The Roles of Independent Legislative Fiscal Institutions: a Multidisciplinary Analysis

USMAN WAQQAS CHOHAN

A THESIS IN FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR

OF PHILOSOPHY AT THE UNIVERSITY OF NEW SOUTH WALES, CANBERRA

SCHOOL OF BUSINESS

AUGUST 2018

This page is intentionally left blank.

Surname/Family Name : CHOHAN Given Name/s : USMAN WAQQAS Abbreviation for degree as give in the University calendar : PHD Faculty : UNSW CANBERRA School : SCHOOL OF ECONOMICS THE ROLES OF INDEPENDENT LEGISLATIVE FISCAL INSTITUTIONS: A Thesis Title : MULTIDISCIPLINARY ANALYSIS

Abstract 350 words maximum: (PLEASE TYPE)

This thesis approaches the question of the roles that can be fulfilled by Independent Legislative Fiscal Institutions, and it does so in a multidisciplinary manner, through six independent but logically-connected research papers. Independent Legislative Fiscal Institutions (IFIs) represent an institution of ever greater practitioner and academic interest, but a fuller understanding of their roles, and therefore their purpose, is left wanting due to the dispersion of analysis surrounding them across three separate literatures: economics, political science, and governance. Each literature approaches the question of the roles of IFIs in a tangential manner as part of some broader inquiry, and they provide rationales for these fiscal institutions steeped in arguments specific to these literatures. However, there is still a need to validate those literature-specific arguments through further evidence; and the claim that drives this thesis is that, only through a fuller and multidisciplinary synthesis of these literatures, along with the incorporation of a new literature (public administration), can progress be made in contextualizing the roles of IFIs in a comprehensive manner. The need for such an inquiry arises because, given that there is scant explicit consideration of the roles of IFIs, the ambiguities in their roles can and does incite severe budgetary conflicts. As such, the thesis develops multiple case studies to typologize the suggested roles, including: the United States, Canada, Australia, Fiji, and Iraq. In particular, the thesis identifies two types of roles for IFIs, as either (1) mechanistic-costing or (2) normative-advisory, and musters public value theory (from the public administration literature) to do so. Using the same public value lens, the thesis then proceeds to outline the limitations of its typologized roles, by indicating where the ingredients for both roles may be possible and yet where IFIs can still fall short of fulfilling them. Beyond that, the thesis aims to develop an understanding of special, context-specific roles for IFIs that can emerge in unique budgeting contexts, including as a ‘coordination mechanism’ within the broader accountability architecture (using Fiji), and as a vehicle for jumpstarting accountability in the budget process where fiscal architecture has been destroyed (using Iraq).

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‘I hereby declare that this submission is my own work and to the best of my knowledge it contains no materials previously published or written by another person, or substantial proportions of material which have been accepted for the award of any other degree or diploma at UNSW or any other educational institution, except where due acknowledgement is made in the thesis. Any contribution made to the research by others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in the thesis. I also declare that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project's design and conception or in style, presentation and linguistic expression is acknowledged.’

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‘I hereby grant the University of New South Wales or its agents the right to archive and to make available my thesis or dissertation in whole or part in the University libraries in all forms of media, now or here after known, subject to the provisions of the Copyright Act 1968. I retain all proprietary rights, such as patent rights. I also retain the right to use in future works (such as articles or books) all or part of this thesis or dissertation. I also authorise University Microfilms to use the 350 word abstract of my thesis in Dissertation Abstract International (this is applicable to doctoral theses only). I have either used no substantial portions of copyright material in my thesis or I have obtained permission to use copyright material; where permission has not been granted I have applied/will apply for a partial restriction of the digital copy of my thesis or dissertation.'

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Date ……………………………………………...... STATEMENT

I hereby declare that this submission is my own work and to the best of my knowledge it contains no materials previously published or written by another person, or substantial proportions of material which have been accepted for the award of any other degree or diploma at UNSW or any other educational institution, except where due acknowledgement is made in the thesis. Any contribution made to the research by others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in the thesis. I also declare that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project's design and conception or in style, presentation and linguistic expression is acknowledged.

Usman W. Chohan

11th August, 2018

ACKNOWLEDGEMENTS

For all the cautionary tales that I had heard about the harrowing experience of writing a doctoral thesis, I have found instead that this effort of intellectual inquiry has been a pleasurably engaging reprieve. That is in no small part thanks to the people who have helped me to write this thesis.

Above all, the greatest gratitude goes to Professor Kerry Jacobs, my supervisor and mentor.

He had, over these past few years, provided me with cogent guidance and advice, without which, this thesis would likely never have come to fruition. Kerry struck the perfect balance between firmness and flexibility: directing my gaze, but allowing me the freedom to articulate my own interpretations.

The experience of writing the thesis was nourished by engagements outside of the immediate doctoral enterprise, and I should like to thank the institutions that allowed me to branch out so as to regularly write and speak in their forums. These include The

Conversation (Australia, France, the United States, and Africa), The Project (Channel 10,

Australia), The Tax and Transfer Policy Institute (Australia), The Development Policy

Institute (Australia), The Social Science Research Network (SSRN), BigThink (USA), The

World Economic Forum’s Global Shapers (Australia), BBC World News, and SBS Radio in the following languages: Spanish, French, Hindi, and Urdu.

This thesis is comprised of several publications, and I must express my thanks to anonymous referees, as well as the editors, of four journals: Parliamentary Affairs, The

Australasian Parliamentary Review, The International Journal of Contemporary Iraqi

Studies, and most of all, The International Journal of Public Administration.

I must also thank Frederick Stapenhurst for having put me on this path in the first place. He had said in 2014 that a doctoral undertaking was suited to my temperament and that I could discover interesting solutions to the problems that beset Legislative Budget Offices. He was right on both accounts. I must also express my profound gratitude to my co-supervisor,

Professor Satish Chand, for his constant support and encouragement. For every publication

I had, the first and kindest message of congratulations was his; and in the timely submission of this thesis, he was my absolute greatest support.

I am also grateful to my parents, Musa J. Chohan and Naela Chohan, whose patience and encouragement made this doctoral work possible. In fact, Musa had his South Asian historical-fiction book Ghungroo published during the period that I wrote this thesis, and

Naela intends to pursue a PhD of her own in 2018. As such, there is a filial element to the preparation of this thesis that may find manifestation in future intellectual enterprises.

Because of the enjoyable conception and preparation of this thesis, a fact that I state openly

– only to be met with incredulity – the submission of this final document is a somewhat bittersweet act for me. I shall continue to preserve the skip in my stride by writing more academic papers on Independent Legislative Fiscal Institutions in the years to come.

Finally, this doctoral work was written under Professor Kerry Jacob’s supervision, even as he battled against a malignant cancer throughout this period. With the diagnosis of his health declared negative, and his subsequent passing away on March 1st, 2018, I wish to say that, in earnest reflection, I hope that he smiles downwards from heaven, seeing this thesis among one of his life’s many triumphs, as I see it among mine. Vita brevis, ars longa, and no man I have met could exemplify this better than Kerry Jacobs.

THESIS BY RESEARCH PAPERS

This thesis consists of six papers published in peer-reviewed journals. All of these papers represent individual research studies that have been brought together under the overarching thematic heading: a multidisciplinary analysis of the roles of Independent

Legislative Fiscal Institutions. An introductory chapter identifies the various bodies of literature (economics, governance, and political science) as well as the gaps in the literature, along the with the need for a greater synthesis of these different bodies of work. The introduction also maps the course that is covered by subsequent chapters, which by ways of reiteration are all published in peer-reviewed journals. These chapters follow a logical flow, and include a solution to the research question, along with a recognition of the boundaries of that solution, as well as exceptional circumstances where unusual solutions can be conceived. A final chapter reflects upon the findings of the body of work, its contributions, its limitations, as well as its future directions. For the thesis overall, whenever possible, the format is written in accordance with the stylistic guidance of traditional thesis work required by the University of New South Wales, which most examiners are accustomed to.

All six papers have been published in peer-review journals, which is to say that they were written, accepted, revised (sometimes multiple times), and finally published within the period of my PhD enrolment, beginning in August, 2015. Where these papers are co- authored (with my supervisor, Professor Kerry Jacobs), a signed statement by the co-author attests to my contribution at the commencement of each relevant chapter.

Paper 1 (Chapter 2)

Chohan, U.W., and Jacobs, K. (2017). The Presidentialisation Thesis and Parliamentary Budget Offices. Parliamentary Affairs. 70(2), 361-376. DOI: https://doi.org/10.1093/pa/gsw026

Paper 2 (Chapter 3)

Chohan, U.W. (2017). Independent Budget Offices and the Politics–Administration Dichotomy. International Journal of Public Administration. DOI: http://dx.doi.org/10.1080/01900692.2017.1317801

Paper 3 (Chapter 4)

Chohan, U.W., and Jacobs, K. (2016). Public Value in Politics: A Legislative Budget Office Approach. International Journal of Public Administration. 40(12), 1063-1073. DOI: http://dx.doi.org/10.1080/01900692.2016.1242612

Paper 4 (Chapter 5)

Chohan, U.W. (2017). Public Value as Rhetoric: A Budgeting Approach. International Journal of Public Administration. DOI: http://dx.doi.org/10.1080/01900692.2017.1373673

Paper 5 (Chapter 6)

Chohan, U.W. and Jacobs, K. (2016). A Parliamentary Budget Office in Fiji: Scope and Possibility. Australasian Parliamentary Review. 31(2), 117-129. URL: http://www.aspg.org.au/journal/2016spring.php

Paper 6 (Chapter 7)

Chohan, U.W. (2016). The Idea of Legislative Budgeting in Iraq. International Journal of Contemporary Iraqi Studies. 10 (1-2), 89-103. DOI: https://doi.org/10.1386/ijcis.10.1-2.89_1

QUOTES

“Let us remember, then, in the first place, that political institutions (however the proposition may be at times ignored) are the work of men; owe their origin and their whole existence to human will. Men did not wake on a summer morning and find them sprung up.

Neither do they resemble trees, which, once planted, "are aye growing" while men "are sleeping." In every stage of their existence they are made what they are by human voluntary agency. Like all things, therefore, which are made by men, they may be either well or ill made; judgment and skill may have been exercised in their production, or the reverse of these.”

John Stuart Mill, Representative Government, 1861

“The much longed for efficiency in government cannot be obtained by securing experts and then tying them hand and foot. The two courses are largely inconsistent. We have been led into the tying method because we have not had experts with expert standards; to prevent our tyros from making excessive blunders, we have hobbled them. If now we propose to employ experts, as we should, we must cut away the hobbling devices and enforce their accountability by other and more grown-up means.”

Rufus Miles, “The Budget and The Legislature,” 1915

ABSTRACT

This thesis approaches the question of the roles that can be fulfilled by Independent

Legislative Fiscal Institutions, and it does so in a multidisciplinary manner, through six independent but logically-connected research papers. Independent Legislative Fiscal

Institutions (IFIs) represent an institution of ever greater practitioner and academic interest, but a fuller understanding of their roles, and therefore their purpose, is left wanting due to the dispersion of analysis surrounding them across three separate literatures: economics, political science, and governance. Each literature approaches the question of the roles of IFIs in a tangential manner as part of some broader inquiry, and they provide rationales for these fiscal institutions steeped in arguments specific to these literatures. However, there is still a need to validate those literature-specific arguments through further evidence; and the claim that drives this thesis is that, only through a fuller and multidisciplinary synthesis of these literatures, along with the incorporation of a new literature (public administration), can progress be made in contextualizing the roles of IFIs in a comprehensive manner. The need for such an inquiry arises because, given that there is scant explicit consideration of the roles of IFIs, the ambiguities in their roles can and does incite severe budgetary conflicts. As such, the thesis develops multiple case studies to typologize the suggested roles, including: the

United States, Canada, Australia, Fiji, and Iraq. In particular, the thesis identifies two types of roles for IFIs, as either (1) mechanistic-costing or (2) normative-advisory, and musters public value theory (from the public administration literature) to do so. Using the same public value lens, the thesis then proceeds to outline the limitations of its typologized roles, by indicating where the ingredients for both roles may be possible and yet where IFIs can still fall short of fulfilling them. Beyond that, the thesis aims to develop an understanding of

11 special, context-specific roles for IFIs that can emerge in unique budgeting contexts, including as a ‘coordination mechanism’ within the broader accountability architecture

(using Fiji), and as a vehicle for jumpstarting accountability in the budget process where fiscal architecture has been destroyed (using Iraq). The thesis thereby makes a series of multidisciplinary research contributions by (1) identifying the three relevant literatures that tangentially explore the roles of IFIs in terms of their localized (single-discipline) logic, (2) synthesizing their findings to provide an overarching context for the study of possible institutional roles, (3) introducing a new literature (public administration) that fills an important gap in understanding these institutions, (4) advancing two debates within public administration using IFIs (‘public value theory’ and the ‘politics-administration dichotomy’),

(5) typologizing two roles for IFIs, and then delineating their limitations, (6) analysing two other unique roles that these institutions can fulfil in specific contexts (‘coordination mechanism and ‘ab initio fiscal body’), (7) highlighting practitioner interests in designing and successfully operating IFIs, and (8) identifying future areas of research that can build upon the multidisciplinary approach that this thesis develops.

OUTPUTS OF THIS DOCTORAL THESIS

Some of the components of this thesis generated outputs in the public sphere that, despite not being directly incorporated into the thesis, warrant mention for their outward reach.

First1, an opinion-editorial titled “Young, Educated and Underemployed: Are We Building a

Nation of PhD-Baristas” compared work by the Canadian Parliamentary Budget Office on levels of youth underemployment to the context of Australia’s youth cohort. This Op-Ed was incorporated into a book titled The Conversation Yearbook: 50 Standout Articles from

Australia’s Top Thinkers (Melbourne University Press, 2016).

Second2, I was invited as a contributor to the multi-stakeholder input phase of the

Independent Review of the Australian Parliamentary Budget Office, conducted by the Joint

Committee of Public Accounts and Audit (JCPAA) of the Australian Parliament in 2017.

Third3, a Public Value paper incorporated into this thesis was presented at the International

Political Science Association’s (IPSA) 24th World Political Science Congress (Poznan,

Poland) in July, 2016. That version of the paper was titled “Legislative Budget Offices:

Applying a Public Value Perspective to Parliamentary Fiscal Scrutiny.”

1 The book 50 Standout Articles from Australia’s Top Thinkers is available at: https://www.goodreads.com/book/show/33154754-50-standout-articles-from-australia-s-top- thinkers?ac=1&from_search=true# 2 A letter of gratitude from the Australian Parliamentary Budget Office Review Committee is appended to the back of this thesis, while the final report of the independent review is available at: http://www.aph.gov.au/~/media/02%20Parliamentary%20Business/24%20Committees/244%20Joint% 20Committees/JCPAA/PBO/Report%20of%20independent%20review%20into%20PBO.pdf?la=en 3 The IPSA World Congress Public Value Presentation is available at: https://wc2016.ipsa.org/my- ipsa/events/istanbul2016/paper/legislative-budget-offices-applying-public-value-perspective-parli

Fourth4, a “Business Briefing” interview by The Conversation: Business & Economics was conducted specifically on the roles of Legislative Budget Offices and a focus on Australia’s

Parliamentary Budget Office. This interview was titled: “Business Briefing: how does

Australia’s policy costing body, the PBO, compare?”

Fifth5, various opinion-editorials on fiscal policy issues were penned for the Tax and

Transfer Policy Institute (TTPI), a think-tank on fiscal issues nestled in Canberra, Australia at the Australian National University.

4 The Business Briefing interview is available at: It is available at: https://theconversation.com/business- briefing-how-does-australias-policy-costing-body-the-pbo-compare-60622 5 The Tax and Transfer Policy Institute (TTPI) Opinion-Editorials are available on the TTPI website: http://www.austaxpolicy.com/author/usman-w-chohan/

TABLE OF CONTENTS

Statement ...... 3

Acknowledgements ...... 6

Thesis by Research Papers ...... 8

Quotes ...... 10

Abstract ...... 11

Outputs of this Doctoral Thesis ...... 13

Table of Contents ...... 15

A Note on Terminology ...... 20

List of Tables ...... 21

List of Figures ...... 22

A Note on Referencing and Formatting ...... 22

List of Acronyms & Abbreviations ...... 23

Full List of Publications Arising from this Thesis ...... 25

Chapter 1: Introduction ...... 27

[1.1] Independent Legislative Fiscal Institutions: An Overview ...... 27

Table 1: The Dispersion of Discourse on Independent Fiscal Institutions Across Three Disciplines ...... 29

[1.2] Literature Review: Three Disciplines ...... 31

[1.2.A] One: Political Science ...... 31

[1.2.B] Two: Economics ...... 33

[1.2.C] Three: Governance ...... 37

[1.3] Research Aims ...... 42

Table 2: Research Paper Aim, Focus, and Approach ...... 42

[1.4] Research Question ...... 45

Figure 2: The Logical Progression of the Thesis ...... 45

[1.5] Research Contribution ...... 55

Chapter 2 : The Presidentialisation Thesis and Parliamentary Budget Offices ...... 61

Abstract...... 63

[2.1] Introduction ...... 63

[2.2] Presidentialisation Revisited ...... 64

[2.3] One: The American CBO ...... 69

[2.4] Two: The PBO of Canada ...... 72

[2.5] Against All Odds: PBO under a strongly presidentialised PM ...... 74

[2.6] Conclusion: Presidentialisation and Parliamentary Budget Offices ...... 80

Chapter 3: Independent Budget Offices and the Politics-Administration Dichotomy ...... 83

Abstract...... 85

[3.1] Introduction ...... 85

[3.2] One: Canada – Truth and Lies on Parliament Hill ...... 88

[3.3] Two: The Congressional Budget Office – Honest Numbers, Power, and Policy Making ...... 93

[3.4] Three: Restoring Public Debt Sustainability –The Role of Independent Fiscal Institutions ...... 100

[3.5] Conclusion ...... 103

Chapter 4: Public Value in Politics A Legislative Budget Office Approach ...... 106

Abstract...... 108

[4.1] Introduction ...... 108

[4.1.A] The Prism of Public Value in Budgeting ...... 108

Figure 3: Public Value Contribution: Roles for an LBO ...... 111

[4.1.B] Theorizing LBOs’ Public Value ...... 112

[4.2] The CBO of America ...... 115

[4.3] The PBO of Canada ...... 119

[4.4] The Public Value of a Budget Office ...... 122

Table 3: The Ingredients for an Advisory Role and a Costings Role ...... 124

[4.5] Strategic Triangle ...... 128

Table 4: An assessment of the Strategic Triangle for Budget Offices ...... 128

Figure 4: Democracy and Efficiency – LBOs contribute to both ...... 131

[4.6] Conclusion ...... 132

Chapter 5: Public Value as Rhetoric: A Budgeting Approach ...... 135

Abstract...... 137

[5.1] Introduction ...... 137

[5.2] Revisiting Public Value as Rhetoric ...... 139

Table 5: Applying the prism of budgeting to two criticisms of public value ...... 140

[5.3] The Australian Budget Context ...... 144

Table 6: Assessing Australia’s PBO: Ingredients for an Advisory role and a Costings Role in Public Value ...... 149

Table 7: Assessing the Australian PBO through Moore’s Strategic Triangle ...... 151

[5.4] Measuring Public Value as Rhetoric ...... 156

Table 8: Annual Budget Speeches and Budget Reply Speeches, a textual analysis of mentions of “responsibility” and “sustainability” (2006-2016) ...... 156

[5.5] Public Value and Citizen Preferences ...... 159

[5.6] Conclusion ...... 161

Chapter 6: A Parliamentary Budget Office in Fiji: Scope and Possibility ...... 164

Abstract...... 166

[6.1] Introduction ...... 166

[6.2] Parliamentary Budget Offices ...... 167

[6.3] The Budget Transparency Problem ...... 169

[6.4] Accountability Institutions in Fiji ...... 171

[6.5] Public Accounts Committees and Auditors-General ...... 172

[6.6] The New Constitution (2013) ...... 174

[6.7] Role 1: A Coordinator...... 176

Figure 5: PBO at the accountability juncture ...... 176

[6.8] Role 2: A Budget Analyst ...... 179

Table 9: The ‘Budget’ Function of a PBO in Fiji ...... 180

[6.9] Conclusion ...... 182

Chapter 7 : The Idea of Legislative Budgeting in Iraq...... 184

Abstract...... 186

[7.1] Introduction ...... 186

[7.2] Legislative Budget Reform in Iraq ...... 188

[7.3] Iraq’s budget: how little we knew ...... 190

[7.4] Budgeting in Iraq: a brief historical context ...... 193

[7.5] Budgeting in a post-Saddam Iraq ...... 196

[7.6] Towards Legislative Budgeting ...... 202

[7.7] Conclusion ...... 205

Chapter 8: Conclusion ...... 209

[8.1] Thematic Conclusions ...... 209

Figure 2 (Reproduced): The Logical Progression of the Thesis ...... 209

[8.2] Research Contribution ...... 211

Table 10: Research Papers – Contributions to the Thesis, and Contributions to the Literature ...... 213

[8.3] Research Limitations and Future Research Directions ...... 216

[8.4] Concluding Remarks ...... 220

Bibliography ...... 223

List of Legislation ...... 244

Appendix: Letter of Gratitude from the Parliamentary Budget Office Review Committee 245

Appendix: Challenges to the Measurement of the Effectiveness of LBOs ...... 246

A NOTE ON TERMINOLOGY

This thesis addresses questions relating to an institution known as an “Independent

Legislative Fiscal Institution.” However, there are overlapping terms in both academic and practitioner literature for this institution, depending on (1) the target audience, and (2) the discipline (economics, political science, or governance). These terms are used interchangeably in this thesis, unless there is a specific reason for using a precise term, which is explained accordingly. The variants of this institution’s names are enumerated as follows:

1. Legislative Budget Office (LBO): an office of economists attached to the

legislature, but (usually) independent from it, with the task of providing various

forms of analysis to legislators on fiscal matters pertaining to current and future

budgets. This term is the most commonly used, especially in political science and

governance literatures.

2. Independent Fiscal Institution (IFI): this term has a wider remit than ‘LBO’, in

that an IFI can be attached to an institution other than the legislature, such as an

Audit Institution (e.g. France and Finland), or not attached to any institution at all

(e.g. Belgium). This term is preferred by economists and is often found in the

economic literature.

3. Fiscal Council: Originally a subset of IFIs, the use of FCs is now commonly

conflated with IFIs.

4. Parliamentary Budget Office (PBO): a subset of LBOs found in parliamentary

systems (Canada, Australia, Uganda)

5. Congressional Budget Office (CBO): a subset of LBOs found in congressional

systems (US).

LIST OF TABLES

Table 1: The Dispersion of Discourse on Independent Fiscal Institutions Across Three

Disciplines

Table 2: Research Paper Aim, Focus, and Approach

Table 3: The Ingredients for an Advisory Role and a Costings Role

Table 4: An Assessment of the Strategic Triangle for Budget Offices

Table 5: Applying the Prism of Budgeting to Two Criticisms of Public Value

Table 6: Assessing Australia’s PBO: Ingredients for an Advisory role and a Costings Role in

Public Value

Table 7: Assessing the Australian PBO through Moore’s Strategic Triangle

Table 8: Annual Budget Speeches and Budget Reply Speeches, a textual analysis of mentions of “responsibility” and “sustainability” (2006-2016)

Table 9: The ‘Budget’ Function of a PBO in Fiji

Table 10: Research Papers – Contributions to the Thesis, and Contributions to the

Literature

LIST OF FIGURES

Figure 1: Conceptualizing the Literature

Figure 2: Logical Progression of the Thesis

Figure 3: Public Value Contribution: Roles for an LBO

Figure 4: Democracy and Efficiency – LBOs contribute to both

Figure 5: PBO at the Accountability Juncture

A NOTE ON REFERENCING AND FORMATTING

This thesis is composed of several published papers, which means that the formatting used within each chapter is influenced by the requirements of the journal where it is published.

Therefore, formatting issues such as in-text referencing (use of commas, colons, or neither) or quotation marks, are different between chapters, so as to conform with the formatting requirements of each publication/journal. Also, wherever the original text of a published journal article or paper is placed, as represented by a chapter within this thesis, the text continues to refer to the chapter as “article” or “paper”, for the purposes of consistency.

LIST OF ACRONYMS & ABBREVIATIONS

AG: Auditor-General

CBO: Congressional Budget Office

CIA: Central Intelligence Agency (US)

CPA: Coalition Provisional Authority (US/Iraq)

DoD: Department of Defense

FAO: Financial Accountability Office

GAO: Government Accountability Office (US)

GDP: Gross Domestic Product

IAR: Iraqi Administrative Reports

IBP: International Budget Partnership

IFI: Independent Fiscal Institution

IMF: International Monetary Fund

JCPAA: Joint Committee of Public Accounts and Audit (Australia)

LBO: Legislative Budget Office

LSP: Legislative Strengthening Program

OBI: Open Budget Initiative

OECD: Organization for Economic Cooperation and Development

OIG: Office of Inspector-General

PAC: Public Accounts Committee

PBO: Parliamentary Budget Office

PBOA: Parliamentary Budget Office of Australia

PBOC: Parliamentary Budget Office of Canada

SAI: Supreme Audit Institution

SIGIR: Special Inspector-General for Iraqi Reconstruction

SOE: State-Owned Enterprises

UNDP: United Nations Development Program

USAID: United States

USDS: United States Department of State

USNDU: United States National Defense University

UNIJAU: United Nations Iraq Joint Analysis Unit

UNDP: United Nations Development Program

WB: World Bank

FULL LIST OF PUBLICATIONS ARISING FROM THIS THESIS

This section enumerates the sum total of publications that arose from the work within this thesis, some of which were not incorporated into the thesis itself. Those publications which are incorporated into this thesis are marked with asterisks (***).

1. ***Chohan, UW, and Jacobs, K. (2016). Public Value in Politics: A Legislative Budget

Office Approach. International Journal of Public Administration. 40 (12), 1063-

1073.

2. ***Chohan, UW, and Jacobs, K. (2016). A Parliamentary Budget Office in Fiji: Scope

and Possibility. Australasian Parliamentary Review. 31 (2), 117-131.

3. ***Chohan, UW. (2016). The Idea of Legislative Budgeting in Iraq. International

Journal of Contemporary Iraqi Studies. 10 (1-2), 89-103.

4. ***Chohan, UW, and Jacobs, K. (2017). The Presidentialisation Thesis and

Parliamentary Budget Offices. Parliamentary Affairs. 70(2), 361-376.

5. ***Chohan, UW. (2017). Independent Budget Offices and the Politics-Administration

Dichotomy. International Journal of Public Administration.

6. ***Chohan, UW. (2017). Public Value as Rhetoric: A Legislative Budget Office

Approach. International Journal of Public Administration.

7. Chohan, UW. (2017). What is a Charter of Budget Honesty? The Case of Australia.

The Canadian Parliamentary Review. 40 (1), 11-15.

8. Chohan, UW. (2017). Public Value: Politicians Versus Bureaucrats. Global

Encyclopedia of Public Administration, Public Policy, and Governance. Springer:

New York, NY.

9. Chohan, UW. (2017). Legislative Oversight of the Bureaucracy. Global Encyclopedia

of Public Administration, Public Policy, and Governance. Springer: New York, NY.

10. Chohan, UW. (2017). Budget Offices. Global Encyclopedia of Public Administration,

Public Policy, and Governance. Springer: New York, NY.

11. Chohan, UW. (2017). Public Value and Bureaucratic Rhetoric. Global Encyclopedia

of Public Administration, Public Policy, and Governance. Springer: New York, NY.

12. Chohan, UW. (2017). Charters of Budget Honesty. Global Encyclopedia of Public

Administration, Public Policy, and Governance. Springer: New York, NY.

13. Chohan, UW. (2017). Accountability and Governance in Fiji. Global Encyclopedia of

Public Administration, Public Policy, and Governance. Springer: New York, NY.

14. Chohan, UW. (2017). Budget Policy and Reconstruction in Iraq. Global Encyclopedia

of Public Administration, Public Policy, and Governance. Springer: New York, NY.

15. Chohan, UW. (2017). Pension Fund Regulation and Governance. Global

Encyclopedia of Public Administration, Public Policy, and Governance. Springer:

New York, NY.

16. Chohan, UW. (2017). Budget Reform and Political Reform. Global Encyclopedia of

Public Administration, Public Policy, and Governance. Springer: New York, NY.

17. Chohan, UW. (2017). Qu’est-ce que une charte de l’honnêteté budgétaire? Le cas de

l’Australie. La Revue Parlementaire Canadienne. 40 (1), 11-15. (French).

CHAPTER 1: INTRODUCTION

[1.1] INDEPENDENT LEGISLATIVE FISCAL INSTITUTIONS: AN OVERVIEW

The budget is an inherently complex and obtuse document. 6 This is because it is often very large, constituted of numerous moving parts, and underpinned by many economic assumptions and political predilections. It is also susceptible to intrusion from vested interests that are not always immediately evident, and is usually the product of a process of negotiation that has evolved over a long period of time. These elements make budgets difficult to grasp without the help of economic expertise, which is why budget offices are created to facilitate a greater understanding of what is an erstwhile intimidating and inaccessible document.

In the broadest sense, budget offices are institutions tasked with providing various forms of fiscal analysis. This may include duties such as (1) providing forecasts for economic variables over various time-horizons, (2) analysing how the government is taxing and spending public money, and (3) providing estimates of the costs associated with specific government policies

(“costing”). In some countries, budget offices are given a very broad mandate, while in other countries they may be tasked with very specialized duties.

There are at least three rationales for instituting a budget office, and each emerges from a different discipline: (1) economics, (2) political science, and (3) governance. These rationales are examined in fuller detail in the next section (“Literature Review”).

Briefly, the political science rationale for a budget office arises from the study of the relative power that different institutions have over the budget process, which is to say, over the

6 An extended version of this overview is published in the Global Encyclopedia of Public Administration, Public Policy, and Governance. Full Citation: Chohan, UW. (2017). Budget Offices. Global Encyclopedia of Public Administration, Public Policy, and Governance. Springer: New York, NY.

27 decision to allocate society’s resources. Typically, budget offices are proposed as a mechanism for supporting legislatures due to the pressing need of legislators for economic expertise, which they often do not themselves possess. Lacking budgetary acumen, legislators are usually at a disadvantage to the executive branch, which usually controls budget machinery such as the Treasury or the Department of Finance. This can lead to a diminished role for the legislature in the budget process, and thus to a reduced voice for electoral constituents, as well as a truncated ability of the legislature to play an oversight role in the budget process.

Also briefly, the economic rationale for a budget office stems from the need to address a long-standing concern about the ballooning debt and deficit levels of countries around the world, which may be unsustainable and potentially calamitous. This concern was made all too evident after the economic crisis of 2008, which is incidentally why so many budget offices were created in its immediate wake. Without an expert institution such as a budget office to study and warn against the unsustainable incurrence of debt, there will be insufficient pressure for current consumption to be mitigated, particularly in terms of the ways in which it can be controlled or reduced.

Equally briefly, the governance rationale for a budget office stems from the proposition that countries, and developing countries in particular, need to build strong mechanisms for accountability, which will foster a governance environment that is more participatory, which can in turn boost economic growth and distribute the fruits of that growth in a more inclusive manner. Budget offices are thought to be a particularly effective institution for boosting accountability and transparency in the budget process, because they can be designed to produce independent and impartial economic analysis that is extensive and

28 rigorous. This helps to hold other agents in the budget process to account, and makes the complex nature of the budget more accessible (transparent) to all stakeholders.

Each of these three literatures is considered in substantial detail in the next section

(“Literature Review”), but the purpose here is to provide a summary context for why budget offices are given consideration, and by whom.

TABLE 1: THE DISPERSION OF DISCOURSE ON INDEPENDENT FISCAL INSTITUTIONS

ACROSS THREE DISCIPLINES

Field Claims of Support

Macroeconomics LBOs may help address deficit bias and time inconsistency,

common pool problems, forecasting errors, fiscal

imprudence, and political budget cycles. They may act as a

weaker version of independent central bank equivalents for

fiscal policy (Alesina and Tabellini 1990; von Hagen and

Harden 1995; Alesina and Perotti 1996; Alesina et al 1999;

Debrun 2011; Bertelli and Grose 2011; Eslava 2011).

Political Science In the power struggle between legislatures and executives

over budgets and fiscal decisions, LBOs lend a hand to

legislatures by providing timely and impartial analysis, thus

weakening the tight fiscal grip of executives (Doring 1995;

Olson and Mezey 1991; Haggard and McCubbins 2001;

Hallerberg and Marier 2004; Meyers 2009; Meyers and

Rubin 2011; Joyce 2011)

Accountability/Governance LBOs foster greater accountability and oversight in the

budget process through their analysis. This strengthens the

level of governance, which in turn boosts economic

development (Shah 2007; Von Hagen 2007; Stapenhurst

and Pelizzo 2008; Allen 2009; Dabla-Norris et al 2010;

Acemoglu et al 2001; Keefer and Knack 1997; Page 2015)

The aforementioned three rationales: economic, political, and governance; all make reference to a set of disjointed notions. To state it more bluntly, there are discussions in the literature about a series of ideas: legislative scrutiny, stronger governance, better institutions, fiscal prudence, economic growth, deficit reduction, sustainable fiscal policy, and greater accountability; all of which are tied together through loose connections that assume the following: that greater fiscal transparency and better budgetary accountability lead to better social and economic outcomes.

But these conversations are not yet premised on sufficient evidence, neither in terms of causality nor practical consequence. Wehner (2014) aptly articulates the fact that “the potential role of legislative scrutiny of public finances in delivering development outcomes such as reduced corruption, more efficient government, and democratic consolidation has yet to be explored much more systematically. Without such research, it is impossible to judge whether the benefits of increased legislative activism may outweigh possible risks”.

In light of the absence of evidence to substantiate the links purported between these concepts, I propose that the Legislative Budget Office (LBO) serves as an excellent case study through which to examine the deeper question of public accountability and its fiscal

30 consequences, because the LBO represents an institutional melding of two fundamental ideas: accountability and budgeting. Understanding the roles of LBOs can shed new light on the actual implementation of fiscal accountability.

Nonetheless, to date there is little evidence of the practice and process by which LBOs execute their mandates, and there is even less concrete proof that they achieve their objectives or realize the expectations of their proponents. This thesis will examine to what extent those expectations are met. However, it is first important to note that different stakeholders seem to be demanding different things from the LBO, and there is a pervasive ambiguity about what LBOs are expected to do. Part of this emerges from the sheer difficulty of measuring just what an LBO’s “effectiveness” is.7 The preponderant question that therefore arises is: to what degree do LBOs actually achieve the benefits claimed by their proponents? To understand these claims, it is important to review the pertinent literatures (macroeconomics, political science, and governance) from within which these claims arise.

[1.2] LITERATURE REVIEW: THREE DISCIPLINES

[1.2.A] ONE: POLITICAL SCIENCE

Much of the original work on Legislative Budget Offices was oriented around political science and premised on the American-influenced philosophical question of separations of power, which pondered how to divide the budgetary powers between the legislative and

7 This point about the “challenges in measuring the effectiveness of LBOs” warrants substantial elaboration, and has been the subject of a policy paper that I published at the Tax and Transfer Policy Institute (Canberra). That policy paper has been reproduced as an appendix to this thesis (see “Appendix: Challenges in the Measurement of the Effectiveness of LBOs”). It is also available at the following address (Full Citation): Chohan, U.W. (2016), “How do we Measure the Success of Legislative Budget Offices?” Austaxpolicy: Tax and Transfer Policy, 24 October. Available from: http://www.austaxpolicy.com/measure-success-legislative-budget-offices/

31 executive branches of government. These works considered the role of legislatures in decision-making over financial resources, a subdiscipline that is also known as “Legislatures

& Public Finance.” The relevant works from this category include Wildavsky (1964) and

Fenno (1966), who focused on the American congressional system and pioneered the work on ideas such as budgetary incrementalism and the power of the purse. These were followed by a host of studies that looked at the role of budget institutions “as determinants of fiscal outcomes” (Wehner 2014, p.517) including deficits and debt (Oppenheimer 1983; von Hagen and Harden 1995; Crain and Muris 1995; Hallerberg and Marier 2004; Lienert

2005), which shed light on the common pool problem and fiscal illusion, as well as how procedures of decision-making affect a government’s fiscal performance.

More recent studies on executive-legislative budget relations have laid the groundwork for addressing the imbalance in budgetary power between the two branches (Caiden 1987;

Schick 2000, 2009; Hilley 2008; Meyers 2009; White 2009; Joyce 2011; Meyers and Rubin

2011). Caiden (1987), Rubin (2003) and Schick (2000) even identify specific periods that mark the executive and Congress as alternating in relative power.

Most of the aforementioned works have focused on the American context, with less expansion into other countries and even less comparative work between countries.

Therefore, there is a need for, in the words of Wehner (2014, p.516), a “comparative ambition” in studying the legislative role in public finance. This has been slightly addressed in the previous two decades by some work on comparative legislative analysis, which has allowed for a contrast between the institutional designs of various legislatures and their impact on the budget process and deficits/debt, while also drawing attention to the executive-legislative power relationship more broadly (Doring 1995; Olson and Mezey 1991;

Haggard and McCubbins 2001; Hallerberg and Marier 2004; Meyers 2009; Meyers and

Rubin 2011; Joyce 2011; Wehner 2013; Kopits 2013).

This in turn has led to an explicit comparative examination of legislative budgeting, among which the work of Haggard and McCubbins (2001) is noteworthy for its focus on the extent of executive authority in policymaking compared to legislatures. Hallerberg and Marier

(2004) find that political institutions impact the level of budget discipline, and point to conditions under which executive power in the budget process is most effective in reducing budget deficits. Wehner’s (2013; 2014) work on institutional preconditions for legislative control over the budget has pointed to various measures including parliament’s access to a

PBO. In assessing this body of literature, there is scant evidence that LBOs actually do address the executive-legislative power imbalance. What is the practice and the process by which LBOs address executive-legislative budget relations? And what roles in the political system do they assume in order to do so?

The aforementioned body of literature represents the “Legislature” portion of the theme

“Legislatures & Public Finance”, and is dominated very much by political scientists and legislative experts. However, there is a second source of examination of Parliamentary

Budget Offices that focuses on the “Public Finance” portion of the theme “Legislatures &

Public Finance,” which is dominated far more by economists and financial experts.

[1.2.B] TWO: ECONOMICS

The economic perspective on ‘Independent Fiscal Institutions’ (IFIs), as they are more commonly known in this discipline instead of as ‘Legislative Budget Offices’, centers around the idea of institutions that can help address macroeconomic problems arising from time inconsistency (intertemporal consumption issues), as well as considerations of forecasting error, opacity and the common pool problem. These problems were avidly explored in the

1990’s when the European monetary union was being forged, and academics began to study the fiscal impacts that would arise from differing debt levels, differing fiscal positions, and differing fiscal objectives. Noteworthy in this regard is the work of Alberto Alesina, for providing a positive theory of fiscal debts and deficits (Alesina and Tabellini 1990); for studying the relationship between fiscal discipline and the budget process more broadly

(Alesina and Perotti 1996); as well as the budget institutions and the concomitant fiscal performance of countries (see Latin American context in Alesina et al. 1999). These works pointed to a systemic deficit bias as well as permanent national deficits that had little in the way of impetus for having their fiscal trajectory redirected.

The notion of IFIs in the context of these economic problems can be traced to several authors including von Hagen and Harden (1995), who suggested the creation of IFI-like

Debt Boards to manage national debt levels within the then rapidly evolving European monetary arrangement. At the same time, it was noted by Wren-Lewis (1996) that governments had a strong incentive to bias their economic forecasts for political reasons, but this incentive was difficult to immediately detect because of the uncertainty of economic forecasts, which is why an independent forecasting body that conducted longer-term forecasts could help prevent the government’s excessive forecast bias from translating into higher real interest rates.

Even before the crisis of 2008, academics were keenly observing excessive optimism in some governments’ forecasts, which they were using to base fiscal policy programs. Jonung and Larch observed this and recommended independent bodies to provide more realistic forecasts (2006). Similarly, Annett (2005) and Annett et al. (2005) suggested creating IFIs as part of the effort to strengthen fiscal arrangements such as the Stability and Growth Pact

34 by acting as independent watchdogs that would report to parliament and strengthen legislative participation in the budget process.

Wyplosz (2005) argued that the time-inconsistency problem could be mitigated by IFIs, in the sense that a better balance could be struck between the needs of politicians to focus on short-term macroeconomic stabilization and more long-run fiscal discipline based on debt targets. In a similar vein, Calmfors (2003) suggested that the excesses of political budget cycles could be tamed somewhat by effective IFIs.

Several academics also suggested that an IFI could serve to coordinate the fiscal policy priorities of different political agents (von Hagen and Harden, 1994; Eichengreen et al.,

1999; Fatas et al., 2003; Wyplosz, 2002, 2008). This would involve setting ‘optimal’ fiscal rules that would attempt to mitigate the distributional conflicts over debt assumption between political agents.

For developing countries in particular, academics such as Eichengreen et al. (1999) and Ter-

Minassian (2002) argued that, since the borrowing of governments was constrained by a lack of commitment to medium-term fiscal approaches, IFIs could help foster longer-term fiscal strategies that broke from the highly pro-cyclical nature of their fiscal policies.

The lens of economics for IFIs has returned to prominence more recently because of the global financial crisis and the unsustainable debts carried by sovereign countries. Some works have brought Independent Fiscal Institutions (IFIs) to attention as a potential solution to mitigating the deficit bias (Debrun et al. 2007a, 2007b, 2009, 2011), because of their impartial non-alignment. Leeper (2009) argued that the more realistic forecasts of

IFIs would help ground the public’s expectations on fiscal matters and this would enhance policy effectiveness. There is a parallel to be drawn here with the idea of independent central banks, as proposed by Thompson (1981), which have to do with monetary policy,

35 while an IFI would deal with fiscal policy (Berger, De Haan and Eijfinger 2001; Debrun and

Castellani 2001). In a similar vein, Blinder (1997) and Gruen (1997) suggested modeling

IFIs on the Federal Reserve Board with the authority to set taxation-related policy.

Alesina and Tabellini (2007) in particular point out the criteria whereby fiscal policy could be delegated to IFIs, including social policy distortions and coordination problems. Debrun et al. (2008; 2009; 2010; 2011) consider a basic taxonomy of Independent Fiscal

Institutions by looking at what sorts of tasks they may be assigned (such as forecasting), while leaving the implementation in the abstract. Kopit’s (2013) recent work on budget sustainability is noteworthy because it invites seasoned IFI officials to share their perspectives in a compendious work on the role of budget offices in public finance sustainability (see chapters by Rivlin 2013; Steurle and Renane 2013; Page and Yalkin

2013).

There is scant evidence, however, of real-world effectiveness of an IFI with a view to making it a fiscal policy equivalent of an independent central bank. While robust in theory, this approach lacks political practicality, because the holders of public office would be hard pressed to relinquish the power of fiscal choices to an independent agency. As a result, the economist’s approach to assigning a role for LBOs, while delving more deeply into potential options (as enumerated above), tends to suffer nonetheless from an inability to put many

LBO functions into practice, such as binding decisions on fiscal spending that would reign in deficits.

The economics literature is therefore at something of an impasse in terms of understanding the roles of IFIs, even as the economic rationale is responsible for the greatest proliferation of IFIs among the developed world in the past decade, due largely to response of governments to the Global Financial Crisis of 2008. There may be something to be said

36 about the lack of interdisciplinarity in examining IFIs, a point that characterizes the economics field in any case, since economists are known to be among the social scientists least amenable to interdisciplinary inquiry (see Fourcade et al. 2015). This thesis addresses that lack of interdisciplinarity in the study of IFIs by not just attempting to synthesize ideas from existing disciplines (political science and governance) into a problem besetting economics, but also by introducing a new discipline into the study of IFIs: public administration.

[1.2.C] THREE: GOVERNANCE

A third important source of inquiry into PBOs can be broadly defined as the “governance” sphere. The original impetus in this work emerged from the idea of making governments accountable for their actions to reduce fraud and corrupt practices (Stapenhurst 2005), with the underlying reasoning being that having better institutions should contribute to economic growth (Acemoglu, Johnson & Robinson 2001; Barro 1991; Keefer & Knack 1997;

Knack & Keefer 1995) – which is an assertion that has not been unanimously accepted by scholars because of lingering doubts about reverse causality (Kurtz and Schrank 2007;

Wehner 2013). The LBO is located within this field as a “legislative tool for oversight”

(Stapenhurst & Pelizzo, 2002; Stapenhurst & Pelizzo, 2008; Stapenhurst, Pelizzo, Olson, &

Trapp, 2008; Stapenhurst, Pelizzo, Sahgal, & Woodley, 2006) that assists parliament, along with other oversight institutions such as the Parliamentary Accounts Committee (PAC) and the Supreme Audit Institution (SAI), as part of a series of tools available to the legislature for budget oversight. The tools are described as ideally working in concert to strengthen the effectiveness of the legislature in articulating citizen concerns and ensuring better oversight of resources. Stapenhurst’s work in particular has cited some merits of a strong legislative role for fostering development by (1) increasing the representation of the electorate in the

37 budget process, (2) enshrining laws that make resource allocation more participatory, and most of all (3) creating oversight mechanisms that help ensure that budget is being spent in a way that increases the welfare of the broader population by holding the other agents of budget power accountable.

The governance literature is today perhaps the most important driver of interest in LBOs, because of its relationship to the practitioner sphere which helps to see LBOs put into practice, particularly in developing countries. In fact, multilateral institutions interested in governance reform in developing countries have contributed much to the proliferation of

LBOs, both in terms of literature and in their practical establishment. A particular focus has been on Resource-Rich Developing Countries (RRDCs), because it is believed that strong institutions put in place now can help to better manage the resource windfalls that are to be reaped in the future, particularly in terms of distributing those windfall gains more equitably amongst the population, as many developing countries find themselves inequitably concentrating the wealth within a limited cohort of the population. To this effect, the two largest contributors are the World Bank and the IMF (Shah 2007; Von Hagen

2007; Stapenhurst and Pelizzo 2008; Allen 2009; Dabla-Norris et al 2010) although their policy prescriptions are premised on scant evidence regarding the actual success of the

LBOs in the countries where they have already implemented the institution.

This thesis builds on the aforementioned governance literature by introducing two case studies where LBOs can play an effective and exceptional role: Fiji and Iraq. In the case of

Fiji, it builds on the aforementioned “tools for oversight” by stressing the need for coordination among these tools, and how an LBO can serve as a coordination mechanism in the budget process for these other tools including the Public Accounts Committee (PAC) and the Auditor-General (AG). In the case of Iraq, it focuses on the aforementioned “RRDC”

38 status of the country as rich in oil wealth but lacking a role for the legislature in the oversight of that natural wealth, which can be addressed through the creation of an LBO with a specific view to rapidly forming a legislative budget oversight role from scratch.

There is an addendum that warrants mention at this juncture: three books have been published specifically on the experiences of LBOs. These three books have not been given extensive treatment earlier in this review because they comprise a complete chapter within this thesis (Chapter 3). Their contributions are highly significant to an understanding of the real-life situations that LBO must navigate. However, they are left out here due to the extensive treatment that they will receive in Chapter 3.

Figure 1: Conceptualizing the Literature

Political Design: LBOs empower legislatures to take on assertive executives in budgetary affairs.

Gap: To what degree do the roles of LBOs help actually achieve the claimed benefits? Accountability / Governance: Economics: IFIs can help LBOs are part of a toolkit that reduce deficits, mitigate improves budget oversight, budget cycles, and act as transparency, accountability, fiscal policy equivalents to and the overall level of central banks governance.

There are therefore three strands of academic inquiry into LBOs, and each stream asks different questions about LBOs and therefore provides answers only in the context of those narrowed questions. This is akin to the parable of three blindfolded men touching various parts of an elephant and describing the animal as akin to a rope (tail), a tree (legs), and a sail (the ear).

In economics, the interest in IFIs has been circumscribed by the pressing need to address fiscal policy problems arising from time inconsistency, forecasting error, political budget cycles, short-termism, unsustainable debt levels, and permanent deficit. There is still much to be done in this field in terms of providing solutions to unsustainable debt with fiscal prudence grounded in (fiscal) rules, but the boundary of that work is found when the actual decisions of apportioning fiscal wealth are realized to be a political enterprise more so than an economic one (or at least of being of equal measure between both fields). This thesis reflects this because it does not include any economics-oriented papers, but rather infuses papers from political science, governance, and public administration into a domain of economic concern. As mentioned earlier, this helps to address the longstanding aversion to interdisciplinarity that is seen to characterize the economics profession (Fourcade et al.

2015).

In political science, much of the interest in LBOs has dealt with the problem of dividing the power over the budget (and therefore of decisions about the wealth of society) between branches of government, and LBOs are seen to strengthen the hand of legislatures.

However, the literature is not fully settled on the idea that legislative dominance of the budget really is the ideal organizing rubric for the political budget process. For much of the history of liberal democracies, particularly the United States, it had been assumed that it would be the executive’s prerogative to exercise dominion over the budget process

(Cleveland, 1915). Indeed, for much of the 20th century (at least 1921-1974), the budget process was an executive-led exercise (Schick, 2000). Therefore, further inquiry is required into why and how legislative budget oversight can be optimized, both in terms of efficiency as well as democracy (a question that is directly addressed in a paper within this thesis, see

Chapter 4), and how independent budget offices can assist in that effort, even as there is recurrent debate on executive-legislative relations in the budget process.

In governance, much of the interest has been in reforming the institutions of developing countries, with the assumption that this will help to generate economic growth. However, this has not been sufficiently proven in the literature, and harks back to the question of reverse-causality: is it because countries are well-behaved that they become rich, or is it that they become rich and then become well-behaved? This thesis addresses the notion of strengthening institutions by introducing a different lens, one of “public value” that stems from public administration, to revisit this governance question. Public value theory attempts to discuss how institutions can create value for the public, how that value might be measured, and how the challenges to that value creation can be overcome. In doing so, it circumvents the still questioned assumptions of the governance literature about good governance leading to economic growth, by instead framing the contribution of LBOs in terms of how they can create ‘value for the public’, which may in part be an economic- oriented sort of value, but it extends beyond that ambit.

What is thus being asserted at this early juncture is that:

1. The three disciplines that consider LBOs of interest examine them separately, and

there is insufficient interdisciplinarity in their inquiry to date.

2. Each of these disciplines operates under assumptions that have yet to be

meaningfully proven, examples include:

a. Economics assumption: an IFI can help with the permanent deficit problem

(does it?)

b. Political assumption: Strong legislative dominance of the budget is better

than strong executive dominance (is it?)

c. Governance assumption: Building strong institutions leads to stronger

economic growth (does it?)

3. The roles of LBOs have been overlooked by these disciplines, but the ambiguity over

their roles is a major source of difficulty for LBOs (this will be demonstrated in the

early chapters)

4. A multidisciplinary examination into the roles of LBOs should help to address the

underlying question: to what extent do LBOs actually attain and provide the benefits

claimed by their proponents?

[1.3] RESEARCH AIMS

Each paper’s research aims, research focus, and research design is enumerated in the table below:

TABLE 2: RESEARCH PAPER AIM, FOCUS, AND APPROACH

Presidentialisation Thesis and Parliamentary Budget Research Paper 1 Offices

Examining the political circumstances that influence the Research Aim divergence between LBOs in terms of effectiveness

Executive-Legislative budget relations in a congressional system Research Focus (US) and a parliamentary system (Canada)

Two case studies: (1) The Congressional Budget Office (US) and Research Design (2) The Parliamentary Budget Office (Canada)

Independent Budget Offices and Research Paper 2 the Politics-Administration Dichotomy

Research Aim Introducing LBOs to the public administration literature

Three expert accounts of LBOs (Joyce 2011; Kopits 2013; Page

Research Focus 2015) in a politics-administration dichotomy context to further

develop CBO and PBOC case studies

Research Design Thematic review of three LBO works with case-study orientation

Public Value in Politics; A Legislative Budget Office Research Paper 3 Approach

Articulating solutions to LBO role gap by applying public

Research Aim administration perspectives (public value theory) to the LBO

context

Theorising two roles for the LBO: Normative-Advisory and Research Focus Mechanistic Costings

The Strategic Triangle (Moore, 2005) and US/Canadian Budget Research Design Office Case Studies

Public Value as Rhetoric: A Legislative Budget Office Research Paper 4 Approach

Identifying the boundaries (limitations) of the thesis solution

Research Aim (previous chapter) by examining the critique of “public value as

rhetoric”

Applying the prism of budgeting (LBOs) to the critique of public Research Focus value as rhetoric

Case study of Australian budget mechanisms: Charter of Budget

Research Design Honesty, Annual Budget and Budget Reply Speeches, and

Parliamentary Budget Office of Australia (PBOA)

A Parliamentary Budget Office in Fiji: Scope and Research Paper 5 Possibility

Identifying special roles for LBOs, here as a coordination Research Aim mechanism

The scope and possibility of an LBO in Fiji that would serve as a Research Focus coordination mechanism as well as a budget analyst

Case study of accountability architecture in Fiji, Constitution of Research Design Fiji, and International Budget Partnership’s Country Rankings

Research Paper 6 The Idea of Legislative Budgeting in Iraq

Identifying special roles for LBOs, here as an assistant for the Research Aim creation of a legislative oversight role in the budget

The possibility of legislative role in budget oversight in Iraq, and Research Focus how an LBO could support that role

Case study of the legislative budget role in Iraq in the 20th and Research Design 21st centuries

[1.4] RESEARCH QUESTION

It emerges from a review of the literature that an important question about IFIs remains unanswered: “to what degree do IFIs, based on the roles they are assigned, actually attain and provide the benefits claimed by their proponents?” This is a complex and multifaceted question, and one that has so far gone unanswered in each of the three literatures. To determine an answer to this research question requires a logical progression, beginning with

(1) a statement of the problem, then (2) an inquiry into what new literatures may help to explain the problem, (3) the articulation of a solution to the problem, (4) the identification of the boundary (limitations) to the solution, and finally (5 & 6) an examination of other solutions that might be possible in special circumstances. All of the elements within this logical progression are published in peer-reviewed journals.

FIGURE 2: THE LOGICAL PROGRESSION OF THE THESIS

Statement of Introducing new Articulating a Limitations of Special Solutions / Problem Literatures Solution Solution Additional Solutions • Presidentialisation • Politics Administration • Public Value in Politics • Public Value as Rhetoric • Coordination Thesis (Political Science) Dichotomy (Public (Public Administration) (Public Administration) Mechanism: Fiji Administration) (Governance) • Completely New Legislative Oversight: Iraq (Governance)

STATEMENT OF PROBLEM

[Chapter 2 – Presidentialisation Thesis] The first paper states the problem in the following manner: “there seems to be a difference between countries in terms of what roles their LBOs are allowed to play in the budget process.” It draws a comparison between the

Congressional Budget Office (CBO) of the United States and the Parliamentary Budget

Office of Canada (PBOC), and it draws attention to the immense resistance that the PBOC has faced compared to the CBO, particularly from a vindictive executive branch. A comparative case study is thus built around these two institutions, which delineates the differences between them and the relative successes they have achieved. This paper does not provide a solution to the problem of this thesis, however, as that is the remit of subsequent chapters. Instead, its purpose is to lay out a case study that is to be used in the following two chapters, that is grounded in the literature of political science. Why? Because this is the literature in which the LBO model originated, in comparing the budget power of the executive and the legislature. That very same context is recreated to understand the position of LBOs in the two countries and then lay the groundwork for further analysis. In addition, this chapter (paper) makes a contribution to the “Presidentialisation Thesis” itself, by presenting a noteworthy paradox. According to it, parliamentary systems are beginning to adopt features of presidential systems (such as the American one), including increasing powers, autonomy, initiative, and resources for the executive in parliamentary systems.

Using a budgeting context, the paper shows that, while a parliamentary system may become more presidential-like in terms of powers of the executive, it may also adopt features of presidential systems that check that very same power, by establishing oversight institutions that create a more separation of powers-like institutional power-balance. In this case, it is the Legislative Budget Office, which originated exclusively in a presidential system (US), that is now appearing in presidentialising parliamentary systems to check the budgetary

46 power of the executive. This paradox merits academic attention, and the paper was thus published in the journal Parliamentary Affairs (Vol 70, Issue 2).

INTRODUCING A NEW LITERATURE

[Chapter 3 – The Politics-Administration Dichotomy] Having stated the problem, one of discrepancies in the relative performance of LBOs across countries, and having constructed a comparative case study of the CBO and the PBOC, the third chapter introduces a new literature to analyze their disparities: public administration. This chapter demonstrates a position of compatibility between LBOs and the public administration literature. For LBOs, it suggests that public administration literature can inform the question of differences between LBOs by drawing on theories such as Public Value, which constitutes the lens applied in the ensuing two chapters. For public administration, it argues that LBOs are a highly suitable organization in the study of the “Politics-

Administration Dichotomy” (Roberts, 1995), which seeks to answer questions about the degree to which public managers can engage in the political sphere. The chapter shows that, since LBOs are an office of public managers (economists) engaging in a highly political enterprise (legislative budgeting), LBOs can be analyzed with a view to determining their success in balancing the notions of “efficiency” (economic expertise) and “democracy”

(informing citizens and their elected representatives about the complexities of the budget).

This chapter is a paper that was published in the International Journal of Public

Administration, and reviews three salient works on LBOs, which were left out of the literature review of this thesis as they receive extensive individual treatment in this chapter.

The three books are Unaccountable: Truth and Lies on Parliament Hill by Kevin Page

(2015), The Congressional Budget Office: Honest Numbers, Power, and Policymaking by

Philip Joyce (2011), and Restoring Public Debt Sustainability: The Role of Independent

Fiscal Institutions by George Kopits (2013). In situating LBOs within the public administration literature, this paper represents an innovation in both the analysis of LBOs as well as in examining the “Politics-Administration Dichotomy.” Furthermore, the chapter paves the way for a more rigorous treatment of LBOs through public administration perspectives in subsequent chapters, particularly in terms of balancing “efficiency” and

“democracy” and how different roles can fulfill these objectives.

ARTICULATING A SOLUTION [Chapter 4 – Public Value in Politics] Building on the public administration discussion of the previous chapter, a solution is articulated in Chapter 4 to the roles of LBOs using the “prism of budgeting” as applied to Public Value. Using the same Canada-US case study developed in Chapters 2 and 3, this paper uses public value frameworks such as the

Strategic Triangle (Moore 1995), to typologize two basic roles for LBOs. In essence, an LBO can serve in a normative-advisory role and in a mechanistic-costings role. The costings role is the basic role fulfilled by all LBOs, and entails the calculation of policies brought by politicians on their initiative, with a view to estimating the likely budget impact of the policy. This role involves little contention, but also has less (albeit still important) public value creation. By contrast, the advisory role is more proactive and draws on a ‘value- seeking imagination’ through the LBO’s own initiative to provide options to politicians on complex budgetary issues. In other words, the advisory role is more meaningful in terms of enhancing the legislative budget process than the costings role because it necessitates normative recommendation with budgetary sophistication and political non-partisanship.

This role involves much greater contention, but also has a larger public value contribution.

The case studies of the CBO and the PBOC contrast the two roles, where it is seen that the

PBOC is only allowed to play a costings role, even as it is capable of acting in an effective normative-advisory role, but is resisted (even brutalized) when it attempts to do so. By

48 contrast, the CBO plays both roles, and therefore makes a greater public value contribution.

The reasons for this divergence are carefully examined, and thus the new typologies of normative-advisory and mechanistic-costings are reinforced. As such, this paper was published in the International Journal of Public Administration because of the innovations that it brought both to (1) the questions of roles for LBOs (the core question of this thesis), as well as to (2) the question of “Public Value in Politics.” The notion of public value has gained much currency in the public administration literature over the past two decades, but there has always been a lingering criticism of the intrusion by public managers into politics, as a trade-off between “efficiency” and “democracy.” This paper effectively demonstrates that specific engagements by public managers, such as in LBOs, can enhance both (1) efficiency, by providing more accurate and analytically rigorous budgetary analysis; as well as (2) democracy, by informing citizens as well as their elected representatives in the legislature, about the impacts of budget choices in a more transparent and participatory fashion. This is a significant step in contextualizing one of public value theory’s most strident criticisms, because it posits that ‘public value in politics’ is not just possible, but desirable in the case of an LBO.

While this is sufficient to address the initial question of this dissertation, “to what degree do

LBOs, based on the roles they are assigned, actually attain and provide the benefits claimed by their proponents?” I nonetheless envisage a more ambitious proposition for this thesis by not simply articulating a solution, but also delineating the limitations (the boundary) of that solution, which is the subject of Chapter 5.

LIMITATIONS TO THE SOLUTION [Chapter 5 – Public Value as Rhetoric] This dissertation goes beyond the provision of a solution to actually investigating the limitations and the obstacles to achieving that

49 solution. Continuing from the previous chapter’s lens of public value theory, this chapter raises another criticism of public value aside from that of ‘public value in politics’. It looks at the strident accusation that public value is little more than a ‘rhetorical device’ used by public managers to advance their relative position (see Alford and O’Flynn, 2009). In the same way that the previous chapter addressed a criticism of public value using LBOs, this paper introduces a case study of a new LBO to examine the nature of ‘public value as rhetoric,’ by analyzing the Parliamentary Budget Office of Australia (PBOA), as well as the unique budgeting context of Australia as manifested by its (rhetoric-heavy) Charter of

Budget Honesty. It applies the strategic triangle (Moore 1995) to the PBOA and finds that the institution benefits on each account from favorable nodes of the triangle (recognition of its public value, legitimacy in its authorizing environment, and sufficient operational resources). However, the PBOA does not engage in the normative-advisory role typologized in the previous chapter, but rather deliberately relegates itself to a mechanistic-costings position. This is to say that the PBOA makes a deliberate choice to minimize political contention through a costings-only role, even as it would be more than capable of playing a normative-advisory role that further enhances its public value creation. Why is this so?

Several aspects of public value are considered in this regard, including the impact of

‘leadership’ and a ‘value-seeking imagination’, as well as the Australian budgeting

‘authorizing environment’ including the Charter of Budget Honesty and the mandate that it dictates for the PBO. This then raises questions about the rhetorical nature of the Charter of

Budget Honesty and ties it into the criticism of ‘public value as rhetoric.’ As a result, two important conclusions are drawn in this Chapter. First, that even as an institution may be capable of maximizing public value by playing both roles typologized in the previous

Chapter 4, there are factors that may limit it from doing so, which are examined in detail in the paper. This creates a boundary as to how far the solution of the previous chapter can go.

Second, it draws attention to a deep underlying reason why public value can function as a rhetorical device: because of the contradictory values held by the public. In this paper, the contradictory values examined are: on one hand, the value of greater services (more lavish expenditure) for the public; and on the other, the value of budgetary discipline. These two are contradictory values, because one must be satiated at the expense of the other.

Therefore, politicians, as the “final arbiters” of public value (Moore, 1995), must prioritize between these values, by diverting resources to one value, and rhetoric to the other. This is a significant contribution to the understanding of the criticism of public value as a rhetorical device, and the paper was therefore published in the International Journal of Public

Administration. The PBOA is thus used to demonstrate a limitation to the previously typologized roles. However, there is room to now examine special situations wherein LBOs can serve unique roles that arise from unusual circumstances in budgetary contexts, which is the purpose of the subsequent two chapters.

SPECIAL ROLES FOR LBOS [Chapter 6 – A Coordination Mechanism (Fiji)]

For the governance literature, Chapter 6 delves into how accountability institutions can serve a coordinating role with other institutions in addition to their own work, using a developing country context where there is a high nominal commitment to transparency and accountability (Constitution of Fiji, 2013). This coordination mechanism is premised on the recognition that (1) there is a budget transparency problem in developing countries

(including Fiji), (2) that many countries are voicing increased commitment to transparency and accountability, and (3) many countries have existing accountability institutions, but their work is not sufficiently coordinated or synchronized. In the budgeting sphere, an LBO can bring the requisite expertise to coordinate with other institutions, notably the

Parliamentary Accounts Committee (PAC) and the Auditor General (AG). This role

51 represents an innovation, beyond the traditional costings role of LBOs, and addresses a need in the governance literature for strengthening accountability. This paper was published in the Australasian Parliamentary Review (Vol 31, Issue 2).

[Chapter 7 – Creating Legislative Oversight from Scratch (Iraq)]

Chapter 7 contributes to the governance literature by examining how a situation where no legislative budget oversight role exists can quickly deploy accountability expertise (a PBO) to launch legislative participation in budget oversight from scratch, using Iraq as its case study. From a governance perspective, the paper brings additional value by examining a

Resource-Rich Developing County (RRDC) context, which is an area of high interest for academics and practitioners. The paper looks at the long history of the budget process in

Iraq, finding that legislative oversight was removed in the 20th century and how the country suffered – both during the Saddam regime and, sadly, under American occupation as well.

This raises two interesting problems in the implementation of accountability institutions in developing countries. First, it shows that there is a mismatch between the priority placed on budget reform in theory and praxis (Williamson 1989). Second, it shows a double-standard vis-à-vis accountability reform, because whereas external developed-country stakeholders advocate strong legislative oversight in the budget process for their own local contexts (e.g.

US Congressional Budget Office), they argue for non-transparent arrangements in developing countries, such as an ‘Economic Czar’ in Iraq. The paper shows how a legislative budgeting role can be quickly recreated in Iraq’s budget context so as to enhance accountability and divert its oil wealth towards the ‘fiscal liberation of her people’, and how an LBO can serve to foster such accountability in a relatively short time and in an efficient manner. This paper was published in the International Journal for Contemporary Iraqi

Studies (Vol 10, Issues 1-2).

NOTE ON FIJI AND IRAQ A further note is required on the selection of Fiji and Iraq as case studies for the roles of

LBOs beyond those typologized in Chapter 4. There is an ever-growing community of IFIs around the world (Kim, 2015), and many countries can be argued to have ‘unique budgeting contexts’, as I have claimed earlier. The question that is then pertinent is: where can a unique role can be served, or to put it differently, a unique purpose fulfilled, through the establishment of a Legislative Budget Office? In that sense, there are few countries that would provide as rich a context for analysis as Fiji and Iraq, because not only do they present unique exploratory cases in their own right, but that (1) the material for analysis, and (2) the subjacent budgetary history, are also noteworthy and interesting from the perspective of the governance literature (as discussed in Section: Literature Review).

In the case of Fiji, the budgetary context is enriched by a long history of budgetary documentation that paints a picture of efforts towards fostering accountability, but in an unsynchronized fashion, with institutions such as the Public Accounts Committee (PAC) and the Auditor General (AG) leading efforts towards better fiscal governance along separate paths (see Chapter 6). The argument that a Parliamentary Budget Office (PBO) would be uniquely suited towards coordination of fiscal accountability between such extant institutions, while possible in some other developing countries (Pakistan and Bangladesh might have been examples), could not be as richly developed in the budgetary context as can be done with Fiji, as Chapter 6 of this thesis shall proceed to examine. In addition, the relevant documentation in other similar countries may also not have been as efficiently compiled as in Fiji, which is in part due to the important reform efforts that have been taken place over the past decade (which cannot be said for comparable fiscal examples such as

Pakistan and Bangladesh), including through the new national constitution promulgated in

2014, which seats the themes of ‘accountability’ and ‘transparency’ at the very heart of the

53 document. As such, Chapter 6 of this thesis demonstrates why and how Fiji serves as an especially à propos case study for the development of a role for LBOs as coordination mechanisms in a country’s fiscal accountability architecture.

In the case of Iraq, it can be similarly argued that, while there are sadly many countries that have suffered invasions or warfare and the corresponding near-total destruction of their fiscal institutions and processes (Bosnia and Herzegovina, Kosovo, and Syria are examples in living memory), Iraq serves as an especially à propos study for the aforementioned two reasons: better documentary materials for analysis; and a rich budgetary history. On this point, Savage (2013, p. 71-74) notes that American treasury officials sent to reconstruct

Iraq’s post-invasion budget process who had even previously served in warzones such as

Bosnia and Kosovo expressed bewilderment at the sheer magnitude of destruction in Iraq’s fiscal system. Iraq’s budgetary history is characterized by very peculiar extremes, including the Saddam regime, the Ottoman dynasty, British Colonial rule, the Hashemite kingdom, and American military occupation. This presents an (unfortunately) powerful budgetary backdrop of extremes within which the presence of legislative budgeting, and therefore for a legislative budget office, can be critically examined in a meaningful way. In addition, the documentation on Iraq’s post-invasion budget process has been rigorously kept by

American authorities (although important gaps are identified in the analysis of Chapter 7), and more importantly, independent audits (see Special Inspector-General for Iraqi

Reconstruction, SIGIR, 2005) have been conducted which pointed to the budgetary anomalies, inconsistencies, and problems that allow for a rich analysis and critical appraisal of the context in which an IFI can be (but has not been) instituted, despite the presence of just such an institution in the United States’ domestic context (the Congressional Budget

Office, CBO). Chapter 7 draws upon these factors in the Iraqi context to examine how a budget institution such as an LBO can serve an ab initio fiscal role, invigorating the budget

54 process in a post-conflict situation with a legislative oversight role that is bolstered by an independent legislative fiscal institution. It thereby shows why and how Iraq is uniquely à propos to developing a discussion around jumpstarting ab initio fiscal accountability in a manner that other countries could not.

[1.5] RESEARCH CONTRIBUTION

Each of the papers in this thesis makes a contribution to a specific literature, whether it be within political science, public administration, or governance. I note at this point that, although none of the papers are ostensibly tailored towards the (macro)economic literature, they are all part of an endeavor to bring more interdisciplinary approaches towards solving an inherently macroeconomic problem: the creation of effective Independent Fiscal

Institutions.

For the political science literature, Chapter 2 addresses the presidentialisation thesis and advances it by presenting the paradox that presidentialising parliamentary systems may not just see greater president-like powers ascribed to the executive, but that institutions which challenge executive power in presidential systems, such as an LBO, can also be established to simultaneously mitigate executive power as the political system “presidentializes.”

For public administration, there are three chapters that make significant and original contributions to the literature. Chapter 3 introduces the LBO as a model for examining one of the core questions in public administration: the “Politics-Administration Dichotomy,” because of the manner in which these institutions reconcile their public manager aspect with the political budgeting realm. Chapter 4 introduces the LBO to public value theory and typologizes two types of roles for LBOs, therein demonstrating the inherent trade-offs in public value theory as it is manifested in the political realm, which is one of the most intensely disputed portions of the theory (Rhodes and Wanna, 2007), while also reconciling

55 the ostensible public value trade-off between “efficiency” and “democracy”. Chapter 5 addresses a different criticism within public administration, that of “public value as a rhetorical device” (Alford and O’Flynn, 2009). The paper’s findings contribute to the public value literature by showing that (1) public value’s rhetoric can be used by politicians as well as public managers, and (2) that the rhetorical aspect is a function of contradictory values held by the public (greater budget expenditure on services vs. budget sustainability), and that politicians must prioritize between these contradicting values by diverting either resources or rhetoric.

For the governance literature, Chapter 6 delves into how accountability institutions can serve a coordinating role with other institutions in addition to their own work, using a developing country context where there is a high nominal commitment to transparency and accountability (Constitution of Fiji, 2013). Chapter 7 contributes to the governance literature by examining how a situation where no legislative budget oversight role has ever existed can quickly deploy accountability expertise (a PBO) to launch legislative participation in budget oversight from scratch (an ab initio fiscal body), using Iraq as its case study.

In sum, each paper addresses an important body of work and pushes it forward by introducing perspectives from the experience of Legislative Budget Offices. From the opposite viewpoint, each of these literatures is used to inform the manner in which the roles of LBOs can be typologized, both in “normal” situations (normative-advisory and mechanistic-costings roles), as well as in exceptional situations (introducing legislative budget oversight, and acting as a coordination mechanism).

CONSIDERING THE CONTRIBUTIONS

Denoting these roles is an innovation in budgetary thinking itself; and as I have noted, because there is no explicit consideration of the roles of LBOs, neither in practitioner or theoretical literature, there is much ambiguity in the design and implementation of LBOs, which has led to severe budgetary conflicts (Chohan 2013; 2013a; 2013b). Delineating the roles of an LBO thus constitutes both a comprehensive dissertation, as well as a significant and original contribution to the global understanding of what Legislative Budget Offices are, and what they should be.

The most significant contributions of the thesis can arguably be placed in two categories: (1) theoretical aspects of public administration, for which the exploration of LBOs provides a rich lens to advance public value theory and the politics-administration dichotomy; and (2) practitioner elements in the roles of LBOs, for which the case studies developed on the

United States, Canada, Australia, Fiji, and Iraq serve as informative guides in the consideration of LBO design and in the assignment of LBO roles.

The practitioner interest in this work should arise from the contributions to the assignment of roles, particularly in Chapter 4 of this thesis. Along those lines, practitioner-experts in

IFIs can typologize existing institutions in terms of whether they are currently fulfilling only a mechanistic-costing role or a normative-advisory role, and whether this is helping to serve accountability and transparency aspects of the budget process. They may also examine two nuances behind this typology: (1) whether any particularly IFI has the capacity to fulfill a normative-advisory role, and (2) if it is able to, but still is not doing so, then what are the factors holding the IFI back from fulfilling a normative-advisory role. Chapter 5 is very helpful in this regard, as it identifies an IFI that can, but does not, fulfill a normative- advisory role and relegates itself to a mechanistic-costing role.

Beyond the extant institutions, given the proliferation of IFIs in the present day, both at the national and subnational levels, relevant practitioners should remain attuned to the frameworks presented in Chapters 4 and 5 in assessing whether new and future IFIs are being designed to fulfill both roles (or simply one). Each budgeting context is unique, and the generalizability of IFIs can only go so far, but this thesis provides at least a useful set of discussions and frameworks (particularly centered around public value theory) to inform the work of practitioners. In future instances, situations may also arise that behoove stronger fiscal accountability coordination among various institutions through an IFI (see

Chapter 6), or unfortunately, the fiscal reconstruction process following the destruction of a society and its budgetary architecture (see Chapter 7). Those situations may be informed by the research presented in the final two case studies.

In the category of academic interest, the theoretical advancement of the public administration literature is notable in three debates: the politics-administration dichotomy

(Chapter 3), ‘public value in politics’ (Chapter 4), and ‘public value as rhetoric’ (Chapter 5).

The politics-administration dichotomy as it was initially developed (see Roberts, 1995), has considered how much involvement by public managers is warranted in the political sphere.

It has implied that there is a subjacent adversity between the political realm and the administrative realm, which perhaps may be irreconcilable (see review of literature in

Chapter 3). By positioning the Legislative Budget Office between both realms, Chapter 3 argues that the sense of dichotomy presented in the literature is reconcilable, and this is made possible because of the nature of LBOs as situated on the boundary between ‘politics’ and ‘administration’, for while they may be seen prima facie as independent fiscal experts assisting in administration, the work of LBOs is located squarely in the budget process, which is ineluctably political. LBOs bestride both domains, and this allows for a revisitation of this old dichotomy as posited in the public administration literature (see Chapter 3).

‘Public value in politics’ examines a criticism of public value theory in public administration as inherently incompatible with the democracy, since the active interference by public managers constitutes an inherently anti-democratic dynamic (Rhodes and Wanna, 2007, p.

414), and the criticism implies that there is a forced trade-off in societies between greater efficiency (led by expert public managers) and greater democracy (led by democratically- elected politicians). In addition to providing the solutions for this thesis in the form of two typologized roles, Chapter 4 makes a contribution when it discusses how LBOs negate the forced sense of a trade-off, because LBOs enhance the level of efficiency and democracy simultaneously. They improve efficiency in terms of their expert analysis of the budget in an independent manner, such as when greater budgetary accuracy is achieved in a technical sense; but they also improve democracy in the sense that their independent analysis, disseminated through open-publishing for the wider public in addition to parliamentarians, helps to mobilize the public towards holding politicians to account, thereby strengthening democracy. This shows that ‘public value in politics’ is not inherently anti-democratic, and that careful interventions by public managers, such as those by LBOs, will not cause automatic trade-offs between efficiency and democracy, which advances the public value literature.

‘Public value as rhetoric’ examines the criticism of public value theory that it is essentially just a rhetorical ploy by public managers to justify greater power, larger budgets, and wider mandates for interventions in the political sphere (Crabtree, 2004; Oakley et al., 2006). The contribution of Chapter 5 is that it builds a great deal of nuance around the use of rhetoric, and in two important ways. First, it uses the example of the Australian budget process to show that politicians are equally guilty of deploying rhetoric, in this instance through the use of strategic terms such as ‘sustainability’ and ‘responsibility’ in the budget process. As such, the condemnation of public managers for using rhetoric is shown to be too one-sided,

59 and in the process of public value creation, while the rhetorical aspect may indeed be true, it is an exercise in which both the public manager and the politician engage, which contributes to rebalancing the literature. Second, the chapter examines why rhetoric may be an inextricable part of public value creation, finding that it is but a reflection of the contradictory values held by citizens, which forces public mangers and politicians to choose between which values will be met with resources and which will be met by rhetoric. The question of why rhetoric remains an aspect of public value theory advances the public administration literature in seeking the underlying causes for the criticisms of an important theory.

With these academic and practitioner considerations now highlighted, the thesis hereby proceeds to address the aforementioned research question through a series of independent but logically-connected chapters, involving case studies on five countries, and synthesizing three literatures while introducing a fourth.

CHAPTER 2 : THE PRESIDENTIALISATION THESIS

AND PARLIAMENTARY BUDGET OFFICES

Discipline: Political Science

Citation: Chohan, U.W., and Jacobs, K. (2017). The Presidentialisation Thesis and

Parliamentary Budget Offices. Parliamentary Affairs. 70(2), 361-376.

DOI: https://doi.org/10.1093/pa/gsw026

Contribution to Thesis

States the problem of divergent performance among LBOs, and builds a case study of

Canada’s Parliamentary Budget Office and the American Congressional Budget Office that is applied in subsequent chapters.

Contribution to the Literature

Presents a paradox in presidentialisation: that institutions of presidential systems which check the power of the executive can be introduced into Parliamentary Systems as counterweights to the executive’s power in presidentialising parliamentary systems.

ABSTRACT

This paper examines the presidentialisation thesis through the lens of the Parliamentary

Budget Office (PBO). It considers the origins of the PBO in the American presidential system, where it has served to challenge the fiscal power of the president, and finds that

PBOs perform an analogous function in parliamentary settings. The paper then explores the PBO’s logic in parliamentary systems that exhibit evidence of presidentialisation, specifically examining the case of Canada. It finds that such budget offices mitigate the budgetary power of presidents, as well as prime ministers who are becoming more like presidents. They thereby offer a counterweight to the assertive fiscal tendencies of executives in presidentialising parliamentary systems.

[2.1] INTRODUCTION

In this paper, we use the Parliamentary Budget Office (PBO) as both a lens and a test of the presidentialisation thesis. The Parliamentary Budget Office is a non-partisan office of parliament that provides parliamentarians with timely and rigorous economic analysis of important matters pertaining to the budget. This paper hypothesizes that executive- legislative budgetary relations are recalibrated with the help of the PBO institution in presidentialising parliamentary regimes through its nonpartisan analytical and informational role. If evidence of this hypothesis is found, the PBO should serve to cast a new light on the presidentialisation debate, as the PBO would stand as a poignant and noteworthy example of an institution that has originated in presidential systems, but which counterbalances and countervails the very tendencies of assertive presidential executives.

Whereas the themes of PBOs and presidentialisation are both keenly discussed, what has not yet been examined is the interesting relationship between the two. For the link to be

63 drawn between the two seemingly disparate issues, it must be realized that the origin of the

PBO is in the American congressional-presidential system. Any parliamentary system that is suspected of becoming too presidentialised should be inspected to see if the necessary antidotes to extreme executive power are also being concurrently administered.

We theorize that, in the case of the major Westminster democracies that have been studied for evidence of presidentialisation, this should be the case. Today, Canada is one of several

Westminster countries with a Parliamentary Budget Office (PBO) to assist parliament in the analysis of the budget and thus, we theorize, to possibly circumscribe the budgetary dominance of a presidentialising prime minister. In the case of Canada, we hypothesize that that the PBO has, in spite of meagre resources and nascent establishment (Chohan 2013), worked towards arming the parliament with rigorous nonpartisan analysis to challenge headstrong executive agendas, in same way that the Congressional Budget Office has worked towards this objective in the American presidential context. Towards this end, this paper develops a case-study oriented understanding of the evolution of the PBO in Canada.

[2.2] PRESIDENTIALISATION REVISITED

The presidentialisation thesis constitutes a long-running debate in numerous parliamentary democracies, including Westminster systems such as Australia, Canada and the United Kingdom. The thesis draws upon a long and rich tradition of comparative political study between the parliamentary and presidential systems of government. In other words, presidentialisation is a somewhat new conversation about an old topic: the power of the Prime Minister; which as Rhodes (2009: 126) noted, is the ‘defining debate of the

Westminster approach’, adding that it is ‘difficult to overstate the scale’ of the broader debate about prime ministerial power in the academic literature. The main assertion by presidentialisation’s proponents is that prime ministers in some parliamentary democracies

64 are, for a variety of reasons, gravitating towards a resemblance to presidential leaders such as in the United States (Poguntke and Webb 2005: 3).

The most widely applied framework in the presidentialisation debate is that of Poguntke and Webb (2005; 2012). They identified the key markers of presidentialisation as power resources, autonomy, and personalization; while pointing out the causal factors driving the process internationally, including: internationalization of politics; growth of the state; mass communications; and so forth. They also highlight the ‘three faces’ of presidentialisation: the executive face, the party face, and electoral face; arguing that the phenomenon occurs at differing levels of the political system (2005: 5).

Poguntke and Webb’s (2005) systematic approach lends itself naturally to case studies. Bakvis and Herman (2005: 200-19) examined the case of Canada, and find that there is strong evidence of presidentialisation at the executive level, in large part because the PM and his office enjoy a degree of power that even many presidents would envy, especially since the PM is not beholden to a separation of powers arrangement characteristic of presidential systems.

There are various components to this assertion (see Bakvis and Wolinetz 2005 for a broader discussion), and we enumerate a few. First, the reporting structure that exists between the ‘core executive’ of the Prime Minister and close advisers, with the lower structures including deputy ministers, enables the centre to exercise ‘considerable influence over line departments and their ministers’. Second, there is an extremely high co- integration of political decision-making between the Prime Minister’s Office (PMO) and the purportedly independent Privy Council’s Office (PCO). Third, Prime Ministers have supreme discretion in who joins and who leaves cabinet. Fourth, the PMO has a great deal of discretion in the recruitment and selection processes that allow for the insertion of

65 political (‘exempt’) staff in the ministries. Fifth, PMO staff are in ‘constant communication’ with ministries’ staff about the political management of different files. These are but some of the factors that advance the central and strong position of the PM and his office, and make the Canadian executive a particularly strong agent compared to other parliamentary systems. Nonetheless, this power is mitigated somewhat by strong federating units compared to the center (Bakvis and Wolinetz 2005: 213). We believe that the aforementioned discussion about Canadian presidentialisation raises the question about the

Canadian PM’s power in the budgetary sphere in terms of whether a PBO would be able hold its own against such a powerful political entity.

Poguntke and Webb’s (2005; 2012) work should be seen as a core piece of a broader presidentialisation debate that has been tackled by several important authors. Rhodes and

Wanna (2009: 126) highlighted the position of the presidentialisation debate within in the broader body of work on prime ministerial power, particularly in the Australian context; while Strangio (2013: 264-87) similarly considered the level of prime ministerial power in the Australian setting. Helms (2005) examined presidentialisation through a three-way comparison between the United States, the United Kingdom, and Germany, drawing on

German-language work by Poguntke (2000), which was one of the earliest references to the presidentialisation notion. Mughan (2000) examined presidentialisation in the United

Kingdom through the lens of the media’s impact in elections, while Bean and Mughan

(1989: 1165–79) conducted a comparative leadership exercise between Britain and Australia which touched upon features (e.g. authority of the Prime Minister) that would be considered essential to presidentialisation (Rhodes 2009: 169).

It can thus be seen that presidentialisation covers a fairly wide range of subtopics that define the relationship of the executive to various stakeholders, and this breadth is

66 attributable to an ambiguity in the interpretation of what the term ‘presidentialisation’ really means, which Helms describes as ‘much definitional confusion’ (2005: 253).

In broad terms, presidentialisation implies a transition from collective (parliamentary) to personalized government; one that results in greater autonomy for executives from legislatures; and one that consists of a shift from political party as the core entity in electoral politics towards a single individual executive and his leadership, with correspondingly greater resources for leaders (Mughan 2000: 1-22; Poguntke and Webb 2005: 3-23, 2012;

Helms 2005: 253). In other words, the logic of presidential systems differs from that of parliamentary setups in that they offer greater ‘executive power resources’ to the leader, allowing them to govern with lesser interference, more autonomy, and in a more personalized manner.

The advocates of presidentialisation do not assert any structural changes in the parliamentary format, but rather point to a set of functional changes in parliamentary mores. They rest their thesis on three underlying principles: a centralization principle, in the coordination of government activity; a pluralisation principle, in that there is an expansion in the number of sources of advice to the PM; and a personalization principle; wherein the face of the leader becomes the ‘embodiment’ of the party (Rhodes 2009: 126;

Strangio 2013: 10-12). To corroborate this triad, proponents point to certain tendencies of recent prime ministers in commonwealth Westminster parliaments, including: (a) greater autonomy for the PM as a political force, and the formation of a tightly knit ‘inner-circle’ close to him; (b) a monopolization of administrative, personnel, and financial resources by the PM and his office; and of greatest import to this paper, (c) a change in the relationship and the balance-of-power between the executive and the parliament (Helms 2005: 253;

Poguntke and Webb 2005: 3-23; Rhodes 2009: 126; Strangio 2013: 10-12).

As the ‘executive face’ within Poguntke and Webb’s (2005: 5-8) framework asserts, presidentialisation leads to a shift in power from the political parties in the legislature towards the executive, to the ‘recourse to a personal mandate’ by the leader, as well as to an increasing independence from direct interference in the executive’s rule. Furthermore, whereas parliamentary government means ‘governing through parties, presidentialised government implies governing past parties’ (Poguntke and Webb 2005: 9). It is important to note that, in such circumstances, executives can adorn the garb of a popular mandate to

‘have their way’ without exerting direct control or leadership over parties, and may even try to circumvent parliament altogether (Helms 2005: 5-6).

In light of the importance of PBOs to the stability of democratic equilibrium between legislatures and executives, this paper will examine two different budget offices through the lens of presidentialisation. Beginning briefly with the United States to establish a benchmark of formally presidential systems, it will then explore the subsequent evolution of the budget office in Canada, a country clearly delineated in the literature on presidentialisation (see Bakvis and Wolinetz 2005). It should also be noted that the

American CBO had served as a mentor to the PBO during its early days, with PBO officials consulting with CBO staff on issues of budget analysis (see Chohan 2013 for a discussion of budget office mentorships).

We theorize that the PBO’s assistance in the recalibration of executive-legislative power would be met with resistance and reprisals by the executive, and that they would not let the realignment of budgetary power go through unchallenged. This should be particularly true in Canada, where the PM enjoys powers that even some presidents would envy (Bakvis and

Wolinetz 2005: 199). We theorize that ‘executive face’ presidentialisation in Canada would

68 make the job of an independent parliamentary budget office much more difficult and subject to a backlash from the executive.

To be clear, legislative budget offices do not possess any ‘hard’ tools such as vetoes, proposal powers, or amendment powers. Their ability to influence the budget and challenge the executive is ‘soft’ in that it stems from their ability to conduct robust analysis, but nothing more. However, the analysis that they produce is available to legislators who do wield ‘hard’ political powers in the budget process. It is also available to the media and the public that can exert pressure on the executive branch in the budget process through indirect means.

The budget office is thus a source of nonpartisan information for stakeholders that do possess budgetary power, and its influence is therefore indirect. This is an important clarification in the parliamentary context because a PBO’s ‘power’ to ‘challenge’ the executive branch in budgeting is in fact premised on open and transparent publishing of budgetary documents for use by legislators in the process of budgetary oversight, as well as for use by the public to engage in a more participatory democracy. Therefore, whereas a budget office’s influence in the fiscal process is not direct, it is nonetheless, as we examine, quite potent.

[2.3] ONE: THE AMERICAN CBO

In order to proceed towards an analysis of presidentialisation in parliamentary democracies from a budgetary perspective, it is first necessary to examine the budgetary context in the

United States, the presidential reference point for gauging presidentialisation in parliamentary democracies.

It is not coincidental that the first national legislative budget office was created in the presidential milieu of the United States (1974). The American government has grappled with the notion of an all-powerful executive for a very long time, and the inherent interplay

69 between Congress and the White House has been a core aspect of the doctrine of the

Separation of Powers (Haggard and McCubbins 2001: 4-6; Poguntke and Webb 2012: 80;

Rivlin 2013: 22). For more than two hundred years, the nature of American federal budgeting has been described as an antagonistic and zero-sum ‘contest’ between the executive and legislative branches where their weapons have been the rules and procedures of budget, and where each has sought the imposition of its own budget priorities (Schick

2000: 8). For the more recent period of 1921-74, which represents the era between the promulgation of the pro-executive Budget and Accounting Act 1921 and the pro-legislature establishment of the Congressional Budget Office (1974), the budget process has been described as subject to clear and unequivocal ‘presidential dominance’ (Schick 2000: 14;

Joyce 2011: 15). Since the establishment of the CBO in 1974, the budget office has successively challenged the administrations of presidents Ford, Carter, Reagan, Clinton,

Bush, and Obama (Joyce 2011; Rivlin 2013: 20-33).

During the Ford administration, CBO Director Rivlin challenged the economic recovery policies of the executive by observing that, whereas the budget committees were proposing expansionary policy, the executive’s contractionary recommendations would likely slow economic recovery (Joyce 2011: 54; Rivlin 2013: 26). During the Carter administration, the

CBO regularly disagreed with the executive branch on budget estimates, and went on to challenge the financial projections underlying the major Carter energy program proposal. In challenging both Ford and Carter, the CBO evidenced its nonpartisan character, by putting equal spotlight on both Republican and Democrat executives (Joyce 2011: 55-56; Rivlin

2013: 26; Steurle and Rennane 2013: 105).

During the Reagan administration the CBO challenged the president’s deficit-reduction plan for its politicized budget numbers. Reagan’s riposte was that the CBO produced ‘phony

70 numbers’, and he called for the CBO director’s removal (Joyce 2011: 57). However, both parties in Congress supported the CBO’s work, and in fact, the CBO provided cover for

Republican members of Congress who would otherwise not have been able to challenge a president from their own party (Joyce 2011: 57).

During the Clinton administration, the CBO played a crucial role in the Clinton health care reform effort. The growing clout of the CBO meant that planners within the administration were mindful of deliberately designing portions of the plan for deficit-neutrality (Joyce

2011:160). Both Congress and the President put ‘intense’ and ‘abusive’ pressure on the CBO during its healthcare analysis (Johnson and Broder 1996: 283). However, the CBO did not budge in the face of such political belligerence, and produced its independent report on the subject. In the end, the Clinton healthcare package was defeated, in spite of the executive branch’s political will to force the proposal through. The impact of the CBO in the ultimate downfall of the plan is disputed, but at a minimum, the CBO added a layer of critical rigor to the debate through its analysis (Rivlin 2013: 23; Steurle and Rennane 2013: 106).

When the Obama administration revisited healthcare reform, it was successful in large part because it learned from the mistakes of the Clinton administration. The Obama administration cooperated with Congress in terms of providing inputs into congressional legislation, and did not dig in its heels on any particular iteration of the proposal (Joyce

2011: 175). The executive branch also engaged in cooperation with the CBO itself, as when

Director Elmendorf went with other healthcare experts to brief President Obama on options for healthcare reform at the Oval Office (Joyce 2011: 189). The executive branch avoided any disputes over the accuracy of the CBO as opposed to their own estimates; they simply went with the CBO’s conclusions (Joyce 2011: 201).

Beyond the aforementioned events in the institution’s history, the CBO also had latent and subtler impacts on the executive branch. First, it helped to keep the Office of Management and Budget (OMB, the executive budget wing), “more honest” – which is a point noted both by budgeting scholars as well as officials in the OMB (Joyce 2011: 207), and the key reasons for this was that the OMB would use the CBO as a shield against pressure to produce politicized budget numbers, by telling politicians that the OMB could not diverge significantly from the CBO without damaging their own credibility. Second, the CBO assumed the cost estimating and scorekeeping responsibilities in the budget process, which before the office’s establishment in 1974, was the preserve of the executive branch through the OMB (Joyce 2011: 65).

In observing the various aforementioned episodes, it becomes clear that the CBO represents an institutional innovation within the presidential framework that serves as a counterbalance to the strong executive budget powers inherent in that system. That is why, having ascertained the importance of the CBO in presenting a congressional budgetary counterbalance to the executive, it is a logical next step to gauge the effectiveness of the independent budget offices which have been founded in Westminster systems, particularly the ones which have been scrutinized for evidence of presidentialisation. This will help assess whether those institutions have challenged the budgetary dominance of prime ministers who are assuming a more presidential garb.

[2.4] TWO: THE PBO OF CANADA

Canada provides an ideal test subject for the role of the budget office in the presidentialisation debate, a fact dually attributable to the resilience of its PBO, as well as its relevance to the presidentialisation thesis. As mentioned earlier, within the presidentialisation debate, Canada stands out due to the influence and power that the Prime

Minister and his office wield in the political system. This is due to factors such as the co- integration between the Prime Minister’s Office and Privy Council Office, the reporting structure of ministers and advisors, the Prime Ministerial discretion in who joins and who leaves cabinet, the PMO discretion in recruiting and inserting ‘politically exempt staff’, and the PMO management of political files through ‘constant communication’ with ministries’ staff, among other factors.

As the Canadian Prime Minister is both autonomous from and yet in control of the legislature, he is in fact far more powerful than the American president, who while being formally accountable to the electorate instead of Congress, does not exert control over the legislature and is instead subject to various checks from it (Bakvis and Wolinetz 2005: 199).

Conversely, MPs are more restricted in their power and influence in the Canadian system.

Prime Ministers are not beholden to many stakeholders in their parties, and the leadership selection process, fragmented opposition, and strict party discipline help to bolster their dominance over the cabinet and the parliament (Bakvis and Wolinetz 2005: 217). This is moderated somewhat by the unique nature of the Canadian federation, wherein provinces provide a bulwark against total prime ministerial domination by maintaining a constant and concentrated pressure on the federal center (Bakvis and Wolinetz 2005: 199).

Of the three faces of presidentialisation posited by Poguntke and Webb (2005), the most relevant to the situation in Canada is the ‘executive face’, where the executive is strong due to the PM’s pervasive control of the cabinet and the parliament; followed by the ‘party face’; while the ‘electoral face’ has less relevance (Bakvis and Wolinetz 2005: 207-09). In the legislature, Bakvis and Wolinetz (2005: 217) asserted that, whereas Canadian ministers know that they are formally responsible to the House of Commons, they are also aware that they are beholden to the PM and that their reporting relationship is with him.

Given the far greater power that the PM enjoys under the Canadian system, it is conceivable that a Parliamentary Budget Office in Canada would face stiff and perhaps explicit forms of resistance. If the PBO would act as a counterweight to the budgetary power of the PM, it would mitigate the presidentialising tendencies of the assertive executive, for which it might face adversity and hostility. This is particularly true because legislative budget offices, as mentioned earlier, do not possess any ‘hard’ powers of their own such as vetoes, proposal powers, or amendment powers. Rather, their power arises from their ‘soft’ ability to influence the budget discourse by providing impartial and nonpartisan analysis on budget matters to an audience that does wield ‘hard’ power; above all parliamentarians, but also the media and the public more broadly. The following section examines the evolution of the

PBO in the presidentialised milieu of Canada.

[2.5] AGAINST ALL ODDS: PBO UNDER A STRONGLY PRESIDENTIALISED PM

The Conservative government of PM Stephen Harper came to power in 2006 with a promise to clean up government and bring ‘truth in budgeting’ (Jeffrey 2010). The PBO came as a part of the new Federal Accountability Act 2006 that was passed to address this trust deficit. According to the act, the PBO would be an ‘independent oversight office’ that would provide Parliament with objective analysis about government estimates, the state of the nation's finances, and trends in the national economy. It was in part intended to be like the

Congressional Budget of Office of the United States (Federal Accountability Act 2006; Page and Yalkin 2013). This could have been interpreted (Chohan 2013; Page and Yalkin 2013) as creating an independent Officer of Parliament, with a similar status to other officers such as the Auditor General (est. 1868), the Chief Electoral Officer (1920), the Official Languages

Commissioner (1970), or the Commissioner of Public Sector Integrity (2007). In their status as Officers of Parliament, these entities are functionally linked to Parliament but are not

74 under its dictate. Their relationship is one of close association without submission. They carry out work for Parliament and are ‘responsible’ to it, but exercise independence from the government of the day.

However, the Parliamentary Budget Office was not fashioned along the lines of an Officer of

Parliament, which meant that although the Federal Accountability Act ostensibly paid homage to the notion of ‘independent oversight’, it did not create a truly ‘independent’ budget office. There are several ways in which the PBO was not allowed to represent a properly independent oversight institution (see Page and Yalkin 2013 for fuller legal analysis). First, in order for a legislative budget office to be truly independent, it would need to be a separate office of Parliament not beholden to any ancillary institution, such the

Library of Parliament, for permission to operate or for its budget and resources. Instead, the

PBO was cocooned within, and made subservient to, the Library of Parliament. By tying the resources of the PBO to the discretion of the Library, a significant measure of independence was lost. Second, the PBO would need to be protected from the risk of arbitrary termination by the executive, but the Canadian PBO could be terminated by the executive without cause

(Page and Yalkin 2013: 168). Third, an effectively independent oversight office would need to have clearly delineated reporting relationships, but the PBO’s exact reporting relationship was not clarified. Fourth, in order to exercise independence, the PBO would have needed access to requisite budget and non-budget information, but the PBO was restricted access to certain types of information under the Access to Information Act 1985 (Jeffrey 2010: 38;

Lee 2013: 24).

The mandate of the PBO was also saddled with ambiguities, for example in the meaning of term ‘independent’ with respect to the PBO’s authority. For the parliamentarians, there was an almost unanimous understanding that the PBO would adopt an open-publishing

75 approach to its work that would inform all parties, including the public, of its findings and analyses (Lee 2013: 24). However, the executive would soon come to vehemently disagree with this approach when the PBO would undertake its study of the cost of Canada’s involvement in the Afghanistan War. The PBO found that the government’s figure of $8 billion grossly underestimated the cost to the taxpayer, which it found to be closer to $18.1 billion for the same period (2008-11), or $1,500 higher per Canadian household (Lee 2013:

24). The media and the public were infuriated by the magnitude of the costs, and the government was livid that this report was published so close to the election period (Chohan

2013: 18; Lee 2013: 24). In the presidentialisation context, it can be seen that Mughan’s

(2000: 23-28) work on the impact of presidentialisation on the media’s relationship with election cycles was being echoed in this Canadian incident. The presidentialising character of Canada’s executive branch meant that it expected public servants such as the PBO to meekly withdraw from politically charged issues close to the election period (Lee 2013: 24).

A second confrontation took place in November, 2008 when the PBO released the Fiscal and Economic Assessment. Whereas the Department of Finance was proclaiming a federal budget surplus estimate for 2009-10, the PBO’s analysis found that the government would instead produce a deficit of $3.9 billion (Lee 2013: 24), and the PBO’s estimate was far more accurate than that of the Department of Finance. The executive took a harsh measure of reprisal against the PBO at this juncture in the form of imposing restrictions on its budget

– a move harsher than anything the American CBO had ever undergone. Instead of the earlier proposed $2.7 million that the PBO had been promised, it would be getting a paltry

$1.8 million sum; an amount visibly insufficient for an institution already short on resources, but charged with the analysis of $250 billion in appropriations (Chohan 2013: 17-

18; Lee 2013: 24). This withholding of funds was emblematic of the budgetary dominance that the Canadian executive branch, already considered a very strong case of

76 presidentialisation (Bakvis and Wolinetz 2005), would have expected to exert in the fiscal arena. Furthermore, the PBO was also put under a ‘review’ which ruled that it should

‘respect’ the Federal Accountability Act and be mindful of its place within the Library of

Parliament, while linking its future funding to approval from the Library (Brooke 2010: 40-

41; Lee 2013: 24-25).

In July, 2009 it handed over its five-year forecast of the Canadian economy, the Economic and Fiscal Update 2009 to the Finance Committee of the House (PBOC [Parliamentary

Budget Office of Canada] 2009). It found that there was a structural deficit emerging in the

Canadian economy that would go beyond the economic cycle, and create a cumulative series of budget deficits worth more than $150 billion over the next five years (PBOC 2009: 14).

This document was intended for the Finance Committee, with the understanding that it would later be shared publicly. However, the liberal opposition leader leaked it to the press

(Lee 2013: 25). The media drew the public focus onto the report, as it had done with the

Afghanistan War report. In the presidentialisation context, it is important to note the connection that the media has with the image of government (Mughan 2000: 23-28;

Poguntke and Webb 2005: 15), which in this case is the negative portrayal of government in light of the PBO’s robust analytical work. As Reagan had called the CBO a maker of ‘phony numbers’, so too did the Canadian PM label the five-year forecast as ‘dumb’ (Lee 2013: 25).

However, public opinion, the media, and academia expressed strong support for the PBO’s institutional continuity (Brooke 2010: 44; Chohan 2013: 20).

The PBO released an analysis of the Truth in Sentencing Act 2010, finding that the government’s claim of being ‘tough on crime’ through changed sentencing laws and correctional facilities would cost $9.5 billion until 2016, instead of the mere $2 billion that the government was claiming (Lee 2013: 25).

In 2010, the PBO’s analysis found that a major military project of the government, the controversial F-35 Jet procurement plan, would cost $30 billion, or half a billion dollars per jet, which was twice what the government had stated (Chohan 2013: 17-18). The F-35 figures produced by the PBO were ultimately vindicated by their accuracy in subsequent months, even though they appeared to be a pyrrhic victory at the time, given some increasingly vocal expressions of hostility by the executive branch towards the institution (Lee 2013: 25-26;

Chohan 2013: 18).

Such reprisals continued during the remainder of the tenure of Mr. Kevin Page as head of the PBO. During the first five years of the institution, Mr. Page, a career civil servant with an excellent public service reputation, had manned the institution and given it much of the impetus for challenging the executive dominance in the budget, driven in part by his belief that public trust in institutions had ‘never been so low’ and that transparency and accountability reforms were required to overhaul the Canadian system (Chohan 2013). After

Mr. Page stepped down from the position in 2013, however, the PBO was left vacant for more than half a year because the Prime Minister did not nominate a replacement (the position was held in interim by Librarian of Parliament Sonia L’Heureux).

Nevertheless, the post-Kevin Page phase was marked by a continued determination of the

PBO, under new head Jean-Denis Frechette, to provide nonpartisan budget analysis. This was evidenced on various occasions. In 2014, the PBO produced a Fiscal Sustainability

Report that stood out for its analysis on the healthcare costs embedded within the federal budget. The PBO found that the government, in order to minimize the burden of its healthcare obligations, was transferring the burden of the cost structure onto the provinces

(PBOC 2014: 3, 17), a move that caused a commotion in provincial circles. It should be remembered that, as research into presidentialisation in Canada has found, the Canadian

78 provinces serve as an important bulwark in checking the power of the Prime Minister

(Bakvis and Wolinetz 2005: 199).

In 2014, the PBO produced a Labour Market Assessment that disagreed with what the

Ministry of Finance had claimed was a ‘skills shortage’ plaguing Canada. The PBO found that there was scant evidence of such a national labour market shortage or of a ‘skills mismatch’, belying the Finance Ministry’s claim. It also raised the issue of stagnating real wages in Canada since the end of the global economic recession, which challenged the executive branch’s claims that wages had seen growth (PBO 2014).

In late 2014, the PBO began to analyze the cost of Canada’s participation in the war against

ISIS in Iraq (‘Operation IMPACT’). This exercise was similar in scope to the work the PBO had done in the Afghanistan War report, and was met with similar ire from the executive branch. Initially, the Defense Ministry was refusing to divulge any information at all to the

PBO, using pretexts such as ‘parliamentary privilege’ and then ‘cabinet confidence’ as delay tactics (Lang 2015). The Canadian parliament in turn reacted vehemently, but the Defense

Ministry’s riposte was to provide a blank and vague number, $122 million, and then offer no clarity on what number meant. When the PBO crunched its own numbers in February 2015, it found the projected cost to be 40% higher at ‘up to $166 million’ or at a conservative level, down to $128 million, still higher than the DND’s calculation (PBOC 2015a: 3). In spite of the centralized coordination and lack of executive cooperation with the legislature on transparency in budgeting, the PBO was still able to conduct its analysis in a resourceful manner.

It should also be noted that some efforts were made by the opposition to try to make the

PBO into a truly independent office. The most notable occasion had been in 2013, when the opposition NDP party tabled Bill C-476, An Act to Amend the Parliament of Canada Act,

79 which stipulated making the PBO a truly independent Officer of Parliament, drawing upon work by the PBO itself as well as other academics (see for example, Chohan 2013) that demonstrated the important role that the Canadian PBO played not just in the national budget process but also in mentorship of budding legislative budget offices in foreign

(mostly developing) countries. However, the Conservative Party, which had in 2006 promised to bring ‘truth in budgeting’ and ostensibly make an ‘independent oversight officer’ out of the PBO, summarily shut down the bill in parliament in the second reading, under a 148-131 vote.

As recounted above, although the list is not exhaustive, it becomes evident that Canada’s

PBO has had a rocky start. The high concentration of prime ministerial powers within the presidentialising parliamentary system has mounted staunch resistance to the PBO, which has had its operational budget threatened and its autonomy stifled. A small office of 14 staff and barely $3 million dollars in funds, it has had to scan the machinery of a government whose budget now exceeds $250 billion dollars in appropriations (Chohan 2013: 17-18).

Despite the Herculean nature of its task, it has strengthened the hand of the Canadian parliament in budgetary matters to an astonishing degree, and since its inception, the

Canadian PBO has produced more than 200 publications (PBOC 2015b: 4). It has given the legislature a leg to stand on, by proffering a treasure trove of essential budgetary analysis that has bolstered the capability of parliament to debate fiscal decisions of the executive branch.

[2.6] CONCLUSION: PRESIDENTIALISATION AND PARLIAMENTARY BUDGET

OFFICES

It is important to recall that the PBO model has ineluctably American origins, stemming from the congressional desire to balance the president’s power over the budget process. The

CBO has served as a challenge to presidential budgetary dominance, and the American example serves as a benchmark for investigating whether parliamentary systems suspected of becoming highly presidentialised have also established budget offices to circumscribe the fiscal dominance of their Prime Ministers. In Canada, this has been shown to be the case through the recognition of the importance of constructing institutional counterweights, like the PBO, to mitigate the growing power of presidentialising PMs. Although Canada’s PBO possesses meagre resources and draws on a fairly nascent establishment, it has worked diligently towards arming its parliaments to challenge a headstrong executive agenda, in same manner that the Congressional Budget Office has worked towards this objective in the

American presidential context. Specifically, it is the strong ‘executive face’ of presidentialisation that has adversely impacted the growth of the PBO, as the intensity of reprisals by the extremely powerful Canadian PM have been far greater than that seen in other parliamentary systems.

In terms of future research, this paper sets an example of discovering institutions which are transposed from presidential systems onto parliamentary ones but which limit the expansion of the executive’s power and influence – in this case in the sphere of national budgeting. The presidentialisation thesis would be greatly enriched by similar explorations in other areas of parliamentary involvement. For example, in legislative engagement with foreign policy, national defence, extractive (natural resource) policy, taxation, subnational government, supranational entities, financial sector regulation, and so forth. Such lines of inquiry would constitute a valuable next step in the substantiation and development of the presidentialisation thesis.

This paper has shown that PBOs help to recalibrate executive-legislative budgetary relations in parliamentary regimes undergoing presidentialisation. This budgetary angle in

81 presidentialisation had heretofore not been explored. The PBO serves to cast a new light on the presidentialisation debate, because it stands as a poignant and noteworthy example of an institution that has originated in presidential systems, but which countervails the very tendencies of assertive presidential executives. Through the budget office we see, in other words, that what is born of greater presidentialisation is a counterweight to presidentialisation itself.

CHAPTER 3: INDEPENDENT BUDGET OFFICES AND THE

POLITICS-ADMINISTRATION DICHOTOMY

Discipline: Public Administration

Citation: Chohan, U.W. (2017). Independent Budget Offices and the Politics–

Administration Dichotomy. International Journal of Public Administration.

DOI: http://dx.doi.org/10.1080/01900692.2017.1317801

Contribution to Thesis:

Further develops two case studies (CBO of US, PBO of Canada), and examines three expert accounts of LBOs to situate them in the Public Administration literature that is used to provide the solutions to the thesis

Contribution to the Literature:

Introduces LBOs to Public Administration, heretofore unexplored, as an avenue of inquiry in the politics-administration dichotomy.

ABSTRACT

The discipline of public administration has long grappled with the ‘politics-administration dichotomy,’ therein studying and debating what degree of involvement by public managers is warranted in the political sphere. Legislative Budget Offices (LBOs) provide an intriguing case study into how public managers can engage with politicians to enhance the budget process. However, LBOs are often attacked for their work by agents in the highly politicized budget milieu. This review article examines the contributions of three works that successfully encapsulate the difficulties, as well as the merits, of an institution constituted of public managers (economists) wresting political control from politicians

(executives and legislators) in order to reduce opaqueness and secrecy in budgeting, which in turn creates value for the public. The article thus shows why the experiences of

Legislative Budget Offices can serve as informative accounts in studying the ‘politics- administration dichotomy’.

[3.1] INTRODUCTION

The discipline of public administration has long grappled with the issue of how much involvement by public managers is warranted in the political sphere (Moore, 1995, p. 118;

Roberts, 1995; Rhodes and Wanna, 2007; Alford and O’Flynn, 2009; Meynhardt, 2009;

Chohan and Jacobs 2016b). On one hand, there is the argument that active interference by public managers constitutes an inherently anti-democratic dynamic (Rhodes and Wanna,

2007, p. 414). On the other hand, it is argued that careful and specific engagements by public managers can enhance both the level of efficiency and quality of democracy (Chohan and Jacobs 2016b).

One area where there has been particular interest in observing this tussle has been in the field of budgeting (Chohan, 2013; Chohan, 2016a; Chohan and Jacobs, 2016b), where the assertion is made that parliamentarians would benefit from having a dedicated body of economists to provide independent nonpartisan analysis on budgetary matters (Kopits,

2013; Rivlin, 2013; Steurle and Rennane, 2013; Joyce, 2011; Page 2015; Chohan, 2016a).

They should have access to rigorous, accurate, and succinct analysis on what is often one of their toughest duties: parliamentary oversight of the budget process (Stapenhurst et al.,

2008; Chohan and Jacobs, 2016a). This should enhance the level of transparency in budgeting, which is an important precondition to the creation of public value (Douglas and

Meijer, 2016).

An institution of economists that supports parliamentarians in this way has come to be known as a Legislative Budget Office (LBO, also alternatively known as “Independent Fiscal

Institution”, IFI), and its variants can today be found in many countries (Kim, 2015). A large proportion of these institutions have been created in only the last decade, and particularly in the wake of the 2008 crisis (von Trapp et al 2016; Kopits, 2013). While they are generally a new feature in the public administration landscape, LBOs diverge enormously between countries in terms of their resources, their mandates, and their level of legitimacy (Kopits,

2013, p. 8; Chohan 2013a, 2013b, 2016a). Indeed, there is little in the way of a coherent international template for what a LBO should look like, what it should do, and how it should go about doing it (Chohan, 2016a, 2016b), although efforts have been made by organisations such as the OECD to address this through the provision of guidelines (OECD 2002; Kopits,

2013, p. 11; von Trapp et al., 2016)

Nevertheless, LBOs have had a very difficult time negotiating the inherent public administration tension between public managers and politicians (“the politics-

86 administration dichotomy” as Roberts put it, 1995, p.291), and have often struggled in establishing themselves in the political budget process (Kopits, 2013; Chohan 2016a;

Chohan and Jacobs 2016a). They risk being treated as a somewhat irrelevant and perfunctory body, as in some European countries (Horvath, 2017); they risk internal corruption, as in Uganda (Chohan, 2016e); and they even risk being shut down, as in

Venezuela or Hungary (Santiso, 2004; Kopits, 2013, p.9; Kopits and Romanyi, 2013, p.212).

Even without such ominous difficulties, it is still difficult for every LBO to find a stable equilibrium position within the budget process.

This article draws on the perspectives of three important recent works to synthesize common threads within the experiences of LBOs, with a particular focus on public administration in terms of the approaches of these institutions in reconciling the “politics- administration dichotomy”. The three books are Unaccountable: Truth and Lies on

Parliament Hill by Kevin Page (2015), The Congressional Budget Office: Honest Numbers,

Power, and Policymaking by Philip Joyce (2011), and Restoring Public Debt Sustainability:

The Role of Independent Fiscal Institutions by George Kopits (2013).

This is an important exercise because (1) there is still limited exploration of the roles of

LBOs (see discussion in Chohan 2016a); (2) no review has so far synthesized the varying perspectives and thematic elements pertaining to LBO-specific works; and most importantly, because (3) the three books examined in this article would prima facie be thought of as lying outside the purview of public administration. This article will show that the opposite is true, that the lens of budgeting (Chohan and Jacobs, 2016b) provides important insights into managing the tension between public managers and politicians, and is therefore conducive to the advancement of public administration thought.

The article proceeds in a specific order, beginning with the Canadian LBO’s perspective

(Page, 2015), advancing to the American LBO (Joyce, 2011), and then addressing the international compilation of LBOs (Kopits, 2013). This order reflects increasing degrees of institutional age and institutional scope. The Canadian story (Page 2015) is the most localized and was influenced by the American experience (Page, 2015, p.57; Chohan, 2013a), which was a pioneer in the development of the Legislative Budget Office model (Joyce,

2011). Meanwhile, the international compilation (Kopits, 2013) incorporates both the

Canadian and American experiences, while also contextualising LBOs within global fiscal trends and difficulties.

[3.2] ONE: CANADA – TRUTH AND LIES ON PARLIAMENT HILL

To date, the most authoritative account on the evolution of the Canadian Parliamentary

Budget Office has been written by Kevin Page, in Unaccountable: Truth and Lies on

Parliament Hill. As the first Parliamentary Budget Officer of Canada, Mr. Page has been in a unique position both to guide the growth of the PBO, but also to impact and improve accountability in the Canadian parliamentary budget process. As mentioned before, no LBO has had a seamless integration into the budget process, but that general difficulty notwithstanding, it is also true that no LBO encapsulates the large sum of hardships that can be meted out on an independent fiscal institution as does the Parliamentary Budget of

Office of Canada (PBO) (see also discussions in Chohan and Jacobs, 2013, 2016a, 2016b).

Due to the sheer amount of adversity that it has had to face, the PBO of Canada holds several instructive lessons on the role and character of public managers in service of politicians.

Mr. Page provides a candid and informative account of the evolution of the PBO, from being just a perfunctory election promise to a respected and highly visible institution in the budget

88 process. His book expounds on the challenge of building an institution of public administration from scratch, and seeing it rise to a level of surprising success in an atmosphere of sometimes outright hostility.

The book is particularly noteworthy for discussing important budget issues during the

Harper era (2006-2015) from a perspective that was often left wanting in mainstream

Canadian media coverage. In particular, this includes the PBO’s costing of several controversial policies: The Afghanistan War costing (2008), The F-35 Jet Costing (2010), and the Truth in Sentencing Act costing (2010), among others. When taken together, these incidents showed the extent to which Canada’s PBO could be an instrument for enhancing budget accountability, much to the chagrin of the executive branch, which as Page describes, thought the PBO would ‘simply have a nice cup of shut the hell up on a daily basis’ (2015, p.39).

For the Afghanistan War, Kevin Page describes the adversity that he faced from the earliest days of the PBO, when his office would study and then publicly reveal the costs of Canada’s military engagement on a morally divisive issue. The PBO found that the Harper government understated the cost to the taxpayer by a staggering amount: the government was saying $8 billion but the PBO’s more accurate numbers exceeded that figure by more than double, at $18.1 billion for the same period. Such activism from a newly-built and rather small institution was a large risk, albeit a principled one, and Mr. Page looks back at the judgement with the fatalism of the moment: ‘If this [Afghanistan War document] was gonna be the end, then [we] were gonna “make it one hell of a document on our way out the door,”’ (2015, p.64).

The displeasure of the Harper government at this loud new institution swelled almost to a rage when the PBO produced a forecast for the fiscal year 2009-10 that showed the

89 government falling into a period of deficit for several years, and the government responded with the brazen threat of withholding the PBO’s funding (Chohan 2016b). This was a measure unprecedented in the history of independent budget offices. Mr. Page rightly describes the funding of the PBO as a ‘pittance’, and compares the withholding of funds to ‘a hard right-cross on the chin,’ thereby emphasizing the combative nature of the engagement of public managers with politicians. To put the figure in perspective, Canada’s PBO has a budget of $3 million, but Canada’s Auditor General has a budget of $95 million.

In a similar vein, PBO analysis found in 2010 that a major military project of the Harper government, the controversial F-35 Jet procurement plan, would cost $30 billion, or half a billion dollars per plane; a figure twice what the government had stated (Chohan 2013a).

The PBO’s numbers on this costing were corroborated by the Canadian Auditor General, and ultimately vindicated by their accuracy in subsequent months. This incident is explored in considerable detail in Kevin Page’s book.

Collectively, the aforementioned incidents show how politicians in the Harper government

‘duped’ the Canadian public about the costs incurred on morally divisive policies. Yet these sorts of budget gimmicks usually do not rouse moral outrage from the broader public, because they often lack a ‘human face.’ Fortunately, Kevin Page’s book fills this gap by engaging the reader at a personal level to a degree that is seldom found in the literature on public administration. Furthermore, the merits of policies must be debated by legislators both in terms of the moral impact as well as the fiscal impact. The PBO under Kevin Page has furthered both objectives.

Although it offers a highly instructive perspective on the tension between public managers and politicians, the book might be seen to suffer from two small shortcomings. In the first instance, the book has been written with a wider audience in mind, which leaves many of

90 the important details of the PBO’s work out of the story. Instead, the story is framed in terms of pitting a David against the Goliath of the Harper government. Scholars of public administration would have benefitted from more extensive treatment of the relevant institutions in addition to the exposition of personalities.

A second drawback that seems to emerge from the account narrated in this book is that, while it portrays Mr. Page’s office as the principled underdog throughout its life, the one- sided nature of this uphill battle risks presenting an overly simplistic picture. This is because much of the PBO’s work would have required tactful and clever handling of the political environment, a deft management of a public profile, and above all a use of circuitous methods for digging up relevant budget information. The search for information in particular would have required PBO staff to deploy tactics that seem to be omitted in the book, perhaps for the purposes of a more straightforward characterisation of the PBO.

There are nonetheless several important lessons for scholars of international public administration in this book. First, it provides a glaring example of the abuses of power that can occur under politicians when public managers’ inputs are suppressed, particularly in instances where the executive is both headstrong and predisposed to controversy

(international conflict, for example).

Second, it depicts a small institution working efficiently with scarce resources to advance the purpose of higher transparency in a democratic environment. The achievements of the

PBO are particularly remarkable when one takes into account its meagre size and resources: a unit of 12 staff and a mere $3 million dollars in charge of studying $250 billion dollars in government appropriations (Chohan, 2013).

Third, it reminds us that the budget process in most parliamentary democracies is in need of urgent reform. The budget process is at once an economic enterprise and a political one,

91 and reform needs to emerge from both prisms. Citizens are insufficiently informed or engaged in budgeting, and PBOs are one measure towards drawing them, both directly and through their elected representatives in Parliament, into more meaningful engagement with the budget process.

Fourth, it highlights the need for greater accountability throughout the parliamentary architecture. Canada is often touted as an example of a strong democracy, and yet it too is very much a work-in-progress. The strong powers that Prime Ministers enjoy under the

Westminster model can sometimes lead to intense domination of the entire political superstructure (Chohan and Jacobs, 2016a), and the budget process is but one reflection of this. Mechanisms of accountability are required throughout the system to ensure that democratic elements can thrive. The PBO is a strong example of this in a fiscal context.

Going forward, it is evident that the parliamentary budget reform alluded to throughout Mr.

Page’s book needs to be carefully attended to. As an example, Mr. Page has noted that the current government of Prime Minister Trudeau is even less transparent than the Harper government was, because a vast number of changes are being implemented by the new

Trudeau government whose fiscal assessment is not being shared with the Canadian public

(Page, 2016). In the meantime, Canada’s historic reliance on oil revenues for the budget has meant that the weak energy prices in the world markets now require a careful repositioning of Canada’s budget priorities (Chohan, 2015).

Furthermore, the successor to Kevin Page, Jean-Louis Frechette, was not appointed because of his budgetary acumen (he is not an economist), but due to his relationship with the

Library of Parliament. While this means that the level of budget activism found during the

Kevin Page years is unlikely to be repeated, it also means that the Canadian PBO might head the way of certain European countries where PBOs are largely symbolic and therefore

92 mostly ignored in the budget process (Horvath, 2017; Kopits, 2013). This entire aspect of the design underlying the Canadian PBO, as subservient to the Library of Parliament rather than acting as an independent office, is highly problematic and stifling to the exercise of analytical rigor free from political recrimination.

Nonetheless, despite the various obstacles and hardships underlined in Mr. Page’s informative book, the PBO continues to produce a considerable sum of analytically rigorous reports for parliamentarians and for the public. Since inception, the PBO has produced more than 200 publications (Parliamentary Budget Office of Canada [PBOC], 2015).

Furthermore, Canada’s PBO now plays an important mentorship role for numerous budget offices around the world (Chohan 2013b), which enriches their work and strengthens budget accountability in these countries as well. This means that Canada’s PBO is not just good for accountability in Canada, but good for accountability around the world.

In sum, the portrayal of parliament by Canada’s Parliamentary Budget Officer points to a pressing need for considerable reform, but also highlights how far a small budgetary institution has come. As there is no coherent overarching template at the international level for what a PBO should like, what it should do, and how it should go about doing it (Chohan

2016a, 2016b; work by OECD, 2002 notwithstanding), the case of the Canadian PBO helps to present a possible schema that possesses the core aspects salient to the function of strengthening public administration in budget oversight. Scholars of international public administration should therefore find such an account both engaging and informative to their inquiry.

[3.3] TWO: THE CONGRESSIONAL BUDGET OFFICE – HONEST NUMBERS,

POWER, AND POLICY MAKING

The most authoritative account of the American Congressional Budget Office to date has been written by Philip G. Joyce in The Congressional Budget Office: Honest Numbers,

Power, and Policy Making (2011). In this work, Joyce examines a full 40-year history of the institution (est. 1974), which began as a small office of “insignificant staff housed in the damp basement of a former hotel” (Rivlin, 2013, p.25) battling its way through difficult and partisan policy debates to become a “powerful and influential arbiter” in the budget process

(Joyce, 2011, p.1). Its power may be reflected in its size: the CBO today has the most number of economists of any federal agency except the Federal Reserve (Steurle and Rennane, 2013, p.106). Joyce’s book depicts a public administration entity caught in the crossfire between

Republicans and Democrats across successive shifts in power, and riding the turbulence by emphasizing one important factor: nonpartisan analytical rigour.

Founded during the backdrop of the Nixon-Watergate scandal when a climate of low trust in government prevailed (Joyce, 2011), it was also aided by a general feeling among members of Congress that the legislative branch did not play a sufficiently large role in the budget process (Rivlin, 2013). Joyce recounts the rocky start that the institution faced as it began from the very outset to challenge the rosy budgeting projections of the Ford administration, and then continued to produce well-reasoned and well-grounded budget analysis during subsequent administrations including those of Carter, Reagan, Clinton, Bush and Obama.

One of Joyce’s important observations about the CBO is the nonpartisan manner in which the office challenged both Democrats and Republicans in equal measure, premised solely on the economic merits of budget proposals and never on partisan inclinations. Joyce effectively argues that this equal challenge to both parties explained in large part the legitimacy that was conferred on the budget office in a comparatively short span, as by the time the Clinton administration took power, the CBO was already a well-entrenched public administration entity in Washington (2011, p.159).

Joyce notes that there were periods of greater tension, such as when Reagan called the

CBO’s figures ‘phony numbers’ (2011, p.3), but such criticisms were generally mild, and certainly so when compared with the adversity faced by the aforementioned Canadian PBO

(Page, 2015). As Joyce notes, the major healthcare Clinton-era reform package was produced in a manner that specifically took the anticipated reaction of the CBO into consideration (2011, p. 159-161). Whereas the package was ultimately defeated, the CBO

‘made a public value contribution to the political process by adding a layer of critical rigor and methodical consistency to the analysis,’ (Chohan and Jacobs, 2016b, p.6). More importantly, the Clinton healthcare reform’s failure was followed by the Obama healthcare reform package which did succeed, in part because it learned from the mistakes of the

Clinton administration in dealing with nuances pertaining to the budgetary mandate of the

CBO. As Joyce notes, the Clinton administration simply drafted a ‘mammoth’ health-care reform bill and ‘dropped it in the lap of Congress in late 1993,’ while the Obama administration was more cooperative with Congress in terms of providing inputs and not letting itself be ‘tied to any one piece of legislation,’ (2011, p. 182).

Joyce draws attention to a particular event that represents a high watermark in the relations between the CBO and the executive branch, and perhaps of the ‘politics-administration dichotomy’ vis-à-vis the congressional budget process in the United States more broadly.

The CBO’s Director Elmendorf and other health-care experts were invited by President

Obama to brief him on options for health-care reform at the Oval Office (Joyce, 2011, p.189). The fact that the CBO director sat with the President and directly communicated budget options to him represents, according to Chohan and Jacobs (2016b, p. 7), the ‘most resounding example of an LBO serving its normative-advisory role [in public value creation].’ Furthermore, the executive branch avoided irritations over whether its estimates

95 or those of the CBO were better; it simply accepted the CBO conclusions (Joyce, 2011, p.201).

Such avoidance of acrimony between public managers and politicians in a complex domain such as healthcare reform suggests that there is room for optimism in conciliatory engagements between the two that can benefit the public more broadly. Certainly when compared to adversity faced by the Canadian PBO, the CBO has fared much better. But why? Chohan and Jacobs (2017) suggest that this may be due to the age of the institution, because as Joyce points out (2011), the American CBO has 40 years to hone its skills, develop its reputation, and earn a legitimacy in the budget process that even the most vindictive politicians could not thwart. Another reason might be in the separation of powers arrangement of congressional systems that allows for the legislative branch to be more effective as a counterweight to the policies of the executive, allowing public managers in LBOs to adapt to the checks-and-balances to become ‘powerful and influential arbiters’

(Joyce, 2011, p.1). This aspect has been explored by Chohan and Jacobs (2017) using the

‘Presidentialisation Thesis,’ who suggest that there may be some truth to the impact of different political designs in the effectiveness of LBOs.

Joyce’s account of the CBO provides several key lessons for the domain of public administration. First, like Page’s account of the PBO of Canada (2015), this book shows how a relatively small institution can work efficiently with scarce resources to advance the purpose of higher transparency in a democratic environment. The CBO’s resource endowment may be large for an LBO, but for a federal agency, the CBO remains a low-key institution that is able to generate a significant volume of analysis with comparatively scant resources (see also Rivlin, 2013; Steuerle and Rennane, 2013).

Second, Joyce notes that there is a second-order effect of the CBO’s ‘honest numbers,’ which is that it pressures other budget institutions to also produce more honest numbers, particularly in the case of the Office of Management and Budget (OMB), the budgeting arm of the executive (2011, p.210). The CBO has done so by providing a cover to OMB when pressured by the executive, because the OMB is able to retort that significant deviations in budget figures from the nonpartisan CBO would compromise the integrity of the OMB

(Joyce, 2011, p.210-1). The de-politicization of the budget process by public administrators in one office can thus help to de-politicize other more politically-inclined institutions as well.

Third, the book stresses the possibility of public administrators and politicians working in a conciliatory manner to effect positive policy change, as in the Affordable Care Act

(“Obamacare”). Fourth, the book draws attention to the importance of leadership in public administration (2011, p.211), by enumerating various instances when specific decisions by directors of the CBO have helped to both strengthen the institution itself, but also improve the budget process in a larger sense. Leadership is an important area of inquiry in public administration (see discussion in Wallis and Gregory, 2009), and as with the Canadian

PBO, whose director Kevin Page recounts the tough choices he has had to make to adhere to principle (Page 2015), the CBO’s successive leaders have also had to make difficult choices in order to preserve the integrity of the institution even at the peril of aggression from politicians ( Joyce, 2011, p.212).

While the book offers an important perspective on the nature of interaction between public managers and politicians, there are two small shortcomings that may be mentioned at this juncture. First, although it does raise the question (Joyce, 2011, p.234), it does not sufficiently explore answers to the problem of whether the CBO, in spite of its nonpartisan

97 analytical rigour, can ever actually help solve the truly pressing fiscal question in America: its unsustainable debt and deficit position. For all the hard work of the public administrators and their collaboration with politicians in improving the budget process, the fiscal position of the United States becomes ever more precarious with each passing year.

According to the most recent Budget and Economic Outlook Report produced by the CBO,

‘such high and rising debt would have serious negative consequences for the budget and the nation,’ (2016, p.4). A point may soon come when the fiscal position of the United States may become untenable, and whether high-quality nonpartisan analysis can help avoid that outcome remains an open question. During the 40-year lifespan of the CBO, it has repeatedly tried to apprise politicians as well as the general public about the unsustainable debt and deficit trajectories of the country (Joyce, 2011, p. 229), but thus far this has not produced much remedial action. Therefore, whether professional public managers can actually address the deeper problem afflicting their domain (budget sustainability in this instance) is yet to be seen.

Second, due to the long history of the CBO, the author has had to engage with key events in a selective fashion that best illustrate the nature of the organization through a coherent narrative. However, this may come at a cost in terms of omissions from the storyline of the organization. One particular omission seems to be in the work of the CBO during the administration of George W. Bush, specifically with regards to the Iraq and Afghanistan wars. This is a lesson to be gleaned from Page’s study of the Canadian PBO (2015), in that the early works of that institution served as a casus belli for the opposition, the media, and the general public against the war ambitions of the Harper government (Chohan 2013). But it is not that the American CBO had chosen to avoid the issue of the costs of these invasions, because as an example, testimony by CBO Director Orzsag in 2007 showed that the cost to the American taxpayer of the two wars would exceed $2.4 Trillion dollars by 2017 (Orzsag,

2007). This is a significant fiscal outlay by any measure, but its treatment is left out of

Joyce’s book, perhaps because, in addition to the narrative requirements, such a study did not serve as the rallying cry that it did in Canada (Chohan, 2013).

Although it is a historical account of a public institution, Joyce’s book speaks directly to the current problems facing American politics and American society. First, the evidence-based approach of the CBO is not just a luxury but a necessity in what is being described as a

“Post-truth” world where the public is increasingly “indifferent to objective facts” and where impartial inquiry “can be lost in the noise generated by direct appeals to emotion, sentiment, and deeply held personal beliefs,”(Gewin, 2017, p.425).

Second, the CBO and other public institutions operate in a fragile equilibrium where the balance between partisanship and nonpartisanship must be carefully negotiated. In a post-

2016 American political environment, the delicate equilibrium negotiated between the CBO and the OMB (executive budget office) may come under strain due to excessive pressure from the executive branch on the OMB (Chohan, 2017).

Third, one of the core components of federal-level American spending, healthcare expenditure, is currently in a phase of possible transformation. As of this writing, the Trump administration had already proposed an alternative healthcare bill (“The American

Healthcare Act”), which was costed by the Congressional Budget Office and found to leave a further 14 million Americans uninsured (CBO, 2017), and was withdrawn by Republicans before it went to a vote (March, 2017). As Joyce has outlined, the CBO has played an important role in American healthcare reform, both in failed programs (Clinton) as well as successful ones (Obama). The CBO is likely to continue to play an important role in the

American healthcare saga over the years to come, and Joyce’s work provides a useful backdrop for understanding the role of public administrators in that ongoing episode.

In sum, Joyce’s work provides as much of a context for current issues facing American institutions as it does a historical account of an important public administration institution.

[3.4] THREE: RESTORING PUBLIC DEBT SUSTAINABILITY –THE ROLE OF

INDEPENDENT FISCAL INSTITUTIONS

Whereas Page (2015) and Joyce (2011) provide necessary contributions to the understanding of LBOs in two specific country-contexts, Kopits (2013) offers an important compilation of LBOs at an international level in Restoring Public Debt Sustainability: The

Role of Independent Fiscal Institutions. The book uses the term ‘Independent Fiscal

Institution’ (IFI) instead of LBO because it focuses on a remit that is slightly broader than

Legislative Budget Offices: an IFI does not need to be attached to a legislature, but can be established in relation to a different institution, such as an Audit Office, as is the case in

Finland and France.

Kopit’s compilation covers numerous budget offices by drawing on the expertise of the heads of budget offices as well as leading economists. Both Kevin Page of the Canadian PBO and Alice Rivlin of the American CBO contribute chapters that outline their roles as public managers facing politicians in a candid and analytical fashion (Page and Yalkin, 2013;

Rivlin, 2013). In contrast to Page (2015) and Joyce (2011), Kopit’s compilation emphasizes the economic aspects of an IFI’s work, in particular by situating the IFI within the context of the sustainability of finances and the reigning in of deficits and debt levels. In order to investigate the economic issues underpinning IFIs, the book makes an important distinction between IFIs created due to “sui generis domestic developments” (The American CBO and the Canadian PBO are both examples), and IFIs that have been created in response to the

2008 financial crisis. As Kopits notes, a large cohort of IFIs were created in direct response to the financial fallout of 2008, when the realization dawned upon numerous governments

100 that their fiscal trajectories were unsustainable, and that institutions needed to be established in order to help governments develop more reasonable fiscal strategies.

The two chapters of greatest interest to scholars of public administration are those of the

American CBO (Rivlin, 2013) and the Canadian PBO (Page and Yalkin, 2013), because these chapters help to address gaps in the works of Joyce (2011) and Page (2015). A clear example of this is in addressing the aforementioned shortcoming about the need for discussing the actual impact of the CBO on the American federal debt and deficit levels. Rivlin addresses this in her chapter quite directly:

“Unfortunately, the United States is currently a clear example of the sad fact that

having an independent fiscal institution issuing objective estimates and reports does

not guarantee that politicians will act responsibly. Despite decades of warnings from

the CBO and other independent analysts, on present trends, the United States is

facing the most serious fiscal challenge in its history. Our federal budget is on an

unsustainable trajectory. If policies are not substantially changed, spending will

continuously rise faster than revenues, requiring ever-increasing borrowing and

sending the public debt into high risk territory.” (Rivlin, 2013, p. 21)

This book is also important in highlighting other limitations of public institutions, and one example is the transposition of the logic of a public institution from one context to another, as with the shortcomings of drawing parallels between independent Central Banks in monetary policy and Independent Fiscal Institutions in fiscal policy. The limitations of transposing that logic, given the differing nature of fiscal and monetary fiscal policy (precise goals, measurable outcomes, controllable tools etc.) are an important contribution of this book (see further discussion in Debrun et al., 2008).

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With specific regards to the ‘politics-administration dichotomy,’ Kopits considers the extent to which IFIs ‘may be entrusted with an advisory function in addition to the monitoring role,’ which would involve a more normative engagement by the IFIs with politicians.

Chohan and Jacobs (2016b) have produced a public administration-oriented framework using public value theory that also splits the role of IFIs into ‘normative-advisory’ and

‘mechanistic-costing,’ arguing that there a higher public value contribution of independent budget offices as normative-advisors, even as this can incur greater political recrimination.

Kopits’ work also examines a failed attempt at an IFI in Hungary and how this ‘illustrates in fast motion the range of challenges faced by an independent fiscal institution in an environment characterized by a tradition of fiscal indulgence and opacity, by low policy credibility, by a fragile system of checks-and-balances, and by a reluctance to shed past practices,’ (Kopits and Romanyi, 2013, p.212). The short-lived Hungarian Fiscal Council was terminated without cause in 2010.

A further contribution of this compilation is its approach towards identifying common threads in the experience of IFIs. From a public administration perspective, Kopits notes that ‘in general, IFIs tend to converge as regards their organizational structure, operations, and staffing. These practices encompass the qualifications, non-partisanship, remuneration, and absence of conflict of interest of the leadership,’ (Kopits, 2013, p.10). Commonalities are also identified in the challenges faced by IFIs, particularly as they come into confrontation with entrenched political interests (see also discussions in Chohan 2013a, 2013b, 2016a).

Despite its thorough approach and broad perspective on IFIs, there are two small shortcomings that may be identified at this juncture. First, the book is written with a developed-country context in mind, focusing on OECD members exclusively. This is unfortunate for two reasons: one, because going forward, the main thrust of IFI creation will

102 be in developing countries (Chohan, 2016b); and two, because those developing countries where IFIs do exist face numerous problems (see discussion on Uganda in Chohan, 2016e).

That said, the differences between IFIs are already substantial, and incorporating the variety of developing-country contexts into a single book will become an order of magnitude more difficult. Yet it is important to articulate this point because it mirrors a concern in the public administration literature, that there is a pressing need for greater research on the roles and functions of public institutions in developing countries (see discussion in

Samaratunge and Wijewardene, 2009).

Second, while the book does a thorough job of integrating the political science and economics aspects of IFIs, it does not sufficiently explore the input of other disciplines in studying these institutions. As new works are beginning to show (see public administration example in Chohan and Jacobs, 2016b), branching out into other disciplines and fostering more interdisciplinary approaches is crucial to fostering a fuller understanding of the nature of IFIs.

These small shortcomings notwithstanding, this compilation of IFIs provides a key point of departure for future research on independent budget offices because of the expertise that it draws upon and the contexts that it explores. Future research on IFIs, particularly when addressing a public administration audience, can draw on the observations of this book in advancing relevant areas of inquiry.

[3.5] CONCLUSION

This article provided an examination of the three most salient books on LBOs, all of which were produced in the comparatively recent past. Although they mostly recounted the travails of LBOs in a hindsight manner, they all raise important questions about the future.

In the case of the Canadian PBO, questions loom about the survivability of the office given

103 its continued lack of statutory independence (Page and Yalkin, 2013; Chohan and Jacobs,

2017). In the United States, important fiscal issues are being revisited in an aggressive manner, such as in the guise of the current healthcare reform debate (CBO, 2017).

Moreover, American society is now beset by a Post-Truth environment where the public is increasingly ‘indifferent to objective facts’ and where impartial inquiry ‘can be lost in the noise generated by direct appeals to emotion, sentiment, and deeply held personal beliefs,’

(Gewin, 2017, p.425). Independent analytical rigour, such as that evidenced by the CBO

(Joyce 2011), becomes even more important in environments where such partisan and non- factual tendencies loom large. For the world more broadly, the effectiveness of nonpartisan public administration institutions has been achieved to varying degrees, and in some countries, it is worrying to note that their efforts are being met with only limited success

(Kopits, 2013).

Nevertheless, whereas at one level these books draw attention to the viability of LBOs specifically, at a deeper level, they raise questions about the importance of analytical rigour and nonpartisanship in the most partisan possible context: the politically-driven decision making process of allocating society’s resources. This debate is fundamental to the purpose of public administration, which seeks to contextualize the position and purpose of public institutions in service of the wider society. Yet public managers cannot effectuate this purpose without engaging (or confronting) politicians, who are the ‘final arbiter’ of public value (Moore, 1995, p.38). That process of negotiating an ‘authorizing environment’ (Moore and Khagram, 2004, p.8) has long been of interest to scholars of public administration, who have regarded, treated, and debated the tussle of public managers and politicians as the core question of the ‘politics-administration dichotomy,’ (Roberts, 1995, p.291). Therefore, whereas these works would prima facie seem to fall outside the purview of public administration, they address a question that lies at the essence of the discipline.

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The politics-administration dichotomy has been historically described as generally antagonistic, zero-sum, and even anti-democratic (Rhodes and Wanna, 2007, p. 414), but

LBOs show that synergies are possible between the realm and the work of the bureaucrat and the politician. In fact, LBOs can enhance both efficiency and democracy (Chohan and

Jacobs, 2016b). However, the challenges faced by LBOs, as narrated in Page (2015), Joyce

(2011), and Kopits (2013), also show that the synergies are hard-won and impermanent, susceptible to reversal and oftentimes a cause of consternation to the politicians. Future public administration research can help to unravel mechanisms, compromises, and arrangements by which LBOs can serve a greater value-creating role that is still palatable to politicians, and thus help reconcile the long-standing ‘politics-administration dichotomy.’

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CHAPTER 4: PUBLIC VALUE IN POLITICS

A LEGISLATIVE BUDGET OFFICE APPROACH

Discipline: Public Administration

Citation: Chohan, U.W., and Jacobs, K. (2016). Public Value in Politics: A Legislative

Budget Office Approach. International Journal of Public Administration. 40(12), 2063-

1073

DOI: http://dx.doi.org/10.1080/01900692.2016.1242612

Contribution to Thesis:

Provides solutions to the thesis, there are two essential roles: normative-advisory and mechanistic costing. Uses previous chapter case studies (CBO, PBOC), and the introduction to the public administration literature in previous chapter. Uses “public value” frameworks including Strategic Triangle, and discusses the difficulties in performing both roles and the

“public value” contribution of each.

Contribution to the Literature:

Advances understanding of “public value in politics,” by introducing LBOs and the lens of budgeting to public value theory. Finds that public managers can make specific engagements with the political realm that enhance both “efficiency” and “democracy.”

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ABSTRACT

We use Legislative Budget Offices (LBOs) as both a lens and a test of “public value in politics”, a facet of Moore’s original framework that remains its most contested. We identify two public value roles for LBOs: (1) as a normative-advisory institution, and (2) as a mechanistic-costing one. Through Moore’s Strategic Triangle, we contrast the higher public value contribution of the advisory role, as manifested in the United States, with the costings role as manifested in Canada. Our findings suggest that LBOs enhance both democracy and efficiency, and thus show how ‘public value in politics’ can be achieved

[4.1] INTRODUCTION

[4.1.A] THE PRISM OF PUBLIC VALUE IN BUDGETING

Public value in politics remains a highly contentious aspect of Moore’s original public value theory (1995; 2007). In politics, the debate about whether public managers could usurp the role of elected politicians seems to undermine the democratic process (Wanna and Rhodes,

2007, p. 415), although as Alford and O’Flynn (2009, p. 177; Talbot, 2009) have pointed out, this represents a misreading of Moore’s work. Nevertheless, a greater intensity of disagreement exists among scholars on the political facet of public value theory.

Although it has been argued that public value theory must articulate its solutions to the three goals of “efficiency, accountability and equity”, at present there is a gap in the public value literature because of a “lack of clarity of response” in terms of providing “plausible answers” to those three goals (Stoker, 2006, p. 49). This article attempts to address that gap in the public value literature, by using the Legislative Budget Office (LBO) model, as both a lens and a test of public value in politics.

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By way of definition for the scope of this article, the LBO is intended as an independent analytical unit that provides legislators with an impartial economic evaluation of important matters pertaining to the budget. We use public value’s “central symbol”, the strategic triangle, in the context of legislative budgeting to shed light on the intersection between public value and politics. We believe that comparing LBOs in terms of their shortcomings on the strategic triangle can show: (1) differences in their ability to perform their roles; and (2) how public value can be applied to politics. This is in line with Alford and O’Flynn’s assertion that the strategic triangle helps to “structure thinking” about what ought to be the case, as well as being “utilized to diagnose the existing situation” (2009, p. 174).

Meynhardt has noted the need for “concrete managerial settings” in contextualizing public value (2009, p. 214). We believe that LBOs serve as one such “concrete” setting, and are an excellent test of public value theory because they are designed to enhance public value in the political (legislative) arena, since they can be thought of as a natural dialogue between public managers (economists) and political agents (legislators). We contend that the public value contribution of LBOs is premised on enhancing accountability and oversight by endowing legislatures with better budgetary decision-making capabilities through their timely, rigorous, and nonpartisan analytical work. This speaks to Meynhardt’s discussion of

“legitimization by numbers” coupled with “a pro-active dialogue about ‘why our work is valuable to society,’” (2009, p. 214). It also speaks to Benington’s definition of public value as “adding value to the public realm by stimulating and supporting democratic dialogue and active public participation and citizen engagement,” (2009, p. 237). It is important to make an early identification of this public value mechanism because, as Meynhardt (2009, p. 196) suggests, much of the dispute over public value does not focus on what it means to create public value.

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Public value scholars remark that there is a need to “rebuild public confidence in political institutions, and the most powerful way to do that is to seek active citizen endorsement of the policies and practices of public bodies” (Stoker, 2006, p. 48), and this is a need that

LBOs address by strengthening public confidence in the budget process through nonpartisan analysis.

Whereas Stoker (2006, p. 43) has noted that the public value debate contains an important element of a balancing act between efficiency with democracy, we theorize that LBOs can support both efficiency and democracy at the same time, because on one hand their fiscal analysis improves efficiency in the budget process, and on the other hand their work improves the level of transparency and accountability in budgeting, thereby strengthening the democratic process as well. We argue that LBOs provide legislatures with greater decision-making capabilities and a better understanding of the breadth and complexity of the budget, thus allowing the legislatures to make decisions at their own behest.

However, we go beyond this and identify two basic types of roles that the LBOs can perform: a ‘normative-advisory role’ and a ‘mechanistic-costing role’. This logic speaks to a pertinent distinction in the public value debate, as articulated by Roberts (1995), between public managers as “moderators of discussion” rather than “players in the political game”. Our choice of the term “normative-advisory” is strongly tied to the public value discourse, as when for example Jorgensen and Vrangbaek assert that “public value research is […] not about ‘creating public value’ [but rather] the theoretical and empirical analysis of normative manifestations in the public sector,” (2011, p.487).

We theorize that there is a spectrum of public value contribution in politics, where the mechanistic-costing role is the basic function of an LBO, while a normative-advisory role is a more advanced, and more valuable, role for the institution. In other words, on one hand,

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LBOs can be relegated to a perfunctory and mechanical role of costing policies that are brought to them by political parties. This is their basic role. On the other hand, LBOs can provide an advisory role that is normative, intellectually rigorous, and valuable for the public. It involves a more active engagement; a presentation of budget options; and sense of

‘right’ policies in a variety of fields such as inter alia government borrowing, healthcare expenditure, or spending on military deployment. These are the sorts of ambits in which, in a general sense, there is a lower level of clarity and a higher degree of subjectivity on the

‘correct’ ways to proceed, which is why a normative-advisory position by an LBO can help to add greater clarity to the budget decision-making process. This is a more advanced, and more valuable, but also more politically contentious role.

FIGURE 3: PUBLIC VALUE CONTRIBUTION: ROLES FOR AN LBO

Mechanistic-Costings Role Normative-Advisory Role

Costings Advisory Basic Role: All LBOs perform Advanced Role: Some LBOs can perform (US) Lesser Public Value Greater Public Value Lesser Political Contention Greater Political Contention

The costings role is performed by all LBOs, and although it provides comparatively less public value, it is also subject to less political contention. The advisory role is more politically contentious, and provides greater public value, but not all LBOs are allowed to fully perform this role.

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Although both responsibilities are important to the budget process, we argue that the advisory role has the potential to contribute to greater public value, and represents a fuller use of the LBO’s capabilities. This is because it enhances budget transparency, ex-ante and ex-post policy oversight, and policy prioritization within the budget. However, the advisory space is also the more politically contentious “authorizing environment”, where LBOs must struggle to earn, in Moore’s words, their “right to operate” (Moore and Khagram, 2004, p.

8). By contrast, the mechanical policy-costing role of the LBO would be expected to make a comparatively smaller contribution to public value by serving as the equivalent of a passive calculator for costing proposed policies. But it is also the less politically contested space, with a lower emphasis on public value’s aspect of “challenge and change” (Stoker, 2006, p.

49), which allows LBOs to perform the costing function with less hindrance from political actors within the legislative and executive branches.

[4.1.B] THEORIZING LBOS’ PUBLIC VALUE

To better understand the public value contribution of LBOs, it is useful to revisit the concept of public value as posited by Moore (1995, 2004, 2007, 2008, 2012), particularly as this pertains to ‘public value and politics’. The concept of public value has garnered a remarkable following since it was first advanced at the Harvard Kennedy School nearly twenty-five years ago, and it has been lauded as the ‘next big thing in public management’

(Talbot, 2009, p.167), a fact that is due in large part to its relevance as an ‘umbrella concept’ for a broad set of public administration discussions (see literature review by Alford and

O’Flynn, 2009). Public managers have embraced the theory but academics have been more divided (Alford and O’Flynn, 2009). Its detractors notwithstanding (Wanna and Rhodes,

2007), recent years have demonstrated both more normative as well as non-normative explorations of the concept of Public Value (Meynhardt, 2009). Meynhardt has divided the discussion into a sequential examination of terms values, public, and public values, finding

112 among other things that public value is both value for the public as well as value from the public (2009, p. 212).

Meynhardt (2009, p. 193) portrays the public value scheme as a broader question about

“impact on how people think and feel about society”, while Benington considers public value in terms of value that is “co-created” by stakeholders within the boundaries of the public sphere (2009). Benington also provides an explicit definition for political public value as

“adding value to the public realm by stimulating and supporting democratic dialogue and active public participation and citizen engagement” (2009, p. 237). Wallis and Gregory

(2009) study the public value leadership impact arising from the distinction between accountability types (managerial vs political accountability) and the blame-shifting exercise that this creates. Van der Waal and van Hout (2009) combine the public value debate with literature on multiplicity, hybridity, and competing values to argue that there are various competing definitions of public value. All of these scholars thus allude to public value as a collective dialogue that incorporates politicians, public managers, and the public at large, so as to negotiate policy priorities and define approaches for creating value that benefit society in a broad sense; all while maintaining both a role for politicians as well as for public managers.

By Moore’s own recognition, there lies a quandary for public administrators with respect to politicians, arising from their inextricable place in the decision-making and accountability hierarchy:

At the core of political management—the actors who are always present and

must always be attended to—are those who appoint managers to their offices,

establish the terms of their accountability, and supply them with resources.

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The single most important figures in this context are the managers’

immediate superiors—usually political executives (Moore, 1995, p.118–9).

At the same time, it lies at the core of Moore’s analysis of public value in the political sphere that the decision-making process is susceptible to corruption:

Political decision-making is vulnerable to many different kinds of

corruption… These well-known difficulties can and do affect the moral claims

of political decision-making on the conduct of government in the eyes of both

citizens and managers. (1995, p.54–5).

In light of this political process’ susceptibility to corruption, Moore adopts a nuanced vision for independent public management bodies. Independent and “politically neutral” public institutions to assist, advise, and serve politicians are to occupy, in Moore’s theory, a position that is ultimately subservient to politics, which is described as the “final arbiter”:

In the end none of the concepts of ‘politically neutral competence’, ‘policy

analysis’ and ‘program evaluation’, or ‘customer service’ can finally banish

politics from its pre-eminent place in defining what is valuable to produce in

the public sector. Politics remains the final arbiter of public value, just as

private consumption decisions remain the final arbiter of private value (1995,

p.38).

We use this paper to examine the nuanced dynamic that Moore has alluded to: in a realm where politicians are paramount, and yet vulnerable to corruption; what is the nuanced public value role that can exist for nonpartisan public managers in politics?

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In line with Moore’s thinking (1995), we explore in this article whether LBOs can serve as an interesting lens and test of public value creation in politics, in line with O’Flynn’s (2005) assertion that public value provides the next “lens” for public sector challenges. We do so by examining two preeminent LBOs: the American Congressional Budget Office (CBO) and the

Canadian Parliamentary Budget Office (PBO); and we compare the degree to which they have maximized their public value creation while navigating contention in the political space. To do this, we use Moore’s strategic triangle framework that entails the fulfillment of three criteria: (1) recognition of substantive public value creation; (2) legitimacy and support; and (3) operational capabilities (1995; 2004). The CBO’s case covers the period since inception (1974) until the Obama administration, while the PBO’s case covers the period since inception (2007) until the end of the recently concluded Harper government

(2015).

[4.2] THE CBO OF AMERICA

Moore has observed that “political decision-making is vulnerable to many different kinds of corruption, [whose] difficulties can and do affect the moral claims of political decision- making on the conduct of government in the eyes of both citizens and managers” (1995, p.

54-5). Such was the context in which the CBO was born, during a period of heightened mistrust towards government following the Watergate scandal. Since its founding in 1974, the CBO’s public value contribution to politics, as expressed in its empowering of Congress in the budget process through both a costings and an advisory role, has been observed systematically during each administration including those of presidents Ford, Carter,

Reagan, Clinton, Bush, and Obama (Joyce, 2011; Rubin, 2003; Rivlin, 2013).

During the Ford administration of the mid-1970’s, CBO Director Rivlin threw the analytical weight of the CBO behind Congress and challenged the president’s economic program in

115 observing that, instead of stimulating the struggling economy, his policies would slow the recovery, as opposed to the expansionary policy advocated by portions of Congress (such as in the budget committees). Similarly, she questioned the president’s budget and expressed the belief that the president was blatantly threatening the new congressional budget process

(Joyce, 2011; Rivlin, 2013). These were the earliest examples of the normative-advisory role that the CBO began to undertake. This continued during the Carter administration, when the CBO diverged from the executive branch over budget estimates on a consistent basis, and it questioned the financial projections underlying the administration’s major project, the Carter energy program. An important aspect of the CBO’s successive defiance of both

Ford’s and Carter’s executive budgetary domination was that it cemented the nonpartisan reputation of the CBO (Steurle and Rennane, 2013; Joyce, 2011; Rivlin, 2013), because Ford as a republican and Carter as a democrat faced equal resistance from the CBO. By the end of the decade, the CBO was beginning to be regarded as “perhaps the most credible source on fiscal matters in Washington” (Joyce, 2011, p. 56).

The Reagan administration marked a pivotal moment in the CBO’s public value contribution in strengthening legislative budgeting, by providing an independent fiscal voice against the politicized budget numbers of the Reagan presidency. Reagan was elected under a three-part fiscal agenda that included a deficit reduction pledge, and when Reagan’s proposed budget numbers were analyzed by the CBO, it was found that the president’s proposal underestimated the expanded deficit by an amount in excess of $20 billion for the fiscal year 1981, thus presenting a markedly different view of federal fiscal health (Joyce,

2011; Steurle and Rennane, 2013). As a reaction, Reagan accused the CBO Director of producing “phony numbers” and made calls for the removal of the CBO Director because of her purportedly democrat predilections and supposed hostility to supply-side economics

(Joyce 2011, p. 57). An important facet of the CBO’s public value contribution in politics was

116 that the institution provided cover to congressmen who, otherwise, would not have had the wherewithal to check the president, particularly when they belonged to his political party.

The impartiality of the CBO allowed members of the same party to question the president’s policies in a strategic manner. In the case of Reagan, this included Republican congressmen such as Senate Budget Committee chair Domenici who thought that the Reagan program

“did not add up” (Joyce 2011, p. 66). At that time, congressmen from both sides of the aisle recognized the public value contribution of the CBO and supported its authority to challenge the executive’s budget estimates. The CBO’s legitimacy was cemented by the fact that its numbers and projections were more realistic (ex-post facto accurate) than those of the executive. This also allowed the CBO to encourage the executive branch’s budget-maker, the

Office of Management and Budget (OMB) to “keep honest” (Joyce, 2011, p. 210). If the OMB felt politically pressured to make budget figures that would appease the administration, it would use the defense that the CBO would produce more rigorous and accurate numbers which would discredit the OMB. The CBO was, through its own nonpartisan credibility, thus

“encouraging” the OMB to produce more accurate numbers by providing a higher standard of accurate budgeting, which the OMB could use to shield itself from political pressure.

The CBO’s legitimacy and the recognition of its public value contribution to the political budget process continued to grow with time, as it maintained its emphasis on a culture of impartiality and intellectual rigor. By the time the Clinton administration came to power, the CBO had already forged an effective track record spanning two decades. The major area of contention between the CBO and the Clinton administration would be in the large-scale healthcare reform debate. Maintaining deficit neutrality in the proposal was politically necessary, so planners from the executive side deliberately designed portions of the plan in anticipation of rigorous CBO analysis (Johnson and Broder, 1996; Joyce, 2011). Wallis and

Gregory discuss the blame-shifting aspect of the public value debate as characteristic of risk-

117 aversion among politicians and public managers (2009). In the end, the Clinton healthcare package was defeated, but whereas the impact of the CBO in the ultimate downfall of the plan (and the attendant blame) is disputed (Joyce, 2011; Steurle and Rennane, 2013), at the very least, the CBO made a public value contribution to the political process by adding a layer of critical rigor and methodical consistency to the analysis.

Although Clinton’s healthcare package was defeated, the Obama healthcare package proved successful in large part because it learned from the mistakes of its Democrat predecessor. As an example, whereas the Clinton administration simply drafted a “mammoth” healthcare reform bill and “dropped it in the lap of Congress in late 1993”, the Obama administration was more cooperative with Congress in terms of providing inputs and not letting itself be

“tied to any one piece of legislation” (Joyce, 2011, p. 182). The executive branch had more direct cooperation with the CBO itself, as when Director Elmendorf and other healthcare experts were invited by President Obama to brief him on options for healthcare reform at the Oval Office (Joyce, 2011). This example of public value in politics, wherein the CBO director sat with the President and directly communicated budget options to him, represents the most resounding example of an LBO serving its normative-advisory role.

Furthermore, the executive branch avoided irritations over whether its estimates or those of the CBO were better; it simply accepted the budget office’s conclusions; and by accepting

CBO’s inputs, it conferred legitimacy on the institution and recognized its public value contribution to the political process.

The success of the CBO’s normative-advisory role over the past forty years has been remarkable. Today, the CBO has the largest number of highly qualified economists of any agency of the federal government after the Federal Reserve (Steurle and Rennane, 2013, p.

106). This pool of expert economics represents a significant endowment in terms of

118 operational resources – a core tenet of Moore’s strategic triangle. In Congress, the chairs of committees and members often do not start working on a bill until they receive CBO analysis, preferring to wait for the budget office’s estimates before beginning at all (Steurle and Rennane, 2013), which speaks to the legitimacy conferred on the CBO – another tenet of Moore’s triangle.

Nonetheless, to get an idea of just how successful the CBO has been in creating public value in the political space, it serves meaningfully to contrast it with the Parliamentary Budget

Office (PBO) of Canada, which has had a very different trajectory, deeply imbued with the

“conflictual change” mechanism (Jorgensen and Vrangbaek, 2011, p. 490) of value-conflict, and therefore a markedly different degree of public value contribution. This comparison will reinforce our framework contrasting the normative-advisory and the mechanistic-costing roles, while also demonstrating how democracy and efficiency are together strengthened by

Legislative Budget Offices.

[4.3] THE PBO OF CANADA

The Canadian PBO was, like its American counterpart, formed during a period of heightened public mistrust towards government, following the Sponsorship Scandal that highlighted a grave lack of fiscal accountability in parts of Canadian government (Brooke,

2010). Sitting in the opposition at the time, the Conservative Party of Canada under Stephen

Harper seized the opportunity to make a campaign promise to clean up the system and bring “truth in budgeting” (Brooke, 2010, p. 37). After winning the election in 2006, Mr.

Harper passed Bill C-2, which included the creation of a Parliamentary Budget Office, and came to be known as the Federal Accountability Act 2006. However, this Act did not create a truly independent PBO, because the institution was made a part of, and subservient to, the

Library of Parliament. The Parliamentary Budget Officer could be terminated by the

119 executive without cause (Page and Yalkin, 2013). The exact reporting relationship of the

PBO had also not been made clear, and certain types of information were to be kept restricted from it under the Access to Information Act of 1985 (Lee, 2013; Brooke, 2010).

Given its vague mandate, ambiguity over its degree of “independence”, and many functional and operational details left unclarified, the space was created for a “conflictual change mechanism” of public value (Jorgensen and Vrangbaek, 2011) early in the life of the PBO.

For example, most parliamentarians understood the independence of the PBO to mean that it could openly publish its findings in the public domain (Brooke, 2010, p. 39; Lee, 2013, p.

24). This is in line with Benington’s discussion of linking public value to the “public sphere”

(2009, p. 233). However, the PBO published its first report on the controversial Afghanistan war just days before the 2008 election, finding that the government’s alleged cost of the war was not $8 billion as it had claimed, but closer to $18 billion. An important aspect of public value theory is that there is a “need to give more recognition to the legitimacy of a wide range of stakeholders” (Stoker, 2006, p. 47), and LBOs are representative of this way of thinking in that their work is meant to address budget transparency beyond just their key stakeholder (legislators) and reach out to the media as well as the wider public. In the

Afghanistan war case, the PBO’s analysis contributed to public value in painting a realistic picture of the costs associated with morally divisive policies, and unlike most government watchdogs, it did so an ex-ante manner before much of the policy implementation took place.

The second bout in PBO-executive pugilism came soon after in November 2008 through the release of the Fiscal and Economic Assessment (PBOC [Parliamentary Budget Office of

Canada] 2009). Whereas the Department of Finance, headed by Jim Flaherty, had trumpeted a federal budget surplus estimate for 2009-10, the PBO found that the

120 government would instead produce a deficit of $3.9 billion (Lee, 2013). The PBO’s estimate was far more accurate than that of the Department of Finance, but this turned out to be an

“almost pyrrhic victory” (Chohan, 2013, p. 18). As a reprisal, instead of the $2.7 million that it had been promised, the PBO was told that it would get $1 million less, leaving it with a

$1.8 million when it was already short on resources, and still had a mandate to analyze more than $250 billion in appropriations. The withholding of funds reflected the executive branch’s attempt to strangle the PBO in its infancy (Chohan, 2013), and represented a move far more vindictive than anything meted out to the American CBO. As the PBO had been subsumed under the Library of Parliament, the PBO was also given a hostile “review” of its practices by a Standing Joint Committee, which ordered the PBO to “respect the provisions” of the Federal Accountability Act and to back away from public release of information during elections (Lee, 2013). These reprisals are important to note in the context of public value in politics as examples of political resistance to change (Jorgensen and Vrangbaek,

2011, p. 494) in public value, and are a component of the “operational resources” that Moore

(2003, p.18) considers vital to public value contribution. They show the level of contention that is possible when public managers attempt to navigate the political space, especially in terms of the spectrum that we have theorised wherein moving from a mechanistic-costings focused role to a more normative-advisory one portends resistance.

In July 2009, the PBO handed over its five-year forecast of the Canadian economy to the

Finance Committee of the House. Although initially prepared just for the committee, a liberal opposition leader leaked it to the press (Lee, 2013). The media and the wider public paid careful attention to the report, given its importance in presaging structural deficits that would outlast any business cycle, and included larger job losses as well as a $150 billion cumulative 5-year deficit (Lee, 2013). Stoker has stated that in public value thinking there should “be a shift from a culture that accepts public acquiescence in decision making to one

121 that expects active citizen endorsement” (2006, p. 47), and the PBO was illustrative of this effect. Meanwhile, Prime Minister Harper reacted by calling the PBO’s conclusions “dumb”

(Lee, 2013, p. 25), much as Reagan once called the CBO’s work “phony numbers”. Spano

(2009, p. 335) suggests that when politicians make poor selection of needs they can cause public value destruction as opposed to value creation. In 2010, the PBO raised due alarm over the government’s controversial F-35 Jet procurement plan. The PBO forecasted a figure of $30 billion, double what the government had stated (Chohan, 2013; Page and

Yalkin, 2013). Many parliamentarians turned against the procurement plan after reading the analysis. The PBO’s numbers were also corroborated by work done by the Auditor

General of Canada (Lee, 2013).

In 2014, in a manner similar to the costing of the Afghanistan War, the PBO examined the foreseeable cost of the war against ISIS in Iraq (termed “Operation IMPACT”) (PBO, 2014).

However, the executive branch was initially reluctant to provide any information whatsoever to the PBO. Public value creation requires a multidirectional exchange of information (van der Waal and van Hout 2009; Spano 2009; Bennington 2009) but the political agent (executive branch) in this case was recalcitrant, using circumlocutory tactics such as calling for “cabinet confidence” and “parliamentary privilege”. However, with the uproar in parliament about this behaviour, and after much to-and-fro, the Defense Minister was forced to release incremental information. Public Value scholars (e.g. Alford and

O’Flynn, 2009; Stoker, 2006; Benington, 2009; Spano, 2009) have recognized the importance of dialogue between stakeholders and political decision-makers, and the

Operation IMPACT incident shows how politicians can stifle the dialogue process necessary for public value creation.

[4.4] THE PUBLIC VALUE OF A BUDGET OFFICE

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It emerges from examining the aforementioned two cases that public value in politics is a contested space, and when LBOs attempt to move from a costings role to an advisory one, they can be met with staunch resistance. Canada’s PBO has had a far more arduous journey towards establishing itself within the institutional landscape. Among the two roles, it has been allowed to conduct mechanistic-costing work, but has faced a vehement backlash whenever it has attempted to play a normative-advisory role, particularly when this has involved controversy, such as military campaigns abroad. Therefore, despite its considerable analytical and intellectual capacity (Chohan 2013) for fulfilling the dual LBO roles outlined in this article, the Canadian PBO has instead been relegated to the mechanistic-costing task, which is a disservice to its potential for contribution to public value.

It also becomes evident that the public value of the advisory role of LBOs is premised on certain ingredients. First, it involves “questioning” the assumptions and choices of decision- makers. This is different from a passive costing-role which is not about challenging assumptions; because an advisory role actively questions the underlying political reasoning of budget choices and thus reframes the budget discourse. As this article examined, CBO questioning of executive branch numbers goes back to the foundational years under

Director Rivlin, while the PBO’s questioning of the government’s F-35 procurement or

Afghan War spending reframed these bellicose decisions as not just morally divisive but financially costly as well. Second, an advisory role involves “providing cover” such that the merits of policy are segregated from political loyalty, and an example of this was the CBO providing cover to Republicans who wanted to challenge the President Reagan’s deficit- reduction plan without compromising party loyalties. Third, an advisory role involves providing options, and the CBO Director sitting in the Oval Office with President Obama to discuss options on healthcare reform exemplifies this. Fourth, an advisory role requires the fostering of a conciliatory negotiation process between the executive-legislature. A passive

123 costings role does not require actively fostering a climate where the two branches of government can work through law-making; but by contrast, an advisory role does entail the encouraged of budget-oriented negotiation between the legislature and the executive to help get difficult legislation passed, so long as there are nonpartisan fiscal merits in doing so. An example of this was how the CBO helped foster a climate where Congress and the Obama administration were better able to work through the budgeting details of Obamacare, which in contrast to the Clinton package, was successfully enshrined into law. Fifth, an ingredient in the advisory role is raising public awareness of budget matters, particularly those that involve moral controversies, and a good example of this is the open publishing approach adopted by the PBO in bringing to light the Afghan War and F-35 controversies of Prime

Minister Harper. A mere costings role does not involve such creation of public awareness.

Sixth, an advisory role involves encouraging institutions, such as budget-makers in the executive branch, to exercise better analytical discipline. A passive costings role does not require encouraging other institutions to “behave better”, but as the advisory role of the

CBO has shown, it has helped encourage the OMB to “keep honest.”

TABLE 3: THE INGREDIENTS FOR AN ADVISORY ROLE AND A COSTINGS ROLE

ADVISORY COSTING

• Questioning: The LBO questions • Number-crunching: Be the

the budgeting assumptions, “number cruncher in chief” and cost

challenges the underlying (produce figures for) policies

biases, and reframes the brought to the LBO

budget discourse.

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• Providing Cover: The LBO allows • Forecasting: Provide projections

politicians to disaggregate the of budget figures over long-term

merits of policy from issues of horizons.

political loyalty. Example:

Senate Budget Committee v

Reagan,

• Providing Options: Providing • Scorekeeping: Note the changes

politicians with multiple ways in budget figures due to changes in

to proceed, not just passively policy measures.

costing what is given to them.

Example: Obama Healthcare.

• Fostering Negotiation: Fostering a

conciliatory negotiation

process between executive-

legislature. Example: CBO

helped foster a budget-oriented

Congressional-Presidential

negotiation that helped get

Obamacare passed.

• Raising Public Awareness:

Advising on ex-ante and ex-

post oversight that increases

public awareness of

controversial plans. Example:

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PBO v Harper on Afghan War,

F-35.

• Encouraging Discipline:

encouraging executive budget-

makers to exercise better

analytical discipline. Example:

CBO helping OMB keep ‘honest’

The spectrum between advisory and costings roles speaks to an existing distinction in the public value debate as articulated by Roberts (1995) who distinguishes between public managers as “moderator of discussion” rather than “player in the political game”. However, we believe the two roles that we have outlined bring greater clarity to the discussion of public value contribution, especially in case studies such as LBOs, since these budget offices can at the same time be thought of as “players in a political game” and yet be “moderators of discussion” as well. For example, the Congressional Budget Office is “a player in the political game” in the sense that Congress and the executive both accord legitimacy to its analysis and attribute considerable weight to its recommendations, but the CBO is also simultaneously a “moderator of discussion” because it tempers the nature of fiscal debate towards a non-partisan, numbers-based dialogue on budgetary matters. Therefore, the moderator/player distinction in public value contribution is less exact than the normative/mechanistic distinction.

Moore states that institutions may need to invest “significant effort in negotiations with the political authorizing environment to reach some kind of agreement about what they are expected to produce” (2007, p. 99). Budget offices have gone through such negotiations

126 time and time again. For the Canadian PBO, those negotiations with the authorizing environment are far from over. Moore also aptly remarks that “while the political system often says that it wants accountability, and occasionally demands it, it is usually reluctant to negotiate a stable deal about what constitutes public value,” (2007, p. 99).

Stoker has noted that “the emphasis in public value is on challenge and change” (2006, p.

49), while Jorgensen and Vrangbaek assert that “public value research is […] not about

‘creating public value’ [but rather] the theoretical and empirical analysis of normative manifestations in the public sector,” (2011, p.487). With respect to our theorised spectrum on which LBOs can act as normative-advisors and mechanistic-costing agents, the aforementioned cases of the United States and Canada demonstrate a considerable difference between both budget offices in terms of success in contributing to public value.

Whereas both LBOs are capable of acting as normative-advisors, only the American CBO has been allowed to adequately play this role, while the Canadian PBO has limited to the costings role. Part of the difference may be in the age gap between the two institutions

(established 1974 vs 2007) which is important because, as Benington (2009, p. 240) rightly observes, public value is an outcomes-based approach that evaluates meaningfully over the medium- and long-term. However, the intense reprisals against the PBO under the Harper regime were never experienced by the CBO. Rhodes and Wanna (2007, p. 414) warn that such reprisals against public managers can occur and “get nasty, bite them back, leave them exposed”. We believe that the strategic triangle framework provides a public value explanation for why the American CBO had an easier time adopting the normative-advisory mantle and navigating the space between the costing and advisory roles. We turn to the strategic triangle to “structure thinking” and provide a public value oriented explanation about differences between LBOs (Alford and O’Flynn, 2009, p. 174).

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[4.5] STRATEGIC TRIANGLE

Described as the ‘central symbol’ of public value (Alford and O’Flynn, 2009, p. 173), Moore posits a strategic triangle framework that requires public sector organizations to have three criteria: (1) creation of substantive public value; (2) legitimacy and support; and (3) operational capabilities (1995; 2004). As Moore notes, the triangle is both a tool for making calculations about strategy as well as used as a framework for measuring performance against that strategy (2008).

TABLE 4: AN ASSESSMENT OF THE STRATEGIC TRIANGLE FOR BUDGET OFFICES

CBO PBO Criteria (USA) (CAN)

Broad and bipartisan Parliament generally supports congressional the mission and acknowledges Value Yes agreement on the value Yes its value. Opposition more of a nonpartisan fiscal cognizant of value. office.

Congress often waits PBO has not been afforded

for CBO to first provide requisite level of support and

its analysis. legitimacy. Difficulties have

Legitimacy Congressmen give included: Withholding of fund Yes No and Support vocal bipartisan threat; Non-independent

support for CBO’s officer (tied to Library of

work. Executive tacitly Parliament); insufficiently

willing to cooperate on clarified mandate; hostile

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major issues. 40-year ‘performance reviews’; short

track record gives institutional lifespan;

institutional combative engagement on

legitimacy. politically charged issues; and

other vocal and tacit reprisals

from the executive.

Employs the most

economists of any

federal agency after Only 14 people with meagre

Federal Reserve. $3Mn in funding, dealing with

Secures talent and has >$250Bn in appropriations.

Operational sufficient funding. Funding has been threatened; Yes No Capabilities Well-established analytical resources are

analytical limited; ambiguity in

programs/projects. operational details. Operations

Strong organizational therefore constrained.

knowledge

management.

Total 3/3 1/3

1. Substantive Public Value: in the case of the first criterion, it has been widely accepted

by legislators and the public in both the United States and Canada that their budget

offices provide a service of substantive public value. Their timely, informed,

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nonpartisan and credible analysis allows the legislators to participate in the budget

process on a more equal footing with the executive, thereby expanding the

“democratic leverage”, in the words of Stapenhurst (2008), for their citizens. They

broadly and explicitly recognize that, even when it seems a bitter pill, a legislative

budget office has “salubrious long-term benefits” (Chohan, 2013).

2. Legitimacy and Support: it is in the second criterion of the strategic triangle that the

budget offices have faced their most resolute difficulty. This is also where the CBO

and PBO diverge. Moore describes legitimacy and support as the willingness of

“customers and stakeholders” to accept what is offered by the entity which in turn

gives it the “right to operate” in that “authorizing environment” (Moore and

Khagram, 2004, p. 8; Moore, 1995, p. 114). “Customers”, in this case, are the

congressmen and MPs directly, and the public indirectly and more broadly. It took

the CBO decades to grow into an entity considered legitimate by both parties in

Congress (and by the executive). As observed earlier, this legitimacy was earned in

large part through solid analytical work, but also through an equal and nonpartisan

challenge posed to both Republicans and Democrats. For the Canadian PBO,

legitimacy is still not a fait accompli, with threats such as the withholding of funds

still considered viable tactics to strong-arm the institution. The PBO is still

contending for its “right to operate” in the political milieu.

3. Operational Capabilities: the differences between the CBO and the PBO is further

heightened in the third category of operational capabilities, which is defined by

Moore (2003, p.18) as “the technologies that convert input into outputs, and outputs

into […] desired outcomes”. This ranges from staffing, to analytical tools, to funding,

to access to resources for analysis. As a reminder, whereas the CBO now employs

more economists than any other federal agency except the Federal Reserve (Steurle

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and Rennane, 2013, p.106), the PBO has only a dozen analysts and a meagre budget

(Chohan, 2013). The PBO’s operational wherewithal is compromised by the adversity

that the executive poses, and this markedly reduces PBO’s public value contribution.

An assessment of the strategic triangle framework demonstrates that the creation of public value by the CBO in the United States is facilitated by its institutional legitimacy, a robust operational structure, and recognition of its value proposition to Congress and to the public.

Meanwhile, the PBO in Canada is hampered both by political attacks on its legitimacy and a restriction of its operational resources, cutting off two of the nodes of the strategic triangle.

The executive has tried to force the PBO into a mere mechanistic-costing role, in spite of the fact that it is more than capable of fulfilling an important normative-advisory role with respect to the Canada’s budget.

FIGURE 4: DEMOCRACY AND EFFICIENCY – LBOS CONTRIBUTE TO BOTH

Democracy Efficiency

By providing more Open publishing and accurate budgeting dissemination of analysis: information and analysis, democratises budgeting they enhance the by involving broader efficiency of the budget stakeholders incl. public process at large and the media

LBOs can support both efficiency and democracy at the same time, because on one hand their fiscal analysis improves efficiency in the budget process, and on the other hand their

131 work improves the level of transparency and accountability in budgeting, thereby strengthening the democratic process as well.

[4.6] CONCLUSION

Stoker has noted that the public value debate contains an important dynamic of balancing democracy and efficiency (2006, p. 43), and Rhodes and Wanna contend that public value is a “non-democratic notion” (2007, p. 408), but we have shown in this article that LBOs strengthen both efficiency and democracy. By providing more accurate budgeting information, they enhance the efficiency of the budget process, but they also involve external stakeholders, such as legislators, the media, and the public at large; which helps

LBOs to strengthen democracy as well. We therefore disagree with Rhodes and Wanna, using LBOs as our lens, that public value is a non-democratic notion, because the democratic process is enhanced through improved budget transparency, while efficiency is enhanced through rigorous analytical budget work. We used the strategic triangle to

“structure thinking” about what ought to be the case for LBOs: that they should have both an advisory role and a costings role. We used the triangle to “to diagnose the existing situation” as well (Alford and O’Flynn, 2009, p. 174), finding that in the CBO is allowed to employ both roles, but the PBO has regularly been forced into a costings-only position.

In the United States, the CBO has demonstrated repeated successes over the past four decades in reinforcing the congressional role in budgets, which had long been dominated by the executive. Today the CBO is able to maximize its public value because it enjoys legitimacy, operational resources, as well as broad recognition of its value proposition. The successive administrations of Ford, Carter, Reagan, Clinton, and Obama have all felt the presence of the CBO in the budget process, not least when major new proposals such as healthcare reforms or deficit reduction packages have been involved. The CBO is firmly

132 integrated into the budget process, and this integration allows it to maximize its public value by enhancing accountability and oversight, which are key components of public value

(Stoker, 2006).

Meynhardt has keenly observed that “legitimization by numbers may appear a less complex challenge than facing the challenge of a pro-active dialogue about ‘why our work is valuable to society,’” (2009, p. 214). In the case of Canada, the PBO has been short-changed on two of the strategic triangle’s nodes: operational resources and legitimacy. Yet it still enjoys a broad recognition for its value proposition by parliamentarians, the media, and the wider public. Despite a series of vindictive blows by the executive during the now concluded

Harper-era, the Canadian PBO has strengthened the parliamentary role in budgeting by laying bare many highly controversial budgetary issues, including the F-35 procurement plan, the Afghan War report, the Fiscal and Economic Assessment, and the costing of

Operation IMPACT. Nonetheless, the PBO is capable of a far greater contribution to public value if allowed to more fully serve both its advisory and costing roles.

Public value is an “umbrella construct” that has not been fully agreed upon and typologized as of yet (Alford and O’Flynn, 2009, p. 187), and there are multiple, competing, hybrid definitions of public values (van der Waal and van Hout, 2009), but the issue of “public value in politics” remains the most contentious iteration of the public value debate. We have shown that Legislative Budget Offices help to provide a new lens and test for showing how public managers can engage in the political sphere by enhancing the process of political budgeting.

Future explorations of “public value in politics” can draw from the approach of this article and branch out into other “concrete managerial settings” where political engagement, or

“imperfect political agreements” as Moore put it (1995, p. 54-5), loom large. This should

133 include areas such as local government issues; regulatory oversight bodies (Securities

Exchange Commission versus the politicians “influenced” by the financial sector, for example), and monetary policy (interactions between the Federal Reserve and Congress, for example).

Looking back inwards through the lens of the LBO, we also remark that our spectrum of

LBO roles also serves as a useful framework in the literature on LBOs themselves, insofar as this improves the understanding more broadly of what LBOs as institutions can accomplish.

In sum, LBOs are intrinsically public value-creating institutions because they are an inherent dialogue between public managers (economists) and politicians (legislative & executive). If allowed to play a normative-advisory role which benefits from provision of all the three nodes of the strategic triangle, LBOs can contribute significantly to public value in politics. They enhance both democracy and efficiency by providing fiscal “politically neutral competence” to the realm of politics, which as Moore (1995, p. 38) observed, is the “final arbiter of public value”.

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CHAPTER 5: PUBLIC VALUE AS RHETORIC:

A BUDGETING APPROACH

Discipline: Public Administration

Citation: Chohan, U.W. (2017). Public Value as Rhetoric: A Budgeting Approach. International Journal of Public Administration. http://dx.doi.org/10.1080/01900692.2017.1373673

Contribution to Thesis: Identifies limitations to the solution provided in the previous chapter, because public value can be used as a rhetorical device, which is why, even when the ingredients for playing both roles are provided to LBOs, they may not necessarily perform both.

Contribution to the Literature: public value can be used as rhetoric both by politicians and public managers, and so long as citizens have conflicting values, politicians must prioritize between rhetoric and resources, which leaves public managers with a limited ability to create public value, which is limited by rhetoric while other values are prioritized.

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136

ABSTRACT

Public value theory has been accused of serving as a “rhetorical device” for public managers to advance their interests and influence vis-à-vis politicians. This article uses

Legislative Budget Offices (LBOs) as a lens to re-examine the theme of “public value as rhetoric”. It examines how an LBO can relegate itself to a lower public value-creating position that avoids conflict with politicians, which then allows politicians to employ rhetoric such as fiscal “sustainability” and “responsibility”, without making actual budget choices that incur political costs. The findings of the article suggest that the use of public value as rhetoric is a function of contradictory values held by citizens, which politicians and public managers must reconcile by choosing to divert either resources or rhetoric.

Furthermore, rhetoric is bidirectional, and employable not just by public managers, but by politicians as well.

[5.1] INTRODUCTION

The aim of this article is to revisit the theme of “public value as rhetoric” (see Alford and

O’Flynn, 2009, p.180), using the “prism of budgeting in public value” (see Chohan and

Jacobs, 2016b), to assess whether public value, insofar as it is a rhetorical strategy, is employed by politicians in addition to public managers during the complex interaction that arises between the two, as they negotiate an “authorizing environment” (Moore and

Khagram, 2004, p. 8). In other words, the focus of this article is on whether the notion of a

“rhetorical strategy, designed to protect the sectional interests of bureaucrats and their organizations” (Alford and O’Flynn, 2009, p. 180), is also a device employed by politicians during the process in which managers and politicians alike try to create value for the public

(Moore, 2003; Spano, 2009; Benington, 2009; Meynhardt, 2009; Wallis and Gregory,

2009).

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To this end, the article examines the Parliamentary Budget Office (PBO) in Australia, a country with a rich public value discourse (Meynhardt 2009, p. 195) and “some of the most radical experiences” with public administration reform (O’Flynn, 2007, p. 363; Hawke and

Wanna, 2010). It does so specifically in relation to the Australian Charter of Budget

Honesty (1998) and its rhetorical commitments to inter alia “responsibility” and

“sustainability” in the budget process (Hawke and Wanna, 2010; Kirchner, 2011). It uses the strategic triangle framework of public value (Moore 1995), the advisory-costings framework of public value (Chohan and Jacobs, 2016b), and a textual analysis of Australian budget speeches and budget reply speeches over the period 2006-2016, to assess the use of rhetoric on values of fiscal “responsibility” and fiscal “sustainability”, as well as the decoupling of these values (see “values” discussion in Meynhardt, 2009, p. 196-7) through the actions – and more importantly, through the inaction – of politicians and public managers in the fiscal process.

This exploration in turn raises questions about three other areas of inquiry in public value.

First, it ponders the role of “leadership” in public value (see discussion in Wallis and

Gregory, 2009), as the Parliamentary Budget Office’s leadership limits its own authorizing environment in exchange for less contention (see also Moore 2007, p.99). This challenges

Chohan and Jacob’s (2016b) subjacent assumption that a greater enabling environment will automatically result in greater initiative by public manager leadership. Instead, public managers can make deliberate choices to create more docile and less contentious organisations, which makes the Australian PBO unlike its counterparts in the United States or Canada (see Chohan and Jacobs, 2016b, 2017).

Second, it raises questions about “values” as they are “articulated by the public” (Spano,

2009; Benington, 2009), by considering the fact that politicians may articulate “budget

138 discipline” as a value, but then not actually pursue the requisite fiscal restraint, because it is the public that holds a contradictory stance on this value. On one hand, the public voices a desire for the value of budget sustainability, but on the other hand, they do not want this value to restrict their actual consumption, expenditure, or well-being through restrained budget spending. This speaks to Meynardt’s (2009, p.206) point that public value does not need to be positive or good, but can also comprise negative traits. Furthermore, this contradiction is important to point out, because as both Meynhardt (2009, p.198) and

Talbot (2006, p.3) note, there is a need for “a grounding of public value in our evolved and contradictory human nature.” This paper helps to ground public value in one such contradiction.

Third, and most importantly, this article’s exploration turns the typical criticism of “public value as rhetoric” on its head by considering whether politicians are not equally capable of, and complicit in, employing rhetoric vis-à-vis public managers (Alford and O’Flynn, 2009;

Oakley et al., 2006; Crabtree, 2004; Roberts, 1995). Much of the accusation of public value as rhetoric has pointed the finger at the public manager, but what now warrants investigation is whether the politician employs the same forms of rhetoric. To pursue this line of inquiry, it is first necessary to examine the extant literature on public value as rhetoric from the perspective of both its proponents and opponents.

[5.2] REVISITING PUBLIC VALUE AS RHETORIC

Despite the proliferation of the public value discourse (Moore, 1994, 1995, 2003, 2007) in both academic and practitioner circles, public value has been met with some dissent (see

Alford and O’Flynn, 2009), in part because public value is seen as a “broad portmanteau phrase expressing ideals and aspirations about public service, but capable of meaning many different things to different people” (Benington, 2009, p. 233). Two notable and enduring

139 criticisms of public value are that: (1) public value undermines the role of democratically elected representatives if public managers usurp power from politicians (Rhodes and

Wanna, 2007); and that (2) public value is used as a “rhetorical strategy, designed to protect the sectional interests of bureaucrats and their organizations” (Alford and O’Flynn, 2009, p.

180).

TABLE 5: APPLYING THE PRISM OF BUDGETING TO TWO CRITICISMS OF PUBLIC VALUE

Criticism Public Value in Politics Public Value as Rhetoric

Example Rhodes and Wanna 2007; Stokes Roberts 1995; Crabtree 2004;

Authors 2006 Oakley et al 2006

Principal Public Value is an anti-democratic Public Value is a public relations

Arguments notion that lets public managers ploy that lets managers justify

usurp the role of politicians in the their work (Roberts 1995) and

decision-making process (Rhodes “puts a good spin” (Crabtree

and Wanna 2007); Public Value has 2004) on what they do

an inherent trade-off between

“efficiency” and “democracy”

Lens of Legislative Budget Offices: CBO Legislative Budget Office: PBO

Budgeting (USA) and PBO (Canada) (Australia)

Counter- LBOs enhance both “democracy” and Public Value can serve as rhetoric argument “efficiency” (Chohan and Jacobs for both politicians and public

2016b). They allow greater managers; public managers can

transparency, participation, and limit their own authorizing

accountability in budgeting (i.e. environment while conforming to

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democracy), and they improve the political rhetoric; politicians may

accuracy and rigor of budget analysis employ rhetoric without taking

(i.e. efficiency) (Chohan and Jacobs actual action because citizens

2016b) prefer rhetoric but do not yearn

for actual action.

The first criticism of democratic usurpation has been shown by Alford and O’Flynn, (2009) to be a misreading of Moore’s original work, and Chohan and Jacobs (2016b) have used the lens of budgeting to show that public value creation can even be a pro-democratic force that balances both “efficiency” and “democracy”. However, the second criticism of “public value as a rhetoric” has not been fully addressed in the academic literature and warrants further inquiry. Both criticisms are enumerated here to point out that, in the first case, it is the prism of budgeting in public value (Chohan and Jacobs, 2016b) that offered a means of revisiting the debate, and therefore the same prism of budgeting should be applied to the second criticism as well, which this article does.

Moore himself noted early on that public value has a rhetorical element, but that public value would need to move beyond rhetoric to serve as a meaningful discourse (1994). In a contrasting analysis, termed “civic discovery”, Roberts (1995) described Moore’s work as advocating “managerial realpolitik”, arguing that public managers could use public value as a form of defence for increased involvement in political decision making, after “allaying public concern about bureaucratic power,” (1995, p. 293). Roberts defined public value’s rhetoric as “the idea that managers may legitimize the exercise of discretion by showing it to be consistent with a mandate that is produced through a fair process of deliberation,” (1995,

141 p. 291). Roberts further cautioned that public value as a rhetorical strategy “may overestimate the ability to build mandates, the ability to build deliberative processes that are manifestly fair, and the willingness of dissentient citizens to defer to such mandates,”

(1995, p. 291). Roberts then argued that a rhetorical strategy would also “bind public managers to a demonstration of neutrality unlike that imposed by the politics- administration dichotomy,” a point that is particularly à propos to the neutral and nonpartisan nature of Legislative Budget Offices, the institutions that are to be examined in this paper, since these offices are expected to analyse matters pertaining to budgets with neutral and impartial economic rigour (Chohan 2016a, 2016b; Chohan and Jacobs, 2016a,

2016b, 2017). In response to Robert’s criticism, Alford and O’Flynn argue that his viewpoint insinuates “bad faith” on the part of public managers (2009, p.180).

Benington draws a distinction between public value as a “heuristic device” and as a

“rhetorical device” (2009). The distinction between the two is important, because whereas a rhetorical device can detract from the public manager’s effort “to integrate politics, substance and administration” (Moore, 1995, p.22), a heuristic device can serve to

“stimulate debate between competing interests and perspectives, and to generate dialogue about how to improve services, about who gains and who loses, and about relative benefits and cost,” (Benington, 2009, p.240).

Oakley et al. (2006) stated that public managers can be viewed as engaging in a public relations exercise through public value. Similarly, Crabtree argued that public value allows governments “to put a good spin” on activities, claiming somewhat dismissively that “public value: who could possibly be against it? As an objective for public service modernisation, it gives motherhood and apple pie a good run for their money” (2004, p. 55). Alford and

O’Flynn respond to this criticism by noting that, given that the value of government is

142 inherently difficult to monetise and that the critics are mired in “private sector nostrums” which lead them to “misconstrue the notion of public value”, it is in fact the critics who are employing rhetoric rather than the targets (2009, p.182).

As such, the debate on “public value as rhetoric” has yet to reach its full development, and in a similar vein to what Meynhardt has aptly noted, “there are significant research gaps to deepen our understanding” in this aspect of public value, particularly with respect to the

“synergetic interplay between institutions and sectors” (2009, p.215). This article applies the lens of budgeting that Chohan and Jacobs employed in “public value in politics”

(2016b), to address the criticism of public value as rhetoric, drawing upon that approach of

Legislative Budget Offices (LBOs) to examine how and why public value can persist as a rhetorical ploy in the perennial tussle between public managers and politicians (the

“politics-administration dichotomy,” see Roberts 1995, p.291; Chohan 2017b).

This perspective will be interesting to scholars who have together criticized public value and also acted as vocal critics of contemporary Australian budgeting practice (Hawke and

Wanna, 2010). These authors are indeed the one and the same (Wanna, 2007), and the discussion in this article thus brings together the critiques of scholars who find fault both with public value theory as well as with budgeting practice (see discussions by Wanna in both Rhodes and Wanna, 2007; and Hawke and Wanna, 2010). The use of a legislative institution is also apt because, as Frederickson (1991, p.395) recognises in his demarcations of the “public”, the “public as represented” equates to an intrinsically “legislative” perspective. This article situates the LBO of Australia (Parliamentary Budget Office, “PBO”) within the larger Australian budget context, with particular emphasis on the Charter of

Budget Honesty (1998), which represents a cornerstone in the contemporary budget architecture of Australia. This Charter resorts to fiscal rhetoric that is influential (Robinson,

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1996), vague (Kirchner, 2011), and subject to interpretation (Wanna, 2007). In the words of

Hawke and Wanna, Australian reform proposals have been “frequently rhetorical, unclear or indeterminate; or ambitious grandiose statements that were then rarely revisited" (2010, p.67).

From this point of departure, the article considers whether Australian politicians, bolstered by a budget architecture that is sufficiently vague and a budget office that is sufficiently non- confrontational, can employ budget rhetoric such as fiscal “sustainability” and

“responsibility”, without actually undertaking the requisite reforms. Their rhetoric serves to elude decision-making on the necessary tough fiscal measures that would incur political costs. This article tallies the explicit mentions of “sustainability” and “responsibility” (See

Table 8) in the annual budget speeches and budget reply speeches in the Australian parliament. These speeches are made by the Treasurer of the Commonwealth and the

Leader of the Opposition respectively. A textual analysis of the persistent usage of the terms budget “sustainability” and “responsibility”, and the decoupling of this rhetoric from actual budgetary reform, can help to illustrate the application of a rhetorical strategy by politicians vis-à-vis the public managers (the PBO) and the public more broadly.

[5.3] THE AUSTRALIAN BUDGET CONTEXT

Whereas the Australian budget reform process was “not planned or linear, and has occasionally zigzagged,” (Hawke and Wanna 2010, p. 71), Australia has nonetheless long been recognized as a pioneer in budget reform (Blondal et al., 2008; Robinson, 1996; Kopits

2001). Much of this transformation was attributable to budgetary initiatives on the part of public managers, particularly in the Australian Treasury, beginning in the mid-twentieth century (Hawke and Wanna, 2010). Equally importantly, these initiatives received both tacit and explicit support from politicians at various critical junctures (Robinson 1996; Kirchner,

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2011). Therefore, the evolution of the budget process in Australia can be effectively described in terms of the “politics-administration dichotomy” (Roberts, 1995, p.291) since it was premised on tacit as well as active cooperation between public managers and politicians.

However, many budget scholars now assert that the initial impetus for budget reform has been lost in rituals and fiscal affectations (Blondal et al., 2008; Hawke and Wanna, 2010;

Wanna, 2007; Kopits, 2001; Kirchner, 2011). Hawke and Wanna argue that much of

Australian budget process today is rhetorical rather than practical, and that proposals have been “frequently rhetorical, unclear or indeterminate; or ambitious grandiose statements that were then rarely revisited" (2010, p.67). This can be most clearly seen in what is now a deeply embedded, perhaps incontrovertible, cornerstone of Australia’s budget process: the

Charter of Budget Honesty (1998) (see discussions in Chohan 2016d, 2016e as well). In public value terms, this Charter provides the bedrock “legislative frame” (Meynhardt, 2009, p.193) and “policy context” (Benington, 2009, p.237) in which budgetary public value could be created in Australia.

The Charter of Budget Honesty is committed to the rhetorical goal of “adhering to the principles of sound fiscal management,” without specifying what this means in practice

(Hawke and Wanna, 2010, p. 77; Chohan, 2016e). Furthermore, the Charter insists upon

“moderating cyclical fluctuations in economic activity, as appropriate, taking account of the economic risks facing the nation and the impact of those risks on the Government’s fiscal position”, without elaborating on this. Similarly, it implores officials to hold a “regard to economic circumstances,” while saying that decisions must be taken with “regard to their financial effects on future generations,” and equally so without sufficient explication.

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In addition, the Charter has established a series of “rituals” in terms of the release of certain documents at regular intervals, that underpin much of the contemporary budget practice in

Australia. A tremendous amount of detailed fiscal information is presented in these documents, which are produced in several stages: A Fiscal Strategy Statement (FSS); a Mid-

Year Economic and Fiscal Outlook report (MYEFO) half-way through the year; a Budget

Outcome Report (BOR) after the budget’s passing; an Intergenerational Report (IR) released every few years to ponder the coming five decades; and a Pre-Election Fiscal

Outlook (PEFO) in election years (see discussion in Wanna, 2007; Blondal et al., 2008;

Hawke and Wanna, 2010; Chohan 2016d, 2016e).

The focus in these documents is on the technical representation of budget information instead of on strategic budgetary thought, a point that is best articulated by Hawke and

Wanna, who argue that “Australia has shown itself prepared to tackle the technical input side of budget reform, while consigning broader strategic decision-making to the margins, and being churlish in showing reluctance to tackle the harder performance-related side of the budget including 'hard' accountabilities for delivering programs" (2010, p. 66).

In order to contextualize the rhetorical aspect of all this, it serves to note that the fiscal rhetoric is couched in generalities and vagueness, and bereft of specificity with respect to budget measures (Hawke and Wanna, 2010). For example, as Hawke and Wanna assert,

“often when reforms were introduced, the executive was not particularly forthcoming about what it intended to achieve with any one component, preferring to talk in generalities such as greater efficiency, transparency, tighter discipline or a greater focus on results,” (2010, p.

67). As a result, “in the absence of specific definitions, the [Charter] remains a set of platitudes and nice sounding intentions” (Hawke and Wanna, 2010, p. 73).

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As part of the Charter, the Australian government presents budgets as consolidated statements for financial reporting, much like a corporate sector would. These include cash flow statements, balance sheets, movements in equity, and monthly financial reporting. This mirrors the original logic of public value theory, which juxtaposed public sector value creation with that of the private sector (Moore and Khagram, 2004; Stoker, 2006;

Benington, 2009; Alford and O’Flynn, 2009). However, this process contains a significant discretionary element, because governments can choose one of at least four essential indicators to suit their narratives, which “allows the government slippage room to interpret results in the most favourable light,” (Hawke and Wanna, 2010, p. 72). As a result,

Australian budget reform, as encapsulated in the Charter, adheres more to the letter (rituals of paperwork) than to the spirit of fiscal prudence (tough budgetary choices). “Some key terms in [the Charter] are subjective and highly contextual” and “leave wide scope for interpretation” so that “the words mean what the government wants them to mean,”

(Hawke and Wanna, 2010, p. 73).

Due to the rhetorical nature of the Charter, whereas both Stapenhurst et al. (2008) and

Wehner and Renzio (2013) have noted that in developing countries, a frequent or erratic series of changes in government can lead to poorer outcomes in budgeting; Wanna has noted that, “there is considerable evidence from Australia that government longevity is inversely related to budgetary reform,” (2007, p. 2). This is to say that stable and long- lasting governments can continue to remain inactive on fiscal reform while making rhetorical reference to the Charter on budget “sustainability” and “responsibility”. A series of oversight reports by parliament have corroborated this, and they have also found that much of the material produced under the requirements of the Charter is confusing and meaningless (Senate Standing Committee on Finance and Public Administration, 2007).

They also note that the rituals initiated by the Charter lead to a “more is less” situation,

147 producing budgetary information that in effect clouds both judgement and initiative on the fiscal front. This runs contrary to the value of “transparency” in the budget process, because whereas national budgeting is generally susceptible to insufficient divulgence of information

(Stapenhurst et al., 2008), in Australia’s case, there is too much (unproductive) information. Douglas and Meijer find that transparency is a “precondition” for public value

(2016, p.940), but an excess of information can work to produce a counter-productive outcome.

An important amendment was made to the Charter in 2012, so as to incorporate a new institution within the budget process that would ostensibly revive the stagnating fiscal effort, and would infuse an international best practice (Chohan, 2013, 2016a) into the

Australian budget process: the implementation of a Parliamentary Budget Office (PBO). The

PBO represents an independent, nonpartisan office of budget experts who produce fiscal analysis for the Australian parliament (Chohan, 2016b). Its design is based on similar institutions (collectively known as Legislative Budget Offices, “LBOs”) in the United States and Canada (see Chohan 2013b, 2016a, 2016b; Chohan and Jacobs 2016a, 2016b). From a public value perspective, LBOs are contributors to “political value—adding value to the public realm by stimulating and supporting democratic dialogue and active public participation and citizen engagement,” (Benington, 2009, p.237).

However, compared to its American and Canadian peers, Australia’s PBO differs in at least one peculiar way: it does not attempt to “challenge” the entrenched institutions in the budget process through its nonpartisan analysis (Chohan, 2016b). Whereas the American and Canadian budget offices have tried to play both an “advisory” and a “costings” role, one that is normative and one that is mechanistic (see typology of advisory-costings roles in

Chohan and Jacobs, 2016c), the Australian budget office relegates itself to just a “costings”

148 role, which actively avoids budgetary conflict and evades contention with other institutions

(Bowen, 2013b).

TABLE 6: ASSESSING AUSTRALIA’S PBO: INGREDIENTS FOR AN ADVISORY ROLE AND A

COSTINGS ROLE IN PUBLIC VALUE (1) Normative – Advisory Role Australian PBO

1 – Questioning: The LBO questions No: PBO deliberately does not challenge the the budgeting assumptions, challenges executive in the budget process in terms of the underlying biases, and reframes the challenging assumptions or biases; and does budget discourse not reframe the budget discourse

2 – Providing cover: The LBO allows No: legislators from governing party have not politicians to disaggregate the merits of leveraged the “cover” that PBO numbers can policy from issues of political loyalty provide

3 - Providing options: Providing No: PBO has not advised politicians through politicians with multiple ways to the provision of multiple policy options proceed, not just passively costing what is given to them

4 – Fostering negotiation: Foster a No: PBO has not actively participated in such conciliatory negotiation process between a “negotiation process” executive-legislature

5 – Raising public awareness: No: PBO has not engaged issues that would

Advise on ex-ante and ex-post oversight represent “controversial plans” such as war that increases public awareness of efforts controversial plans

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6 – Encouraging Discipline: Yes: PBO has encouraged budget-makers to encouraging executive budget makers to exercise greater discipline exercise better analytical discipline

Advisory Score: 1/6

(2) Mechanistic – Costings Australian PBO

Role

1 – Number-crunching: Be the Yes: PBO provides highly professional and

“number cruncher in chief” and cost rigorous assessments of budget numbers

(produce figures for) policies brought to the LBO

2 – Forecasting: Provide projections Yes: PBO has provided long-term projections of budget figures over long-term that assess the feasibility of the budget over a horizons long horizon

3 – Scorekeeping: note the changes in Yes: PBO has regularly assessed changes to budget figures due to changes in policy budget figures due to changes in fiscal measures measures

Costings Score: 3/3

“Ingredients for an Advisory role and a Costings Role in Public Value”

Source: Chohan and Jacobs (2016b)

Unlike the Canadian PBO (see Chohan, 2013, 2016a, 2016b; Chohan and Jacobs, 2016a,

2016b, 2017), where the PBO’s public managers were restricted in terms of their authorizing environment by a confrontational political landscape, and were punished by “vindictive”

150 politicians (Chohan and Jacobs, 2016b), the Australian PBO is not subdued by exogenous political force. Rather, its own leadership confines the PBO to a more passive, less contentious “costings” role (Bowen 2013a, 2015). The first (and current) Parliamentary

Budget Officer of Australia, Mr. Phil Bowen, has stated that his approach to the PBO is to situate it within the Charter, and not to serve as an “advisory” body that challenges the government, adding that confrontations with the political parties are not advisable, and that he does not intend for his office to play an advisory role (Bowen 2013a, 2015). In his own words, “The PBO undertakes positive analysis. It does not engage in normative analysis and it does not make policy recommendations,” (Bowen, 2013b, p.2). As a result, the Australian

PBO plays a “costings” role instead of both an “advisory” and a “costings” role due to the internal decisions of its leadership.

This approach of deliberate institutional limitation challenges an underlying assumption in the public value theorization of Legislative Budget Offices (Chohan and Jacobs, 2016b), which is premised on the assumption that, should an LBO be allowed to play an “advisory” role, as allowed by the strategic triangle of Moore (1995), it would do so. In other words, if an LBO is conferred a degree of legitimacy, a recognition of its public value, and requisite operational capabilities, it is assumed that the LBO would naturally extend towards an

“advisory” position, as the LBO of the United States has done since the 1970s (Joyce 2011;

Chohan and Jacobs 2016b, 2017). We consider the Australian PBO’s situation in terms of the strategic triangle, which is the “central symbol” of public value (Alford & O’Flynn, 2009, p. 173), in Table 7.

TABLE 7: ASSESSING THE AUSTRALIAN PBO THROUGH MOORE’S STRATEGIC TRIANGLE

Criteria Australian PBO

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Value Yes There is broad and bipartisan parliamentary agreement on the

value of a nonpartisan fiscal office. All political parties, the

media, and the public, collectively recognize that the PBO is an

important institution to have

Legitimacy Yes Parliament considers the PBO to be an integral and legitimate

and Support part of the Australian budget process. Parliamentarians give

vocal bipartisan support for the PBO’s work. Enshrined in

Charter of Budget Honesty. Has Memoranda of Understanding

with other departments. Held accountable by a Senate Estimates

Committee.

Operational Yes Australian PBO is a well-funded, well-staffed, highly competent,

Capabilities independent fiscal institution. Strong organizational knowledge

management. Large staff of nearly 50 competent officials. Access

to information through memoranda and through budget

legislation. Strong financial endowment of up to $7 million per

annum.

Total 3/3

Source: Moore’s Strategic Triangle (Moore, 1995 )

As Table 7 shows, the Australian PBO enjoys all three nodes of the strategic triangle: a recognition of its public value, a sufficient degree of legitimacy and support, and a sufficient grant of operational capabilities. In terms of the first node, recognition of public value, the

Australian PBO enjoys broad and bipartisan parliamentary agreement on the value of an impartial fiscal office (Joint Committee on Public Accounts and Audit, “JCPAA”, 2014). The

152 major and minor parties in Parliament recognise the value of the PBO (Bowen, 2015), and to date there has been no negative reprisal against the Australian PBO (Chohan, 2016b), certainly not to the degree experienced by cousin institutions such as Canada’s PBO

(Chohan, 2013a, 2013b). The media has also had a positive relationship with the PBO that expresses general recognition for the nonpartisan nature of the PBO (Bowen, 2013a;

Chohan, 2016a). As with other LBOs, the Australian PBO also enjoys the respect of the general public, even as the general public has not always been interested in the work of the institution (Bowen, 2013b; Chohan, 2016a; JCPAA, 2014)

Along the second node of the strategic triangle, that of legitimacy and support, the

Australian PBO enjoys an integral status and occupies a legitimate space in the budget process, despite its young institutional age (see discussion about institutional age in Chohan

2013b, 2017b). Moore describes legitimacy and support as the willingness of “customers and stakeholders” to accept what is offered by the entity which in turn gives it the “right to operate” in that “authorizing environment” (Moore, 1995, p.114). Australian parliamentarians give vocal bipartisan support for the PBO’s work (JCPAA, 2014), and as mentioned earlier, the PBO is enshrined within the Charter of Budget Honesty.

Furthermore, unlike the PBO of Canada (Chohan 2013b), the Australian PBO has established Memoranda of Understanding (MoUs) with other departments, which allow it access to important information that facilitates detailed and rigorous analysis (Bowen

2013a, 2013b). In addition, it is also held accountable by a Joint Committee of Public

Accounts and Audit (JCPAA), a form of reverse-accountability that cements its position in the budget process (JCPAA, 2014).

Along the third node of the strategic triangle, that of operational capabilities, the Australian

PBO is one of the most effectively endowed budget institutions in the world (JCPAA, 2014;

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Chohan 2016a). Operational capabilities are defined by Moore as “the technologies that convert input into outputs, and outputs into [. . .] desired outcomes,” (2003, p. 18). Even as the director of the PBO describes its funding as “reasonable” (Bowen 2013b, p.2), the PBO is indeed a comparatively well-funded organisation, drawing upon up to $7 million per annum, which is far higher than what European LBOs or the Canadian PBO receive

(Chohan 2013). It is also a highly competent organisation, drawing on the expertise of nearly 50 staff with vast experience in cognate institutions such as the Australian Treasury and Department of Finance, as well as support from academics and, when required, external consulting services (Bowen 2015). The MoUs that it has established also allow it to extract valuable budget information without substantial institutional resistance. The legislation underpinning the PBO, in the guise of both the Charter of Budget Honesty as well as the

Parliamentary Services Act (1999), provide a significant amount of protection as well.

Furthermore, there are strong knowledge management practices within the PBO that allow for effective economic analysis on a more sustained basis (JCPAA, 2014).

In sum, the Australian PBO is an institution that, given its fulfilment of all three nodes of the strategic triangle, is in a position to ostensibly create significant public value. It would in fact seem, along the line of argument articulated by Chohan and Jacobs (2016b), well- situated to play both an advisory and a costings role. However, as noted above, the PBO still does not exercise an advisory role, despite being conferred all of the elements of Moore’s strategic triangle, a point that is explicitly remarked upon by the head of the PBO himself

(Bowen 2013a, 2013b, 2015). This raises questions about the role of “leadership” in public value (Wallis and Gregory 2009), as the Parliamentary Budget Office’s leadership limits its own authorizing environment in exchange for less contention (see also Moore 2007, p.99).

Wallis and Gregory note that the drive to “make managers manage” has increased the risks facing managers who seek to exercise public value-seeking leadership (2009). With specific

154 reference to rhetoric in public value, they note that “it may be possible for policy reformers only to – often rhetorically – exhort rather than assure this type of leadership” (2009, p.253). Yet Wallis and Gregory also make an important observation about docile public manager leadership, that “the failure to exercise leadership in a situation is not an abuse of power or discretionary authority. It is a failure to explore and realize possibilities that are implicit in formally delegated authority,” (Wallis and Gregory, 2009, p. 255).

Alford and O’Flynn assert that effective public value creation “connotes an active sense of adding value, rather than a passive sense of safeguarding interests,” (2009, p. 176). In a budgeting context, Chohan and Jacobs have found that a more “advisory” approach to public value creation raises the contention but also increases the amount of value generated

(2016b), and that LBOs can employ “creative approaches” to bypass institutional structures and enhance value through circuitous strategies (Chohan 2013a, 2013b; Chohan 2016b), which in the case of LBOs means reaching out to other stakeholders in the budget process.

The media, the Auditor-General, and the opposition parties are but some examples that the

Canadian PBO has resorted to (Chohan 2013). This requires both a willingness and a sense of imagination in value creation (see also references to ‘value-seeking imagination’ in Alford and O’Flynn, 2009, p. 174; Wallis and Gregory, 2009, p. 255; and Moore, 1995, p.22), as evidenced by the Canadian PBO (Chohan 2013a).

The absence of such initiative and imagination by the Australian PBO’s leadership leaves room in the budget process for the rhetoric of fiscal “responsibility”, and “sustainability” to persist. Accountability, which is construed in a “negative light” (Wallis and Gregory, 2009, p. 252) is therefore very much a rhetorical affectation in the budget process, so long as the

PBO avoids a more active public value creation approach. But it is not the public managers

(in the PBO) that employ rhetoric in this instance. Rather, it is the Australian politicians

155 who can leverage two compliant elements: (1) the Charter of Budget Honesty, and (2) the

Australian PBO; to make claims to fiscal “responsibility” and “sustainability” without actually taking politically costly budget decisions. They are able to do so with regularity and consistency, and without exogenous pressure to undertake reform, to a significant extent.

But to what extent? This article undertakes a textual analysis of budget speeches and budget reply speeches to measure the trends in the budgetary public value rhetoric employed by

Australian politicians.

[5.4] MEASURING PUBLIC VALUE AS RHETORIC

The Parliamentary Budget Office may produce factual, economically rigorous analysis, but it is up to the politicians to act upon those fiscal facts. As Meynhardt notes, public value theory “needs to tackle issues of the interaction between ‘facts’ and the evaluation of those facts” (2009, p.211). Stoker points out that “politics is the process that breathes life into the whole process,” (2006, p. 46), and therefore the responsibility lies on politicians to take fiscal measures that go beyond the utterance of rhetoric. Yet it is the rhetoric of budget

“responsibility” and “sustainability” that has remained consistently high in the Australian fiscal setting. Using a textual analysis approach of budget speeches and budget reply speeches in the Australian parliament over the period 2006-2016, this article tallies the frequency of mentions of both “responsibility” and “sustainability” to measure the trends in their usage. These speeches are made by the Treasurer of the Commonwealth and the

Leader of the Opposition respectively.

TABLE 8: ANNUAL BUDGET SPEECHES AND BUDGET REPLY SPEECHES, A TEXTUAL ANALYSIS

OF MENTIONS OF “RESPONSIBILITY” AND “SUSTAINABILITY” (2006-2016)

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Budget Speeches and Deliverers

Budget Reply Speeches*

(Government & Opposition)

Year “Responsibility”** “Sustainability”** (Budget Speech / Budget Reply Speech)

2006 0 2 Peter Costello / Kim Beazley

2007 8 2 Peter Costello / Kevin Rudd

2008 7 0 Wayne Swan / Brendan Nelson

2009 9 17 Wayne Swan / Malcolm Turnbull

2010 9 4 Wayne Swan / Tony Abbott

2011 8 8 Wayne Swan / Tony Abbott

2012 3 5 Wayne Swan / Tony Abbott

2013 11 9 Wayne Swan / Tony Abbott

2014 6 7 J. B. Hockey / Bill Shorten

2015 8 6 J. B. Hockey / Bill Shorten

2016 7 9 Scott Morrison / Bill Shorten

Total 76 69 Overall: 145

Source: Parliament of Australia, Budget Speeches and Budget Reply Speeches. Archived Collection. www.budget.gov.au

* The Budget Speech is delivered by the Treasurer of the Commonwealth of Australia, while the Budget Reply Speech is normally delivered by the

Leader of the Opposition in Parliament.

** The keywords “Responsibility” and “Sustainability” also include counts of their variants “Responsible”, “Irresponsible”, “Responsibilities”,

“Responsive” “Unsustainable”, “Sustain”, “Sustaining”, and “Sustainable”.

There are several important points to glean from a content analysis of budget speeches and budget reply speeches over the period 2006-2016. It is evident that the message of budget

“sustainabilty” has been influenced by the 2008 crisis. Given the political pressure worldwide to offer responses to the unforeseen and profoundly damaging fallout of the

2008 economic crisis (see Debrun and Kinda, 2014), Australian politicians began to allude

157 with ever greater frequency to greater fiscal “sustainability”. The excuse of “sustainable” rhetoric rose immediately after the crisis, in the budget speech and reply speech of 2009; and has persisted ever since. The rhetoric around the need for budget “responsibility” was already part-and-parcel of budget speeches, but rose to its highest level in 2013, concomitant with the establishment of the Australian PBO, and has been reiterated with regularity throughout the ensuing years. Together, “responsibility” and “sustainability” are the two most frequently occurring fiscally-oriented rhetorical terms in Australian budget speeches and budget reply speeches, followed by “innovation” and “prosperity”. It is important to note that this consistent rhetoric is employed regardless of economic cyclicality. Furthermore, it is employed regardless of the political party at the helm of government.

However, despite the widespread use of the terms budget “responsibility” and

“sustainability”, as the earlier discussion on the Charter of Budget Honesty and the

Parliamentary Budget Office has shown, very little has come about in terms of actual budget reform. The aforementioned criticisms of the Charter as vague, subject to interpretation, and premised on ritual instead of substance, point to its ineffectual position as more of a rhetorical affectation. Similarly, the Australian PBO, despite its endowment on all three nodes of the strategic triangle, does not play an advisory role that would maximise its public value creation. In the absence of meaningful reform, politicians have led a sustained effort to employ rhetoric that favours fiscal “responsibility” and “sustainability” without imposing concomitant restraints to fiscal expenditure.

This leads to the question of whether fiscal restraint really is a value that politicians are willing to pursue. Posner and Blondal have raised the concern that, in democracies, the political will to make tough budget choices may not exist, and that the “political wherewithal

158 to respond to gathering fiscal pressures through early and timely action” is wanting (2011, p.11). In the meantime, the use of political rhetoric remains the norm in democratic dispensations. There are political costs involved in implementing budget restraint, as this may include a reduction in fiscal programs that benefit citizens, with an ensuing electoral disappointment and loss of votes. It appears therefore that the “constant negotiations of value propositions for deliveries” (Meynhardt, 2009, p.216) between public managers, politicians, and citizens does not augur well for actual fiscal restraint. This raises questions about “values” as they are “articulated by the public” (Spano, 2009; Benington, 2009), and about the contradictory stance of citizens vis-à-vis values (see discussion of “values” in

Meynhardt, 2009, p.196) such as budget “responsibility” and “sustainability”.

[5.5] PUBLIC VALUE AND CITIZEN PREFERENCES

It may be the case that politicians may articulate “budget discipline” as a value, but then not actually pursue the requisite fiscal restraint, because it is the public that holds a contradictory stance on this value. On one hand, the public voices a desire for the value of budget sustainability, but on the other hand, they do not want this value to restrict their actual consumption, expenditure, or well-being through restrained budget spending. This speaks to Meynardt’s (2009, p.206) point that public value does not need to be positive or good, but can also comprise negative traits. Furthermore, this contradiction is important to point out, because as both Meynhardt (2009, p.198) and Talbot (2006, p.3) note, there is a need for “a grounding of public value in our evolved and contradictory human nature.”

Spano notes that “elected politicians are asked to read and interpret peoples’ preferences and to make a decision about what needs should be satisfied first and at what level satisfaction should occur,” (2009, p.335). If citizens do not really want budget discipline, how are politicians to choose it?

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As a vast economic literature on fiscal sustainability shows (see review in Posner and

Blondal, 2011), there is a tendency to perennially push forward debts and incur deficits

(excessive spending) in the present, leading to the well-researched permanent deficit problem (see Weil, 1987). If budget reforms are initiated, they often seem to come in the wake of a crisis, even though waiting for crises to initiate politically difficult reforms is an unwise tactic that does “incur a steep price” (Posner and Blondal, 2001, p.11). This creates an inherent intergenerational inequity, as future generations are expected to incur the debts of consumption by the current generation. From a public value perspective, Spano notes that organisations driven to value creation “have to look forward towards future citizens or the next generation […], and today’s governments have to make sure that future citizens will have the opportunity to share the same or a higher amount of public value,” (2009, p.333).

Using the example of budget sustainability, Spano adds that “if a government decides to finance today’s expenses with long term debt, a clear intergenerational clash emerges: today’s generation is going to enjoy a higher value whose cost will be paid by tomorrow’s citizens,” (2009, p.333).

If citizens hold a contradictory stance on a value, then politicians can employ public value rhetoric to address the secondary priority of citizens, which is budget discipline, while diverting resources towards satiating the overriding priority, which is more lavish current expenditure. This speaks to Benington’s observation that there are competing priorities and trade-offs in public value (2009, p. 240). Politicians are therefore as capable of, and complicit in, the use of rhetoric when addressing public value as are public managers. As

Spano suggested, when politicians make poor selection of needs they can cause public value destruction as opposed to value creation (2009, p. 335).

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The accusation of public value rhetoric is thus bidirectional. In an enabling environment where the “legislative frame” is conducive to rhetoric (Meynhardt, 2009, p.193) i.e. the

Charter of Budget Honesty is ritualistic and rhetorical; and where public managers (the

Australian PBO) restrict their own authorizing environment, there is a sufficient “policy context” (Benington, 2009, p.237) for politicians to defer to the utterance of rhetoric instead of engaging in substantive public value creation.

[5.6] CONCLUSION

Public value “does not seek to confine politics but rather sees it as central to the management challenge” (Stoker, 2006, p.46). Because politics is the “final arbiter” (Moore,

1995, p.38) of public value, politicians must be a co-creator of public value and strike a balance between the political benefits of value creation and the costs of doing so. As

Benington remarks, “governments cannot create the public value or the public realm on their own—it depends on a wider network of institutions, actors, and cultures—but it cannot be achieved without government and political leadership. This can include political, economic, and social and community development roles” (2009, p.245). Yet with the contradictory stance that citizens have on certain values, such as budget “responsibility” and

“sustainability”, politicians must reconcile the contradiction (Meynhardt, 2009, p.198;

Talbot, 2006, p.3), and prioritize between those values that will be addressed through resources and those that will be addressed through rhetoric.

Whereas it was initially public managers who were accused of employing rhetoric to justify their positions and influence vis-à-vis politicians (Roberts, 1995; Crabtree, 2004; Oakley et al., 2006), this article finds that politicians can equally engage in public value rhetoric. The lens of budgeting in public value, which Chohan and Jacobs applied to examine the criticism of “public value in politics” (2016b), was applied in this article towards examining “public

161 value in rhetoric,” finding that, so long as the “legislative frame” was conducive to rhetoric, and public managers failed to become “strategists rather than technicians” (Moore, 1995, p.20), public value may indeed take the form of a rhetorical gambit. As Moore noted, public managers “must find a way to integrate politics, substance and administration” (1995, p.22).

If this is not the case, then even fulfilling all of the nodes of the strategic triangle will not compensate for a lack of “value-seeking imagination” (Moore, 1995, p.22; Alford and

O’Flynn, 2009, p.174) that is requisite for the maximisation of public value.

This draws attention to the crucial role of leadership in public value creation (Wallis and

Gregory, 2009), for a lack of initiative in favour of lower contention comes at the expense of creative strategies for public value enhancement (Chohan and Jacobs, 2016b). Yet ultimately, public value is a process of co-creation between politicians (the arbiters), public managers (the executors), and the public. If the public holds a contradictory stance on such a key element as fiscal “responsibility” or “sustainability”, then public managers and politicians must reconcile that contradiction, and prioritize between values, by diverting resources to the one value, and rhetoric to another.

Further research can help to elucidate the process by which (1) values are “articulated by the public” (Spano, 2009; Benington, 2009); (2) how politicians interpret the signalled values

(Spano, 2009, p.335; Stoker, 2006); (3) how politicians prioritize between competing values; and (4) how the “politics-administration dichotomy” (Roberts, 1995, p.291) strikes balances between rhetoric and execution. As Roberts cautioned, a rhetorical manifestation of public value “may overestimate the ability to build mandates, the ability to build deliberative processes that are manifestly fair, and the willingness of dissentient citizens to defer to such mandates,” (1995, p. 291). Public value is a discourse that is still being typologized as of yet (Alford and O’Flynn, 2009), which is why there is an ever-pressing

162 need to examine the boundaries in public value between the actual exercise of value creation, and the garb of rhetoric that can enshroud it.

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CHAPTER 6: A PARLIAMENTARY BUDGET OFFICE

IN FIJI: SCOPE AND POSSIBILITY

Discipline: Governance

Citation: Chohan, U.W. and Jacobs, K. (2016). A Parliamentary Budget Office in Fiji:

Scope and Possibility. Australasian Parliamentary Review. 31(2), 117-129.

URL: http://www.aspg.org.au/journal/2016spring.php

Contribution to Thesis: Introduces a special role: LBOs can act as coordination mechanisms for accountability institutions in the budget process, in addition to their usual costings budget analysis work.

Contribution to the Literature: Develops a governance-based exploration of how accountability institutions can serve a coordinating role with other institutions in addition to their own work, using a developing country context where there is a high nominal commitment to transparency and accountability.

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ABSTRACT

This article assess the merits of establishing a Parliamentary Budget Office (PBO) in Fiji by examining how such an institution would fulfil two important roles: first, by assisting in the oversight of the budget process; and second, by supporting coordination among key accountability institutions such as the Public Accounts Committee (PAC) and the Auditor

General (AG) in their fiscal oversight roles, which is a role specific to Fiji’s accountability ecosystem and which stems from the uniqueness of the Fijian context itself. The article thereby shows that a PBO fits very well into Fiji’s new constitutional commitment to enhancing accountability, by strengthening institutions that are enshrined within the new constitution.

[6.1] INTRODUCTION

The aim of this article is to assess the merits of establishing a Parliamentary Budget Office

(PBO) in Fiji by examining how such an institution would fulfil two important roles: first, by assisting in the oversight of the budget process, which is a typical role for such an office; and second, by supporting coordination among key accountability institutions such as the

Public Accounts Committee (PAC) and the Auditor General (AG) in their fiscal oversight roles, which is a role specific to Fiji’s accountability ecosystem and which stems from the uniqueness of the Fijian context itself.

The article begins by identifying a budget transparency problem, while considering the distinct evolution of accountability institutions given the republic’s historical circumstances.

This includes a focus on the Auditor General’s Office and the Public Accounts Committee, as well as the interaction between these two institutions, as they have emerged in Fiji.

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The article then examines why a PBO’s role in the Fijian context would involve harmonisation of the oversight function between parliament (broadly), the PAC, the AG, as well as certain other institutions. In doing so, the paper identifies how a PBO would help fulfil the desire for better transparency and accountability as enshrined in Fiji’s new constitution (2013).

It is important to note, therefore, that part of the value of this paper will lie in its raising and putting forth an idea that is not explicitly mentioned in the new constitution (i.e. the PBO), but which would assist greatly those institutions that are explicitly nominated in the constitution.

The article will draw upon important documentation produced (at times intermittently) by core Fijian institutions such as the Auditor General and the Public Accounts Committee, as well as the new constitution itself. Furthermore, it will turn to previous work that studies the relationship between Public Accounts Committees and Auditors-General in the

Australasian context, as well as the leading international budget transparency index (Open

Budget Index). This article argues that in the consolidation of these seemingly disparate trends in accountability and transparency within Fiji lies the unique dual-purpose of a Fijian

Parliamentary Budget Office.

[6.2] PARLIAMENTARY BUDGET OFFICES

For the purposes of definition, the Parliamentary Budget Office is defined here as an independent office, which produces non-partisan and impartial analysis on matters and policies pertaining to budgeting and finance, including the budget itself, for the consumption of legislators who then use the PBO’s analysis to inform their legislative budgetary duties including debate, legislation, and fiscal oversight (Chohan and Jacobs

2016b, 2017).

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The PBO model has received growing attention worldwide, with nearly 60 countries presently possessing the equivalent of an ‘Independent Fiscal Institution’ (IFI) attached to their legislatures (von Trapp et al 2016), but the scant literature on the subject (see literature reviews by Kopits 2013 and Wehner 2014) point to a great deal of ambiguity on what precisely the PBO model should do (Chohan 2016). Despite the lack of clarity on the role of the institution, the PBO model has proliferated to such an extent that they now participate in joint global fora such as the Global Network of Parliamentary Budget Offices

(Chohan 2013a).

The Parliamentary Budget Office is considered a ‘tool for legislative oversight’ (Stapenhurst and Pelizzo 2008), in the same vein as Public Accounts Committees (PACs) and Supreme

Audit Institutions (SAIs) are; both of which exist in Fiji but which do not have a fully coordinated mechanism for joint execution of accountability and oversight functions. Public

Accounts Committees are an omnipresent accountability institution among Australasian jurisdictions (Jacobs, Jones, and Smith 2006; Jones and Jacobs 2005; Stapenhurst et al.

2005), although they can vary greatly by jurisdiction in terms of the oversight duties they fulfil and oversight powers they employ. This is why they diverge in the level of independence they can exert. Irrespective of these idiosyncratic regional differences, the practical oversight benefits of PACs are widely recognised, thanks to a series of important works over the previous decade dating back to McGee (2002), Stapenhurst (2005), and

Jacobs and Jones (2005); which is why PACs are thought of as a core institution of oversight both in Australasia and beyond.

Numerous scholars have highlighted the merits of Parliamentary Budget Offices

(Stapenhurst and Pelizzo 2002, 2008; Von Hagen 2007; Rivlin 2013; Kopits; Chohan 2013,

2013b, 2017; Chohan and Jacobs 2016b, 2017; Wehner 2014), and their arguments

168 generally center on the nonpartisan and independent nature of the PBO, as a source for unbiased and apolitical budget work that is premised on analytical rigor. The independent and economics-focused nature of the PBO allows for a more long-term and dispassionate approach to budgeting, distanced from the often highly partisan dictates of legislative decision-making.

As shall be examined in this paper, there are merits for instituting such a nonpartisan institution in the Fijian legislative space, to assist in the provision of timely, independent, unbiased analysis on matters pertaining to Fiji’s budget. This budget analysis would prima facie be the main objective of the PBO in Fiji, because there is ample room to improve the level of budgetary transparency, particularly in terms of legislative contribution to Fiji’s budget process.

[6.3] THE BUDGET TRANSPARENCY PROBLEM

The most prominent international budget transparency index is known as the Open Budget

Index, produced by the International Budget Partnership (International Budget Partnership

2015a). It is formulated through extensive analysis of the budget process of nearly 100 countries based on a peer-review system of a richly detailed questionnaire that covers five overarching fiscal themes (including legislative participation) across more than 100 questions.

From this questionnaire resource, the Open Budget Index accords a score ranging from 1-

100, with 100 reflecting perfect budget transparency. According to the 2015 assessment of

Fiji’s budget, its score was a paltry 15/100, equating to a ‘scant’ provision of information on budgeting (International Budget Partnership 2015b). This would put Fiji’s budget transparency among the very lowest of the measured 100 countries, a fact that seems

169 particularly striking given its explicit constitutional commitment to transparency and accountability, as set out in the very first article (1) of the 2013 Constitution of Fiji.

By comparison, another Australasian country holds the very highest score on the index:

New Zealand (88/100); while Papua New Guinea and Indonesia rank 55/100 and 59/100 respectively (Australia is not ranked by the index due to a peculiarity of the IBP not finding a national partner for survey purposes). Fiji’s low-scoring trend has typified the past decade of its budget process, but should not come as a surprise given the exceptional governance circumstances (including military rule) during this period: in 2008 Fiji garnered 13/100 points, which fell to 0/100 during 2010 (as there was no parliamentary-equivalent institution at that time), followed by a rise to 6/100, and now to 15/100 in 2015

(International Budget Partnership 2015c). This low score masks a more glaring disparity: the overall 15/100 score disaggregated represents a 25/100 for transparency by the Auditor

General that is ‘weak’, while the legislative role is relegated to 0/100 and ‘nonexistent’. It should be noted that the 0/100 is an exceptional figure as parliament was not operating under normal conditions around the survey date. Nonetheless, legislative involvement in the budget process in Fiji is a low-scoring metric.

The Open Budget Index notes that out of their eight metrics of content, only two are delivered transparently in Fiji, one of which is the Auditor General’s Report (International

Budget Partnership 2015c). The absence of a legislative oversight role in Fiji’s budget process leads the IBP to explicitly suggest that the country ‘establish a specialised budget research office for the legislature’ i.e. a PBO (International Budget Partnership 2015c). To put this low budget score into context, however, it is important to first examine the historical backdrop of budgeting in Fiji to understand the evolution of its accountability institutions.

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[6.4] ACCOUNTABILITY INSTITUTIONS IN FIJI

The uniqueness of budget oversight institutions in Fiji is attributable to a multiplicity of factors, including: a bicultural demography; a colonial Westminster political heritage; a legislature made unicameral in 2013; a series of tussles between civilian and military regimes; and a large population compared with other Australasian island republics.

These layers of complexity notwithstanding, it can be said that the oversight role in Fiji suffers from an inherent fragmentation. Although it has had core oversight institutions in place since (and even before) independence, these institutions have not devised a coordinated effort to oversee policy more broadly and budgets specifically. The key agents examined in this paper are (1) the Public Accounts Committee, and (2) The Auditor

General; although the new constitution of Fiji (2013) envisages other institutions in the future, including an Accountability and Transparency Commission (ATC) which although constitutionally nominated, did not exist at the time of this writing.

Stating that the interaction between the Public Accounts Committee and Auditor General is fragmented does not mean that they have not engaged together in oversight duties; far from it, the Auditor General and the Public Accounts Committee have a longstanding history, preceding in fact the independence of the Fijian republic, of a joint auditing role wherein the

Auditor General submitted special audits to the Public Accounts Committee (Nath, Van

Perseum, and Lowe 2006).

However, their work does not equate to a consistent and stable accountability and oversight mechanism, certainly not with respect to budget scrutiny and oversight. Rather, it represents ad-hoc initiatives driven more by individuals than by systems. This is where the discussion of coordinating the oversight role of accountability in institutions in Fiji really

171 begins. It is important, therefore, to examine the positioning of the Public Accounts

Committee and Auditor General both in theory and then in Fijian praxis in more detail.

[6.5] PUBLIC ACCOUNTS COMMITTEES AND AUDITORS-GENERAL

Jacobs and Jones (2005) describe the place of Public Accounts Committees as paradoxical, in that the global trend to move accountability towards a more private sector outlook does not prevent the PAC, one of the oldest extant accountability institutions, from remaining relevant and ‘a constant presence’. They describe the relationship between a Public

Accounts Committee and the Auditor General as a ‘critical part of public sector accountability’ (Jones and Jacobs 2005; Stapenhurst et al. 2008). It has been pointed out by accountability scholars that part of a PAC’s theoretical role is to enhance the effectiveness of the Auditor General (McGee 2002), and that ‘historically PACs were created to ensure parliamentary follow-up on Auditor General’s reports, and because the jurisdiction of PACs has more in common with Auditor General’s remits than does that of other committees’

(McGee, 2002:81). Wehner describes the PAC as the ‘principal audience’ of the AG’s work.

Generally, PACs are the only committees with explicit mandates to study the AG’s reports, although in some jurisdictions other committees can also examine these reports if there is a crossover between the AG’s report and the committee’s area of interest (Jones and Jacobs

2005). Coghill (2004) has noted that there is a balancing act to strike between the Public

Accounts Committee and Auditor General, whereby the relationship should not be too

‘cosy’, which is to say that the Auditor General should listen to the views of the Public

Accounts Committee but not be held captive by those views. Instead, the PAC-AG relationship should be one of trust based on impartiality. Of extreme import, Stapenhurst et al (2005) find that, among other things, the PAC’s relationship with the Auditor General determines the very success of the Public Accounts Committee institution itself.

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In sum, the literature argues for a positive and collegial relationship between the Public

Accounts Committee and the Auditor General such that they can more easily coordinate their oversight duties. In Fiji, although the Public Accounts Committee and the Auditor

General do have a history of working together, the process has been more personality-driven and event-driven, rather than a stable and continuous relationship that coordinates their oversight efforts, not least in the budget ambit.

The Auditor General occupies a preeminent position in the accountability field in Fiji. It was noted earlier that the Open Budget Index actually scores the Auditor General at 25/100, and that the AG’s audit documentation is one of the few pieces transparently delivered

(International Budget Partnership 2015b). In the period immediately preceding Fiji’s independence (1956-1969), the Auditor General was made independent through colonial laws including the Audit Ordinance of 1956 and the Finance Ordinance of 1965. The 1965 ordinance specified that the ‘Director of Audits’ acted on behalf of the ‘Legislative Council’ when carrying out inquiry into the public accounts. Following independence in 1970, the

Auditor General’s oversight role grew, and on various occasions it had special audits conducted, and it transmitted special reports to parliament on certain public organisations, while maintaining some contact (a relationship that was positive but not regularized) with the Public Accounts Committee (Nath, Van Perseum, and Lowe 2006).

However, the role of the Auditor General in Fiji was not without resistance from executive agency. A lack of resources, restricted staff recruitment process (Public Service

Commission), conflicting traditional native laws, and a dependence on the Ministry of

Finance for appropriations are just some of the obstacles that the Auditor General has faced in the post-independence era, making his work statutorily independent but constrained in practice (Nath 2006). Exogenous factors have also exerted pressure on the AG’s work in the

173 past. The 1987 military coup, for example, led to a mass exodus of its talent pool, with the

Fijian Audit Office losing important staff members. The coup also created an environment of government austerity which cut spending (Appana 2003). The AG’s work was also stalled because the Public Accounts Committee was suspended until 1992, which led to a severe backlog in audit and oversight work. The 2000 military coup also created similar challenges, including a two year backlog in the PAC’s scrutiny work. In the decades since independence, therefore, it can be said that there have been several costly interruptions in the work of the

Auditor General and the Public Accounts Committee that is largely attributable to political shocks, as well the accompanying budget constraints, brain drain, delays/backlog, and institutional shut downs.

[6.6] THE NEW CONSTITUTION (2013)

A new constitution was adopted in 2013 to breathe new life into the Fijian governance ecosystem. Aiyaz Sayed-Khaiyum, the current (34th) Attorney-General, as well as Minister of

Finance, unveiled a constitution that was notable for several reasons, including its vocal support for increased ‘transparency and accountability’ and ‘good governance’ in the Fijian system, as enshrined in the very first article of the document. The new constitution assures the independence of the Auditor General and makes very strong provisions for the Auditor

General to play an active role. For example, its provisions include appointment “by the

President on the advice of the Constitutional Offices Commission, following consultation with the Minister responsible for finance”. In Chapter 8, Articles 51-52, the constitution declares that:

At least once in every year, the Auditor General shall inspect, audit and report to

Parliament on— (a) the public accounts of the State; (b) the control of public money

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and public property of the State; and (c) all transactions with or concerning the

public money or public property of the State.

This provision is supported by sub-clauses allowing for complete accessibility of the Auditor

General to all required documentation, as well granting him provisions for enhancing future functions and powers through additional written laws. Whereas the Auditor General was historically constrained in the hiring of staff by Public Service Commission rules, the

Auditor General now has the fullest hiring, appointment, salary, and dismissal discretion.

Meanwhile, the funding requirements of the Auditor General are no longer subject to the

Ministry of Finance but instead to the Parliament itself, enabling greater practical independence. The Auditor General must offer his opinion to parliament on whether public money is being applied to the purpose for which it was authorised. As such, these constitutional reforms bolster the oversight powers of the Auditor General and thus help foster a better oversight climate and support the Public Accounts Committee.

With respect to the PAC, despite exogenous setbacks in the past, such as the suspension for five years after the military coup of 1987 or the two-year suspension after the 2000 military coup, the Public Accounts Committee has generally played a constructive and active role in oversight, adjusting for its limited resources and an overarching climate that has perhaps not always been amenable to transparency. In the new constitution, the Public Accounts

Committee is justified by Article 70, Chapter 3, as follows:

Parliament must, under its rules and orders, establish committees with the functions

of scrutinising Government administration and examining Bills and subordinate

legislation and such other functions as are specified from time to time in the rules

and orders of Parliament.

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The Public Accounts Committee has increased its oversight activity in the past 18 months.

In May, 2015 the Public Accounts Committee released a report titled ‘No More Repeats’ that represented a studied compilation of three previous reports by the Auditor General (PAC

2015). It analysed the backlog from 2007-09, citing the necessary efforts to provide ‘value for money’ in public services and to take ‘a step forward for good governance’ (PAC 2015).

In February, 2016 there were two important changes made to the Standing Orders [S.O.] that affected the PAC (S.O. 109(2)(d)). First, the earlier requirement that PAC may only be chaired by a member of the Opposition was removed. Second, whereas the earlier scrutiny of the PAC was limited to how public money had been dealt with and accounted for in terms of written law, now the PAC is allowed to examine and consider the merits of the underlying policy that informs public spending (S.O. 109(2)(d)).

In addition to the constitutional recognition for a stronger Auditor General and Public

Accounts Committee, the new 2013 constitution is important in that it makes provisions for new institutions that could help support the oversight and accountability ecosystem in Fiji.

Primary among these is the Accountability and Transparency Commission, which is provided for by Chapter 5, Article 121 of the constitution (The Republic of Fiji 2013). It is expected to be an independent commission with funding determined by Parliament and powers to appoint its own staff. The mandate of the ATC is to assist and advise Parliament in carrying out its accountability work – broad and imprecise as this may prima facie seem.

However, as of this writing, the institution has not yet been functionally established, as noted by the PAC, which had earlier urged the establishment of the ATC ‘as a matter of urgency in Fiji’ (PAC 2015).

[6.7] ROLE 1: A COORDINATOR

FIGURE 5: PBO AT THE ACCOUNTABILITY JUNCTURE

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PAC Conducting fiscal analysis on behalf of Parliamentarians and Parliamentary Committees such as PAC.

ATC* PBO AG Providing analysis for Corroborating, institutions such as Evaluating, and Accountability and offering a ‘second Tranparency data point’ to AG's Commission work (pending)

Figure: A Simplified Relationship between the Parliamentary Budget Office (PBO) and the major accountability institutions: Public

Accounts Committee (PAC), The Auditor General (AG) and other institutions such as the Accountability and Transparency

Commission (ATC*: constitutionally mandated but yet to be established)

The landscape of accountability, particularly with respect to budget oversight, thus appears to be a disjointed arena, with the Auditor General and Public Accounts Committee working in generally unsynchronised trajectories – at least to the extent that the IBP accords Fiji a

15/100 in budget transparency, with the legislative role 0/100 and the AG’s work 25/100

(International Budget Partnership 2015c). What is required, therefore, is a mechanism for the coordination of the budget oversight initiatives of these accountability institutions. This is where a Fijian PBO can fulfil a unique purpose.

A PBO in Fiji can act as a coordinator of budget oversight activities by providing the Public

Accounts Committee, the Auditor General, and the Accountability and Transparency

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Commission, with impartial and non-partisan budget analysis pertaining to fiscal oversight.

From the Public Accounts Committee perspective, as members of the PAC do not themselves necessarily possess the fiscal acumen to scrutinise a complex document such as the national budget, which approximates $2.5Bn Fijian ($1.2Bn USD) in total operating receipts (KPMG 2014), the PBO can serve as a legislative tool to enable long-term oriented, unbiased, detailed budget analysis. As a matter of best practice (Chohan 2013b), the PBO should not provide analysis only to the PAC, but share its findings in an ‘open publishing’ format that is accessible to all parliamentarians, to the media, and to the general public.

From the Auditor General’s perspective, the PBO would serve as a second data point of comparison with the AG’s analysis, and muster a position of ex ante oversight that complements the ex post oversight role of the AG. Having two unbiased and separate analyses on a key issue adds analytical rigor to its study (Chohan 2013). This AG-PBO link does have several Westminster precedents. The F-35 parliamentary debate in Canada serves as a good example (Chohan 2013; Lee 2013). In July, 2010 the Canadian Defense Minister

Peter Mackay stated that the procurement of 65 advanced F-35 fighter jets would cost the

Canadian taxpayer ‘$9 billion’, but the opposition asked the Canadian PBO to provide an impartial and detailed analysis on the costs of procuring this air fleet (Lee 2013). In its analysis, the PBO found the number to be closer to $30 billion dollars, more than triple what the defense minister had claimed and large enough to cause an uproar in parliament

(Chohan 2013a). The government vehemently rejected the PBO’s analysis. Then, the Auditor

General Michael Ferguson, undertook an equally detailed study into the F-35 costs, and found that his figure of $25 billion was much closer to the PBO estimates, thereby corroborating the office’s work (Lee 2013). The aforementioned example shows that the

PBO and Auditor General can lend credibility to each other’s analysis, thereby enhancing transparency by bringing more accurate figures to the parliament’s and public’s attention, as

178 well as promoting accountability by bringing government departments to account for the claims they make to the broader public.

From the Accountability and Transparency Commission’s perspective, once it is established, the PBO could help the commission in the same manner as it would either the PAC, the AG, or both. This is to say, the PBO could help the ATC as it would the Public Accounts

Committee, with fiscal analysis pertaining to the accountability of budget matters; or it could serve as a second data point corroborating the work of the ATC, as it would the

Auditor General. It could even serve both purposes, but since the ATC has not yet been functionally established, assessing the precise relationship between the three institutions is speculative at this juncture.

The notion of ascribing a role to a PBO as ‘a coordinator’ of accountability mechanisms would be unique among PBOs; but it is apt given the unique present circumstances of Fiji: whereas the republic possesses the necessary accountability institutions and has capable and astute leaders at their helm, there is insufficient fiscal oversight coordination between them. The new constitution reflects this quandary: although there are numerous laudable instruments (extant and forthcoming) for enhancing fiscal transparency and accountability, there is no article that binds their efforts in a consolidated or coordinated manner. This is a shortcoming that the PBO can address, by synchronising the budget oversight apparatus and initiatives of various accountability institutions.

[6.8] ROLE 2: A BUDGET ANALYST

The unique Fijian coordination role for a PBO notwithstanding, if mere coordination were the sole task of the PBO, then it would no longer be a budget office, but rather be some sort of ‘Accountability Coordination Bureau’. This would not help Fiji address its budget transparency shortcomings as manifested in its Open Budget Survey Ranking of 15/100

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(International Budget Partnership 2015c). Rather, there is also a genuine budget analysis role for the PBO to play; one that is in line with international and Australasian practices of independent fiscal institutions.

The budgetary advantages to Fiji of an independent PBO are manifold (see Table 9). A PBO would improve the quality of data gathered for legislative scrutiny, particularly for major accounts such as national accounts, GDP by expenditure, household/corporate debt, and unemployment. It would help to infuse the legislative role in budgeting with a long-term orientation premised on sustainable budgeting.

The PBO would also bring a measure of dispassionate budget analysis to politically charged issues, such as the impact on government budgets of wage increases for civil servants. It could conduct various types of financial analysis such as scenario analysis, revenue analysis, expenditure analysis, sector-specific analysis, and social program analysis (see Table 9).

It may be observed from this discussion that the PBO does have a very important budget role to play, and it has a niche to fill in advising Parliament on complex fiscal issues that require a long-term orientation and a sustainable growth trajectory. Fiji is undergoing a phase of economic transition wherein many core items in the national budget are in adjustment, ranging from tax regimes, to infrastructure investment, to privatisation (IMF

2014). Therefore, a purely budgetary mandate is enough to warrant the establishment of a

PBO in Fiji, although as discussed earlier, the unique oversight circumstances, as well as the need for accountability institution inter-linkages allow for a PBO to be something even more.

TABLE 9: THE ‘BUDGET’ FUNCTION OF A PBO IN FIJI

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Budget Description Function

Improve quality of data gathered for legislative Data Gathering & scrutiny, particularly for major accounts such as 1 Improving national accounts, GDP by expenditure, Statistics household/corporate debt, and unemployment.

Preserve institutional memory and budgeting Long-Term 2 best practices. Look beyond one-offs and Horizon exceptional items.

Manage debt/deficit and other similar variables 3 Sustainability at sustainable levels

Certain budget decisions court more controversy

Analysing than others, e.g. wage bill increase by 20% for

Politically public servants. Providing unbiased and 4 Sensitive nonpartisan analysis about the budgetary merits

Decisions of such decisions is a cornerstone of a PBO’s

success.

Planning for shocks: from climate change to 5 Scenario Analysis commodities.

Various types of taxes and duties, as well as tax- 6 Revenue Analysis holidays and tax incentives.

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Capital and Operating expenditures. In capital Expenditure 7 expenditures, being mindful of capacity issues Analysis while addressing large backlog.

State-Owned Enterprise (SOE) Reform: some are

8 Sector Analysis profitable but others require subsidies. Timing of

divestiture, privatization, de-regulation etc.

The social safety net payments tend to be the

largest (and most non-negotiable) portion of

9 Social Safety Net government spending, e.g. in the U.S. In Fiji,

social safety net is new, so budgeting for its

steady but inclusive growth is necessary.

[6.9] CONCLUSION

The unique circumstances within which institutions have evolved in Fiji mean that its accountability mechanisms, although they do exist, have not been able to coordinate their accountability function vis-à-vis budget oversight. Fiji does possess a strong and active

Auditor General’s Office, as well as a long-standing culture of public accounts oversight through parliamentary committees (PAC), and is even looking to introduce new commissions to facilitate accountability engagement, such as the Accountability and

Transparency Commission, although this has not been established yet despite being enshrined in the new constitution.

From a budgetary standpoint, oversight would be better coordinated if there were a budget office stationed at the juncture between these disparate but highly capable offices. A PBO can fill that role in Fiji, by corroborating the analysis of the AG, providing the Public

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Accounts Committee with fiscal analysis, and assisting the future accountability commissions in their mandates. This role is unique to the proposed PBO of Fiji, and represents a form of interesting innovation in PBO design; given that, to many scholars and practitioners, there is no definite template on what a PBO should do and how it should do it

(Chohan 2016). Given the trend towards establishing small PBOs across the world, this innovation as a coordinating mechanism for other accountability institutions, can serve as an important and useful template in countries where institutions are also capable but not coordinated.

Aside from this role as a coordinator, there is a purely budget analysis role for the PBO to play as well. Fiji is in a state of economic transition wherein budget analysis is prone to a measure of uncertainty, which is attributable to exogenous factors such as alterations in commodity prices, currencies, export revenues, investor appetite for privatisation, cost of borrowing, among other variables (IMF 2014); but also to endogenous factors such as a more stable political climate, successful completion of infrastructure projects, investment in the social safety net, programs to subsidise or deregulate SOEs, among other variables. The

PBO can bring a long-term orientation to budget analysis and foster greater reliability in legislative decision-making through superior data collection.

This paper has demonstrated that Fiji allows for the study of a dual role for Parliamentary

Budget Offices: one as a force for coordinating oversight among accountability institutions such as the Public Accounts Committee and Auditor General; another as a budget analysis office that provides legislatures with analytical rigor to deliberate on complex budgetary decisions. As a final point, although it was not constitutionally enshrined, the PBO fits very well into the new constitutional commitment to enhancing accountability and transparency in Fiji, by strengthening those institutions that are enshrined within the constitution.

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CHAPTER 7 : THE IDEA OF LEGISLATIVE

BUDGETING IN IRAQ

Discipline: Governance

Citation: Chohan, U.W. (2016). The Idea of Legislative Budgeting in Iraq. International

Journal of Contemporary Iraqi Studies. 10 (1-2), 89-103.

DOI: https://doi.org/10.1386/ijcis.10.1-2.89_1

Contribution to Thesis: Introduces special role: as an agent in assisting the creation of a legislative oversight role in the budget process – helping legislative budget participation start from scratch (an ab initio fiscal body), using Iraq as a case study.

Contribution to the Literature: Considers governance-based approaches to introducing legislative budgeting in contexts where it has little historical precedent, particularly in

Resource-Rich Developing Countries. Also identifies two shortcomings in budget reform

(governance): (1) mismatch between Washington consensus prioritization of budgeting in theory and praxis, and (2) identifies double-standard in developed-country budget approaches, advocating strong legislative budget oversight in their own local context, but [in some instances] non-transparent and non-accountable arrangements in developing countries.

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ABSTRACT

In spite of Iraq’s ample natural wealth, its people have in large part remained bereft of the benefits of these extractive endowments, and insufficient legislative oversight of the extractive industries has been partly responsible for this unrealized potential. This article focuses on the importance of parliamentary oversight of Iraq’s extractive industries, and considers the broader evolutionary history of budgeting in Iraq, including the difficulties and setbacks that the budget process has faced both prior to and after the American invasion. The article identifies a mismatch between American budgeting in their local context, which advocates a strong role for Congress in the budget process, versus budgeting in an Iraqi context, where they had advocated alarmingly nondemocratic arrangements, including an “Economic Czar”. The article finally assesses how legislative oversight can serve to address the long-term budget challenges of Iraq, particularly with respect to its extractive wealth.

[7.1] INTRODUCTION

This article aims to assess the need for an oversight role for Iraq’s parliament in the country’s budget process, particularly with respect to Iraq’s extractive wealth.8 In light of the effort to rebuild Iraq’s institutional systems, the article examines the history of Iraq’s budgeting, the difficulties that have traditionally arisen in making the budget process more transparent, and the need for sustained parliamentary oversight of the extractive sectors.

This then leads to an inquiry into how Parliament can make progress given severe contemporary challenges.

8 The term ‘Extractive Industries’ is broadly synonymous with ‘natural resources’ and is commonly used to refer to commodities such as oil, natural gas, coal, iron ore, and precious metals.

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Although written with a focus on fiscal and budget reform, the article should be viewed in light of the pressing need for rebuilding Iraq’s institutions more broadly, a necessity that continues to grow in tandem with the need for channelling the country’s resource wealth towards gains for Iraqi society at large.

Iraq has long possessed a sizeable endowment of natural resources, particularly oil, that could have been (and still can be) channelled towards the general welfare, financial betterment, and fiscal liberation of her people. Yet a century of hardships meted on her people, both from within and without, have meant that much of that oil wealth has been effectively squandered or used in the development of other countries.

The opaqueness of Iraq’s budget, and the significant contribution of oil to that budget, is an important part of that problem, because shortcomings of transparency and accountability in the governance of oil revenues over the past century (Jiyad 2002, 2010; Allawi 2007; Jasim

2012), have meant that the process by which the oil wealth was spent was not revealed to the Iraqi people, much less allowing them to deliberate on it.

This governance problem arises in part due to insufficient incorporation of democratic institutions into the budget process, including the legislature, which can be an important institution for enhancing the ‘democratic leverage of citizens’ (Stapenhurst 2008). Yet speaking of ‘democratic institutions’ belies what is truly noteworthy about Iraq’s recent budget history, which is that the problem of democratic best practices, including legislative oversight, was not a shortcoming merely during the autocratic regime of Saddam Hussein, but one that has persistently remained even after the invasion of ostensibly pro-democracy

Americans. As this article has found, American thinking on Iraqi budgeting included worrying terms such as an “Economic Czar”, which is neither participatory nor particularly democratic. This article will raise the issue of how American occupation forces have failed to

187 democratize the oversight of oil revenues through a well-functioning parliament that would be subservient to the will and aspirations of the Iraqi people.

At the crux of this article’s discussion is the fact that, unlike the strong congressional role in budgeting that the United States has championed for its own context (Joyce 2011),

American thinking has been alarmingly disinterested in a strong legislative role in Iraq’s budgeting. This represents a mismatch between the high prioritization of budgeting for adherents of the Washington consensus in theory (Williamson 1989), versus its

(non)implementation in practice, whereby the Americans were ‘largely ill-prepared’ for budget reconstruction in Iraq (Savage 2013: 47). The article will examine how this is a significant impediment to transforming the extractive wealth of Iraq into a vehicle for the fiscal empowerment of her people.

[7.2] LEGISLATIVE BUDGET REFORM IN IRAQ

Budget reform has been a crucial, albeit only partially understood, component of the reconstruction effort in Iraq. It has been argued that the Americans who planned the invasion and occupation strategy in Iraq ‘knew little or nothing about Iraqi budgetary institutions, their histories, or even their functions within the budgetary process,’ (Savage

2013: 25).

Nonetheless, establishing a strong state with a functioning budget has represented a core policy priority, as evidenced by the United States Government Accountability Office’s (GAO) explicit target of ‘successful budgeting’ as one of its 18 core benchmarks for withdrawal, which was defined as the allocation and spending of $10 billion in oil revenues for reconstruction projects and essential service delivery (GAO 2007).

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Prior to the invasion of Iraq, the US Department of State conducted a largely abstract exercise in the delineation of fiscal objectives in a post-Saddam environment (United States

Department of State [USDS] 2002). They noted in their ‘Future of Iraq’ report that Iraq’s fiscal policy was ‘closely associated to the oil policy’ (USDS 2002: 2), and urged for the development of ‘non-oil revenues coupled with more rational government expenditures’ going forward, so as to reduce ‘the risk of oil revenues as an effective economic and political power’ by instead ‘allocating most of the oil revenues to finance investment’ (USDS 2002: 2-

3), where water resources, transport, utilities, and oil infrastructure were targeted.

The Future of Iraq project highlighted a role for the Ministry of Finance in fiscal policy, and a joint role for the Ministry of Finance and the Iraqi Central Bank in Monetary Policy, but failed to sufficiently emphasize the legislative role in budget oversight. This is to say that the

American focus remained in the executive budgeting function, but did not capture the need for a legislative role, specifically in the legislative oversight of the budget (see Stapenhurst

2008 for a discussion of the merits of legislative budgeting).

This is regrettable because the main external stakeholder in Iraq’s reconstruction, the

United States, could have seized that opportunity to bring a core governance reform, legislative participation in the budget process, to the fore. In particular, the Americans could have established the equivalent of the Congressional Budget Office (CBO), which in the Iraqi system would be a Parliamentary Budget Office (PBO), to assist the legislature in its oversight duties.

Whereas the Americans missed the opportunity to install such an oversight institution, many other extractive-rich countries have contemporaneously implemented a PBO for that very purpose, including: Uganda’s PBO establishment roughly coincident with oil discoveries (Kiraso 2008: 312), and Nigeria’s NABRO to help with its historically large oil endowment (Stapenhurst 2008: 150), among others. Even in developed countries with

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PBOs and extractive endowments, such as Canada, the analysis of oil is important to a

PBO’s work (Parliamentary Budget Office of Canada [PBOC] 2015).

Al-Ali has emphasized that government budget reform, with strong accountability mechanisms, is an exceptionally important vehicle for economic development in Iraq

(2012). This article draws similar attention to the meaningful role that legislative engagement can play with Iraq’s resource endowments.

The article thereby helps to address what the coalition reconstruction efforts had largely missed: that the Iraqi legislature can act as a voice for the interests of the Iraqi people, who have remained largely bereft of the benefits of its oil wealth, in a country where oil accounts for 40% of GDP but only 1% of employment, according to United Nations Iraq Joint

Analysis Unit (UNIJAU 2013).

Furthermore, this article raises these concerns at an opportune time, because external stakeholders such as the United Nations Development Program (UNDP 2014), the World

Bank (2008), and UNIJAU (2013) have begun to pay attention to the PBO model’s potential implementation in Iraq (UNDP 2014), although the institution does not yet exist and its precise role has yet to be carefully considered. The development of a meaningful legislative oversight role in Iraq’s extractive industries will help to address what has amounted to a history of complex, multilayered, but often counterproductive misuse of the budget. This article proceeds first by considering the sparse extant literature on budgetary practice in

Iraq.

[7.3] IRAQ’S BUDGET: HOW LITTLE WE KNEW

The literature on Iraq’s budgeting has suffered from three overarching misfortunes. First, budgeting during the Saddam-era was treated as a ‘state secret’ with heavy punishment for

190 any disclosure of its details (Savage 2013: 40), which is why much of the important budgeting information pertaining to this crucial period is mired in obscurity.

Second, post-invasion (2003) attacks on the Ministry of Finance (in the form of indiscriminate looting, thefts, and arson) decimated Iraq’s budgetary records and archives, which would have been indispensable in reconstructing the nation’s budgeting system

(Savage 2013: 71). American experts who had even worked in conflict zones previously, such as Kosovo and Bosnia, had never seen a country so bereft of budgeting information as post- invasion Iraq (Savage 2013: 71-74).

Third, contracts to build a modern budget infrastructure (such as an FMIS computerized system) in Iraq were stalled and finally voided by kidnappings, murders, corruption in contracts, and a general inaccessibility to the Ministry of Finance, as it was situated outside the Green Zone (Savage 2013: 112-143). As a result, any attempts by the literature to carefully assess the nature of budgeting in Iraq are severely crippled at best.

The preeminent work that has attempted to provide – insofar as this could be possible – a comprehensive view of Iraq’s public finance and budgeting is Savage’s book, Reconstructing

Iraq’s Budgetary Institutions (2013), which draws upon the history and the evolution of

Iraqi budgeting to provide the most detailed account of an erstwhile insufficiently accessible topic. Also helpful to piecing the puzzle are certain US Government documents, available in the public domain, which reflect the effort to reconstitute the scarce information on Iraqi budget practices in the aftermath of the regime change (National Defense University 2011;

Coalition Provisional Authority [CPA] 2003).

In a similar vein, there are certain public domain US reports that display the American thinking vis-à-vis Iraqi finances prior to the invasion (US Department of State 2002; CIA

2004). This body of work is important in that it shows the lack of sufficient intelligence

191 accuracy and detail available to decision-makers at the time, invariably leading to incorrect assumptions and difficulties in the reconstruction process. In the years since the invasion, several US government agencies have produced reports detailing the difficulties that they have faced in executing the targets for budget reform that had been initially set out (GAO

2007, 2008; SIGIR 2005; DoD 2006). These reports have come at varying intervals and from different departments, but several common themes have resonated throughout this corpus of reports, including a lack of stakeholder engagement, insufficient transparency in the management of funds, and a lack of adequate skills and specialist personnel, among other factors. Allawi (2007) and Chandrasekharan (2006) narrate these challenges, with greater focus on stakeholder ineptitude and corruption, in a more personalized form. Al-Ali applies a perspective that examines the oil sector as an ‘enclave’ far removed from the rest of the economy, emphasizing the need for government budgetary improvement as the medium for transferring oil wealth into broader benefits (2012).

Whereas the aforementioned literature focuses on numerous shortcomings, there has been a more positive engagement with public finance and budget reform, at least in the abstract, which emanates on one hand from Iraqi Ministries, and on the other from multilateral institutions. Encouraged by foreign donors, certain Iraqi Ministries have attempted to provide the equivalents of progress reports and forward-looking development strategies, which help to create loosely-bound but coherent frameworks that the ministries are attempting to follow (Iraq Strategic Revenue Board 2005; Iraqi Ministry of Finance 2003).

More importantly, the major multilateral agencies form the most recent body of research into the progress (or lack thereof) on the theme of budget reform in Iraq, including the

World Bank (2008; 2010); the IMF (2013; Allen 2009); the United Nations Iraq Joint

Analysis Unit ([UNIJAU] 2013); and the UNDP (2014). The reports of these multilateral

192 agencies point to the recent headwinds faced by the Iraqi government in implementation of effective budget procedures. Some even allude to the introduction of a Parliamentary

Budget Office (UNDP 2014), but this project is still in the planning stages, and receives at best a perfunctory mention that is generally lost in the details of multilateral donor assessments.

In light of the crippling constraints that have left the analysis (not to mention the reconstruction) of Iraq’s budget institutions unfinished, it serves to contextualize the lack of transparency in the Iraqi budget, as well as the particularly glaring absence of legislative engagement with the budget process, in a historical context.

[7.4] BUDGETING IN IRAQ: A BRIEF HISTORICAL CONTEXT

Savage (2013) has outlined the convoluted history of budgeting in Iraq under Ottoman,

British, Hashemite, and Baathist rule, characterizing it as a ‘historical layering of institutions’ that occurred as a result of ‘dramatic exogenous shocks’ such as world wars, invasions, and foreign occupation (2013: 46).

It was during British rule that an Iraqi Parliament, broadly premised on the Westminster system and cognizant of a public finance role, was formed (Savage 2013: 30). This bicameral parliament (Senate and Chamber of Deputies) created a standing Finance Committee to review budget estimates, with a purview over recommending reductions in government spending. The Iraq Administrative Report for 1931-1932 states that public finance matters were the preponderant topic in parliamentary activity, with the report saying that ‘The

Budget was, as usual, the main issue of the session,’ (Iraq Administrative Reports [IAR]

1992: 469).

It can thus be observed that parliamentary engagement with the budget has had a long precedent in the Iraq context. Extractive revenues, however, were not the main focus of the

193 budget, and oil royalties comprised only 0.3% of government revenues, as opposed to customs duties (37%), agriculture (22%), and excise taxes (9%) (IAR 1992: 88). Oil would begin to assume a larger component in the budget after 1933, when the British Oil

Development Company and the Iraq Petroleum Company began making payments of more than half a million pounds to the Iraqi treasury (Savage 2013: 32). At this time, the outlook on Iraq’s public finances was positive; and ‘with no capital debt, no floating debt, and a substantial Treasury balance, the Iraqi Government [was] in a thoroughly healthy financial position, a happy state of affairs very largely due to oil,’ (IAR 1992: 500).

The major codification of budget rules in Iraq occurred under the Hashemite Monarchy, which promulgated General Accounts Procedure Law Number 28 (1940). It reflected

British fiscal and parliamentary systems in outlining the processes for budget preparation, government accounting rules, and auditing procedures (Savage 2013: 32). The budget sequence would begin with the Ministry of Finance and other line ministries in their submission of the General Budget of the State, which would be studied by the Council of

Ministers, and finally scrutinized by the Parliament for approval.

With the rise of the Baathists (1968) and Saddam Hussein (1979), the parliamentary role in the oversight process was completely discarded, and the economic priorities of ‘centralized political control, economic rewards and patronage to maintain regime support, and economic nationalism’ took center stage; which in turn promoted a shadow budget system removed from the mainstream budget process that ‘rested on a system of parallel hierarchical decision making, institutional compartmentalization, extreme secrecy, and

Soviet-style budgetary planning’ (Savage 2013: 34-35). Savage points out that, after the

1980s, a climate of stress and uncertainty caused by conflicts such as the Iran-Iraq war and

194 the Gulf War nullified much of the long- and short-term planning ability of the ministries, and a far more ad-hoc and military-focused budgeting situation emerged (2013: 38-39).

In 1985, Saddam’s central position in the budget was promulgated through the Law of the

Unified General State Budget, Number 107. There was no room for parliamentary involvement in the budget process or extractive industries by this point, and the budget process would instead begin with the Finance and Planning ministries drafting their respective sections of the general government budget, followed by a review from Council of

Ministers and by the Revolutionary Command Council, which finally went to Saddam for his signature.

Saddam was fully cognizant of the importance of fiscal policy as an instrument of power, which is why he seized control of the distribution of the extractive industry wealth in 1977

(Savage 2013: 41; Tripp 2007: 209) . Several ‘sensitive’ aspects of the budget were completely ‘black boxed’, such as intelligence, security, and military categories (US Central

Intelligence Agency [CIA] 2004: 8).

Saddam considered the budget to be a ‘state secret’ (Savage 2013: 40), and even though

Saddam made the final decisions on budget matters, his own budget acumen was severely limited, as analysis of his declassified and translated cabinet meetings has shown (National

Defense University 2011).

Savage has described the budget planning and budget execution phases during the 1980s and 1990s as governed by ‘compartmentalization, fragmentation, and secrecy [acting] as centrifugal forces that pulled at budget coordination, [but which were] countered by

Saddam’s centralized hierarchy of decision making and the widespread fear of his vengeance’ (2013: 42).

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The Future of Iraq Project’s assessment was that Saddam’s regime operated during the

1980s ‘without fiscal constraint’ (USDS 2002: 3). Decision-making followed a downstream path emanating from the President’s Office, and a ‘rentier’ system developed therefrom

(Savage 2013: 42-43). Extractive revenues helped to sustain that ‘rentier’ nature of the

Saddam regime, and in 1980, the debt-to-GDP ratio was only 5.2%, but this swelled to

35.4% of GDP by 1987 (Jiyad 2002: 109), and the stresses were exacerbated during the era of the Oil-for-Food program.

In sum, the Saddam-era budget process was, as Savage has euphemistically put it, ‘a distinct alternative to contemporary international best practices,’ (2013: 44), completely bereft of the democratic process that would involve parliamentary deliberation, oversight and approval; let alone systems of transparency and accountability.

[7.5] BUDGETING IN A POST-SADDAM IRAQ

The general consensus among scholars is that the American planning for fiscal and budgetary reconstruction of Iraq following the toppling of Saddam was ‘woefully inadequate’, and that the United States ‘went into the business of state building in Iraq reluctantly and ill-prepared’ (see literature survey by Savage 2013: 47). This is somewhat counter-intuitive given that the ‘Washington Consensus’ followed by neoliberals in the Bush administration had a commitment, at least in the abstract, to budgetary reform, as is seen for example in the first two among the ten neoliberal recommendations for development

(Williamson 1989: 16-17).

It has been contended that important voices in the invasion force were not focused on long- term budget restructuring but rather on short-term humanitarian efforts instead, with the assumption of leaving before a protracted engagement became necessary (Savage 2013: 48).

Additionally, it has been observed that much of the Coalition staff involved in this area

196 comprised young, inexperienced neoconservatives that were unprepared for the mammoth task ahead (Chandrasekaran 2006; Savage 2013: 50).

Because the Ministry of Finance was not protected militarily during the first six years of the occupation (in fact none except the Ministry of Oil were), rampant looting and ransacking destroyed many valuable resources including databases and records; and the top four floors of the Finance building were burned (Savage 2013: 71). Even American experts who had previously worked in conflict zones, such as Kosovo and Bosnia, had never seen a country so bereft of budgeting information as post-invasion Iraq (Savage 2013: 71-74).

One important document that did consider the budgetary implications of a post-invasion

Iraq was the State Department’s Future of Iraq Project, which outlined some ways to tackle the fiscal problems that could emerge (USDS 2002). It advised that the Ministry of Finance should be put in charge of the budget process, and the Ministry of Finance and Iraqi Central

Bank should work together on monetary policy, but it left out a consideration of the parliamentary role in budgeting (USDS 2002: 2). It pointed to a focus on re-establishing a tax base and investing in infrastructure while focusing on basic necessities such as foodstuffs, public health, public transport, education, and rehabilitation work.

The report was mindful of the extractive sectors of Iraq, noting that, at the time, Iraq had the second-largest known oil reserves and yet only 3% of the world’s production capacity, which could take more than a decade to double (USDS 2002: 30). Oil had served as the mainstay until that point and eroded any domestic tax base on which the Coalition could build. The report also pointed out that the second-largest source of government revenues after oil was customs duties, but the report’s neoliberal philosophical stance discouraged a reliance on such a mechanism (USDS 2002: 31). It made other recommendations characteristic of neoliberal regimes, such as low income taxes, higher consumption taxes, no

197 export taxes (even as Iraq’s largest export was oil), and no exemption on taxes for necessities such as food and medicine.

Lamentably, the Future of Iraq project also considered legislators to be generally inept at legislating for taxation; but rather than advocate a better advisory mechanism such as a

PBO to support legislators, the Future of Iraq project instead suggested that legislators be taken out of the tax legislation exercise altogether, making the sweeping statement that ‘tax administration cannot be micromanaged by activist legislators’ (USDS 2002: 35). Therefore, an important early opportunity to advance the cause of better parliamentary engagement with the budget thorough a PBO was tragically missed, even though the United States had been a pioneer in the budget office model through its Congressional Budget Office (1974).

To further stifle the democratic and participatory impulse in budgeting, the Future of Iraq

Project suggested that ‘the way to take advantage of the possibilities of harmonization and solidarity is for a post-Saddam regime to appoint an Economic Czar to coordinate the different measures advocated [here]’ (USDS 2002: 36). It can be inferred from wording such as ‘an Economic Czar’ that early American planning for Iraq’s fiscal framework was sadly not tailored towards a participatory, nor even a particularly democratic, approach to budgeting.

This is an alarming finding, because it shows just how glaring the mismatch is between what

American society has wanted for itself, a very significant congressional role in the budget process (Joyce 2011), versus what leading American thinking had argued for Iraq: an

‘Economic Czar’. Discussions of foreign interventionism in the twenty-first century should draw upon this example of incoherence between the exacting standards of accountability that liberal democracies would demand for themselves, as opposed to the undemocratic arrangements that they would seek to install in occupied countries.

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From a theoretical standpoint, the use of czarist terminology also identifies a mismatch in neoliberalism in theory versus in praxis. In theory, neoliberalism places a very high priority on budget reform, at least in the abstract, as is seen for example in the first two among the ten neoliberal recommendations for development (Williamson 1989: 16-17). In practice, however, the neoliberal machinery that pushed for occupation of Iraq was grossly unprepared for a full, sustained, long-term effort towards budget reform.

The primary American authority deployed in the immediate aftermath of the invasion was the Coalition Provisional Authority (CPA), and which focused on the pressing short-term needs of administration in a crisis situation (Savage 2013: 57).

The first budget that the Coalition Provisional Authority (CPA) had to construct was for the fiscal year 2003, but constraints in analysis made medium-term planning, forecasting, non- extractive revenue collection (taxes), and line-item details considerably hazy in the 2003 budget. A vocal criticism of that budget came from Allawi (2007: 194), who would serve as

Iraq’s Finance Minister during the 2005-06 budget, when he described it as an ‘amateurish and unrealistic affair, hastily put together by ministries that had no idea of modern budget preparation requirements, […] and the old ways were kept going for the sake of expediency.’

However, one of the more tangible budgetary impacts of the CPA was in promulgation of

Order Number 95, the Financial Management Law and Public Debt Law, which rescinded all previous budget related legislation.

The purpose of this order was to try to draw in some international best practices into the nascent budget reconstruction process. However, the order’s promulgation was a mixed blessing, because whereas it streamlined certain procedures, it failed to incorporate several important budget mechanisms, including a procedure for legislative oversight of the budget.

As an example, Section 9 and 12 of the order made the Finance Ministry into the main agent

199 in budget formulation and execution (CPA 2004: 14, 18); but a countervailing limitation was that, in Section 7, while the order did consider the legislature (referred to as ‘the body vested with national legislative authority’) in approval of the budget, it was accorded nothing more than a rubber-stamping role in the process; because according to clause 4, the Finance

Ministry could fund the Iraqi government even if the legislature failed to reach agreement on the budget, whether on technical grounds or due to political deadlock (CPA 2004: 12).

Therefore, even at this stage, the legislature’s oversight role in the budget was not considered particularly significant, and the Ministry could override parliamentary moves.

This law laid the groundwork for subsequent budgetary evolution in Iraq, and has been described as lying ‘at the heart of Iraqi Public Finance,’ (Savage 2013: 97).

Nonetheless, subsequent revelations of the CPA’s gross mismanagement discredited much of the authority’s oversight capability over budgetary matters, particularly in a figure of $8.8 billion that went unaccounted for (Office of the Special Inspector General for Iraq

Reconstruction [SIGIR] 2005: 1). CPA’s lack of budgetary accountability and transparency,

‘ghost employees’, inaccurate metering of oil production, and lapses in record-keeping of funds were just some of the problems highlighted in an alarming SIGIR audit, which also lamented that the CPA’s budget effort was ‘burdened by inefficiencies and poor management’ (SIGIR 2005: 2).

The mismanagement by the CPA reinforces the premise, raised earlier in this article, that there is a gross mismatch between what Americans have wanted for themselves, a strong oversight of efficient government expenditure, and how American operations in Iraq were conducted, by the ‘promulgation of orders’ of a non-elected foreign authority (CPA) not answerable to anyone for clear failures of management.

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Transparency and accountability were thus issues unresolved by the arrival of American experts. As Savage categorically states, ‘The United States simply does not manage money well when the solution to difficult problems rests with spending large amounts of money quickly to achieve strategic military and political goals’ (2013: 109). Even the foremost attempt to implement a modern electronic budgeting system in Iraq, through a contract awarded to the consulting company BearingPoint to install the FMIS software, was halted, mismanaged, and ultimately deemed a failure (Savage 2013: 112-143).

After the transfer of power to the Iraqis was nominally accomplished, there were three different governments in less than three years, which meant three different finance ministers came and ‘disrupted cohesive and comprehensive budgeting of any kind’ (Savage

2013: 46). The interim and transitional governments continued to suffer from the budgeting resource shortfall that the CPA had suffered, i.e. a lack of capable staff and usable equipment; but also a crisis of insecurity, sectarian disharmony, and political instability (US

Department of Defense [DoD] 2006: 15).

The situation continued to worsen throughout 2006 and 2007. Extractive revenues received underinvestment during this period and much of their transformative potential was effectively squandered. It has been estimated that between 2004 and 2006 Iraq had $24.6 billion in lost oil revenues (Savage 2013: 149).

In terms of the budget process, in 2010 and 2011, what had earlier been a set of steady improvements, began to regress to the state of the immediate post-Saddam years. A significant part of the problem was that Parliament was not receiving the budget from the

Council of Ministers on time (Savage 2013: 166). CPA Order 95 stipulated that Parliament should receive the budget by October 10th of every year, but the budget was typically brought to Parliament with one to two months of delay, which left barely a few weeks for Parliament

201 to scrutinize the budget before the next fiscal year began, and ‘this delay greatly limited the

Parliament’s ability to review the budget and make its own proposals in a timely fashion, resulting in the Parliament passing the budget a month or more into the fiscal year’ (Savage

2013: 166).

[7.6] TOWARDS LEGISLATIVE BUDGETING

Attention only began to really divert towards the parliamentary role in budgeting after

2007, when the Iraqi government requested assistance from the US on legislative reform

(USAID 2011: 35), including committee operations reform and procedural reform that could cover budgetary oversight as well.

In 2008, USAID awarded a contract to AECOM worth $42 million for a Legislative

Strengthening Program (LSP) for the purposes of capacity-development among Iraq’s parliamentarians through training programs, as well as through the establishment of a

‘Parliamentary Development Center’ for training, research, and support tasks (USAID 2011;

Office of the Inspector General [OIG] 2012).

Although it began with high hopes, subsequent audits by USAID and the Office of the

Inspector General found that the AECOM contract was grossly mishandled and had shortcomings across virtually all major evaluation metrics (USAID 2011; OIG 2012). The audits noted numerous cases of ineptitude and ineffective execution by AECOM, including questionable costs that went unaccounted for, arbitrary shifts in program leadership on four occasions, shoddy and incomplete implementation of systems, as well as poorly designed and inaccurate training programs ill-suited to the MPs’ requirements. The audits also suggest that AECOM did not properly reflect its inadequate performance and instead selectively made its work appear partially successful (OIG 2012: 6; USAID 2011: 48).

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However, the audits also noted that the blame was not squarely on AECOM’s shoulders, because a very high turnover of MPs (80%) created many inconsistencies, including a nine- month delay in choosing a speaker and two deputy-speakers (OIG 2012: 5), a fact exacerbated by a very recalcitrant, even ‘hostile’, attitude towards training among some MPs

(USAID 2011: 28). The Iraqi system of proportional representation also obstructed the program somewhat, in that there was a rule stating that the speaker, first deputy-speaker, and second deputy-speaker ‘must all agree before any action is taken’ (USAID 2011: 28).

Seeking approval from 3 different persons before moving forward with any aspect of the program caused regular slowdowns in the process. Perhaps worst of all, USAID came to determine that many MPs were ‘inaccessible and not accountable to the people they represent and should serve’ (USAID 2014: 4).

It should also be noted that the entire design of the program was intended to give short- term training to MPs, rather than build up a cadre of budget professionals who could advise

MPs on an ongoing basis. The contractual nature of the approach towards legislative budgeting reflected short-termism and a disinterest in permanent and recurrent capacity- building. Legislative budgeting is a complex process (Stapenhurst 2008; Chohan 2013a) which requires greater permanence in the sources of expertise along with a process for proper knowledge retention, which would not have been possible in the ‘workshop’ oriented approach that this contract took, even if it had worked properly.

In sum, the first attempt towards genuine parliamentary strengthening, via a contract awarded to a private-sector entity with low transparency ‘did not achieve expected results’

(OIG 2012: 5), and led to a haemorrhaging of $75 million dollars by the time it was completely discarded in 2014. This frightful example constituted a cautionary tale for

203 reformers interested in bolstering the capabilities of Iraq’s parliament, not least in its budget process.

The tense security situation in Iraq, combined with dwindling oil prices in 2014 and 2015, meant that the strains in the budget process were getting much worse instead of witnessing improvements. The World Bank had described the Iraqi budget as a ‘rather unreliable instrument of government policy,’ (2010:19) with ‘a significant level of unreported government operations and weak oversight of fiscal risk arising from the activities of other public sector entities.’

The economic term ‘budget execution’ refers to the percentage of the budget that is actually implemented, not simply earmarked. For example, a budget execution of 100% would indicate that all of the funds that a department earmarked were spent, while 50% budget would mean that half of the earmarked funds were left unspent, either because there were obstacles to execution or too much was earmarked. By this budget execution measure, most of Iraq’s ministries were falling terribly short of what they were earmarked to spend. The

UN’s Iraq Joint Analysis Unit noted that the extractive-related ministries were the ones with the poorest budget execution records, with the Ministry of Oil executing just 32% of its budget in 2011, and Industry and Minerals just 40% (UNIJAU 2013: 3).

However, important stakeholders, both external and internal, have not given up entirely, despite the adversity posed by the ‘a zero-sum, fractious political process’ (USAID 2011: 34).

USAID has described parliamentary reform as a necessary step given that ‘all roads to Iraq’s stable political transition continue to lead through [Parliament], where all consequential legislation must be negotiated and finalized (if not originated),’ (USAID 2011: 34).

In 2014, as part of an effort to revisit the legislative strengthening effort in Iraq, the UN convened a meeting to give Iraqi legislators a rudimentary briefing on their role in the

204 budget process (UNDP 2014). It was during this meeting that the notion of a ‘Parliamentary

Budget Office’ (PBO) was first mentioned in Iraq. For the purposes of definition, a

Parliamentary Budget Office is an independent institution with a mandate to provide parliamentarians with nonpartisan analysis on matters pertaining to the budget (Chohan

2013a). This institution finds its roots in the Congressional Budget Office (CBO) that was founded in 1974 and has played an important part in the legislative oversight of the

American budget process under every administration since the Carter-era (see Joyce 2011).

This is why it is ironic that the United States, having pioneered the legislative budget office model, did not deem it useful when reconstructing Iraq’s budget institutions.

Countries with similar challenges to Iraq, albeit to a lesser degree, include Uganda, Zambia and Nigeria, which have established PBOs in recent years with a specific view towards legislative oversight of their extractive resources (see Chohan 2013a and 2013b for discussions on PBO effectiveness). In all of these countries, PBOs have, despite their small staff and limited resources, made large strides in enhancing the budget process with respect to extractive industries (Chohan 2013b). Could the examples of these countries, in installing an independent budget-analysis institution to advise parliamentarians, serve Iraq as well?

It is important to take a step back and first ask: ‘going forward, is there hope for legislative budget reform in Iraq?’

[7.7] CONCLUSION

The aforementioned discussion about the historically absent legislative role in Iraq’s budget process raises some important points about what needs to be addressed going forward. First and foremost, Iraq’s economy is over-dependent on extractive revenues, and suffers from a high degree of opaqueness in the budget execution of its extractive ministries (Ministry of

Oil) as well as its budgeting ministries (Ministry of Finance). Second, a large proportion of

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MPs express recalcitrance and ‘hostile’ attitudes towards budget reform, while being

‘inaccessible and not accountable to the people they represent’ (USAID 2011). Third, there is a high turnover of MPs and a lack of continuity in the budget process (OIG 2012). Fourth, most of the MPs serving in budget-related positions (e.g. committees) do not have an adequate understanding of the budget’s complexity and what role they can play in overseeing it (USAID 2011; UNDP 2014). Fifth, there is an insufficient amount of credibility in the budget as a policy document (World Bank, 2010). Sixth, the budget process is exceedingly hampered by delays, and parliament is not given enough time to scrutinize the budget (Savage 2013: 166). Seventh, previous private-sector contracts (e.g. AECOM) have had disappointing results, thereby weakening the confidence of internal and external stakeholders in the effectiveness of investing in reform.

These issues suggest that a future legislative role in Iraq’s budget process can only be considered effective if it begins to address these various shortcomings. In the context of

Iraq’s tumultuous fiscal history, and given the looming uncertainty about its near-term fiscal outlook while oil prices reach unprecedented lows, the country must begin to look for answers in other places. This is why it is worth mentioning that other developing countries

(Uganda, Zambia, and Nigeria are notable examples) with rich extractive endowments have incorporated legislative oversight into their budget processes and also implemented supporting institutions like PBOs as a component within that process. In the past few years, there has been an interest exhibited in developing a strong parliamentary oversight mechanism for budget affairs in Iraq, especially by multilateral donor agencies. Most explicitly, the UNDP has expressed explicit interest in having a PBO exist. But the precise role that the institution would play remains unanswered.

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This article brings to light some important avenues of future research. First, the republican period prior to the Baath party requires more examination in terms of its influence on the budget process, as well as on legislative participation, especially since it was during this period that oil came to occupy a large portion of the budget; but there is as of yet scant study of this period. Second, the article raises questions about the Washington consensus in theory versus in practice, which can be seen in the decoupling of budget reform as an important priority in theory (Williamson 1989: 16-17) but not in practice, as the neoliberals went into the business of rebuilding Iraq’s budget ‘largely ill-prepared’ (Savage 2013: 47).

Third, there are questions raised about American foreign interventionism in the twenty-first century under the premise, as examined in this article, that there is a difference between what they want for themselves, which is a Congressional Budget Office and a strong legislative budgeting role, versus what they want for others, which was an ‘Economic Czar’

(USDS 2002: 36), a term that is neither participatory nor democratic. Fourth, the article raises questions about the role of Parliamentary Budget Offices, which have garnered increasing global interest (Stapenhurst 2008; Chohan 2013a, 2013b), but there is no consistent agreement or international consensus on how such institutions should be structured, what roles they should be assigned, and when they should be implemented.

Parliamentarians in Iraq today face a daunting task even without delving into the complexities of budget oversight. However, Iraq possesses great extractive wealth that can be diverted, with sufficient political will and parliamentary engagement, towards championing the welfare of her people. Most developing countries with a natural resource endowment and history of conflict similar to Iraq have indeed turned in recent years towards a stronger legislative role in budgeting, and they have also begun to establish supporting institutions such as Parliamentary Budget Offices. Iraq need not be different, for despite the unique burden of recent history that her people carry, the potential for

207 translating her extractive wealth towards broader societal benefits continues to exist.

Therefore, in reforming the legislative budget process, Iraq may finally shed a long legacy of budget opaqueness, and transform the budget into an instrument for the fiscal liberation of her people.

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CHAPTER 8: CONCLUSION

This chapter summarizes the main findings of the interrelated LBO studies presented, including new contributions, limitations and future research opportunities. Section [8.1] presents the overall thematic conclusions. Section [8.2] details the research contributions made in each paper and the implications of these for the understanding of parliamentary budget offices. A summary of the research undertaken in each chapter, including the research aim, design and findings is presented in a table below. The limitations are discussed in Section [8.3] including research design constraints and areas excluded from specific research attention. This discussion of limitations also invites consideration of further avenues of exploration. The final section of the chapter, Section [8.4] consists of concluding remarks by the author about the format of the doctoral thesis as a series of research papers, which diverges from the typical design of a thesis.

[8.1] THEMATIC CONCLUSIONS

The question that this thesis sought to answer was “to what degree do LBOs, based on the roles they are assigned, actually attain and provide the benefits claimed by their proponents?”

This remains a complex and multifaceted question, and one that lay at the juncture of three literatures: economics, political science, and governance; and which had thus far gone unanswered in each of the three. Therefore, this thesis sought to explore the roles of LBOs using these three literatures, and also examine if new literatures could be introduced to assist in the subjacent inquiry. This required a logical progression, and all of the elements within this logical progression were published in peer-reviewed journals.

FIGURE 2 (REPRODUCED): THE LOGICAL PROGRESSION OF THE THESIS

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Given that the nature of exploration in this thesis was multifaceted, there are in fact several findings of import that emerge. They are enumerated below:

1. Although the three literatures had explored LBOs in various (and separate) ways,

there is scope for the introduction of new bodies of literatures in the exploration of

LBOs, and this thesis highlighted the importance of public administration to this

effect (Chapters 2, 3, 4).

2. There are various forms of political resistance that can stifle the performance of

LBOs (Chapter 2, 3, 4).

3. There are two essential roles that LBOs can play: either as normative-advisory or as

mechanistic-costings institutions (Chapter 4).

4. The normative-advisory role provides greater public value, but also invites greater

political resistance and contention (Chapter 4). The costings role, while still

important, provides lesser public value, but is also subject to much less political

resistance (Chapter 4).

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5. However, even when the requisite ingredients are available, it is not necessarily true

that an LBO will perform the normative-advisory role. This is attributable to several

factors including the decisions of institutional leaders, a lack of “value seeking

imagination”, a preference for diverting rhetoric in lieu of resources, and at a deeper

level, because of conflicting values held by the public which these institutions serve

(Chapter 5).

6. Beyond the essential two roles, LBOs can also perform at least two roles that are

possible in special circumstances (Chapters 6, 7).

a. LBOs can serve as a coordination mechanism with other accountability

institutions in addition to their usual costings role (Chapter 6)

b. LBOs can help foster a legislative oversight role in the budget process where

one has not existed previously, which is to say, in situations where legislative

oversight in budgeting must be introduced from scratch, as an ab initio fiscal

body (Chapter 7).

[8.2] RESEARCH CONTRIBUTION

Institutions. I also note that the literatures addressed within this paper are generally thought of as ‘works-in-progress’ in the sense that they are still being developed and typologized as of yet. For example, the presidentialisation thesis suffers from ambiguity in the interpretation of what the term ‘presidentialisation’ really means, which Helms

211 describes as ‘much definitional confusion’ (2005). Similarly, Alford and O’Flynn point out that public value is still being typologized and there are different (sometimes competing) interpretations about public value’s meanings (2009).

For the political science literature, Chapter 2 addressed the Presidentialisation thesis and advanced it by presenting the paradox that presidentialising parliamentary systems may not just see greater president-like powers ascribed to the executive, but that institutions which challenge executive power in presidential systems, such as an LBO, can also be established to simultaneously mitigate executive power as the political system “presidentializes.”

For public administration, there were three chapters that made significant and original contributions to the literature. Chapter 3 introduced the LBO as a model for examining one of the core questions in public administration: the “Politics-Administration Dichotomy,” because of the manner in which these institutions reconcile their public manager aspect with the political budgeting realm. Chapter 4 introduced the LBO to public value theory and typologized two types of roles for LBOs, therein demonstrating the inherent trade-offs in public value theory as it is manifested in the political realm, which is one of the most intensely disputed portions of the theory (Rhodes and Wanna, 2007), while also reconciling the ostensible public value trade-off between “efficiency” and “democracy”. Chapter 5 addressed a different criticism within public administration, that of “public value as a rhetorical device” (Alford and O’Flynn, 2009). The paper’s findings contributed to the public value literature by showing that (1) public value’s rhetoric can be used by politicians as well as public managers, and (2) that the rhetorical aspect is a function of contradictory values held by the public (greater budget expenditure on services vs. budget sustainability), and that politicians must prioritize between these contradicting values by diverting either resources or rhetoric.

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For the governance literature, Chapter 6 delved into how accountability institutions can serve a coordinating role with other institutions in addition to their own work, using a developing country context where there is a high nominal commitment to transparency and accountability (Constitution of Fiji, 2013). Chapter 7 contributed to the governance literature by examining how a situation where no legislative budget oversight role has ever existed can quickly deploy accountability expertise (a PBO) to launch legislative participation in budget oversight from scratch (as an ab initio fiscal body), using Iraq as its case study.

In sum, each paper addressed an important body of work and pushed it forward by introducing perspectives from the experience of Legislative Budget Offices. From the opposite viewpoint, each of these literatures was used to inform the manner in which the roles of LBOs can be typologized, both in “normal” situations (normative-advisory and mechanistic-costings roles), as well as in exceptional situations (introducing legislative budget oversight, and acting as a coordination mechanism.)

TABLE 10: RESEARCH PAPERS – CONTRIBUTIONS TO THE THESIS,

AND CONTRIBUTIONS TO THE LITERATURE

Presidentialisation Thesis and Parliamentary Budget Research Paper 1 Offices States the problem of divergent performance among LBOs, and Contribution to builds a case study of Canada’s Parliamentary Budget Office and Thesis the American Congressional Budget Office that is applied in subsequent chapters. Presents a paradox in Presidentialisation Thesis: that institutions of presidential systems which check the power of the Executive Contribution to can be introduced into Parliamentary Systems as counterweights Literature to the Executive’s power Presidentialising Parliamentary Systems. Two case studies: (1) The Congressional Budget Office (US) and Research Design (2) The Parliamentary Budget Office (Canada)

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Independent Budget Offices and Research Paper 2 the Politics-Administration Dichotomy Further develops two case studies (CBO of US, PBO of Canada), Contribution to and examines three expert accounts of LBOs to situate them in the Thesis Public Administration literature that is used to provide the solutions to the thesis

Introduces LBOs to Public Administration, heretofore Contribution to unexplored, as an avenue of inquiry in the politics-administration Literature dichotomy. Research Design Thematic review of three LBO works with case-study orientation Public Value in Politics; A Legislative Budget Office Research Paper 3 Approach Provides solutions to the thesis, that there are two essential roles: normative-advisory and mechanistic costing. Uses previous chapter case studies (CBO, PBOC), and the introduction to the Contribution to Public Administration in previous chapter. Uses “public value” Thesis frameworks including Strategic Triangle, and discusses the difficulties in performing both roles and the “public value” contribution of each.

Advances understanding of “public value in politics,” by introducing LBOs and the lens of budgeting to Public Value Contribution to Theory. Finds that public managers can make specific Literature engagements with the political realm that enhance both “efficiency” and “democracy”

The Strategic Triangle (Moore, 2005) and US/Canadian Budget Research Design Office Case Studies Public Value as Rhetoric: A Legislative Budget Office Research Paper 4 Approach Identifies limitations to the solution provided in the previous Contribution to chapter, because public value can be used as a rhetorical device, Thesis which is why, even when the ingredients for playing both roles are provided to LBOs, they may not necessarily perform both.

Public value can be used as rhetoric both by politicians and public Contribution to managers, and so long as citizens (the public) have conflicting Literature values, politicians must prioritize between rhetoric and resources, which leaves public managers with a limited ability to create public

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value, and which is limited by rhetoric while other values are prioritized.

Case study of Australian budget mechanisms: Charter of Budget Research Design Honesty, Annual Budget and Budget Reply Speeches, and Parliamentary Budget Office of Australia (PBOA) A Parliamentary Budget Office in Fiji: Scope and Research Paper 5 Possibility Introduces a special role: LBOs can act as coordination Contribution to mechanisms for accountability institutions in the budget process, Thesis in addition to their usual budget analysis work. Develops governance-based exploration of how accountability institutions can serve a coordinating role with other institutions Contribution to in addition to their own work, using a developing country context Literature where there is a high nominal commitment to transparency and accountability Case study of accountability architecture in Fiji, Constitution of Research Design Fiji, and International Budget Partnership’s Country Rankings Research Paper 6 The Idea of Legislative Budgeting in Iraq Introduces a new role: as an agent in assisting the creation of a Contribution to legislative oversight role in the budget process – helping Thesis legislative budget participation start from scratch (ab initio fiscal body), using Iraq as a case study. Considers governance-based approaches to introducing legislative budgeting in contexts where it has little historical precedent, particularly in Resource-Rich Developing Countries. Also identifies two shortcomings in budget reform (governance): Contribution to (1) mismatch between Washington consensus prioritization of Literature budgeting in theory and praxis, and (2) identifies double- standard in developed-country budget approaches, advocating strong legislative budget oversight in their own local context, but [in some instances] non-transparent and non-accountable arrangements in developing countries. Case study of the budget process in Iraq in the 20th and 21st Research Design centuries

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[8.3] RESEARCH LIMITATIONS AND FUTURE RESEARCH DIRECTIONS

The merits of the exploration and rigour of this dissertation notwithstanding, there are several research limitations that may be identified at this juncture. They are enumerated as follows:

1. Economics: there were no economics papers in this thesis. My approach in this

thesis has been to foster interdisciplinary approaches towards a better

understanding of an inherently macroeconomic problem, but that said, the lack of a

fully economics-oriented paper in this dissertation warrants mention as a limitation.

2. Quantitative Methods: although I strongly believe that narrative approaches and

case studies are often more than sufficient to elucidate complex problems besetting

institutions such as IFIs/LBOs (if executed correctly), it is worth noting that there is

no mathematization of any sort in this thesis. The highest numeracy employed in

this thesis is counting, as in Chapter 5, where mentions of ‘sustainability’ and

‘responsibility’ were tallied in budget speeches and budget reply speeches.

Nonetheless, the qualitative approaches employed in this thesis were sufficient to

produce peer-reviewed journal publications that addressed this thesis’ research

question.

3. Limited LBO sample: this thesis built case studies for the CBO, the PBOC, and the

PBOA; while also considering the scope for LBOs in Fiji and Iraq. However, there is

a great variety in the number of budget offices around the world (Kim, 2015); and

these other LBOs also warrant investigation and may provide interesting insights.

That said, it is beyond the scope of any tract on LBOs to serve as a comprehensive

guide that covers all LBOs (notwithstanding efforts by Kopits, 2013; von Trapp et. al,

2016).

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4. New Literatures: Although the public administration literature, and particularly

public value theory, proved invaluable for the identification of roles for LBOs, there

are indeed other literatures which could also have been deployed, which future

researchers may wish to entertain. A few that are of particular import include the

following:

a. Organizational Institutionalism: LBOs embody numerous subtopics of

interest in the literature on organizational institutionalism. For example,

there is an element of normative isomorphism in budget offices, as alluded to

in Chapter 3, whereby the Office of Management and Budget (OMB) is ‘kept

honest’ by the CBO. Other subtopics include legitimacy, which was examined

through a different lens (public value, Chapter 4 & 5) in this thesis. Finally,

the notion of decoupling is also à propos, in terms of the decoupling of

budget discipline from actual budget decisions by legislatures and executives,

and this is examined through a different lens (public value as rhetoric,

Chapter 5) in this thesis. These are but some examples of linkages between

organizational institutionalism and LBOs that may warrant exploration in the

future.

b. Accounting: LBOs are inherently compatible with the accounting literature

because they in essence mobilize accounting towards enhancing transparency

and accountability. They use an accounting (budgetary) expertise and can be

situated in the literature on public sector accounting. This may include

explorations of LBOs as a public sector innovation, or in terms of the role of

accounting in society, among others.

c. Sociology: LBOs would benefit from a rich tradition of sociological

perspectives that have examined the nature of structure and agency and their

217

intertwined impact as manifested among and across institutions. LBOs are

influenced by structures (the budget process, the legislature, the executive)

and by agents (directors of LBOs, legislators, executives, LBO budget

analysts), which would make sociological perspectives highly à propos. As

such, this avenue of inquiry could also prove very enriching in future

explorations of LBOs.

That said, it is beyond the scope of this dissertation to incorporate these literatures

as (1) the current mobilization of literatures is already a significant step forward, and

(2) it would have been an order of magnitude more difficult to incorporate these

literatures given the time frame of the thesis, as this would have necessitated a

thorough knowledge of these literatures in addition to those for which proficiency

has been demonstrated in this thesis already.

Aside from the new literatures suggested above, there is ample room for further research as suggested by the various papers in this thesis. These are enumerated below:

1. Presidentialisation Thesis: Chapter 2 set an example of discovering

institutions which are transposed from presidential systems onto

parliamentary ones but which limit the expansion of the executive’s power

and influence – in this case in the sphere of national budgeting. The

presidentialisation thesis would be greatly enriched by similar explorations in

other areas of parliamentary involvement. For example, in legislative

engagement with foreign policy, national defence, extractive (natural

resource) policy, taxation, subnational government, supranational entities,

financial sector regulation, and so forth. Such lines of inquiry would

218

constitute a valuable next step in the substantiation and development of the

presidentialisation thesis.

2. Public Value in Politics: Future explorations of “public value in politics”

can draw from the approach of Chapter 4 and branch out into other “concrete

managerial settings” where political engagement, or “imperfect political

agreements” as Moore put it (1995, p. 54-5), loom large. This should include

areas such as local government issues; regulatory oversight bodies (Securities

Exchange Commission versus the politicians “influenced” by the financial

sector, for example), and monetary policy (interactions between the Federal

Reserve and Congress, for example).

3. Public Value more broadly: public value is a theory that is still being

typologized, which is why there is ample room to deploy the prism of

budgeting in service of public value explorations. For example, public value is

a function of the definition of “the public”, and as LBOs are instituted for

subnational, national, and supranational jurisdictions, their budget-oriented

public value creation may raise questions about just what the “public” is.

Similarly, public value is a triangular relationship between politicians, public

managers, and citizens; where the citizen node requires substantial

theorisation (Benington 2009). How LBOs (or other budget mechanisms such

as ‘citizens budgets’) inform the public about value creation can represent

another interesting area of exploration. Similarly, while LBOs constitute an

office of public managers who are experts in the budget sphere, the need for

theorising the role of public manager ‘expertise’ can be examined in situations

outside of budgeting, such as in the case of an independent office for science

and technology that informs legislators about complex scientific processes in

219

a nonpartisan and neutral way. In other words, the analogy of public value

creation by nonpartisan public managers who wield expertise can thus extend

beyond just the realm of budgeting.

4. Accountability: there is a substantial gap in the literature on accountability

in terms of how accountability institutions coordinate with one another.

Chapter 6 examined the need for coordinated approaches in the budgeting

sphere, as between LBOs, Parliamentary Accounts Committees (PACs), and

Auditors-General (AGs). Understanding the nature of coordination between

accountability institutions, as well as how to optimize such coordination, is an

important method of pushing the literature forward, and not just in

developing country contexts but also in developed countries, where the work

of accountability institutions may often be insufficiently synchronised.

[8.4] CONCLUDING REMARKS

This thesis was constructed from several research papers that were bound together by a coherent narrative, even as they explored different literatures and represented different steps along a logical path. The decision to publish and then compile research papers was premised on two factors. First, this allowed for more rigorous, continuous, and expert- driven feedback throughout the writing process. While some papers were accepted in their original form (Chapter 3, “Politics-Administration Dichotomy,” for example), other papers received substantial feedback over several rounds of revision, which only helped to improve the quality of the papers (Chapter 2, “Presidentialisation Thesis,” as an example). Such a rich source of feedback only helps to advocate the pursuit of theses by published papers.

Second, the fact that this thesis speaks to so many literatures necessitates expertise that is too divergent to leave unreviewed without publishing, lest the papers lack intellectual

220 consistency and fail to push each literature forward. In other words, the diversity of perspectives employed in this thesis necessitated inputs from reviewers across multiple disciplines, and hence necessitated an approach of thesis by published papers.

As for a final word on the impact of this thesis – it is hardly a stretch to state, given the current difficulties faced by LBOs, that the effort to denote roles for LBOs is an innovation in budgetary thinking itself. This is because, as I had proposed, the Legislative Budget Office

(LBO) serves as an excellent case study through which to examine the deeper question of public accountability and its fiscal consequences, because the LBO represents an institutional melding of two fundamental ideas: accountability and budgeting.

Understanding the roles of LBOs can shed new light on the actual implementation of fiscal accountability. As I have continually stressed, because there is scant explicit consideration of the roles of LBOs, whether in practitioner or theoretical literature, there is much ambiguity in the design, function and implementation of LBOs, that can in turn incite severe budgetary conflicts.

Delineating the roles of an LBO thus constitutes both a comprehensive dissertation, as well as a significant and original contribution to the global understanding of what Legislative

Budget Offices are, and what they should be. The thesis has also advanced the public administration across three academic debates: the politics-administration dichotomy

(Chapter 3), ‘public value in politics’ (Chapter 4), and ‘public value as rhetoric’ (Chapter 5).

But this thesis’ examination of LBOs shall not only advance the theoretical underpinnings of effective budgeting in any dynamic and democratic society, but also inform practitioners on how to advise nascent LBOs around the world.

This inquiry thereby pushes, however slightly, the boundary of knowledge with respect to the roles, and therefore the purpose, of Legislative Budget Offices.

221

John Stuart Mill aptly noted that “like all things, therefore, which are made by men,

[political institutions] may be either well or ill made; judgment and skill may have been exercised in their production, or the reverse of these.” The findings of this thesis are part of the effort to ensure that LBOs have judgment and skill exercised in their production, and not – as Mill euphemistically put it – the reverse of these.

222

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LIST OF LEGISLATION

1. Budget and Accounting Act, (1921) [United States] 2. Access to Information Act, (1985) [Canada] 3. Federal Accountability Act (2006) [Canada] 4. Truth in Sentencing Act (2010) [Canada] 5. Bill C-476, An Act to Amend the Parliament of Canada Act, (2013) [Canada]

6. Audit Ordinance, (1956). [Fiji] 7. Charter of Budgetary Honesty, (1998). [Australia] 8. Parliamentary Services Act, (1999). [Australia] 9. Constitution of the Republic of Fiji, (2013). [Fiji] 10. Finance Ordinance, (1965). [Fiji] 11. Law of the Unified General State Budget, Number 107, (1985). [Iraq] 12. Standing Orders of the Parliament of the Republic of Fiji, (2016) [Fiji] 13. The Financial Management Law and Public Debt Law, Order Number 95, (2003). [Iraq] 14. U.S. Troop Readiness, Veteran's Care, Katrina Recovery, and Iraq Accountability Appropriations Act, (2007). [United States]

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APPENDIX: LETTER OF GRATITUDE FROM

THE PARLIAMENTARY BUDGET OFFICE REVIEW COMMITTEE

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APPENDIX: CHALLENGES TO THE MEASUREMENT

OF THE EFFECTIVENESS OF LBOS

This appendix reproduces a policy paper which I had published at the Tax and Transfer Policy Institute (Canberra). It is also available at the following address (Full Citation): Chohan, U.W. (2016), “How do we Measure the Success of Legislative Budget Offices?” Austaxpolicy: Tax and Transfer Policy, 24 October. Available from: http://www.austaxpolicy.com/measure-success-legislative-budget-offices/

Legislative Budget Offices (LBOs) are independent institutions staffed with economists that provide rigorous and non-partisan analysis to legislatures on matters pertaining to the budget. Their appeal lies in their ability to provide robust economic analysis that avoids taking political sides, which is meant to help create a more evidence-based dialogue in politics.

So far, there seems to be a general agreement that, in the countries where they have been instituted, LBOs create some form of good in the budget process. The problem is that measuring this good is complex.

Even as academic investigation into LBOs is growing, the actual measurement of their success has not been a primary focus. Rather, the current body of research has looked at their performance in more intangible ways. These intangible contributions have had a significant impact, but they don’t address the more concrete questions around- how successful are the LBOs?

This question is of great importance since the LBO institutional model has now proliferated across more than 60 countries. As their presence, influence, and scope expands, it becomes critically important for more integrated and more specific approaches to measuring their success – ideally in ways that go beyond the intangible or unmeasurable.

For starters, at least three disciplines take an interest in LBOs: economics, political science, and governance. First, from the perspective of economic theory, LBOs are meant to introduce a more long-term attitude towards the budget process, which is a response to dynamic inconsistency that arises from the desire to consume more in the present and save less for future periods, which leads in turn to a problem known as the permanent deficit. The analysis of LBOs is meant to provide more stability and consistency to the fiscal policy decisions over longer time horizons.

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Second, from the standpoint of political theory, LBOs are meant to level the playing field in the budget process between the legislative arm and the executive arm. In many countries, including robust democracies, the dominant executive branch often has the upper-hand in the budget process. Through their analysis, LBOs help to strengthen the legislature’s hand in the budget process, and this is thought to lead to more democratic outcomes both in budget-making and in budget oversight.

Third, from the standpoint of governance theory, LBOs are considered an institution that bolsters the level of transparency and accountability in the budget process, which for the purposes of developing countries, is meant to fuel economic growth as the structural barriers created by poor institutions are lessened. The proliferation of LBOs among developing countries has in large part been driven by such thinking.

These three theoretical approaches notwithstanding, it is important to note two things. First, that there have been very few interdisciplinary approaches to understanding the LBO, and greater research is required to address this knowledge deficit. Second, these approaches are grounded in rigorous theory, but theory nonetheless – the actual assessment of LBO effectiveness remains something of a mystery in the scant literature.

Let’s look at some ways that the performance of LBOs could be measured, and why these approaches might not work due to serious limitations.

1. Counterfactuals: The ideal method of assessing LBO effectiveness would involve a counterfactual approach. This would look at the impact of an LBO in terms of changes in budget balance or fiscal stability, and then compare this with a counterfactual outcome such as what the fiscal balance would have been if the LBO had not been around. The inherent problem with this approach is that the counterfactual cannot actually be observed. There is room for an abstract discussion of how things may have been different, but this does not lend itself to concrete measurements. The counter-factual is the least practicable of all measurement methods.

2. Enhanced transparency: A more practical approach would be to measure the enhanced transparency of the budget process. The International Budget Partnership’s (IBP) Open Budget Index is one particularly noteworthy resource in this regard, given its comprehensive and peer-reviewed methodology. Measuring the change in the IBP score assigned to a country over time can indicate whether there are improvements in the transparency of the budget process over time, and the IBP’s index has several questions

247 specifically about the existence of an LBO. However, a more careful look at the Open Budget Index survey instrument reiterates our initial problem: Simply asking “do you have an LBO?” and answering “yes, we do”, does not speak to the underlying inquiry: “does your LBO do a good job?” To this point, there is a deeper question to ask: does better transparency lead to better fiscal outcomes? If that were true, the country with the best LBO, the United States, could have the most manageable and least worrisome budget balance. But this the truth is in fact quite the opposite, the US is veering towards an untenable fiscal position, even as its budget office, the CBO, has spent the last 40 years trying to avail politicians and the public about this situation.

3. The public and the media: In a vibrant democratic environment, the voice of the public should be seen as the ultimate arbiter of an effective public institution. However, public perceptions are not guided by a fully-informed set of inputs, either due to insufficient knowledge about the workings of an LBO, or a general disinterest in LBOs due to the seeming remoteness of the budget process itself. An active media can play a role in publicizing the work of an LBO, as it has in Canada. To this point, surveys can be conducted that ask the public of their perception of the LBO’s contribution. Press coverage can also be gauged in this manner. Yet, it is difficult to measure the impact of the LBO in truly concrete terms if the assessment is perceptual.

4. The opposition: An important part of an LBO’s work is to arm the opposition with budgetary acumen to challenge the governing party’s budget dominance. When measuring this, an LBO can ask opposition party MPs to fill a survey instrument indicating their level of satisfaction with the analysis of the LBO. This can entail questions of response times, response details, and the like. The PBO of Australia conducts regular feedback surveys from stakeholders. While nonetheless important, the opposition’s opinion of the LBO does not cover the full extent of what an LBO can accomplish, and it may be politically-motivated and dependent on opposition and government switching positions in the legislature. It is also a highly perceptual measure.

5. Sovereign ratings: The creditworthiness of a nation depends on several factors including the current deficit/debt levels, their rate of expansion, and the ability to cover obligations coming due at various maturities. In theory, the “impact” of an LBO can be in part inferred from looking at how the sovereign rating of a country changes after its installation. If the post-LBO sovereign rating is higher, it could insinuate a positive

248 influence on the fiscal position due to the LBO. In reality, this becomes problematic because of false inferences since many countries have instituted LBOs at times when sovereign ratings are in a state of downgrade, or with sovereign ratings unchanged, thereby implying that the LBO had no impact, or worse, a negative impact on the sovereign rating.

6. Cross-country comparisons: To create cross-country comparisons between LBOs would seem like an excellent manner of gauging their effectiveness, but in practice this is impossible due to the immense heterogeneity of LBOs, which diverge so much in size, mandate, scope, purpose, financial resources, staffing, access to information, legal recourse, leadership style, and budgeting culture. Consider this comparison: the CBO of the United States, which has the second largest number of economists of any federal agency, second only to the Federal Reserve. By contrast, the LBOs of some developing countries constitute only a few junior budget officers with limited resources and ramshackle work conditions. Countries such as Canada, Australia, and EU member states fall somewhere in between the two extremes.

These approaches and their limitations are summarized here:

Approach Tool Objective Limitation(s)

Counterfactuals Fiscal To measure the specific Counterfactual is metrics* impacts of the LBOs unmeasurable

Enhanced Open To measure Recognizes LBOs, but does transparency Budget improvements in not assess their success Index (e.g.) budget process

Public and Survey Responses to the work Insufficient information; media instrument of the LBO complexity; perceptual

Opposition Survey Responses to the work Perceptual; susceptible to party instrument of the LBO politically-motivated feedback

Sovereign Change in To measure LBO False inferences: either ratings rating impact on credit downgrades occur or rating worthiness unchanged

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Cross-country Fiscal To measure LBO Excessive country contrasts comparisons metrics* impact between limit value countries

*Fiscal Metrics refer to the fiscal position, budget balance, the size and g rowth of the deficit, and so forth As result, none of the aforementioned approaches is comprehensive and each suffers from substantial limitations. Yet LBOs are becoming ever more important in the budget process, and it is generally agreed that they provide some form of good. Further research and creative approaches are thus necessary for us to really measure success of LBOs.

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