Legislative Oversight

1. Legislative Oversight Mozammal Hoque Sr. Financial Management Specialist AFTFM The World Bank

2. Role of Legislature for Ensuring Accountability • Parliament’s have a constitutional obligation to ensure the fair and effective implementation of the constitution, the laws, policies and regulations through effective, timely oversight • Ensure economic development and poverty alleviation • Ensure accountability for use of public resources • Review the performance of the Government – review government’s accountability for results • Ensure regulatory environment for ensuring financial accountability in the private sector • Carry out investigation on specific issues which affect financial accountability in a country

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

4. Legislative Systems In a parliamentary system, the legislature is not as independent as in the presidential system. In a parliamentary system, the executive branch is an agent of the legislature to manage state craft. Parliamentary System In the presidential system, the legislature is an independent body. For example, the US Congress declare the President budget “dead on arrival” and then put its own budget. However, the President has Veto power for challenging the legislators. Presidential System The French synthesizes both the President and Parliamentary systems and reflects many characteristics of one or other depending on whether the President and parliamentary majority are from the same party. Hybrid System

5. Characteristics Legislative Budget Process Role Capacity to amend or reject the executive’s budget proposal and capacity to formulate a budget of its own (USA). This creates the scope for confrontation between the legislature and executive branch of the government. Budget Making Capacity to amend or reject the executive’s budget proposal, but lacks capacity to formulate and substitute budget of its own – (Germany, Philippine, Poland, Hungary, India). Budget Influencing Lacks capacity to amend or reject the executive budget proposal to formulate a budget of its own. Confines itself to assessing to the budget that is placed before it – (South Africa, Israel, Namibia, United Kingdom, Canada) Budget Approving Source: Legislature and Budget Process by National Democratic Institute

6. Constitutional Role and Political Traditions Specific Constitutional Restrictions: - Can only decrease expenditures (UK, Canada, Ireland, France, Ghana) - No net increase in expenditure (Greece) - Government approve any changes ( Korea) • No net increase in expenditures (Italy, Spain) • Constitution in developing democracies are highly restrictive on the • legislature. In some cases, the Parliament may be hesitant to use such • powers (Malawi). Constitutional Role • Same political party in control of legislative and executive branches (USA) • Vote on the budget is automatically a vote of confidence in the • Government (UK, Canada). • Coalition Governments (India, Bangladesh, Germany) Political Traditions

7. Influence of Various Forces and Factors • Influence of party in power is common in preparing the budget – For example, in Japan, the LDP plays a leading role in preparing the budget, which reduces the role of the Parliament. • The interferences of lobbyist is not uncommon in influencing government policy and may influence budgeting (USA) • Influence of donors is common in countries who are dependent on donor’s resources for budgeting to a great extent (Mozambique, Gambia) • In some countries, the legislators are not allowed sufficient time to review the budget.

8. Trends in Parliamentary Review of the Public Expenditures • The role of legislature is declining in the OECD countries, but increasing in some emerging economies in Africa ( South Africa, Ghana, Uganda), Latin America ( Brazil, Colombia), countries in transition (Poland, Moldova), etc • Executive domination is common in budget preparation but legislatures are developing means for asserting their role in the budget process (South Africa, Uganda, Countries in Transition, Brazil) • Many legislature have created an independent budget office responsible to the Parliament (USA) • Improved reporting to legislature (countries in transition) • Review of performance audit reports (USA, Thailand, etc) • Many legislature that are active in the budget process have strong and active committees (UK, Uganda) • More resources for the legislative review.

9. Legislators Role – Beyond Financial Accountability • Parliament’s have a constitutional obligation to ensure the fair and effective implementation of the constitution, the laws, policies and regulations through effective, timely oversight. • Parliament has a overall responsibility for promoting good governance and good corporate governance. • Review all Government Strategies including PRSP • Legislators should review the performance Accountability of the Government Ministries and Department (Central Government, State Governments and Local Government Institutions).

10. Budget or Finance Committee Parliament: Oversight Functions Public Accounts Committee Citizens Standing Committees for Ministries Auditor General Watch Dog Group Media Civil Society Central Bank • Guiding principles for success: • Facilitate and avoid interfering • Creating an environment of constructive dialogue • Avoiding confrontation and all parties should work as a team • Setting examples for making the executives accountable. Budget Policy Committee Donors Parliament’s Role for Accountability for Results • Review Strategic Planning of the Government • Review Medium-term Expenditure Framework • Review Strategic Planning of Ministries • Give a corporate look to ministries • Review the budget (inputs), outputs and outcomes • Review the performance reports of the ministries • Review the broader administrative reforms • Make Accountable: • Chief Executives of Ministries • Secretaries • Controllers

11. More economic activities are carried out by the private sector • General public invests billions of dollar in the capital market based on trust. • Parliament has a role that these investors are not cheated by the powerful sections of the society who controls corporate world by making institutional arrangements in place. • The Parliament should be proactive in playing its role. • Intervention of US Congress is very proactive. Examples- -The Sarbanes-Oxley Act of 2002 - Public Company Accounting Oversight Board Parliament’s Role for Improving Accountability in the Private Sector

12. Challenges • Time constraints of Legislators • Confrontational politics in the developing world • Capacity constraints • Capacity of Auditor General • Effective network of organizations • Resource constraints • Checks and balances in the systems • Decentralization • Better involvement of public & media • Better procedures for follow-up • Strengthen International linkages • Ethical standards – “ Ghost in the mustard”

13. Uganda Thailand Argentina Bangladesh Challenges are country specific, depends on the socio political environment and the attitude of the political leadership in the country. Q&A and Discussions