Review of budget oversight by parliament: Ireland

Worth a read by readers of this blog (.pdf).

Key lessons:

Budget oversight by the Irish parliamentary chambers is under-developed by international standards.

Reforms mooted include:

  • Ex ante parliamentary input to medium-term fiscal planning;
  • Ex ante parliamentary input on budget priorities;
  • Early publication of full budgetary information and legislative proposals;
  • Timely consideration of the Estimates of Expenditure;
  • Performance Dialogue with joint committees in early year;
  • Re-introduce “Pre-Budget Estimates” showing “no policy change” expenditure baselines;
  • Establish an Irish Parliamentary Budget Office to support parliamentary engagement and budget scrutiny;
  • Continuing Professional Development of parliamentarians and officials;
  • “Performance hearings” with joint committees in early part of the year (February-March);
  • Power for joint committees to recommend changes to performance information;
  • Systematic review of existing performance metrics;
  • Estimates Performance Reports;
  • Promotion of IrelandStat as an authoritative portal for public performance;
  • Linkages to higher level strategies and articulation of a “National Performance Framework”;
  • Establishment of a “National Performance Quality Panel”;
  • Role for Irish Parliamentary Budget Office in supporting performance scrutiny;
  • Selective Audit of Performance Information by the Office of the Comptroller & Auditor General in reports to the Public Accounts Committee and other committees.

Well worth going through this, it is a wealth of constructive suggestions.

Comments

comments

Author: Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

8 thoughts on “Review of budget oversight by parliament: Ireland”

  1. Prior to the financial crash in 2008, banks were required to hold capital equivalent to 8% of risk weighted assets, with equity at only 2%. One ‘lesson’ from the crash was that the quantity and quality of capital held needed to be raised, and under new rules capital ratios are higher, with equity comprising most of the total.
    Higher capital requirements and other regulatory changes have had some unintended consequences. Investments banks have pulled back from holding expensive inventory, with the result that liquidity in many markets had fallen, leading to the wilder intra-day swings. It is also cheaper for banks to deal in derivatives with the result., as noted in the Bloomberg article below, that in some currencies, notably US dollars, banks can now borrow fixed at a cheaper rate than the respective governments.

    http://www.bloomberg.com/news/articles/2015-11-15/debt-market-distortions-go-global-as-nothing-makes-sense-anymore

  2. In earlier times. bankers were almost invariably more solvent than states, or rather the kings that embodied the latter and to whom they provided loans. The likelihood of any Irish government, of whatever hue, voluntarily introducing the budgetary process reforms recommended by the OECD must be rated as nil.

    As the abandoning by the current government of the attempt to introduce universal health care would seem to confirm, politicians are doing what they assume a majority of the electorate wish them to do. There is considerable evidence to say that they are correct in this assumption.

    Hollande has unveiled plans to boost security spending and hire 5,000 new police officers and stated that, as a result, France will miss the deficit reduction targets agreed with the European Commission, adding that “the security pact prevails over the [EU] stability pact.”

    This is a somewhat idiosyncratic reading of the treaties, to put it mildly. It seems governments will cease to give the electorate what it wants only when markets cease to give them the money to do so; as is currently the case with Greece.

  3. Consider ….

    “I am just a poor boy.
    Though my story’s seldom told,
    I have squandered my resistance
    For a pocketful of mumbles,
    Such are promises
    All lies and jest
    Still, a man hears what he wants to hear
    And disregards the rest”

    ‘The Boxer’: Simon + Garfunkel.

    … now read on.

    From Foreword: “The objective of such an approach is to improve the quality of policy making, resource allocation and accountability, and ultimately to promote better outcomes for citizens.”

    Pardon? How does one improve an already ‘improved’ and perfectly good system. You do not – (ie. mess about with it, except for the optics).

    ” … and to conduct in-depth interviews with a wide range of stakeholders.”

    Ah, yes!, the usual puppets, marionettes, etc. Well done there!

    Reading para 2: of the preface, I thought: “Well, George (Orwell) would be so proud.” As for Para 3:, I came to the conclusion they were describing the behaviour of Gerbils – in an appropriate enclosure, gamboling gaily in a well tethered threadmill. Fun to observe – but futile in outcome.

    Chap 1: para 4: “In keeping with most other “Westminster style” models of government, the executive is drawn from members of the Dáil … … and must command the support or “confidence” of that chamber in order to govern effectively. The passage of the government’s budget proposals by the Dáil is regarded as a principal test of that support.”

    Now, in a ‘parliamentary democracy’ – should not the opposition parties also be supportive of the annual budget? – since that budget will affect all citizens in some manner, not just those who voted for the government parties. Maybe a 66% plurality of the elected members (Dáil and Seanad) is what should be required for the passage of a budget. If that level of parliamentary support fails to materialize, then the existing budget remains in effect. The parliamentary opposition needs to be firmly ‘on-the-hook’ for all budget policies – my opinion. But, I respectfully suggest one consults the following: Fig. 2.4: p32, and Table 2.1: p36. Interesting.

    Having read some of this epistIe, which puts me in mind of that monthly insert in the Irish Times (The Gloss), I decided that I needed to update my somewhat narrow-gauge understanding of things Political + Economical, so I consulted an original source: Upton Sinclair’s, ‘The Jungle’ (1905).

    It appears that the mindsets of our current vintages of politicians and “business” leaders have changed little in the intervening century. Just their names and nationalities and the nature, character and locations of their policies and business enterprises. So also for the identities, locations and situations of the lower orders. Now we have robotization, off-shoring, out-sourcing, zero-hour contracts, TPP and the TIPP. And we call this progress? I suppose it may be – if’n you’re not trying to grasp or hold onto the sh*tty end of the stick, that is!

  4. @docm

    “It seems governments will cease to give the electorate what it wants only when markets cease to give them the money to do so; as is currently the case with Greece.”

    A significant part of the art of investing, or ‘investing’, depending on your prejudices, is guesstimating a kind of “fundamental value” for any asset – like a government bond. Another part is second-guessing, and attempting to fron-run, the actions of other market players.

    Currently, the governors or central banks occupy the position of chief market player and for other participants that don’t approve of their actions the only alternative is the FX markets.

    The extent to which markets – or more classically “the bond market” was able to intimidate everybody – could influence political actions, has been largely replaced by small groups of people known as central bank governors.

    However right or wrong market influence used to be at least it was the result of the netting off of many thousands or opinions and investment decisions, few of which were made for political reasons.

    Small groups of central bankers will find it much more difficult to resist lobbying in its myriad subtle forms.

  5. These proposals would be a good thing and in Australia the Parliamentary Budget Office, which reports to Parliament, is reported to be working well — it provides an economics backup for opposition MPs and it costs manifesto proposals at election time.

    Noonan rejected the model when implementing the troika’s request for a fiscal council and opted for an advisory council without any powers — it’s interesting how these guys sit impotent for decades on the Opposition benches but seek to monopolise power for the few years they have it.

    There is little likelihood of change until the current leaders retire to superannuated bliss.

    The sham legal services non-reform coupled with the ad hoc response to another housing crisis shows how useless Joan Burton has been in pushing back against Fine Gael’s protection of its powerful vested interest bases — lawyers and farmers.

    These reforms respond to 34 years of reports recommending reforms to the legal profession, going back to the Restrictive Practices Commission report in 1982.

    Frances Fitzgerald has the audacity/ brass neck to claim, while requiring more reports on the key areas for reform.

    The State is the biggest customer for legal services and it is complicit in sustaining the high legal fees culture according to a 2011 report from the Committee of Public Accounts.

    http://www.finfacts.ie/Irish_finance_news/articleDetail.php?Irish-Legal-Services-Reform-Kenny-Burton-hoist-the-white-flag-370

    Thank the troika for any other reforms but not this group of poltroons. :roll:

    However optimism that significant change would occur after a generational shift has to be tempered by the type of politicians produced by the parish-pump multi-seat system — it’s not easy to turn mules into racehorses! 💡

    There is the voting fodder on the government benches and the risk of losing an opportunity for ministerial office through dissent.

    Most of the Oireachtas members had little if not nothing of substance to say during the years of crisis.

    Do not overestimate as well the interest of the public in economic issues — they want honest politicians but not ones that would tell them bitter truths.

  6. What exactly is the point of this site any more?

    We are now 20 days into November and so far this month there have been 3 threads (on not very hot topics) and 32 posts, an average of little more than one a day. This is despite a raft of economic data and dramatic events in France that may well have significant economic consequences.

    It looks as though most posters have been made speechless by the economic boom (which has exceeded their worst nightmares) and rendered the site redundant.

    Now that Philip Lane is departing, the organisers should mark his departure by closing the site down. It can maybe be reactivated when the next recession occurs (probably around 2034).

  7. @ grumpy

    I agree largely with the view that you express cf. John Dizard in the FT.

    http://www.ft.com/intl/cms/s/0/c8855c5e-8f71-11e5-8be4-3506bf20cc2b.html#axzz3s3kCSbTI

    But the fact remains that governments, as opposed to “borrowers/investors” more widely defined, have to balance their books at some point. The Greeks have reached it. For the reasons advanced by MH above, we are still far removed from it.

    I used the analogy some considerable time ago of a tide – economic – going out, leaving quite a few boats high and dry, many deserving to stay there, but when the tide comes back in – read FDI, mainly US – it lifts all boats. The SS Legal Profession, laden down to the gunwales, was the first to take off. SS Public Sector Pay Restoration is beginning to move etc. etc.

    What is missing is any discussion of basic principles e.g. equal access to health care. Ditto, education. The recent RIA “austerity” conference did not even touch, as far as I know, on the need for such an approach. For the majority of the participants in the actual debate to accept that they are part of the problem, not of the solution, is simply a prospect too terrible to contemplate.

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