1. Pacific Constitutions Conference Vanuatu, 25 November 2016
The constitutional importance of Parliaments and Supreme Audit Institutions in achieving good governance outcomes in Pacific Island Countries
Pacific Constitutions Conference
Vanuatu, 25 November 2016

2. Context
SDG 16: promoting peaceful and inclusive societies for sustainable development, providing access to justice for all, and building effective, accountable and inclusive institutions at all levels
Public Financial Management (PFM) systems: for raising and controlling the use of public financial resources
External audit and scrutiny: to achieve enhanced transparency and accountability, allowing the community to ensure resources are being directed and used appropriately
This paper has been written by:
Robert Buchanan, a New Zealand lawyer and also the Legal Consultant to PASAI, the Pacific umbrella group of public sector auditing institutions (known as supreme audit institutions or SAIs); and
Mitch O’Brien and Ermal Vila of the World Bank, who work with Public Accounts Committees of parliaments all over the world and have recently been involved in setting up a network of PACs in the Pacific.
Unfortunately they are not able to be with us today, but they have prepared this PowerPoint presentation to summarise their paper and have asked if I could speak briefly to it.
The context of the paper is SDG 16: which speaks of promoting peaceful and inclusive societies for sustainable development, providing access to justice for all, and building effective, accountable and inclusive institutions at all levels.
A sound Public Financial Management systems is a key element of success of this SDG, because it provides the basis on which parliaments can raise taxes and authorise public expenditure based on government budgets, and then hold governments to account for their use of the public resources they receive.
External audit and scrutiny is a critical element of any PFM system: the aim being to achieve enhanced transparency and accountability.

3. Focus of the paper: the constitutional importance of PACs and SAIs
Public audit institutions (SAIs) and parliaments (especially Public Accounts Committees) are the institutions responsible for external audit and scrutiny of the use of public resources
Both are central to any PFM system and, consequently, to any effort aimed at achieving the SDGs through appropriate public expenditure
Their effectiveness relies on having adequate status, clear mandates, legal powers, and independence from the stakeholders they are scrutinizing
The key institutions responsible for these oversight functions are the SAI and the PAC, or its equivalent committee of the parliament.
Both are central to any PFM system and, consequently, to any effort aimed at achieving the SDGs through appropriate public expenditure.
Their effectiveness relies on having adequate status, clear mandates, legal powers, and – most importantly – independence from the stakeholders they are scrutinizing.

4. The constitutional context
It is well established internationally that the authority to tax citizens and authorize public expenditure should rest with the parliament
The executive branch of government should be accountable to the parliament for its performance in doing so
A properly resourced and independent parliament (and committees) and SAI are fundamental to the implementation of these principles
The constitutional context is well known – the authority to tax citizens and authorize public expenditure should rest with the parliament;
the executive branch of government should be accountable to the parliament for its performance in doing so; and
A properly resourced and independent parliament (and its committees) and a SAI are fundamental to the implementation of these principles.

5. The constitutional role of SAIs
Most PIC constitutions establish an office of Auditor- General (or similar) to be responsible for auditing the government accounts
But public sector auditing is now much more than being just about the numbers – it is also about performance and value for money, in the complex world of accountability that we live in today
Independence from the executive and legislative branches is a fundamental precept of SAI existence and effectiveness - and has a strong normative basis internationally (Lima, Mexico Declarations)
Not much is known about the role and importance of a country’s public auditing institution. Many of us think of auditing as just to do with the money, the accounts, and other mundane matters. Most PIC constitutions establish an office of Auditor-General (or similar) to be responsible for auditing the government accounts.
But public sector auditing is now much more than being just about the numbers – it is also about performance and value for money, in the complex world of accountability that we live in today.
Independence from the executive and legislative branches is a fundamental precept of SAI existence and effectiveness - and has been for a long time, since the 1970s at least. It now has a strong normative basis internationally through a number of international declarations and standards, especially the 1977 Lima Declaration and the 2007 Mexico Declaration on the independence of SAIs.

6. The importance of SAIs in achieving country outcomes
General Assembly resolutions (A66/209, 69/228):
note the role that strong, properly resourced and independent SAIs play in improving transparency, accountability, and value for money to ensure public funds are appropriately spent
encourage member states to apply the principles of independence in a manner consistent with national institutional structures
Modern, professionalized public auditing achieves these ends, also demonstrating ongoing relevance to citizens, the parliament, and other stakeholders (ISSAI-12)
And SAIs are important in achieving country outcomes.
There have been two recent resolutions of the UN General Assembly resolutions on the importance of a nation’s SAI in improving transparency, accountability, and value for money, and the importance of nation states applying the principles of SAI independence to the best extent possible given country circumstances.
There is a lot of international literature which recognizes these imperatives, and shows the ongoing relevance of SAIs to citizens and the parliament.

7. Why is this important for PIC constitutions?
The powers to tax, authorise, and hold accountable are constitutionally significant
Public auditing in PICs has advanced considerably, but faces inherent challenges
Constitutions stand the test of time, but can become outdated
The constitutional provisions are out of step with modern independence principles (e.g., they do not recognize the importance of financial independence and autonomy, separate from the executive government)
Reform is an imperative to meet the requirements of the SDGs and the General Assembly resolutions
So why is this important for Pacific countries and their constitutions
The paper states these five propositions:
The powers to tax, authorise, and hold accountable are constitutionally significant
Public auditing in Pacific countries has advanced considerably, but faces inherent challenges not least because of the small size of communities
Constitutions stand the test of time, but they can become outdated
Many of the constitutional provisions dealing with SAIs are out of step with modern independence principles . For example, they don’t tend to recognize the importance of the SAI having:
financial independence (i.e. its budget not being controlled by the government, the entity it audits, which could for example cut the budget if it doesn’t like its audit findings); and
operational autonomy, including the power to hire its own staff rather than being part of the civil service.
Reform to meet these types of objectives is an imperative if SAIs are to develop to an extent where they can meet the requirements of the SDGs and the General Assembly resolutions.

8. PASAI’s work to strengthen SAIs’ constitutional status
Regional initiatives to strengthen the capacity and independence of SAIs across the region since 2008
Recognition that such progress is essential to growth, development, governance, and combating corruption
2011, 2015 studies found a significant need for reform, which has been achieved in Samoa and Tonga
Opportunities for progress now exist through legislative reform (Tuvalu, Solomon Islands, others)
The RMI constitutional convention also offers an opportunity to progress a modern constitutional SAI provision
PASAI, the regional body of SAIs in the Pacific, has been working on these issues for several years.
As well as undertaking studies of accountability and transparency in 2011 and 2015, which are both available on its website, it has been actively supporting some of its members to promote legislative and constitutional reforms.
There are new Acts now in place in Samoa and Tonga. Another is on the way in Tuvalu. Others are pending in the Solomon Islands and elsewhere. And there is now an opportunity for a constitutional strengthening of the Audit Office in the Marshall Islands, through the constitutional convention we heard about elsewhere in the conference program.

9. The work of PACs in the Pacific
Parliaments and PACs also need constitutional recognition and independence, if they are to be successful in holding governments to account
The global parliamentary community has made strides in identifying key standards for the independence and functioning of parliaments and PACs (IPU, APF, CPA)
These have now been adopted in the Pacific through the Pacific Islands Benchmarks for Democratic Parliaments (2009)
Turning now to look at the work of PACs.
Parliaments and PACs also need constitutional recognition and independence, if they are to be successful in holding governments to account.
The global parliamentary community has made significant strides in identifying standards for the independence and functioning of parliaments and PACs – with the World Bank authors of this paper in the forefront of much of this work.
(IPU, APF, CPA)
These standards have now been adopted in the Pacific, through the Pacific Islands Benchmarks for Democratic Parliaments (2009).

10. Key elements of the benchmarks
An independent body should determine legislators’ remuneration, entitlements, etc
The size of cabinet should not exceed one-third of the total membership of parliament
Parliaments need meaningful oversight authority, e.g. of compliance with constitutional and international rights
Parliaments should also have meaningful oversight of accountability institutions
Clear procedures are needed for government responses to parliamentary reports and recommendations
Here are some key elements of the benchmarks – covering:
Independent remuneration provisions
The relative sizes of cabinet and the parliament
The need for meaningful oversight authority, and the ability to have meaningful oversight of accountability institutions
Processes for government responses to parliamentary reports and recommendations.

11. Pacific Network of PACs (PaNPAC)
Building on the Benchmarks, a new network of PACs has been recently formed to distil and promote PAC good practice in the region
Self-assessment of powers, functions, and practices (Honiara, 2016)
Results now available and documented in the paper
PanPAC is a recent initiative, which was kicked off this year, and recently met in Honiara. It was a very successful meeting, which included work on a self-assessment of PAC powers, functions and practices – and you can see the detailed results in the paper.

12. The inter-dependence of PACs and SAIs
Parliaments rely on accountability institutions (e.g. SAIs) to assist their oversight functions
Parliaments should:
champion the establishment of these institutions
exercise their oversight functions to ensure their success
The SAI is also reliant on the parliament to:
ensure its independence and provide funding
receive its reports, and follow up its recommendations
The last section of the paper brings these two independent institutions together, looking at how they operate together for the common goal of holding government to account for its use of public resources. It’s a relationship that has been described as one of inter-dependence.

13. PaNPAC focus group views on interdependence (2016)
There was strong agreement with the that PACs and SAIs are interdependent, and the need for SAIs to be operationally independent from the executive
There was strong support for the relationship including an annual exchange of ideas on the SAI’s work programs of audits (especially performance audits) – although the SAI must be able to decline requests
A focus group at the PaNPAC meeting looked at the relationship in detail, and there were some pleasing results – in particular noting the politicians’ general support for a constitutionally mandated SAI and also the importance of the SAI being perceived as independent as well as the reality. This has a strong consistency with the principles of SAI independence that we looked at earlier.

14. PaNPAC focus group views on interdependence (2016)
And the perception of independence is as important as real independence; thus:
Parliament should be involved in the appointment of the SAI Head
the legal authority of the SAI should be anchored in the Constitution
This has strong consistency with the Mexico principles of SAI independence, and is therefore encouraging
A focus group at the PaNPAC meeting looked at the relationship in detail, and there were some pleasing results – in particular noting the politicians’ general support for a constitutionally mandated SAI and also the importance of the SAI being perceived as independent as well as the reality. This has a strong consistency with the principles of SAI independence that we looked at earlier.

15. Concluding thought
Gaining constitutional and legal independence is a long process – “it rarely happens by accident”
If gains can be made in strengthening the constitutional and legal independence of SAIs and PACs, they will lay the foundation for continued development of their relationship – to the good of citizens
So it’s an optimistic paper – noting that much has been achieved but that there are significant challenges ahead, especially if the contribution to SDG 16 is to be usefully achieved. But the authors have been keen to expose these concepts and practices to this audience, as much to gain support for change as to raise awareness of the issues.
Thank you.