Commi%eestructuresforbudgetapprovalandoversight

PreparedfortheMee9ngofOECDParliamentaryBudgetOfficialsStockholm,Sweden,28‐9April2011

JoachimWehner,PhD

h%p://personal.lse.ac.uk/wehner/

Fundamentalra9onalesforlegisla9vecommi%ees

•  Specialisa9onandtheforma9onofexper9seyieldinforma9ongains

thatcanbenefitthebroaderlegisla9vebody

•  Divisionoflabourboostsproduc9vity/throughputandlimitsthe

opportunitycostsofscru9nisingthebudget

•  Commi%eeassignmentscanenablememberstopursuedistribu9ve

objec9vesandaddresshigh‐prioritycons9tuencydemands

•  Effec9veoversightthroughcommi%eescanmi9gateprincipal‐agent

problemsduringbudgetexecu9on

•  SeeMa%son&Strøm(1995)foranoverview.

Commi%eestructuresforbudgetapproval(na9onallegislaturesof34OECDcountries)

Sources:Wehner(2006and2010)plusupdates.

Budgetapprovalwithouteffec9vecommi%ees

•  Veryrare–mostlylimitedtotheUKandsomeofitsformercolonies

•  Nospecialisedbudgetorappropria9onscommi%eeintheUKHouseof

Commons,onlyanadhocStandingCommi%eeontheFinanceBill

•  Departmentalselectcommi%eesaresupposedtoscru9nisethe

es9matesof"their"departments,butthisprac9ceisunderdeveloped

•  TreasurySelectCommi%eelooksatsomemacroandtaxissuesinmore

detail,butmostspendingmeasurespasswithoutdetailedscru9ny

Thecentralisedmodel

•  ThedominantmodelacrosstheOECD(in25outof34parliaments)

•  Centralisesscru9nyinapowerfulbudget/financecommi%ee,

some9meswitharapporteurstructure

•  Someparliamentsallowthebudget/financecommi%eetoreceive

amendmentrecommenda9onsfromsectoralcommi%ees

•  Hasproveneffec9veatcontainingthecommonpoolresourceproblem

(Crain&Muris1995),butattheexpenseofbroaderinvolvement

Thedispersedmodel

•  Rare,withonly3outof34OECDparliamentsinthiscategory

•  Scru9nyofthedifferentpartsofthebudget(health,defenceetc.)is

en9relydecentralisedtotherelevantsectoralcommi%ees

•  Greatlylimitsparliamentarycapacitytoscru9nisefiscalpolicy,andto

influencebroadalloca9onsandinter‐sectoralshiis

•  Promotesaprogramme‐orienta9onthatcaninduceapro‐spendingbias

ifunchecked(Cogan1994,Schick2002)

•  Hasthepoten9altoenablebroaderlegisla9veinvolvement

Thehierarchicalmodel

•  Nowusedby5outof34OECDparliaments,thismodelinvolvesa

budget/financecommi%eeforoverallfiscalpolicyandbroadsector

alloca9ons,andsectoralcommi%eesforalloca9onwithinsectors

•  Hasthepoten9altocombinescru9nyoffiscalpolicyandbroad

alloca9onwithscru9nyofindividualprogrammes/items

•  Inprac9ce,thisidealhasprovenhardtoa%ain:

–  Swedishreformsgreatlyimprovedfiscaldiscipline,butcurtailedtheinfluenceof

sectoralcommi%ees,individualMPs(andparliamentasawhole?);seeappendix1

–  USbudgetprocesshasdisintegratedoverthepastdecade,withbudgetcommi%ees

unabletosetaframeworkforlegisla9veac9on;seeappendix2

Theroleofparliamentaryaudit

•  SomeOECDlegislaturesdonotconsiderauditfindingsindetail,but

morethanhalf(20outof34)usecommi%eestodoso

•  Insomelegislaturesthebudget/financecommi%eeisalsotaskedwith

consideringauditreports,some9mesviaasubcommi%ee

•  Anotherop9oncloselylinkedtotheofficemodelofauditistousea

specialisedPublicAccountsCommi%ee

•  Finally,someparliamentshavedevolvedauditscru9nytorelevant

sectoralcommi%ees(NZ,alsoanoccasionalreformproposalintheUK)

Commi%eestructuresforparliamentaryaudit(na9onallegislaturesof34OECDcountries)

Sources:Wehner(2006and2010)plusupdates.

Thepublicaccountscommi%eemodel

•  ThePACsystemprovidesanins9tu9onalframeworkthatallows

extensiveconsidera9onofauditfindings

•  ThePACoftheUKHouseofCommonsdatesbacktotheGladstonian

Reformsin1861,reliesonstronglinkagewiththeAuditorGeneral

•  Func9onalityoftheprocessreliesondeeplyentrenchedconven9ons

andprinciples(Pelizzo&Stapenhurst2008,Wehner2003):

–  Policy‐neutrality:hearingsfocusonaccoun9ngofficers,notpoli9cians

–  Non‐par9sanship:tradi9onallychairpersonfromtheopposi9on

•  IntheUK,thePACfocusesalmostexclusivelyonvalueformoneyaudit

Linkingauditscru9nyandbudgetapproval

•  Inmanycases,thelinkbetweenauditscru9nyandbudgetapprovalis

incompleteornonexistent:

–  TheUSCongressspendsalmosttheen9reyearonbudgetapproval,buthasno

specialisedcommi%eecapacityorsystema9cprocessforauditscru9ny

–  TheUKParliamenthasadysfunc9onalapprovalprocess,butacompara9vely

rigoroussystemofparliamentaryaudit

•  Perhapsthesubcommi%eemodelmaximisesthepoten9alforaudit

findingstofeedintobudgetarydecisions:

–  TheBudgetCommi%eeoftheGermanBundestagmaintainsapermanentaudit

subcommi%eewitharapporteurstructure

Otherpoten9alco‐ordina9onissues

•  Taxandexpendituredecisions

–  Consideredbyseparatecommi%eesinsomecountries

–  Needforcommi%ee‐levelco‐ordina9onisgreatestwheresignificanttaxchangesare

frequentand/ortaxexpendituresarelarge

–  Ambi9ousfiscalconsolida9onplansrequirecarefulconsidera9onoftheoverallmix

andcomposi9onoftaxandspendingmeasures

•  Inter‐chamberrela9ons

–  Theneedforco‐ordina9ondependsontheauthorityofthesecondchamberandis

mostimportantincountrieswithco‐equalchambers

–  Roleforconferencecommi%eestonego9atecompromise

–  Jointbudgetcommi%eesexistinsomeAmericanstates

Conclusions

•  Withouteffec9vecommi%eestructures,parliamentsarehighlyunlikely

tobeinfluen9alinbudgetapprovalandoversight

•  Ithasbeendifficulttodesigncommi%eestructuresthatsafeguardfiscal

policywhileenablinginfluenceonindividualprogrammes/items

•  Thepoten9alforauditscru9nytoinformandenhancethebudget

approvalfunc9onisunderu9lisedinalmostalllegislatures

Referencesandfurtherreading

•  Cogan,J.F.(1994)."TheDispersionofSpendingAuthorityandFederalBudgetDeficits."In:TheBudgetPuzzle:Understanding

FederalSpending.J.F.Cogan,T.J.MurisandA.Schick,Eds.Stanford,StanfordUniversityPress:16‐40.

•  Crain,M.W.andT.J.Muris(1995)."Legisla9veOrganiza9onofFiscalPolicy."JournalofLawandEconomics38(2):311‐333.

•  Ma%son,I.andK.Strøm(1995)."ParliamentaryCommi%ees."In:ParliamentsandMajorityRuleinWesternEurope.H.Döring,Ed.

Frankfurt,Campus:249‐307.

•  Schick,A.(2002)."CanNa9onalLegislaturesRegainanEffec9veVoiceinBudgetPolicy?"OECDJournalonBudge9ng1(3):15‐42.

•  Pelizzo,R.andR.Stapenhurst(2008)."PublicAccountsCommi%ees."In:Legisla9veOversightandBudge9ng:AWorldPerspec9ve.

Stapenhurst,R.,R.Pelizzo,D.M.OlsonandL.vonTrapp,Eds.Washington,D.C.,WorldBank:117‐129.

•  Wehner,J.(2003)."PrinciplesandPa%ernsofFinancialScru9ny:PublicAccountsCommi%eesintheCommonwealth."

CommonwealthandCompara9vePoli9cs41(3):21‐36.

•  Wehner,J.(2006)."AssessingthePowerofthePurse:AnIndexofLegisla9veBudgetIns9tu9ons."Poli9calStudies54(4):767‐785.

•  Wehner,J.(2010).LegislaturesandtheBudgetProcess:TheMythofFiscalControl.NewYork,PalgraveMacmillan.

•  Wehner,J.(2011)."TheCaseforCongressionalBudge9ng."PublicAdministra9onReview(forthcoming,May/Juneissue).

Appendix1:ParliamentaryamendmentsinSweden,FYs1950/51to2010(%ofexecu9vespendingproposal)

Appendix2:USadministra9onrequests,CBOrees9mates,andbudgetresolu9ons,FYs1995to2011(totals,inbillionsofcurrentdollars)

Source:Wehner(2011).