One of the main reform issues of the National Council for Peace and Order (NCPO) is to modernise the government budget process to keep up with current practices, maintain fiscal discipline, and improve efficiency of public expenditure. An important component of this reform issue is the setting up of the Thai Parliamentary Budget Office (Thai PBO).
The PBO is an independent public institution which usually receives a mandate and public funding to perform tasks such as providing independent analyses of fiscal budgets and the impacts of fiscal policies, identifying sensible fiscal policy options, preparing unbiased projections of the economy and performing medium-term to long-term examinations on the state of the nation’s finances, etc.
The office must perform these tasks in a non-partisan manner. The ultimate goal of the office is to promote financially sustainable and economically sound fiscal policies through greater transparency and accountability.
This means the office has the role of helping to improve communication about citizens’ basic needs to the government under a democratic system.
In the past, a group of supporters who shared the idea that a PBO should be established in Thailand set up an operating team to push the idea forward.
Last year a draft bill on the Thai PBO was formulated. The bill passed through exchanges of comments and concerns and has been revised and improved several times.
Early this year, the group agreed the latest version of the bill is ready to be proposed to the National Reform Council (NRC), through the committee on economics and financial reform chaired by Somchai Ruchupan.
In this bill, there are many interesting issues worthy of public consideration. We will start from an important factor that may determine the success of this office in the long run. That is the independence (and non-partisanship) of the institution.
According to international experience, a good budget office must function independently, especially from the executive branch of power. The office must be accountable with a well-defined mandate in the law.
The Thai PBO would be a state agency which is neither a government agency nor a state enterprise.
Although the legal and operational independence (from partisan influence) is an important feature, the Thai PBO would remain accountable to parliament, as its chairman is the president of the National Assembly of Thailand.
This is to guarantee the office will maintain its independence from executive power. In addition, the executive committee is authorised to provide support for the Thai PBO’s independence.
That committee will have a vital role in monitoring corporate governance and making sure the office performs its tasks as stated in the law, while the academic committee will have the responsibility of monitoring academic integrity.
In conducting a high quality study on fiscal impact analysis, it has been agreed the Thai PBO must have a legal right to gain access to information from other branches of the government to gain all relevant information (except personal data).
Of course, in this draft version of the Thai PBO bill, safeguards have been put in place to protect confidential information and maintain the same level of confidentiality as required by other laws.
In general, information such as individual tax returns is not disclosed by the Revenue Department, as stipulated by the law. However, the accuracy of financial forecasts or the quality of the PBO’s fiscal analysis relies on the availability of that information.
Inaccurate financial forecasts can contribute to deficits larger than the government expects. And the underestimation of government revenue may result in the scrapping of some government programmes, or even an increase in taxes.
Let’s take a look at the experience of the US Congressional Budget Office (CBO), which serves as one of the role models for newly established PBOs around the world (including the Thai PBO). The CBO’s director is authorised to gain access to information, data, estimates, and statistics directly from various departments, agencies, and other branches of government.
The legal right to obtain that information contributes to an important role of the CBO in helping the members of Congress become more aware of the costs associated with legislative proposals and in providing key inputs into the legislative budget process.
In summary, legal and operational independence, high quality studies on fiscal impact analysis, and the legal right to gain access to information are key factors in the success of the Thai PBO.
Pawin Siriprapanukul is a lecturer in the Department of Economics, Thammasat University. Sasatra Sudsawasd is a lecturer at the School of Development Economics, National Institute of Development Administration. Both are members of a research team at the Thailand Development Research Institute which analyses the government’s fiscal policy.
First published: ฺBangkok Post, April 17, 2015