The International Budget Partnership (IBP) has published the paper ‘Explain That to Us: How Governments Report On and Justify Budget Deviations’, by Jason Lakin and Guillermo Herrera.
The report summarises budget credibility research undertaken in partnership with 24 organisations in 23 countries, including Australia, between October 2018 and January 2019. Each partner organisation identified a budget credibility challenge in their country and scrutinised a case where the government consistently failed to raise or spend funds as it said it would at the start of the fiscal year. Partners looked for explanations for deviations in published documents and then sought interviews with public officials to further understand the deviations.
Given the degree to which budget deviations can impact major social priorities in health, education, and beyond, it is essential that governments communicate about them. While report findings show that most governments fail to publish adequate explanations for budget deviations, they also suggest that doing so is possible and relatively easy.
Country cases
In order to qualify for inclusion in the project, the country cases selected had to be consequential: the deviations between enacted budget and actual expenditure or revenue had to have occurred repeatedly over at least a 3-year period (that is, no one-offs due to shocks), had to exceed, on average, 5%, during that period, and had to relate to a program or area of spending with recent and direct impact on budget priorities and the quality of people’s lives.
Australia’s budget credibility challenge focused on budget deviations in the collection of company tax receipts, finding an average absolute deviation of 20% or lower. External shocks, poor forecasting and change in program or program rules and regulations were the types of reasons given by Government for the deviations, from the type of reasons prevalent among the 23-country sample.
Australia’s analysis was undertaken by the Tax and Transfer Policy Institute (TTPI) of the Australian National University.
(Source: IBP)
From the blog:
Open Budget Survey 2017 Part 1: How Transparent is the Australian Budget? and Open Budget Survey 2017 Part 2: What Can Australia Do to Improve Our Budget Process?, by Miranda Stewart and Teck Chi Wong
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