The latest Open Budget Survey for 120 countries - including NZ - was released June 1st. The big news is that NZ, which has been ranked first (or first equal ) since the survey ‘s inception has now fallen off the pace and is now ranked 4th, behind newcomer (in the top group) Georgia, as well as traditional rivals South Africa and Sweden.
The United States dropped out of the top ten group altogether.
These overall country results are shown in Figure 1 below.
The Open Budget Survey is truly international covering 120 countries
The Open Budget Survey (OBS) is part of the International Budget Partnership’s (IBP) Open Budget Initiative, a global research and advocacy program to promote public access to budget information and the adoption of inclusive and accountable budget systems. First launched in 2006 and conducted biennially, the OBS 2021 is the eighth round of this initiative.
Democracy is under threat around the world
The 2021 survey comes at a time when accountable and inclusive public budgeting is more urgent than ever. Democracy is under threat in developed and developing countries alike on a scale last seen in the 1930s. The pandemic has led to the first rise in global extreme poverty in a generation, and debt and inequality within countries is in general increasing.
Open government is critical to reinforcing the legitimacy and credibility of the budget process.
The survey provides a rigorous review under three pillars: Transparency, Participation and Oversight
Table 1 shows the scores of the top four countries (in blue) along with the next eight top performers. What is clear is that different countries do better on particular dimensions. Across the three dimensions, NZ is quite a consistent performer but not best of breed in any one domain.
As a result much can be learnt from the practices of other jurisdictions about how New Zealand can be more transparent and accountable.
Most countries increased transparency while New Zealand’s score dropped slightly
Somewhat surprisingly, the pandemic did not undo hard-fought gains in transparent and accountable budgeting practices worldwide. Most countries were able to maintain, and in some cases build on earlier gains in their annual budget processes, thanks to increased digitization of information and the institutionalisation of accountability practices.
The average transparency score has increased more than 20 percent since 2008. Eastern Europe and Central Asia, East Asia and the Pacific, Latin America and the Caribbean and Sub-Saharan Africa (after a dip in the OBS 2017) have made significant strides in transparency since 2008.
New Zealand’s transparency score dropped slightly, partly reflecting the lack of a citizens budget as a decision was made to drop the Budget Basics series in the 2020 Budget. The Budget Basics series has since been reinstated but much more could be done to make it more useful and more interesting and attractive to Kiwis.
Public participation is the weakest link.
Public Participation is assessed based on the degree to which the executive, the legislature, and the national audit office each provides opportunities for the public to engage during different cycles of the budget process.
Public engagement in budget decision-making is the weakest link in countries’ accountability systems across the survey. Budgets remain a primarily elite conversation with few avenues for ordinary people to engage and have a say. Only eight countries worldwide have formal channels to engage underserved communities.
Budget oversight – New Zealand lacks a Parliamentary Budget Office
Budget oversight examines the role played by formal oversight institutions such as the legislature and the national audit office (the OAG) in the budget process and the extent to which they are able to provide robust oversight of the budget.
Across the world budget oversight by legislators and national auditors is limited and there are serious gaps in checks and balances in the management of public funds. Legislative oversight has declined due to a variety of factors, such as political unrest, the pandemic, and executive overreach. Executives in some countries have found ways to undermine Supreme Audit Institutions (SAIs) while staying within the boundaries of the law.
New Zealand scores reasonably highly but is only ranked 12th in the survey on this dimension. In part that reflects the constitutional arrangements in Westminster systems with the lack of a sharp distinction between the executive and the legislature.
But this also reflects that New Zealand has been slow to adopt practices such as an independent fiscal institution. The Treasury has a well-developed proposal for a Parliamentary Budget Office (PBO) which until recently has been stymied by political opposition. Creating a PBO would significantly strengthen New Zealand’s fiscal constitution.
New Zealand has come a long way, but we still have a lot to learn and do
New Zealand has been a world leader in public financial management for over two decades. The latest OBS survey should serve as a wake up call. Other countries have made significant gains while New Zealand slipped back slightly.
Public financial management is a race without a finish line. We need to learn from others if we are to continuously improve.
The Open Government Partnership process is underway which allows citizens and civil society organisations to engage in setting the agenda for the improvements required. Let’s hope that opportunity is taken with the new plan under development.
About the Author: Derek Gill is the Open Budget Reviewer for New Zealand. He has extensively researched, taught and published on a range of public policy and management issues, while based at the Institute of Governance and Policy Studies at Victoria University of Wellington and at NZIER. His previous experience includes roles as a DCE in CYF and SCC, as a diplomat, a long-standing Treasury employee with a secondment to the OECD.
