New Zealand’s Treasury department was established in 1840 as part of Lieutenant-Governor William Hobson’s administration, along with a customs department and a colonial secretary’s office. Its longevity is testimony to the indispensable nature of the work of keeping the government’s accounts. However, the Treasury has gone through many different phases since 1840. At times it has been primarily a bookkeeper; at other times, notably in the 1980s, it has wielded immense influence both within the government and in the wider society.
Follow the money
Lieutenant-Governor William Hobson embarked from Sydney on the Herald on 19 January 1840, charged with establishing a colony in New Zealand. How was he to pay for this enterprise, or indeed pay for himself? The British government lent £5,000, of which £3,000 was deposited to the credit of the Bank of Australasia in Sydney. The balance was gold coin. On 16 January George Cooper, just appointed colonial treasurer, informed Hobson that ‘the money is to be taken out of the Treasury chest at Six o Clock tomorrow morning and ... taken on board immediately after in strong boxes provided for it.’1
A modest organisation
Through the 19th century the senior official was the colonial treasurer, who carried out much of the work. In 1856 the treasurer became a minister in a cabinet government, but remained directly responsible for overseeing the accounts, preparing an annual financial statement and a budget for the forthcoming year, exactly as the treasurer of an incorporated society might do in the early 21st century.
Treasury kept the books but had neither the resources nor the authority to police spending. That was the task of the comptroller and auditor-general, the office held for over 30 years by former politician James FitzGerald.
Bookkeeper or beast of burden?
Colonial Treasurer Charles Richmond addressed Parliament in May 1858 on his delay in presenting a financial statement: ‘The mechanical difficulties were very considerable, and, when honorable members desired to have everything at once, they forgot the amount of work to be accomplished. … He therefore hoped that honorable members would have a little mercy, and not ride the willing horse to death.’2
In 1866 the Treasury had a staff of nine in Wellington and 14 outside Wellington (a sub-treasurer in each province, and six others). The abolition of the provincial system in 1876 put an end to the sub-treasurers, but the staff in Wellington steadily expanded to about 40 in 1880.
The tasks of government expanded in the 1890s – but Treasury’s influence did not. Major departments such as lands, labour, railways and post and telegraph remained firmly in the hands of their ministers and heads of department. Surpluses underpinned the system – from 1892 to 1908, revenue each year exceeded expenditure by a substantial margin.
Treasury influence grows, 1914–35
The Treasury raised £43 million in New Zealand to finance the country’s war effort in 1914–18. This, coupled with the forceful personality of Treasury Secretary G. F. C. Campbell, enhanced the department’s role. Campbell’s successor, James Esson, was equally influential in the harsh fiscal climate which accompanied the post-war recession of 1921–23. Treasury’s rise in status coincided with the rise of accountancy, which had been statutorily recognised as a profession in 1908.
Through the rest of the 1920s Treasury collaborated with the tax department, with Parliament’s public accounts committee and with business interests in seeking to apply business practices to government commercial enterprises, in particular the Post Office and the railways. Treasury also lobbied for a central bank, which could be expected to follow ‘sound’ money policies.
Treasury was able to secure the government’s endorsement of a role it had first played in the post-war downturn, that of surveillance over all government spending. A cabinet minute of 13 October 1930 stated that new proposals being submitted for ministerial or cabinet consideration were to be accompanied by a Treasury report.
Going up, going down
G. F. C. Campbell was the last secretary to the Treasury to be ‘promoted’ to auditor-general on leaving the Treasury – the position in which he served from 1922 until his death in 1937. Subsequent auditors-general were drawn from the upper but not the top ranks of Treasury officials – control of public finances had shifted from Parliament to the bureaucracy.
Treasury gained this role as the fiscal implications of the economic depression hit home, with a £3 million deficit in the government’s accounts expected for 1930–31. Over the next three years Treasury’s senior officials were at the heart of government efforts to balance the budget, including the massive expenditure cuts of 1932. Treasury was less happy with emergency measures that seemingly breached commercial practice, such as mortgage relief, near-compulsory conversion of loans to lower interest rates, and government intervention in setting the value of the New Zealand pound.