THE CHANGING ROLE OF PARLIAMENT IN THE BUDGET PROCESS 8-9 October - PDF document

INTERNATIONAL SYMPOSIUM On THE CHANGING ROLE OF PARLIAMENT IN THE BUDGET PROCESS 8-9 October 2008 Korel Thermal Hotel, Afyonkarahisar, Turkey Session Four The Monitoring Function of the Parliament in the Budget Implementing Stage: The Role of the Committees and the Budgetary Research Capacity Strengthening parliamentary capacity for scrutiny and oversight of the budget: experiences from the Netherlands by Jan Pieter LINGEN Head of Private Office/Netherlands, European Court of Auditors SIGMA, Support for Improvement in Governance and Management A joint initiative of the OECD and the European Union, principally financed by the EU This document has been produced with the financial assistance of the European Union. The views expressed herein are those of the author, and can in no way be taken to reflect the official opinion of the European Union, and do not necessarily reflect the views of the OECD and its member countries or of the beneficiary countries participating in the SIGMA Programme

Summary There are many different ways parliaments can exercise their rights of approval of the budget, of amending budgets, of monitoring and controlling the implementation of the budget and of giving discharge to the implementing authority. In this paper some experiences will be presented from the Netherlands. After a short overview of the constitutional and political setting of parliament in the Netherlands, the different roles and functions of committees are described, focussing on budgetary scrutiny and oversight. These are sketched against the background given by two major programmes that substantially strengthened the grip of Dutch parliament on the budget: the action plan to improve the financial information and the financial control infrastructure from 1987 onwards, and the improvement of the quality of budgetary information and accounting information through the Dutch type of performance based budgeting: policy budgeting and policy accounting. Both programmes were to a large extent successful thanks to the strategic partnership of parliament (and mainly its budgetary control committee), the Court of Audit, and the Ministry of Finance. They supported each other and kept each other awake. The budgetary control committee inside parliament was largely able to maintain the balance between its own competence and the competences of standing committees, contributing to the strengthening of budgetary scrutiny mainly through its advisory role carried out by its budgetary expert staff. The committee, according to the rule of procedure responsible for the contacts with the Court of Audit, was also able to strengthen its relations with the Court, whilst at the same time the Court moved into the direction of working closely together with parliament as its main client, without compromising its independence. The Dutch model is not a model to be copied - but it probably contains elements that can inspire other parliaments making efforts to strengthen their budgetary scrutiny and oversight function. Biography Jan Pieter Lingen (1950) studied social geography at the Free University in Amsterdam. He started his career at the Royal Tropical Institute, and since 1980 worked as an assistant to the Second Chamber of Dutch Parliament, first for the Development Assistance Committee, and later for the Standing Committee on Finance and the Budgetary Control Committee. In 1998 he was appointed political advisor to the State Secretary for Health Care. In 2000 he joined the European Court of Auditors as the Head of Cabinet of the Dutch Member of the Court. In that position he has been actively involved in numerous support and review activities in the area of audit and financial control, especially in candidate and potential candidate countries. 2

Introduction There are many different ways parliaments can exercise their rights of approval of the budget, of amending budgets, of monitoring and controlling the implementation of the budget and of giving discharge to the implementing authority. These differences may vary according to different constitutional arrangements, political culture, tradition and practices, and will often evolve over time. Ideal arrangements for effective monitoring and oversight do not exist: it very much depends on the circumstances which arrangements are best suited for a given parliament to effectively exercise its functions of budgetary scrutiny and oversight. In order to select appropriate arrangements, it is useful to see how other parliaments have operated in this respect. In this paper some experiences will be presented from the Netherlands. The focus will be on the internal organisation of parliament and on its relations with the supreme audit institution and the ministry of finance in the Netherlands. These will be preceded by some general observations on government budgeting and budgetary management. General observations The budget It may be useful to recall the major principles of, and requirements for the budget in democracies: the budget should be public, the budget should be universal, including all expenditure and revenue separately, the budget should be authorized by the legislature before implementation, the budget should cover a fixed period of time (a year usually), and the budget should be presented in a clear and structured way. The budget should reflect in financial terms the political priorities adopted by parliament. It should therefore allow parliamentarians to recognize how these priorities have been translated into budgetary terms. In his contribution to the World Bank reader on Budgeting and Budgetary Institutions, published in 2007, Jürgen von Hagen gives a brief overview of the literature on public finance in the context of fiscal performance 1 . He rightly states that the core of public finance is that some people spend other people’s money and that in democracies voters delegate the power over public spending to elected politicians: parliament's "power of the purse". In public finance theory the relationship between voters and politicians is defined as a principal-agent relationship: the voters give a mandate to politicians, politicians are under instruction of the voters. However, voters are not in a position to determine completely which projects politicians should spend public money on. In principle, this is counterbalanced by the possibility for voters to hold elected parliamentarians to account during the next elections. A similar relationship exists between elected politicians, parliamentarians, and government. Again, in democracies parliamentarians are to hold government to account for their acts, including public expenditure. This demonstrates the importance of the role of parliament in scrutinizing the budget and in keeping oversight of the implementation of the budget: on behalf of their voters parliamentarians are to see to it that public money is spent in a way corresponding to the wishes of 1 Budgeting institutions for better fiscal performance, in: Anwar Shah (ed.), Budgeting and Budgetary Institutions, World Bank, Washington, 2007, p. 27-51. 3