Best practices for legislative budgeting - Lisa Von Trapp, OECD
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The document outlines steps towards developing OECD Best Practices for Parliamentary Budgeting. It identifies key areas to cover, including budget formulation, approval, implementation, audit, parliamentary organization and resources, and public engagement. An analysis of OECD country practices in these areas is also presented, highlighting variations. The development of best practices will involve further stakeholder consultation and drafting principles to strengthen parliamentary budget oversight.
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Best practices for legislative budgeting - Lisa Von Trapp, OECD
- 1. DEVELOPING BEST PRACTICES FOR PARLIAMENTARY BUDGETING Lisa Von Trapp Senior Policy Analyst, OECD 9th Annual Meeting of Parliamentary Budget Officials and Independent Fiscal Institutions Edinburgh, Scotland
- 2. 2 Ten OECD principles of Good Budgetary Governance
- 3. What these principles say on parliamentary budgeting 3 “Countries should provide for an inclusive, participative and realistic debate on budgetary choices, by offering opportunities for the parliament and its committees to engage with the budget process at all key stages of the budget cycle, both ex ante and ex post” OECD Principles of Good Budgetary Governance
- 4. • set-piece events engagement through the year • financial focus integration of performance info. • general research support support from specialised units • written briefing social-media friendly analysis • fiscal stability heightened focus on fiscal risks • Member driven greater engagement of citizens • national focus budgeting across levels of government • Executive dominance parliament as a partner Trends in parliamentary budgeting
- 5. • Recent reviews have exposed a need for principles to ensure strength of parliamentary budget oversight. 5 A need for principles to guide parliamentary reform
- 6. 6 Step 1. Identify broad areas of coverage Towards OECD Best Practices for Parliamentary Budgeting
- 7. 7 Step 1: Identifying broad areas of coverage Review… • Existing standards from OECD, IMF, World Bank, CPA, OBP, GIFT, Wehner, Lienert, etc. • OECD surveys • Country reviews • Studies and analysis • Gathering and exchanging knowledge … and supplement this with the experiences of practitioners across OECD countries…
- 8. Towards OECD Best Practices for Parliamentary Budgeting 8 Step 1. Identify broad areas of coverage Step 2. Consult with stakeholders • Identify omissions • Hone ideas Step 3. Draft final OECD Best Practices Step 4. OECD approval and launch of Best Practices Potentially in the future…. develop Best Practices into Principles for Parliamentary Budgeting Current stage
- 9. 9 1 3 2 4 5 6 7 8 16 11 1510 12 1413 9 Key areas of best practices Budget formulation Budget approval Budget implementation Audit Organisation and resources Public engagement
- 10. OBSERVATIONS FROM ACROSS THE OECD
- 11. Budget formulation Source: OECD Budget Practices and Procedures Database (2012). Fiscal rules approved by parliament 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2007 2012 %offiscalrulesinOECDcountries basedonnationallegislation Who approves the MTEF? 4% 52% 37% 7% MoF Cabinet Legislature Other
- 12. Is a pre-budget report submitted to the legislature? Budget formulation Source: OECD Budget Practices and Procedures Database (2012) 53% 47% Yes No Timing of pre-budget report No. of OECD countries Submitted 1 month or more before the budget is presented to legislature 11 Submitted less than 1 month before budget is presented to legislature 7
- 13. 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % No.of months budget presented before start of FY No.of months for legislative debate 3 months or more Less than 3 months Budget approval Timetable for presentation of budget and legislative debate %ofOECDcountries Source: OECD Budget Practices and Procedures Database (2012).
- 14. Budget approval Elements included in the budget documentation presented to the legislature %ofOECDcountries Source: OECD Budget Practices and Procedures Database (2012). 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Medium-term fiscal fiscal policy objectives Budget priorities Clearly defined appropriations for legislature vote Linkage of appropriations to administrative units Medium-term perspective on total revenue & expenditure Non- financial performance targets Text of legislation of policies proposed in budget 2012 2007
- 15. Budget approval Other budget documents available to the public %ofOECDcountries 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Citizens budget Long term perspective on total revenue and expenditure (10 or more years) Source: OECD Budget Practices and Procedures Database (2012).
- 16. The formal powers of the Legislature to amend the budget proposed by the Executive AUS AUT BEL DNK FIN DEU HUN ISL JPN LUX MEX NZL NOR PRT SVK SWECHEUSACZE EST FRA ISR ITA NLD POL SVN ESP CHL GBR GRC IRL CAN KOR TUR Other May not make changes; only approve or reject the budget as a whole May amend to decrease existing expenditure/ revenues Amendment powers but cannot change totals proposed by government Unrestricted powers to amend the budget Budget approval 0% 10% 20% 30% 40% 50% 60% Yes No Is vote on the budget considered a vote of confidence? Source: OECD Budget Practices and Procedures Database (2012).
- 17. 17 Budget implementation Source: OECD Budget Practices and Procedures Database (2012). 25% 12%63% Ex-ante approval Ex-post approval No approval needed Requirement for legislative approval to re-allocate funds in budget envelope
- 18. 18 Budget implementation Source: OECD Budget Practices and Procedures Database (2012). 0% 20% 40% 60% 80% 100% Issue a mid-year report 2012 2007 %ofOECDcountries Existence of a consolidated central government mid-year report
- 19. 19 Audit Source: OECD Budget Practices and Procedures Database (2012). 0 1 2 3 4 5 6 7 8 9 10 Austria Slovenia Ireland Turkey Hungary Estonia Japan Canada Italy Australia Poland Czech Republic Finland France Israel Netherlands Sweden Slovak Republic New Zealand Switzerland United States Mexico Number of months after year-end that audited accounts are publicly disclosed
- 20. 20 Organisation and resources Sources: OECD Budget Practices and Procedures Database (2012) and OECD Survey on Parliamentary Committee Structures for Budget Approval & Oversight (2011). 0 2 4 6 8 10 12 Model 1 Model 2 Model 3 Model 4 Model 5 NumberofOECDcountries Committee structures for dealing with the budget Model 1 A single Budget/Finance Committee coordinates a process in which sectoral committees make recommendations to the Budget/Finance Committee.The Budget/Finance Committee then reviews and accepts or rejects these recommendations and formally considers all budget-related matters. Model 2 A single Budget/Finance Committee formally considers budget aggregates (total level of revenue and spending and their allocation to each sector) and sectoral committees formally consider spending for sector specific appropriations. Model 3 A single Budget/Finance Committee formally considers the budget, but members from sectoral committees attend meetings of the Budget/Finance Committee when expenditures in their specific areas are discussed. Model 4 A single Budget/Finance Committee alone is responsible for reviewing the budget, although it may call on sectoral committees for input Model 5 No Budget/Finance Committee is in place, but sectoral committees formally consider appropriations Key:
- 21. 21 Organisation and resources Source: OECD Budget Practices and Procedures Database (2012). 0 5 10 15 20 25 30 2012 2007 2003 2000 Specialised budget research office exists No specialised budget research office exists Existence of a specialised budget research office attached to the legislature
- 22. 22 Organisation and resources Source: OECD Budget Practices and Procedures Database (2012) 0 5 10 15 20 25 30 2007 2013 Countries with IFI No Yes 0 1 2 3 4 5 6 None >10 10 - 20 21 - 60 More than 100 Number of staff in IFI
- 23. 23 Organisation and resources Source: OECD Budget Practices and Procedures Database (2012) 0 5 10 15 20 25 Legislature prepares its budget and this is included in the Gov budget proposal w/o changes Legislature subject to same procedures & policies as any other org in the Gov budget proposal Legislature prepares its budget independently Other NumberofOECDcountries How is the legislature’s budget determined?
- 24. 24 Key questions • Any major omissions? • Should list be more focussed? Which are most important? • Best Practices verses Principles? • Ambition versus realism? Balance of both.
- 25. THANK YOU AND NEXT STEPS… 25 Send written comments to: Lisa.Vontrapp@oecd.org
- 26. Key areas the best practices cover 26 Budget formulation Budget approval Budget implementation Audit Organisation and resources Public engagement