Canadian PBO Spending Analysis 6 June 2017

Our role: fiscal analysis Provide independent analysis to Parliament on: the state of the nation's finances provide independent analysis to Parliament of the government's estimates Upon request, estimate the financial cost of any proposal

PBO priorities vis-à-vis OECD Principles OECD Principles for Budgetary Governance Source: OECD

PBO priorities vis-à-vis OECD Principles (1) Enabling macro-fiscal oversight Budgets should be comprehensive, accurate and reliable Fiscal policy should have clear, credible and predictable limits Budgets should be aligned with the medium-term expenditure framework Budgets should account for longer-term sustainability and fiscal risks (2) Promoting micro-fiscal scrutiny Budget documents and data should be open, transparent and accessible Budget execution should be actively planned, managed and monitored (3) Quality budgetary allocation The capital budgeting framework should be coherent, enabling cost-effectiveness Performance, evaluation and value for money should be integral to the budget process

OECD Principles for Budgetary Governance (1) Macro-fiscal oversight Budgets should be comprehensive, accurate and reliable Tools: Preferred option: independent fiscal forecast Detailed Control of input data and assumptions Internally consistent Time intensive Next best: analysis of exogenous forecasts Adjust and interpret Government’s projections Examine and contextualize Government’s projections OECD Principles for Budgetary Governance

Macro-fiscal oversight OECD Principles for Budgetary Governance Blended analysis based on data availability OECD Principles for Budgetary Governance

Macro-fiscal oversight Scrutiny of exogenous projections Operating spending Pension provisions Adjust government estimates using known common forecast variables: Interest rates Accrued service

(1) Macro-fiscal oversight Fiscal policy should: have clear, credible and predictable limits; be aligned with the medium-term expenditure framework Source: OECD and PBO

(1) Macro-fiscal oversight Consistent tracking of key political fiscal commitments

(2) Promoting micro-fiscal scrutiny Budgets should be open & transparent; budget execution managed & monitored Tools: Policy/program costing Quarterly in-year expenditure estimate updates Links accrual and cash accounting domains High frequency monitoring of budget objectives Fiscal data exploration tool Browseable Searchable by function Aligned to cash-based vote structure Accessible interface

(2) Promoting micro-fiscal scrutiny Policy/program costing OECD Principles for Budgetary Governance Trade agreements Defence procurement Children’s benefits Infrastructure

(2) Promoting micro-fiscal scrutiny In year modeling of existing financial data

(2) Promoting micro-fiscal scrutiny Web applications Budget Tracking Tool Exploratory tool Data is visualized, malleable across categories Built using existing accounting data Previous form: Integrated Monitoring Database OECD Principles for Budgetary Governance

(3) Quality budgetary allocation Capital budgeting Infrastructure program monitoring and forecasting Economic impact estimation Performance & value-for-money Target and outcome tracking Aligned to program framework OECD Principles for Budgetary Governance

OECD Principles for Budgetary Governance Conclusion Macro-fiscal Independent forecast, supplemented by analysis of government data Contextualize data relative to fiscal targets Micro-fiscal Policy costings on high priority spending items Provide coherence to various financial documents Use web tools to enhance accessibility, relevance and depth of program data OECD Principles for Budgetary Governance