GOOD GOVERNANCE, PARLIAMENTARY OVERSIGHT + FINANCIAL ACCOUNTABILITY

1. GOOD GOVERNANCE, PARLIAMENTARY OVERSIGHT + FINANCIAL ACCOUNTABILITY Budget Management and Financial Accountability Rick Stapenhurst, World Bank Institute

2. OVERVIEW OF PRESENTATION • Good Governance + Legislatures • Core Functions + Types of Legislatures, • The Budget Cycle + The Legislature (Ex-Ante) • The Budget Cycle + The Legislature (Ex-Post) • Conclusions

4. Reminder : Core Functions of Legislatures • The Legislative Function • Passing Laws • Participation in Public Policy Making • The Oversight Function • Holding Governments to Account • The Representative Function • Representing Constituents

5. Parliament + Good Governance (Abridged)

6. Heart of Executive-Legislative Relations : The Budget Process

7. Oversight : The Budget Process • “The development, deliberation and passage of a budget with both legislative and executive participation represents one of the vital checks and balances of democracy” • Budget development is typically the domain of the executive branch. • However, in most countries the legislature exerts often considerable influence over the budget through the amendment process. • Proactive budget committees can seek public input into the budget planning cycle • Public Accounts and other oversight committees, often chaired by a member of the opposition, oversee the integrity, economy, efficiency, and effectiveness of government financial management

8. Oversight : The Budget Process “The development, deliberation and passage of a budget with both legislative and executive participation represents one of the vital checks and balances of democracy” • Budget development is typically the domain of the executive branch. • However, in most countries the legislature exerts often considerable influence over the budget through the amendment process. • Proactive budget committees can seek public input into the budget planning cycle • Public Accounts and other oversight committees, often chaired by a member of the opposition, oversee the integrity, economy, efficiency, and effectiveness of government financial management

9. Survey of amendment powers

10. Case Study : Parliamentary Oversight (Commonwealth Countries) • 54 countries in the Commonwealth • “Old” Commonwealth (UK, Canada, Australia, New Zealand) + the New • The “Large” (India, Pakistan, Bangladesh) + the “Small” (Caribbean, Pacific Islands)

11. Conceptual Approach: Key Actors and their Relationships PUBLIC FINANCIAL ACCOUNTABILITY Parliament Accountability Relationship Reports Public Auditor General Executive Examines

12. Conceptual Approach…cont. : Fiduciary Obligations ExplainedParliament, PAC and public audit • Parliament holds ‘power of the purse’ and obligation to hold the Executive to account • Public Accounts Committees oversee use of public funds & resources by Executive • Do this by examining public accounts

13. Conceptual Approach…cont. : Fiduciary Obligations ExplainedMandates of PACs: • PAC mandate determined by Rules/ SOs, some case by Constitution • Narrow Focus - financial probity and regularity • Wider Focus - value for money, perf. audits, program effectiveness • Other matters can be referred to PAC

14. Conceptual Approach…cont. : Fiduciary Obligations ExplainedPAC and the Auditor General • PAC work often determined by the AG reports • PAC must decide follow-up issues • An effective PAC = depts. taking AG concerns more seriously • Cooperation with AG on follow-up = greater accountability • Ensures Depts. are taking corrective action

15. Purpose of PACs • How can parliament ensure that the budget as approved was properly implemented? • Audit report only effective if findings are used to improve public financial management • First PAC established in 1861 as an institutional mechanism to close the “circle of financial control” (Gladstone) • Traditional focus on regularity and propriety • Increasingly also on “value for money”

16. First principles:policy neutrality & non-partisanship • PAC not to question underlying policy • Main interaction with departmental officials • In practice, often difficult to separate administrative and political responsibility • Inter-party co-operation and preference for unanimity in decisions • Opposition chairperson in 67% of PACs

17. Current Situation in the Commonwealth (Recent Empirical Work): • Recent CPA study on PACs – The Overseers • - similar issues, developments and challenges across Commonwealth • Key issues : Status of PAC, Relations with the AG, Membership, Training/ Capacity-Building, Resources, Working Practices, Reporting and Follow-up

18. Average size = 11 MPs Size reflects party in legislature. 2/3 of Chairs from an opposition party; and 1/3 from the governing party Prime focus on Public Accounts & reports of AG. PAC reports generally available to the public. Generally, PAC hearings are open to the public and media. Current Situation in the Commonwealth: Common Features:

19. Who is normally called as witness?

20. A broad scope Power to select issues w/o gov’t direction Power to report, suggest improvements, and follow-up Strong support from AG, MPs and research staff that creates a unity of purpose about PAC work. * Based on recent World Bank survey Current Situation in the Commonwealth: Success Factors*

21. Current Situation in the Commonwealth:Common Challenges: • Highly partisan climate • Government dislike of legislative oversight • Lack of media or public involvement • Lack of a strong ethical baseamong parliamentarians

22. Some challenges • How ensure follow-up? • Tracking reports or chapters • Departmental report backs • Use of audit findings for budget approval • Co-operation with civil society • How strengthen relationship with AG? • Parliamentary liaison offices • Some AGs Officers of Parliament • How deal with varying quality of reports? • Skills enhancement & sufficient funding • PAC and AG networks for mutual learning

23. Conclusions: • The legislature is a key player in promoting good governance • Input into, and passes legislation • Input into and oversees the budget process • Holds government to account • Provides a voice to citizens at the highest level of the state

24. Concluding remarks • PACs are based on very similar formal principles and procedures • But their performance varies, because of the different challenges they face and their varying ability to adequately respond to these • Developed countries’ PACs must manage new audit content and adapt to the changing structure of the public sector • Developing countries often struggle with scarcity of resources and relevant skills • Political constraints can be significant • Also……