Transparency, oversight and engagement
Transparency, oversight and engagement – supporting public trust in government
Within months, the coronavirus became a global public health threat and source of unprecedented economic dislocation. In this crisis, people have looked to government to respond with effective measures to protect public health and offer some relief from the widely felt economic hardship. Citizens have also looked to government for timely and reliable information to protect themselves, their families and their communities. In short, on top of the major challenges to public health and livelihoods, the crisis has also “put to the test”, in quite stark terms, public trust in government. Some governments have risen to the occasion. Others have not, with dire consequences for citizens.
In this context, the release this week of the 2019 Open Budget Survey (OBS) report is particularly timely. In its 7th biennial report since 2006, with global coverage of 117 countries, the Washington-based International Budget Partnership (IBP) and its network of independent country researchers provide a comprehensive assessment of three key elements underlying public trust in government:
the scope and timelines of public access to substantive and reliable information about government finances and policies;
the strength of public sector accountability mechanisms through legislative oversight and independent audit; and
the scope and quality of opportunities for direct public engagement with government during budget formulation and implementation, as well as in legislative review and audit processes.
NZ’s performance in 2019 OBS – consistent strengths and persistent areas in need of improvement
• New Zealand continues its streak atop the “headline” Open Budget Index (OBI) focusing on the availability of information about government finances, now reaching its 4th consecutive round (since 2012). An OBI score of 88 (out of 100) earns NZ a share of the top spot with South Africa (as in the 2017 round). Underlying NZ’s consistently strong performance in budget/fiscal transparency are a legal framework in which comprehensive legal requirements are embedded (Public Finance Act) and application of robust accrual accounting practices to public accounts.
• Survey questions underlying the OBI focus on public availability of information across 8 “key documents” covering the full budget cycle. New Zealand’s consistently high rank in the OBI can be primarily attributed to content of its Budget Policy Statement (BPS) at the start of the budget cycle, the package of budget documentation presented on Budget Day (including both the Estimates and BEFU), as well as the mid-year report (HYEFU) and OAG’s annual audit report for central government. All of these perform well against specific OBI criteria.
• The scope and strength of OAG audit oversight is also an area of consistently solid performance.
Persistent areas in need of
• Accessibility vs availability of information – Unpacking the consistently strong overall OBI scores reveals some of the 8 “key documents” continuing to “underperform”. In particular, “Citizens Budget” documentation is still not meeting expectations for making information about Government policies and finances broadly accessible (or attractive) to “non-specialists”. The BEFU, HYEFU, Financial Statements are rightly recognised as rich sources of information for “specialists” or other particularly dedicated readers, and Treasury’s recently developed “Basics” series is certainly a step in the right direction to make some of the content of these three documents more accessible to a broader audience. But both the presentation and scope of information in the “Basics” documents stand to be improved. Meanwhile, another clear opportunity exists to more effectively communicate information about public resources to a broader audience by greater investment in web-based data visualisations (“info-graphics”).
• Will Parliamentary Budget Office (PBO) help to strengthen Parliamentary oversight? Parliamentary oversight in New Zealand has, in recent OBS rounds, been assessed as either “weak” or “limited”. Although 2019 OBS results deliver an improved assessment of “adequate”, the same underlying institutional challenges remain for this critical dimension of public sector accountability. The PBO, to be operational from July 2021, could constitute a significant institutional change, with potential to bolster relatively constrained/weak legislative oversight. But it remains to be seen whether PBO’s mandate, capacity and activities will extend beyond a narrow electoral cycle-focus on costing party platform proposals. Opportunities exist for PBO to support more regular/routine Parliamentary review processes across the budget cycle.
• Opportunities for routine annual public engagement/dialogue with Government remain limited – The 2019 OBS assesses opportunities for public engagement with each of the three core public sector “segments” – Government (executive), Parliament and OAG. The latest OBS results show the composite score slipping (from 59 to 54), indicating an overall lack of “adequate” opportunities for public engagement in budget processes on a routine annual basis (noting score of 60 as the cut-off “adequate”). But trends for the three specific “segments” are quite distinct, with OAG holding steady at 67, Parliament increasing significantly from 59 to 78. Meanwhile, the scope for public engagement with Government during both budget formulation and implementation has dropped sharply from borderline “adequate” (59 in the 2017 OBS) to “few” (33 in the 2019 OBS). To an extent, the observed patterns reflect the specific focus of OBS assessment criteria, which only allow for consideration of engagement opportunities that occur on a routine annual basis and which focus on Government (executive) engagement on the part of either Treasury or possibly SSC. Parliamentary and OAG tend to maintain relatively routine annual mechanisms for public engagement, with Parliamentary process obviously focusing on hearings, and the scores from one OBS round to the next depending largely on documentable evidence of actual public engagement in the form of written submissions and/or oral testimony. In the case of OAG, public engagement comes through public submissions during formulation of the annual audit work-plan and OAG’s consultation with the public during the conduct of certain types of audits. Those processes have not varied much, if at all, from year to year.
For the Government (executive), it is a different story. In short, the 2019 OBS results reflect the discontinuation of two panels previously operating under Treasury management (but inclusive of a few outside experts) having a role in evaluating certain proposed budget initiatives. For budget implementation, a curtailment in the scope of reporting for the KiwisCount survey for public services contributes to the declining score. On a more general level, the results reflect Treasury’s primary commitment to substantive public engagement for specific “events” that are not part of routine annual budget processes, such as the periodic Investment Statement and Long-Term Fiscal Statement (both legally mandated by the PFA to be produced at least once every four years) or for specific major policy reviews such as the Tax Working Group. Generally, in such cases when Treasury does engage with the public in a consultative process, the process tends to be thorough, substantive and inclusive. The fundamental problem (at least in terms of meeting OBS standards) is that Treasury (or Government) does not appear to perceive broad (“open”) public consultation (as two-way “dialogue”) to be an integral part of routine annual processes for budget formulation, while consultative processes for service delivery (budget implementation) is generally viewed as being more in the domain of sector-specific agencies rather than specifically a Treasury (or central agency) responsibility.
Closer look at OBI segment points to important opportunities, including some “low hanging fruit”
The 2109 OBS results show New Zealand continuing to be a high performer in the “headline” OBI assessing public availability of information. However, results for specific OBI questions also point to the persistence of specific gaps in public availability of essential information, gaps well within the Government’s (Treasury’s) capacity to address. These include:
strengthening web-based data visualisations (“info-graphics”) making extensive information about sources and use of public funds contained in dense budget documents more readily accessible and informative, beyond limited existing options on Treasury or Budget websites;
improving the scope and presentation of information in plain-language “Basics” series (for BEFU, HYEFU and year-end Financial Statements), to include not just “fiscal aggregates”, but also sector and policy-specic spending and a presentation format that encourages broader public interest, accessibility and engagement, including attention to narrative "story-lines";
making public a comprehensive budget calendar, before the annual budget cycle begins, inclusive of designated entry points for broad-based public consultations on policy priorities;
developing “alternative displays” of public spending illustrating the distribution of either total spending or for specific sectors or policies according to a given characteristic such as income, poverty status, gender, ethnicity, age cohort or geographic jurisdiction, noting the potential alignment such “alternative displays” could have to the “wellbeing” budget framework;
increasing the scope mid-year (and other in-year) reporting on spending for specific programs;
providing comparisons of macroeconomic forecasts and actual outcomes in annual year-end reporting, with explanation for variances;
reporting estimates of forgone revenue for a broader range of tax expenditures in the annual Tax Expenditure Statement (TES); noting, in particular, substantial growth in use of the tax system to deliver targeted relief to businesses and households as part of COVID-19 Response;
Producing the Open Budget Survey – an 18-month global effort
The results released this week are the product an intensive 18-month effort involving:
collection and review of extensive documentation and data, not only for the OBI’s 8 “key documents”, but also including Parliamentary transcripts and submissions, OAG advice provided to MPs/select committees and available evidence/reporting on public consultative processes;
completion of the 150+ survey questions by country researchers, including direct engagement with relevant executive, legislative and audit entity officials for clarifications and verifications;
submission of completed questionnaires for both independent peer and government review;
responding to all comments and alternative assessments raised by reviewers;
tabulating results as scores and rankings, conducting analysis and drafting reporting materials;
and finally, the dissemination of findings for discussions among stakeholders.