International perspectives on the role of the legislature in public financial oversight

1. International perspectives on the role of the legislature in public financial oversight Associate Professor Joanne Kelly Australia & New Zealand School of Government 12 April 2013

2. Discuss international perspectives on the role of legislature in public financial oversight (budgeting)... • Understand the possible scope of that role – and the limitations imposed by current practices and system • Use as the basis for assessing possible reforms and changes to that role being discussed here.

3. Accounting & Controlling Planning & Accountability Why do governments budget?

4. Fiscal Policy Expenditures Revenues

5. Foundation of the democratic compact

6. Compact between the rulers and the ruled Relationship between the executive and the legislature

7. Posner P & Park C K (2007 ), Role of legislature in public budgeting OECD Journal of Budgeting

8. S81: Consolidated Revenue Fund: All revenues raised…. shall form one Consolidated Revenue Fund….

9. S.83: Money to be Appropriated by Law: No money shall be drawn from the Treasury…except under appropriation made by law.

10. Posner P & Park C K (2007 ), Role of legislature in public budgeting OECD Journal of Budgeting

11. Translate public resources into human activities…

13. …a government’s resources are limited;its ambitions seldom are.Weller & Cutt 1976:1

14. Private sector allocates resources through the market Public sector allocations resources through the budget process

15. …to govern is to choose… ….the annual budget expresses most clearly the government’s priorities

16. So, the key questions in understanding a budgetary system are this: who are the key players in budgeting? where lies the power to choose? what limitations are placed on that power?

17. Two key players in public budgeting... Legislature Executive

18. Traditional budgetary relationship in Westminster system Is held to account for spending (by providing reports on actual spending as requested by legislature; answering questions) Holds to account by requesting reports on spending, examining reports, asking questions, verifying content of reports, undertaking reviews and inquiries

19. Westminster Legislature Executive

21. Presidential Executive Legislature

23. Traditional budgetary relationship in Presidential system Is held to account for spending (by providing reports on actual spending as requested by legislature; answering questions) Holds to account by requesting reports on spending, examining reports, asking questions, verifying content of reports, undertaking reviews and inquiries

24. Scoping the role of legislatures in public budgeting

26. Sovereign?

36. Reforming the role of legislature in PFO: the case of the PBO

38. IMF advice OECD finding

39. R4: Establish Independent Fiscal Forecasting institutions • Aim to strengthen, disclose and verify the information base to enhance the role of legislatures in budgetary and financial oversight. • Description of tasks: • Medium term fiscal and budgetary forecasting • Costing: new policy initiatives or reform options, electoral platform; • Independent policy analysis;

42. WRITE THIS UP ON BUTCHERS PAPER OR JUST REPORT BACK TO THE GROUP AS BASIS OF DISCUSSION • What is the impact of PBO on the role of legislature in public financial oversight? • Draw conclusion from the perspective of your current system...

43. who are the key players in budgeting? where lies the power to choose? what limitations are placed on that power?

44. Does stronger = better?

49. Understanding the budget game A simplified model of budget roles & actors...

50. Two key role in budgeting... Spenders Guardians