Raising the bar on open budgeting.
Murray Petrie (and co-author Shields) observed that “One important but relatively neglected aspect of fiscal transparency is the need for the government to explain its budget proposals and the public finances in one simple, plain language document – often referred to as a “citizens’ guide to the budget”. New Zealand is currently failing in this regard.
Traditionally New Zealand has ranked highly in international comparisons of budgeting – the 2019 Open Budget Survey ranked New Zealand first equal with South Africa. In 2019 NZ scored very highly on Transparency and Oversight but not so well on Participation. However, since the last survey New Zealand has fallen off the pace on Transparency as well as Participation. A number of the Budget at a Glance publications from the Treasury that enabled NZ to score highly in the survey have been dropped in 2020. In the Budget 2017 accompanying the major fiscal documents were series of putting it simply guides: the Budget Economic and Fiscal update (BEFU Basics), the Half year update (HYEFU basics), the end of year Financial statements(FSG basics) as well as a Pre-election guide (PREFU basics). In the lead up to the 2020 election, none of these documents were published and nothing was provided in their place.
Budgeting is fundamental to the role of the state. Good budgeting requires the state to give a clear accessible and transparent account of the revenue that it raises through the exercise of the power of taxation and what it propose to spend those public monies on.
Current material provides extensive technical information on the main macro aggregates (economic assumptions and forecasts, along with overall expenses, revenue, capital transactions, fiscal balance and debt). In addition information is provided at the micro level on discretionary spending on Budget priorities and policy initiatives. Over time there is increasing amounts of nonfinancial information of trends in Wellbeing are being provided. However, it does not provide meso level information on the components of revenue collection or sectoral allocation of expenses and how the sectoral shares are shifting over time. And it the information is not provided in a readily accessible interactive way.
Treasury commissioned research from Colmar Brunton that found:
“”while budget information is available to citizens, it lacks accessibility because it is often too complex for them to understand….Citizens rely on intermediaries such as Media, Analysts, and Academics to understand the Budget information…..Budget at a Glance attempts to make the information user-friendly, but it lacks personal relevance (i.e. ‘what does this mean for me, my family, my community?’). It is too generic.”
Moving forward requires working on the 'what' and the 'how'.
On the 'what' good transparent open budgeting would provide simple information at 3 levels:
Macro - what is the overall mix of current and capital spending, taxes and other revenue, fiscal deficit and debt and how does that relate to the macroeconomic challenges New Zealand faces?
Meso – what are the components of revenue collection and sectoral allocation of expenses and how are the sectoral shares shifting over time?
Micro – what are the key new spending and revenue initiatives?
On the 'how' this would involve the ideas raised by Colmar Brunton such as improved use of trend data, more in-depth visualisation of spending, interactive content and directing users to other relevant information
Why the contribution is important
Open budgeting is important goal as greater transparency will encourage greater participation in Budgeting by citizen. Equally importantly it will lend legitimacy to the decision-making and contribute to sustaining trust in Government.
In the past New Zealand has been regarded as a world leader in Budgeting practice. We have fallen off the pace in ready years and slipped backwards on open budgeting. If is time to put that right. The Open Government Action Plan provide the perfect opportunity for the Government to commit itself to becoming a world leader again on Open Budgeting.
by Derek on March 21, 2021 at 09:48PM