Thursday, 14 October 2010

Realistic Fiscal Planning Requires Much More Budget Transparency

Nat O'Connor: The BBC reports (here) that in a rare public act, Communist Party elders in China has issued a call for increased free speech, which is allowed in their constitution but firmly denied in practice. For example, they call for a change in "the mission of propaganda authorities, from preventing the leak of information to facilitating its accurate and timely spread".

It is all too easy for us to see the issue of free speech as only a struggle in authoritarian regimes, where the situation is undeniably much worse than here. But, as organisations like The Story, or Transparency Ireland will testify, there is a need here too for public authorities to change from "preventing the leak of information" and do much more to facilitate "its accurate and timely spread". The Budget is one example of where there is a lack of accurate and timely information in Ireland.

The UK have much improved the ease with which the general public, businesses and civil society organisations can access and get to grips with budgetary documentation. The UK Budget website not only provides a clear set of documents, but also provides a range of other supporting material. There are links to user-friendly summaries of the budget material for the members of the public, as well as a business-focused summary. The Treasury uses Internet new media to communicate with citizens (e.g. YouTube Treasury channel). Spending information is also provided as raw data in spreadsheet format. This is highly relevant to allow business, policy analysts and civil society organisations across the country to do their own analysis of expenditure.

In TASC's pre-Budget proposals launched today (executive summary), one of the issues TASC addresses is the lack of transparency about Budget documentation. In addition to a range of other proposals, TASC is calling on the Government and Department of Finance to improve transparency by:
• Providing Budget documentation and supporting material in easily accessible formats, appropriate to the needs of different sectors;
• Making all data relating to the Budget available in raw form (e.g. spreadsheets) so that analysis can be conducted;
• Compiling a single database of all state assets and liabilities, revenue and expenditure, and making it publicly available online;
• Allowing written Parliamentary Questions over the summer recess period when these are related to preparation of Budget proposals, as this will allow for an improved level of debate and analysis by opposition parties;
• Publishing an annual Equality Statement, showing the distributional impact of all Budget measures.

Consider just one example. At present, TDs and Senators do not have the right to ask Parliamentary Questions during the summer recess, the length and timing of which is determined by the pro-Government majority in the Dáil. Usually, the Department of Finance is busy preparing the Budget over the summer and by end-October it is almost too late for any Opposition amendments to influence their thinking, no matter how sensible they might be. This year the Dáil returned on September 29th, giving the Opposition only two weeks to send in PQs and seek data upon which to cost their own Budget proposals. And then, the ‘goalposts’ were shifted twice, with the Government’s call for a €4 billion fiscal adjustment, and then the demand to come up with a multi-annual plan. How can they come up with sensible suggestions, if they don't have access to up-to-date and detailed financial information?

There is also something terribly wrong with the fuss about Opposition leaders being given the opportunity to access information held by Finance officials. In almost every other democracy in Europe, detail is provided to parliamentary committees in a timely manner, including sensitive material that is kept confidential in a mature fashion by committee members. As I have argued elsewhere, Ireland’s Cabinet is uniquely secretive. It is an aberration of democracy that access to ‘secret’ Finance files should be a ‘special treat’ for the Opposition; and this information is only made available because Ireland is plunged into possibly the greatest post-War crisis of any Western economy! It should be absolutely normal for much more detailed information to be routinely made available to parliament, researchers and the wider public, so that policy mistakes such as we have made can be identified and corrected much sooner, and multi-year planning can proceed on the basis of evidence and detailed analysis.

The existence of the dedicated website is welcome, but the material seems to be primarily provided for policy-makers, without regard for the needs of the general public to access and understand what is being done with their money. The budgetary process is one of the most important annual elements of democratic politics in Ireland. It lays out the framework of resources within which Government policy objectives are to be achieved. How many or how few resources are allocated to different areas is a clear indication of the Government’s priorities. Easy access to this information by all citizens should be a basic democratic requirement. It should be clear to everyone where tax money is coming from, and where it is being spent. This is a basic democratic right.

In addition, basic data on Ireland’s financial situation falls short of what is needed. There needs to be a single source that compiles all State assets and liabilities in one place. This should include data on the total assets and liabilities of all state bodies, semi-state companies, etc. It should also include social insurance alongside other taxation and expenditure, as well as data on the deficit, national debt, economic activity, etc.

Finally, the Budget has the potential to greatly change the distribution of wealth and income through changes to taxation and social welfare, as well as to change the level of funding for public services upon which many people rely – especially people on low incomes. For example, the Scottish government produces an Equality Statement as part of its budget documentation. TASC argues that Ireland should provide a comprehensive analysis of the distributional impact of measures as part of the annual Budget documentation.


Paul Hunt said...


Excellent post. It's a shame that, when a little bit more transparency is emerging, the European Commission will be doing the detailed scrutiny. The Government, of course, cannot concede that, in addition to voluntarily conceding Ireland's sovereignty in monetary matters, it has also blown Ireland's fiscal sovereignty.

Rory O'Farrell said...

I think it would be worth spending money on some sort of website to disseminate information. I think all information should be made public, unless there is a good case for privacy. Everything down to Bord Gáis's invoices for pens.

This way journalists wouldn't need to bother with Freedom of Information requests, the information would already be online. It should be feasible given that so much is done electronically. And people could rake through the information uncovering some scandal. It would definitely increase accountability.

The only question is how much to spend on such a website.

Nat O`Connor said...


There was an effort made with to put up official spreadsheets in one place. The CSO runs it, but I don't get the impression there are much resources behind it.

In the first instance, each Department and public body would need to do a data audit of what data is holds. Then, a small team would need to make this as user-friendly as possible.

I don't think a website needs to be expensive, or particularly fancy. in the US, or are good examples.

The more important investment is in the back office task of getting researchers in each public body to sort out their stats and deliver them in a timely manner.

Damian said...

Very interesting and relevant post Nat.
The Irish government and its advisors often appear too willing to dismiss policy alternatives on the basis of a lack of hard data - for example in the 2010 pre-budget report it pointed out that it did not have concrete evident on private sector wage trends, but it was quite happy to believe that public sector wages were out of kilter with the private sector. Similarly it seems to have ignored data on rising wages and investment in the MNCs sector. In banking the government has continually claimed that it acted on the best available advice - but it has yet to show how this related to the statistics and analysis published by the Central Bank or what was available to the DoF.
It is possible that the lack of transparency reflects a deep underlying discomfort in the application of data to policy as such transparency would require a more rigorous and robust policy justification