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10 April 2014
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TDRI voices need for parliamentary budget office

THE NEW government should set up a parliamentary budget office (PBO) to enhance transparency in its spending and forestall more political tensions in the future, according to the Thailand Development Research Institute

The lack of clarity in how the government spends its budget, the difference in ideas on how projects should be funded and the increasing in off-budget spending are among the reasons for the current political conflict, the TDRI claims.

Somchai Jitsuchon, director of research into inclusive development at TDRI, said yesterday that the current call for financial reform by parts of society provided a perfect opportunity for a tangible solution, such as a PBO, to the alleged problem of a lack of government fiscal transparency and discipline.

He has mentioned PBOs in TDRI discussions on financial reform and the idea has gained popularity among other think-tanks, which led to a meeting with Somchai providing structural details of what a PBO should look like.

A PBO would provide better checks and balances on government spending by giving more teeth to the legislative branch and allowing it to scrutinise the administration’s spending decisions and create new laws that would help prevent the implementation of badly designed and financially unsustainable policies. The TDRI puts the rice-pledging and first-car schemes in that category.

“It’s like when you go to see a doctor and you aren’t quite sure of his initial diagnosis, so you seek a second opinion from a doctor who seeks no benefit. The PBO would be that doctor who provides the second opinion,” Somchai said.

Currently the administration always has the upper hand over the legislature on access to budgetary information and the ability to analyse and interpret that information, since it can monopolise and the expertise.

Existing institutions such as the National Economic and Social Development Board and the Budget Bureau are government agencies that oversee spending, but they only answer directly to the administrative branch. A PBO would be different from these institutions in that it will be created independently and have no affiliation with the administrative branch.

Its responsibility would be to provide the legislative branch, no matter what party rules it, with an analysis of the effect of government policies on the economy and its benefits for society. Then senators and MPs, no matter what side they are on, can use the analyses as an argument for or against potential laws and spending of the government.

“A PBO should have been created a long time ago, since most MPs lack the ability to analyse budgetary and fiscal policy, especially to do macro analyses,” Somchai said.

The PBO should be headed by a director with no affiliation to any political party. The institution should be free from the control of the administrative branch.

It should have transparency as its modus operandi and its employees should have skills in analysing government budgetary and fiscal policies. The institution should also be able to hire and fire its employees at will.

The structure of the PBO that was suggested by the TDRI is a mix of the US, Canadian and Australian models. The board of directors of the PBO should consist of the Parliament president, Senate Speaker, opposition leader, PBO director, Finance Ministry representatives, Bank of Thailand, Budget Bureau and leading lights in finance, financial law and accounting, who should be selected by academics from public universities.

The director of the PBO should have the status of an independent officer of Parliament.

A selection committee consisting of the finance minister, parliamentary ombudsman, financial ombudsman and central bank governor would nominate two candidates to the appointing committee, which would appoint the director to a term of four to six years based on the unanimous vote of the Speakers and Vice Speakers of the Senate and Parliament.

Four of these appointees should come from different political sides.

The PBO should be granted a budget not exceeding Bt200 million or 0.004 per cent of the annual budget. It should enjoy full access to information needed for the scrutiny of government spending by making sure that the law gives the PBO equal or not less clearance than the administrative branch, he said.


First published: The Nation,  April 10, 2014


Somchai Jitsuchon, Ph.D.
Research Director, Inclusive Development