Establishment of the Parliamentary Budget Office
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Establishment of the Parliamentary Budget Office. Contents. Act Preparations for PBO establishment Work-plan development Research Current Legislative Fiscal oversight Defining Legislative oversight

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Establishment of the Parliamentary Budget Office

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Establishment of the Parliamentary Budget Office


Contents

  • Act

  • Preparations for PBO establishment

  • Work-plan development

  • Research

  • Current Legislative Fiscal oversight

  • Defining Legislative oversight

  • Proposal for PBO: Functions, Organisational design, Stakeholder engagement, Implementation plan, Budget

  • International seminar


Act

  • The Money Bills Amendment Procedure and Related Matters Act came into effect in April 2009

  • Section 15 of the Act established a Parliamentary Budget Office

  • Objective of the PBO is to provide independent, objective and professional analysis and advice to Parliament on matters related to the budget and Money Bills


Section 15(2) outlines the core functions of the Budget Office as follows:

  • reviews and analysis

  • advice and analysis on proposed amendments

  • reports tabled and adopted in a House with budgetary implications

  • abreast of policy debates

  • unfunded mandates


Preparations for PBO Establishment

  • DBSA Research

  • Study tours- Kenya, Germany, Sweden, Japan and the Republic of Korea

  • secondment of MI Jahed


Work Plan Development

Critical Factors:

  • Interaction with Exec Authority, Political Task Team for guidance and advice

    Political Task Team:

    • House Chairpersons-Committees: NA & NCOP

    • Chairpersons of finance committees: NA & NCOP

    • Chairpersons of appropriations committees: NA & NCOP

    • Co-Chairpersons: Review of Rules Committee


Work Plan Development

  • Interaction Senior Management and Specialists

  • Engage external stakeholders

  • Research, international best practices, lessons of experience, understanding SA needs, implementing Act


Research

What do PBOs do?

  • evidence-based budget analysis

  • economic forecasts

  • fiscal projections

  • examine proposals

  • impact of alternative spending policies


PBOs: International trends

  • PBOs relatively recent phenomenon

  • Growth in PBOs in line with more democracies

  • In many countries there is growing trend of rising Executive capacity over Parliament

  • Legislatives generally lack technical, analytical capacity and information

  • Decline in Legislative oversight abilities

  • Limited oversights often leads to poor fiscal outcomes

  • PBOs have improved legislators ability to interpret, review and make better decisions on Budget process


Study Visits

  • Germany, Sweden, Japan, South Korea, Kenya

  • Budget offices across the globe are influenced by the roles played by their legislatures in the budget process:

    • Budget approving legislatures: cant amend and approves Executive budget(Sweden, UK)

    • Budget influencing legislatures: can amend, but can’t formulate budget(Italy, Netherlands)

    • Budget making legislatures: has legal & technical capacity to amend or reject Executive budget proposals and substitute its own( Japan, USA)


  • Study Visits

    • The varying influence of legislatures in budgeting reflects differing authority to modify executive budget proposals.

    • Countries reported that their legislatures have unrestricted powers to amend the budget.

    • Legislatures however, can make amendments only if they do not change the overall fiscal position, while they may only decrease, not increase, proposed spending.

    • Legislative influence is also affected by the time available to consider requests: a legislature that has limited time to examine budget proposals is at a disadvantage.

    • Legislatures established a more regularised process with more time to consider budget requests e.g. Mexico had changes requiring presidents to present their budgets earlier than before.

    • Committee structure is the heart of legislative influence, legislatures have found it essential to divide the task of reviewing the budget into committees.


    Study Visits

    • Staff establishment , Reporting line, Functions

    • PBO: International Experience and Lessons

    • No “one size fits all model”

    • Roles influenced by: type of political system, Legislature’s formal powers i.e. to amend, political environment, technical capacity of Parliament


    Lessons for SA PBO

    • Budget transparency (Parliament & Civics)

    • Enhance credibility of budget process

    • Increase accountability

    • Discipline in public spending

    • Capacitate Parliament to exercise oversight functions


    Legislative Fiscal Oversight

    • In SA, oversight takes place in Committees with significant part occurring in the Parliament

    • Legislative oversight takes the form of:

      • Questions to the President, Deputy President

      • Questions to the Ministers, Deputy Ministers

      • Debates

      • Motions

      • Committee reports flowing from interaction with departments and oversight visits


    Fiscal Oversight

    However fiscal oversight is about:

    • Government expenditure

    • Government Borrowing

    • Tax

    • Regulation


    Fiscal Infrastructure

    Oversight over Institutions:

    • Parliamentary Committees

    • National Treasury

    • SARB

    • SARS

    • Now: PBO


    Fiscal Reform

    • Fiscal Reform: Reform of the budgeting system and Public service reform

    • 2 imperatives for reform of budgeting system: budgeting system is key for attaining objectives and ability of Govt to employ limited resources with maximum effect

    • Budget systems have 3 basic functions: fiscal discipline: “allocative efficiency” i.e. resource allocation in line with govt priorities: “delivery efficiency” i.e. which means the least-cost provision of public services


    Fiscal Oversight

    • Budgeting System most important component of public service delivery

    • Key instrument for translating govt priorities, strategic plans into public goods and services

    • Any policy or plan which does not consider budget constraints is unlikely to be successfully implemented

    • Good Governance: budget captures & implements principles of accountability, transparency, democracy, participatory governance


    Functions


    Organogram


    PBO reporting line


    Internal Stakeholders

    • Organisational Design

    • Human Resource: JD, market- related performance contracts

      • IT: Web design

      • Process mapping between LOD and PBO

    • Legal

    • SCM


    External Stakeholders

    Auditor General


    Amendments to the Act

    • The Money Act envisages that the Director will appoint the Deputy Directors/Senior Analysts and other support staff. This process is currently with the Standing Committee on Finance.

    • Amendments to the Act will focus on the following:

      • Time frames and sequencing

      • Section 15 on the Parliamentary Budget Office

      • Textual amendments


    Implementation Plan The following must be considered during the Budget Period


    Budget


    Way Forward

    • Implementation be prioritised

    • Office space

    • Support and advise on Act amendments

    • Presentations: Exec Auth, Pol Task Team, POA

    • Continue stakeholder engagement

    • International Seminar


    Thank you


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