Time for Parliament to get serious about checks on public spending, says ACCA
Examining the track record of governments here in Canada as well as Australia, Ireland and the UK, the report says that there has been little development in parliamentary financial scrutiny processes since the financial crisis began - and says this is worrying because of the focus on the need to cut public spending and the continuing sovereign debt problems experienced by many governments. The report calls on Parliaments to use the financial crisis as an opportunity to have a fundamental re-think about how they can improve their financial scrutiny, and says that politicians must improve their performance and embrace training and professional development on financial issues, both to increase fiscal awareness and to promote a culture of scrutiny.
It asserts that Parliamentary Committees are an important means of holding governments to account as they have a number of strengths including facilitating technical debate and scrutiny. But they also have a number of limitations, such as a lack of relevant expertise and skills and a lack of action in following up recommendations. If these issues are addressed, this may go some way to making financial scrutiny more effective in the future.
Suzanne Godbehere, head of ACCA Canada, endorses the view that in an increasingly difficult financial climate, it is vital to ensure that public funds are spent wisely and that governments should be held to account for their spending and fiscal policy decisions.
This report reviews the measures that have been taken to improve parliamentary financial scrutiny, the lessons learned and what still remains to be done. In addition to Canada, the report also looked at two other Westminster-style parliamentary systems – Australia and the UK, and also
Ireland (a semi-presidential system as defined by the OECD), and considers the role of parliaments in the context of dramatic political developments and the global financial crisis. The report is based on a review of the existing literature and a series of interviews conducted with officials and politicians in each country.
Gillian Fawcett, head of public sector at ACCA, adds: "All four have a poor ranking in the OECD's 'International Index for Legislative Budget Institutions', which maps the comparative capacities of parliaments for fiscal scrutiny."
The report states that:
• Not all scrutiny is of equal value. A formalized system of financial scrutiny does not automatically give parliament a meaningful role in affecting the budget, as has been shown in the United States.
• The complexity of budgeting together with anxiety about fiscal vulnerability may be used by governments to reduce scrutiny rather than enhance it, undermining their parliamentary accountability and eroding democracy.
• Budget reform predates the financial crisis but systems of parliamentary scrutiny have not kept pace.
• Parliamentarians and their constituents lack interest in scrutinizing finances, and the former are not trained for it. Governments exercise substantial control over parliamentary select committees, whose involvement in budgeting is growing but whose members also lack financial training. They are becoming over-stretched, with diminished resources reducing their efficiency. Parliamentarians' ability to amend draft budgets is limited or non-existent. The countries studied exhibit significant weaknesses in their arrangements for financial scrutiny, which need major structural and cultural reform.
In Canada, the Parliamentary Budget Officer can help the state to navigate the budget, but his office does not act as a financial scrutinizer on behalf of Parliament. Instead, it provides independent analysis and forecasts of the economy and public finances.
Fawcett added that, "Parliamentary financial scrutiny on its own may not prevent the next financial crisis, but it is a vital part of a nation's governance by holding the executive to account for public finance. If done well it may help manage the risks of a future financial crisis and potentially the future risks of a downgrading of a country's credit rating."
The report is available at the attached link: http://www2.accaglobal.com/pubs/general/activities/library/public_sector/ps_pubs/tech-tp-pfs.pdf