Transcript 국회의장업무보고_20050124

Budget Control and the Role of the National
Assembly Budget Office in Korea
Dr. Jhungsoo Park
Director General for Budget
Analysis
NABO, Korea
contents
1. Introduction
2. Government Spending and Budget Control
3. Executive vs Legislative Power of the Purse
4. Details about the NABO in Korea
5. Conclusion
1-1
New budget policy in Korea
• Medium-term expenditure framework
• Top-down budgeting system
• Performance management
• Digital budget and accounting system
Structure of Korean government and the budget process
• Focus on the issue “Can legislature gain an effective voice in budget
policy?”
• Weak role of National Assembly in budget process, traditionally
1-2 The budget process and the decline of control capacity
Today’s process is a layering of various processes developed over time
Significant development
• Budget committee (standing, but special)
• NABO
The decline of independence and control comes from three external
development
• The rise of disciplined political parties
• The enormous escalation in public spending
• The rise in interest groups and corporatist political arrangements
1-3 New roles requires
Legislators have to define a new role
• Promoting fiscal discipline
• Improving allocation of public money
• Stimulating administrative entities to manage their operations more efficiently
Fulfilling these new roles requires
• Enhancement of legislative capacity and resources
• Changes in both executive and legislative budgeting
• New tools for reconciling long term commitments
• Redefinition of relationships with the government
1-4 Characteristics of legislative budgeting
The legislature participates with the government in developing budget
policy
Still vote estimates
Setting out a medium-term framework
Sectoral allocation policies
Statements of policy
1-5
Three restrained characteristics of legislative budgeting
• Budgets limit what the legislature may do with public money
• Budgets intrude on other legislative functions, such as law-making
• Budgets have the potential to turn legislative work into a technocratic
exercise
Focus on three subjects
• Government Spending and Budget control
• Executive vs legislative power of the purse
• Role of the National Assembly Budget Office
2-1
There are three major causes for the fiscal outcomes
• General performance of the economy
• The political commitment to fiscal discipline
• The institutional arrangements for budgeting
Current legislative work on the budget
• To discipline public finance by constraining the fiscal aggregates
• To enlarge the legislature’s role in revenue and spending policy
2-2 The seven institutional features that the OECD recommends
Medium-term budget frameworks
Prudent economic assumptions
Top-down budgeting techniques
Relaxing central input controls
Focus on results
Budget transparency
Modern financial management practices
2-3
The theory of bureaucracy by William Niskanen
• … want more for their agencies and programs
Anthony Downs
• “Why the government budget is too small in a democracy?”
• … voters are consistently misinformed
Gordon Tullock’s theory
• growth of the bureaucracy is self-generating
William Riker’s theory
• Rulers are trapped in a system of exchange of benefits
• The larger government grows, the more policies become their own causes
3-1 Legislative roles and information needs
Informed Legislature
Emerging Legislature
Rubber Stamp Legislature
Need for Information
Role in Policy Making
Transformative Legislature
3-3 Heart of executive-legislative relations
The Budget Process
Planning
Public Accountability
INTERNAL
Accounting
System
Independent
Audit/Evaluation
Managerial
Reporting
Budgeting
System
Cash/Debt
Management
System
CONTROLS
Financial
Reporting
Internal
Audit
Budgeting
Revenue &
Expenditure
3-4
Legislative powers to amend the budget
Rights
Number of
countries
Unlimited powers to amend the budget
32
Reductions of existing items only
17
May reduce expenditure, but increase only with permission of government
4
Increases must be balanced with commensurate cuts elsewhere
13
Rights not specified
15
Total
81
3-5 In practice, does the legislature generally approve the budget as
presented by the government?
With no
changes
Australia
X
Austria
Canada
With minor
With significant
changes only changes
X
X
With no With minor
With significant
changes changes only changes
Korea
X
Mexico
X
The Netherlands
X
Czech Republic
X
New Zealand
X
Denmark
X
Norway
X
Finland
X
Poland
X
France
X
Portugal
X
Germany
X
Spain
X
Sweden
X
Switzerland
X
X
Greece
X
Hungary
X
Iceland
X
Turkey
Ireland
X
United Kingdom
Italy
X
United States
Japan
X
Total
Percent of total
X
X
6
17
4
22%
63%
15%
3-6 Comparison of the growth rate of GDP and
government budget in Korea
Comparison of the Changes of GDP and
Government Budget
Changes of Government Budget
60
50
Year
40
30
20
10
0
-10
-20
Growth rate
Changes of GDP
3-7 Legislative influence
Explaining the differences
• Presidential vs parliamentary systems
• Design of parliamentary powers to amend the budget
• Party political dynamics
• Legislative budget research capacity
• Access to relevant information
• Legislative committees as the engine room for financial scrutiny
• Time for scrutiny and the timing of the budget process
3-8 Strengthening the capacity of the legislatures
Responsible and effective legislative action on the budget depends on
adequate information concerning the activities financed with public
funds and the results ensuing from government programs.
The supply of information has enriched by building the capacity of audit
offices and independent budget office to assist the legislature.
To make effective use of the avalanche of information, modern
legislatures have added staff, invested in IT, and professionalized their
operations.
 Examples in the US and in a number of other countries (Philippines,
Uganda, Poland, Georgia) establish that a nonpartisan, independent,
objective, analytic unit can provide budget information without polarizing
the relationships between the executive and the legislature.
4-1 General information
NABO was created by the National Assembly Law (Article 22-2) on
October 20, 2003
Mission
• Conduct research and analysis on budget and fund, settlement of
accounts, and performance of fiscal operations
• Estimate costs for bills
• Analyze and evaluate national programs and medium/long-term fiscal
requirements
• Conduct research and analysis on the requests by committees or members
of the National Assembly
4-2 NABO’s organization and staffing
NABO has about 92 full-time staffs
Chief appointed by the Speaker and approved by the House Steering
Committee
Chief appoints all NABO staff, in case of higher level approved by the
Speaker, based solely on professional competence, not political
affiliation
90+% of NABO professional staff hold advanced degrees in economics,
public policy, accounting or related fields
4-3 Five objectives which the NABO pursuits
Set its status as a specialized organization with authority supporting
fiscal control
Make sure the national budget is well spent by making analyses of
budget and economic policies
Analyze budget and economic issues based on public opinions
Produce reliable research results through enhancing its expertise
Establish a reputation as a world class budget analysts and policy
evaluators.
4-4 Job philosophy
Impartiality
Timeliness
Responsiveness
Expertise
Excellence
Reliability
Activeness
4-5 Organization of NABO
5-1
The success of reforms and innovations in budgeting will ultimately be
determined by the cooperation of the legislative body
The importance of talking full advantage of the opportunities offered by
developments in IT system
Rather than as controllers of public finance, legislatures should aim to
promote fiscal discipline, improve the allocation of public money and
stimulate public bodies to manage their financial operations more
efficiently
In order to do this, it is necessary to enhance the legislative capacity to
deal with budget issues.
Thank you
for your attention