Eastern Europe SBO Meeting Chung-Keun Park Relationship between the Legislature and the Budget Office in the Budget Process Eastern Europe SBO Meeting Chung-Keun Park

1. Background of this study Two key players in the budget process Increasing demand for active legislative involvement in the budget process OECD experts meeting in October, 2006 ; 9 countries with different power structure - Presidential : Mexico, U.S. - Semi-Presidential : France, Korea - Parliamentary : Italy, Japan, Netherlands, Sweden - Westminster Parliamentary : U.K. Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

2. Factors affecting relationship between the Legislature and the Budget office Power structure - Presidential to Westminster Parliamentary Party system - Strong, cohesive two party system / weaker two party or multiple party system Structure of the legislature - Unicameral / bicameral Structure of the budget - Comprehensive / fragmentary Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

3. Recent trends Executive predominance in 20th century - Expansion of the government - Growth in technical complexity and bureaucracy - Rise of disciplined political party Recent resurgence of legislative role in budgeting - To improve deteriorating fiscal balance - Demand for transparency and accountability - Change from disciplined to fragmented party Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

4. Increasing legislative role, positive or negative for budgetary goals? Fiscal discipline - Feeble faith in their own institutional self restraint / greater fiscal responsibility Allocation - Narrow purpose for local constituency / broader national priorities Efficiency - Hamper administrative efficiency / provide sufficient flexibility Accountability Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

5. Interaction between the Legislature and the Budget Office in the Budget Process Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

(1) Budget preparation and submission Deadline for submission - On average, 3 months before new fiscal year begins Economic assumptions - MOF or shared responsibility of related ministries - Central Planning Bureau (Netherlands) • Legally independent body composed of 200 economists Medium-term budget frameworks - 75% of OECD countries prepare MTBFs (survey, 2003) - Not legal requirement in most countries, but significant in top-down budgeting - Coalition Agreement in the Netherlands Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

(2) Budget deliberation Legislative committees - Budget committee / Sectoral committees • Most countries have budget committee but the U.K. • Increase of entitlements for sectoral committees - Recent trend emphasizing balanced role of the two committees Legislative budget office - 3 out of 39 countries with more than 26 staffs (survey, 2003) - U.S. CBO (Congressional Budget Office) • Non partisan / 235 staffs with budgeting experiences • Providing legislative estimates and analysing proposal - Case of Korea, Italy and Sweden Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

(3) Budget approval Amendments Two-stage budget approval in Sweden - Presidential / Parliamentary Two-stage budget approval in Sweden - Spring Budget Bill; aggregate expenditure limit - Budget Bill; 27 sectoral ceilings and appropriations Earmarked provisions - Allocating resources for constituency / smoothing negotiation process in the legislature - Executive veto power; Line-Item Veto Act in the U.S Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

(4) Budget execution In-year report of budget execution to the legislature Appropriations accounts; simple·programmatic / complex·administrative Flexibility in execution process Cancellation or postponement of appropriations is permitted under limited conditions • France (up to1.5%), U.S. (cancellation forbidden), Korea/Japan (supplementary budget) - End-year flexibility to avoid wasteful end-year surges Audit - From financial audit to performance audit Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

6. Budget reform Most reforms are initiated by the executive - They have more information and responsibility Legislative role in budget reform - Top-down budgeting in Sweden - The Budget Enforcement Act in the U.S. - Italy’s budget reform Requirements for successful budget reform - A common objective and co-operative attitude - Enacting the reform in a law as well as establishing it as a practice Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress

7. Issues for discussion Tradeoff of more involvement of the legislature - Negative (Fiscal discipline, Efficiency) / Positive (Accountability) Issues to consider for strengthening budget process - Information sharing and collaboration of two bodies - Simplifying budget classification for transparency - Enhancing legislative capacity to analyze proposal - More utilization of performance information - Ensuring fiscal discipline in preparation for future fiscal risk (increasing entitlements, population ageing) Some of the advantages of such a tool: Having one place where we can all go, rather than having to sift through reams of e-mails or hunting down the people who may have the information we need Being systematically alerted of new communications needs and changes to things currently in progress Seeing information in the form that is most useful and efficient, to make our work easier and help us do it better Its goal is not: To add a new layer of bureaucracy or supervision To generate more work or e-mail traffic The goal is to reduce these things and cut out the stress