What is a Charter of Budget Honesty? The Case of Australia

Article 3 / 11 , Vol 40 No. 1 (Spring)

What is a Charter of Budget Honesty? The Case of Australia

It is now nearly 20 years since Australia introduced a prominent piece of legislation known as the Charter of Budget Honesty Act (1998) to improve the transparency and the discipline of its budget process. This article examines the success of the charter, as well as its limitations, in the context of Australian budget process, including an analysis of its most pertinent components, so as to then reflect more broadly on the impact of budget honesty mechanisms for parliaments with a similar structure and history, including Canada.

In our time, most Parliamentary democracies in the world are faced with the question of how to maintain budget discipline, particularly with respect to three overarching concerns: a long-run reliance on deficits; the ability to manage unforeseen economic shocks; and the level of transparency and accountability in the budget process. Following the economic crisis of the past decade, more parliaments are finding themselves debating questions of fiscal discipline and fiscal transparency at ever more frequent intervals. Some legislatures have tried to give a more concrete form to their beliefs in budget discipline and budget transparency by enshrining them into charters or acts.

Canada and the Global Network of Parliamentary Budget Officers

Article 5 / 11 , Vol 36 No 3 (Autumn)

Canada and the Global Network of Parliamentary Budget Officers

Many countries are considering the formation of Parliamentary Budget Offices to improve transparency in the budgetary process. They face stiff resistance from key political stakeholders. The divergence of opinion between PBOs and other branches of government has at times put the very existence of the institution at risk, and the very credible threat of reprisals by other governmental institutions through funding cuts, staff removal, or outright institutional abolishment have hung over PBOs like a perpetual Sword of Damocles. In order to promote collaboration among Parliamentary Budget Officers a conference was held in Montreal in June 2013. It consisted of a comprehensive series of lectures, workshops, group reflections, case clinics and debates that allowed participants to coalesce into an extremely active and highly motivated community. The PBO delegates to the seminar agreed to form a symbiotic group, henceforth known as the Global Network of Parliamentary Budget Officers (GNPBO), that would allow for dynamic information-sharing between members using a variety of cutting edge tools and collaborative mechanisms. This article looks at the key role Canada played in the seminar and the establishment of the GNPBO.

In the words of Sahir Khan, Assistant Canadian Parliamentary Budget Officer for Expenditure and Revenue Analysis, the PBO is an institution that can be likened to bitter medicine that faces stiff initial resistance from the legislative organism that it is trying to heal. The PBO will find political ‘antibodies’ pushing back this ‘foreign invader’ because of its astringent effects in the short-run, even though the legislature will be strengthened by a healthy dose of the Budget Office in the long-run. Furthermore, the PBO is an institution that speaks an alien tongue in the political arena: its vernacular is economics and finance, but it speaks to an audience that is accustomed to a political and legal orientation. Additionally, as political space is an inherently zero-sum equation, any political room that a PBO can gain as an institution has to come at the expense of some other political actor, which means that every inch of political space that it wrests away ‘encroaches’ on a previously entrenched political entity. In effect, the salubrious long-term benefits of the PBO are oftentimes ignored by parties that view the PBO as a disruptive force within the political paradigm, and Canada has been no exception to this phenomenon.