1. Public Participation in Fiscal Policy Principles, Mechanisms and Country Practices Murray Petrie GIFT Lead Technical Advisor petrie@fiscaltransparency.net #FiscalTransparency CESEE-SBO Ljubljana 29 June, 2016

2. GIFT Work on Public Participation Overview of presentation  GIFT’s work program on public participation in fiscal policy  What is public participation in fiscal policy?  Possible objections to public participation  The GIFT Participation Principles  Country examples  Implementing the participation principles 2

3. GIFT Work on Public Participation GIFT’s work program on public participation in fiscal policy  Originated with GIFT High Level Principle 10  Eight country case studies  A series of workshops 2012-2015  Public consultation in 2015  GIFT Participation Principles approved December 2015  Preparation of Guide to help implement the Principles  Development of indicators to measure participation in fiscal policy  Ongoing work with Open Government Partnership Fiscal Openness Working Group 3

4. GIFT Work on Public Participation Why a new set of principles on public participation?  Post-GFC: renewed emphasis on fiscal transparency and participation accountability  Going beyond disclosure to direct public participation:  Participation a right of citizens.  To improve quality of policy design and implementation.  GIFT High Level Principle 10: Citizens should have the right and they, and all non-state actors, should have effective opportunities to participate directly in public debate and discussion over the design and implementation of fiscal policies. 4

5. GIFT Work on Public Participation Why a new set of principles on public participation? (2)  Participation is key to SDG Goal 16 and building inclusive institutions, and critical to achieving all the SDGs.  Real and meaningful public participation is critical to success and sustainability of OGP; need to avoid ‘open-washing’ – but how, exactly, should states engage their citizens? 5

6. GIFT Work on Public Participation GIFT High-Level Principle 10 GIFT’s 10 High-Level Principles of Fiscal Transparency, Participation and Accountability were endorsed by UN General Assembly in 2012 (UNGA Resolution 67/218), which called on governments and UN system to:  “Intensify efforts to enhance transparency, participation and accountability in fiscal policies, including through the consideration of the principles set out by GIFT.” Principle 10 establishes that “Citizens and non-state actors should have the right and effective opportunities to participate directly in public debate and discussion over the design and implementation of fiscal policies.” 6

7. GIFT Work on Public Participation What is public participation in fiscal policy? The variety of ways in which citizens and the general public, including CSOs and other non-state actors, interact directly with public authorities with respect to the design, implementation, and review of public policies. Includes any form of invited interaction – does not include autonomous activities. Ranges from one-off consultation to on-going and institutionalized relationships. IAP2 spectrum of public participation: Inform. Consult. Involve. Collaborate. Empower. 7

8. GIFT Work on Public Participation What is the scope of public participation in fiscal policy? Covers all fiscal policy and budget making activities: The annual budget cycle: all stages Fiscal policy reviews and new policy initiatives outside the annual budget cycle (revenues, expenditures, financing, asset, liability management) The design and delivery of public services The planning, appraisal & implementation of public investment projects Far wider and more varied than ‘participatory budgeting.’ 8

9. GIFT Work on Public Participation Possible objections to public participation Could undermine representative government Aim is to complement existing governance arrangements, not to set up parallel processes. Culture and long-standing practice of budget secrecy But policy making more open now, and budget secrecy can be retained where clearly warranted by public policy e.g. to avoid adverse behavioral responses. Concerns that fiscal policy should be left to the experts But open engagement of external experts is one of mechanisms proposed. Fiscal policy involves ethical and distributional choices that should not be the sole preserve of ‘experts’. Fiscal policy is inherently political and will not be left to experts in any case. 9

10. GIFT Work on Public Participation Possible objections to public participation (2) Public engagement takes time, will slow down the policy process But can help avoid policy reversals, and improve policy quality Public participation is costly: But the ICT revolution has dramatically cut the cost of direct engagement with citizens, and created completely new possibilities for interactions. Public participation a means for government to tap into the information, insights and perspectives distributed throughout society, lowering the cost and improving effectiveness of research, policy development, monitoring, review, evaluation Resource costs are recognized in the Principles e.g. proportionality. 10

11. GIFT Work on Public Participation 11

12. GIFT Work on Public Participation Principle 1: Openness 12 Openness Provide full information on and be responsive with respect to the purpose, scope, constraints, intended outcomes, process and timelines, as well as the expected and actual results of public participation.

13. GIFT Work on Public Participation Principle 2: Inclusiveness 13 Inclusiveness Pro-actively use multiple mechanisms to engage citizens and non-state actors, including traditionally excluded & vulnerable groups & individuals, & voices that are seldom heard, without discrimination on any basis including nationality, race, ethnicity, religion, gender, sexual orientation, disability, age or caste; & consider public inputs on an objective basis irrespective of their source.

14. GIFT Work on Public Participation Principle 3: Respect for self-expression 14 Respect for self-expression Allow and support individuals and communities, including those directly affected, to articulate their interests in their own ways, and to choose means of engagement that they prefer, while recognizing that there may be groups that have standing to speak on behalf of others.

15. GIFT Work on Public Participation Principle 4: Timeliness 15 Timeliness Allow sufficient time in the budget and policy cycles for the public to provide inputs in each phase; engage early while a range of options is still open; and, where desirable, allow for more than one round of engagement.

16. GIFT Work on Public Participation Principle 5: Accessibility 16 Accessibility Facilitate public participation in general by disseminating complete fiscal information and all other relevant data, in formats and using mechanisms that are easy for all to access, understand, and to use, re-use and transform, namely in open data formats.

17. GIFT Work on Public Participation Principle 6: Transparency 17 Transparency Support each public engagement by providing all relevant information, highlighting and informing key policy objectives, options, choices and trade-offs, identifying potential social, economic, and environmental impacts, and incorporating a diversity of perspectives; provide timely and specific feedback on public inputs and how they have been incorporated or not in official policy or advice.

18. GIFT Work on Public Participation Principle 7: Proportionality 18 Proportionality Use a mix of engagement mechanisms proportionate to the scale and impact of the issue or policy concerned.

19. GIFT Work on Public Participation Principle 8: Sustainability 19 Sustainability All state and non-state entities conduct on-going and regular engagement to increase knowledge sharing and mutual trust over time; institutionalize public participation where appropriate and effective, ensuring that the feedback provided leads to revision of the fiscal policy decisions; and regularly review and evaluate experience to improve future engagement.

20. GIFT Work on Public Participation Principle 9: Complementarity 20 Complementarity Ensure mechanisms for public participation and citizen engagement complement and increase the effectiveness of existing governance and accountability systems.

21. GIFT Work on Public Participation Principle 10: Reciprocity 21 Reciprocity All state and non-state entities taking part in public engagement activities should be open about their mission, the interests they seek to advance, and who they represent; should commit to and observe all agreed rules for engagement; and should cooperate to achieve the objectives of the engagement.

22. GIFT Work on Public Participation Country Examples: the GIFT Case Studies Countries covered: Brazil, Canada, Croatia, Kenya, Korea, Mexico, the Philippines, South Africa. Overall findings: A.Countries with newer Constitutions place more emphasis on direct public participation in fiscal policy e.g. Brazil, the Philippines, Korea, South Africa, Kenya. B.Three broad types or ‘families’ of public participation in fiscal policy: i.Expert-based: e.g. Korea ii.Top-down: e.g. Brazil iii.Bottom-up: the Philippines 22

23. GIFT Work on Public Participation The Principles in practice: some country examples 23 OpennessBrazil and Kenya: inclusion of public participation in Constitution and laws provides clarity about expectations and processes InclusivenessKenya: multiple mechanisms publicise budget participation opportunities, with range of geographic locations and means of providing input Philippines: Community-driven development program engages marginalised communities Respect for self- expression South Africa: citizen-based monitoring Philippines: bottom up budgeting TimelinessCanada: engagement by executive during budget preparation and on new fiscal policies; by legislature during budget consideration; by executive in program evaluation; and by SAI in audits. AccessibilityMexico: creation of the Transparency Portal for fiscal data.

24. GIFT Work on Public Participation The Principles in practice: some country examples (2) 24 TransparencyMexico: Education Reform Program ProportionalityUK Cabinet Office requirement; principle in EU law on consultation SustainabilityBrazil: Public Policy Councils, National Conferences routine part of institutional framework. ComplementarityMany legislatures provide for public testimony during budget oversight, and in consideration of fiscal policy Bills ReciprocityThe Philippines DBM-CSO Principles of Engagement

25. GIFT Work on Public Participation Selected Country Examples: the Philippines DBM-CSO Principles of Engagement, institutionalized in National Budget Circular 536, January 31, 2012 Principles of transparency, accountability, integrity, partnership, consultation and mutual empowerment, respect for internal processes, sustainability, and national interest. Budget Partnership Agreements between line ministries and CSOs Bottom Up Budgeting 25

26. GIFT Work on Public Participation Bottom Up Budgeting (BUB) in the Philippines Launched in 2012 with 515 communities and small budget Aims: deliver basic social services to the poor, reduce the influence of local elites and empower the citizenry Local poverty reduction action teams (LPRAT) determine local priority projects A general assembly: half members from government, half from CSOs, recommends projects to the LPRAT Suggested projects are submitted for incorporation in the budget of the participating national agencies CSOs can engage in the monitoring of the BuB projects In 2016: BuB included 1,514 cities and municipalities and a budget 3 times bigger than in 2012 26

27. GIFT Work on Public Participation Education Reform Program in Mexico Launched in 2014-2015 to improve infrastructure and equipment of most vulnerable basic schools. Parents, teachers and directors form a committee and decide how to prioritize federal funds that have been allocated to their school Public engagement takes place at all stages of the process, from allocation of resources, to implementation and monitoring Interactive website allows users to monitor project status The program has benefited over 20,138 schools, renewed for 2016 PRINCIPLES OF OPENNESS, INCLUSIVENESS, RESPECT FOR SELF-EXPRESSION, TIMELINESS, TRANSPARENCY, PROPORTIONALITY, COMPLEMENTARITY, RECIPROCITY 27

28. GIFT Work on Public Participation Public Policy Councils in Brazil Permanent collegiate bodies creating, implementing, and monitoring public policies Operate at all three levels of government (federal, state, municipal), in various thematic areas Membership is based on parity (government and CSOs) Councils must approve the budget in their policy area In 2012 municipals councils in health, social care, and rights of children fully operational in 99% of municipalities. 75% of national council members consider they have a significant impact on policy. Number of councils grown exponentially over the past 20 years. PRINCIPLES OF OPENNESS, INCLUSIVENESS, RESPECT FOR SELF-EXPRESSION, TIMELINESS, TRANSPARENCY, SUSTAINABILITY & PROPORTIONALITY 28

29. GIFT Work on Public Participation Canada: Pre-budget Consultations through the House of Commons Standing Committee of Finance A mechanism for Parliament to evaluate government policy Adds quality and legitimacy to the budget process The Finance Committee receives witness testimony and online submissions An annual public report is drafted, highlighting recommendations tied to the consultation exercise In 2014, the Finance Committee received testimony from more than 100 people and groups and more than 400 online submissions The 2014 Finance Committee Report contained 47 recommendations in six priority themes identified by the Committee PRINCIPLES OF OPENNESS, RESPECT FOR SELF- EXPRESSION, TIMELINESS, TRANSPARENCY, SUSTAINABILITY, COMPLEMENTARITY 29

30. GIFT Work on Public Participation Top-Down Budgeting System in South Korea Two-step process: 1.Central budget agency sets sector ceilings 2.Line ministries allocate the budget within those ceilings At each step, an Advisory Committee consisting of CSO and expert members is consulted Budget programs are evaluated every 3 years, with the involvement of the Advisory Committee The Committee can provide oral and written suggestions and can vote for or veto proposals Considered to have resulted in shift to a more welfare-oriented budget PRINCIPLES OF OPENNESS, RESPECT FOR SELF- EXPRESSION, TIMELINESS, ACCESIBILITY, TRANSPARENCY, SUSTAINABILITY 30

31. GIFT Work on Public Participation Implementing the participation principles Launch a practical Guide/manual at the IMF/WB Annual Meetings in October. Support development of tools to measure public participation in fiscal policy. Inspire and support governments, and encourage them to make concrete commitments to increase fiscal transparency and public participation within the Open Government Partnership framework and elsewhere. Provide practical support to MOFs and civil society actors in designing and implementing public participation mechanisms, including through the Fiscal Openness Working Group 31

32. GIFT Work on Public Participation GIFT Guide on Public Participation in Fiscal Policy Aim of the Guide is to aid the implementation of the GIFT participation principles through practical examples and step-by- step explanation of functioning mechanisms. Six practices have been selected as the initial group of cases, with a view to add further examples to these practices over the next year. Guide takes the form of a PDF version as well as an online, multimedia platform. 32

33. GIFT Work on Public Participation Measuring participation: Pilot Supplementary PEFA Indicator One indicator covering four dimensions of fiscal policy: 1.Public participation across the annual budget cycle: Budget preparation and Legislative approval 2.Public participation in the design and delivery of public services (two of largest sectors) 3.Public participation in the appraisal and implementation of public investment projects (sample of largest projects) 4.Public participation in oversight processes (legislative review and Supreme Audit)  Scores of a - d defined for each of the 4 dimensions.  Piloted in the Philippines and South Africa. 33

34. GIFT Work on Public Participation Some Issues for Discussion The case for more direct public participation in fiscal policy Developments in your country Promising mechanisms for participation at different stages of the budget and policy cycles 34

35. @FiscalTrans Engage with us fiscaltransparency.net