,000Appropriation Minister.

Over $750,000Cabinet.

Critical qualificationThe payment must also be lawfully chargeable to an appropriation or other statutory authority.

A settlement therefore needs both legal authority to settle and financial authority to spend.

Current Cabinet authorityCO (18) 2 — Proposals with Financial Implications and Financial Authorities.

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