Friday, October 30, 2009

Complying with legislation

Well, my layman's reading of the PBO legislation tells me that they have a right to get the information--it doesn't specify the technology.
79.3 (1) Except as provided by any other Act of Parliament that expressly refers to this subsection, the Parliamentary Budget Officer is entitled, by request made to the deputy head of a department within the meaning of any of paragraphs (a), (a.1) and (d) of the definition "department" in section 2 of the Financial Administration Act, or to any other person designated by that deputy head for the purpose of this section, to access at all convenient times to any financial or economic data in the possession of the department that are required for the performance of his or her mandate.
But, in practical reality, I have to think this is a bit contemptuous in spirit.
The Harper government has dumped three box-loads of information about its efforts to stimulate Canada's sputtering economy on Parliament's independent budget watchdog.

Kevin Page had asked for more information, complaining that the sketchy data provided up to now made it impossible to tell whether $12-billion in stimulus spending is having any impact on the economy.

But rather than provide an easy-to-analyze spreadsheet listing infrastructure projects and how much money has been spent on each of them to date, the government flooded Page Thursday with 4,476 pages of documents.

If Parliament wants the PBO to be effective, we need better behaviour than this.

UPDATE: The Halifax Chronicle-Herald has some good quotes:

"We were expecting to get a spreadsheet," Kevin Page, Canada’s parliamentary budget officer, said in an interview Thursday.

"The deputy minister was using a ‘spreadsheet.’ Now it is a spreadsheet. We’re just getting a hard copy. So we’ve asked to get the data electronically. We were turned down. We’re now in the process of figuring how we can turn this hard copy information into an electronic spreadsheet so we can make sense of it."

Monday, October 26, 2009

Keeping Secrets Hurts Democracy

. . . says the Globe and Mail in an editorial today.
Accountability in politics is possible only when the governed obtain fair, unbiased information about the government's track record and future plans. The federal government preaches accountability, but is being only selectively transparent about its own spending activities. In addition to being bad public policy, this opacity does a disservice to democracy.

Monday, October 12, 2009

The Office

Back in July, there was some debate about proper descriptive of the O/office of the Parliamentary Budget Officer. As I mentioned at the time, I wasn't trying to be subtle--I had just taken the 'Office' from the website, which at the time referred to the OPBO. Now, I see the leading O has been scrubbed from the website.

Over the Summer, I received several communications accusing me more or less of sedition for having the audacity to refer to the office in which the PBO sat as an Office. I thought this was a bit of an over-reaction, given that many governmental institutions are commonly referred to by names that don't necessarily have official recognition in legislation. (I don't see the phrase 'Mounties' anywhere in this Act, for example.)

Nevertheless, seeing that the website now refers only to the PBO, and conceding the point that the legislation does not recognize the office as an Office, I have begun to refer more to the PBO than the OPBO. When referring to the office in which the PBO operates, perhaps I'll use the acronym oPBO.

But, I'll leave the name of this blog as is because:
  • I (and lots of other economists) think the office should be an Office; i.e. independent and reporting to Parliament not the Library of Parliament.
  • I would like the focus to be on the role of the institution itself; the office rather than the officer.
  • We have an established web presence here--too hard to 'rebrand' the blog at this point.
So, anyone castigating the 'O' users as some kind of Canadian Guy Fawkes for the sin of capitalizing an 'o' can now stand down.

The Conservatives and the PBO

Rounding out my survey of the positions of Canada's political parties on the PBO, let me now turn to the governing Conservatives. In their 2006 platform (I got it here) there is a section on page 11 that reads:
Ensure truth in budgeting with a Parliamentary Budget Authority

In the spring of 2004, the Liberal government told Canadians that the 2003-04 surplus would only be $1.9 billion. In fact, it was $9.1 billion. In 2004-05, the Liberals spent about $9 billion at the end of the year to reduce their surplus to only $1.6 billion. Just this year, the 2005 Budget estimated the 2005-06 surplus at $4 billion, a number no reputable economic forecaster accepted.

In the economic update only nine months later, this estimate had ballooned to $13.4 billion. Governments cannot be held to account if Parliament does not know the accurate state of public finances.

The plan
A Conservative government will:
• Create an independent Parliamentary Budget Authority to provide objective analysis directly to Parliament about the state of the nation’s finances and trends in the national economy.
• Require government departments and agencies to provide accurate, timely information to the Parliamentary Budget Authority to ensure it has the information it needs to provide accurate analyses to Parliament.
• Ensure that government fiscal forecasts are updated quarterly and that they provide complete data for both revenue and spending forecasts.
Two comments from me on this:
  1. I think the Conservatives deserve a lot of credit for their innovative thinking on this persistent problem in Canadian public policy and governance. Credit where it is due.
  2. I score them 2.5/3 on the three elements of their plan. They did require information to be provided by government departments. They did ensure that the PBO has enough information for quarterly reports on revenue and spending. However, on the first bullet they only get part marks. They did create the Authority, but they didn't make it independent.
My hope is simply that the Conservatives go the distance and fulfill this campaign promise for an independent authority. This promise is quite consistent with the traditionally conservative principle of keeping a very careful and prudent eye on public finances, lest government taxation and spending run amok.

Canadians have a variety of opinions on the legacy of the Reform Party from the 1990s. But I suspect that the 'democratic accountability' element of the Reform legacy is one that resonates with almost all Canadians as a positive contribution to Canadian politics.

It seems to me that there is no strong reason--other than short-term political expediency--for conservatives or Conservatives to want to 'shackle' the PBO. I'm not so naive as to believe that short-term political expediency is not given weight in decision-making by any government. But, in my view, it is important to point out when good short-run politics is chosen over good long-run policy.

I'm quite sure there are differences of opinion on the PBO within the Conservative caucus. I hope those who support independence will find their voice.

Paul Dewar's Private Member's Motion

Re-reading the Hill Times article, the positions of the Bloc and NDP are actually quite clear.

The Bloc supports the independence of the PBO.
His party has been asking for an independent office since the PBO was created, but Mr. Duceppe said they weren't able to push for that in the committee because, with only two members on the 17-member committee they don't have enough of a voice.
The NDP's Paul Dewar wrote a private member's motion to make the PBO independent.

I don't know much about the nuts and bolts of how Parliament works, but according to this list, a notice was filed on June 17th, but the motion has not yet been debated. According to this document, there is some kind of draw for MPs with motions to be placed in the Order of Precedence. If I understand this correctly, I see that Mr. Dewar is #88 on the list as of October 9th. From January to now, they have gotten through 46 of the names on the list. So, depending on how long this session of Parliament lasts, the motion might make it to debate.

In any case, the text is on Mr. Dewar's website here:
That in recognition of the Standing Joint Committee on Library of Parliament‘s recommendation for the review of the effectiveness of the position of the Parliamentary Budget Officer, the House recognizes the importance of the office of the Parliamentary Budget Officer in ensuring accountability and to that end calls on the government to enact legislation that ensures the office of Parliamentary Budget Officer is independent of the Library of Parliament, the executive or any other branch, is answerable to Parliament only and receives adequate and sustained resources to continue its important work.
Given Mr. Duceppe's stated position, I suspect this wording will be acceptable to the Bloc. We can also likely guess that Mr. Dewar has the support of his colleagues in the NDP. With sufficient Liberal support, this could pass.

Of course, this motion doesn't literally change anything. It is a just a call for Parliament to enact new legislation. But it would be a meaningful expression of the will of Parliament.

What's happening next?

The Hill Times story by Cynthia Münster (who has been on top of this story like no one else in the media) also contains several hints about where this issue may go next. This is a lot of inside Ottawa procedural stuff on which I'm no expert. But I relay it here for those who are interested in following the PBO storyline and want to know what's next.
  • Two weeks ago, the PBO provided a formal response to the Committee report from June. The Hill Times story mentions that the PBO has not been able to post this response on the PBO website because the Committee doesn't want him to. (How's that for transparency?)
  • The Speaker of the House (Peter Milliken) informed the Committee that he would like to have the Committee's recommendations from June approved by the House before he took any action.
  • Vice Chair of the Committee (Mauril Bélanger) argues that the House does not need to approve the recommendations before the Speaker acts, and will be discussing this further with the Speaker.
  • The Speaker of the Senate (Noël Kinsella) wants to know if the Committee is satisfied with the PBO's response to their June report before he recommends the increase in funding.
  • Co-Chair of the Commitee (Senator Carstairs) reminds everyone that the fiscal clock is ticking--we're talking about the PBO's budget for 2009-10 here and the deadlines are looming very shortly.
  • The Committee is scheduled to meet again with the two speakers on October 20th.
  • The Committee may meet with the PBO on October 22nd.

The Opposition and the PBO

This week's Hill Times has an in-depth and detailed article about the latest political positions on the PBO. (Complete, no-subscription required link here.)

I don't really care for games of 'gotcha' and comparing who said what 6 months ago. (It often seems like the point of such exercises is little more than this.) If people have changed their minds toward a better position, that's great. Welcome aboard.

But something that does stick in my craw a bit is having the Leader of the Opposition demand that the Prime Minister 'unshackle' the PBO. It is not the Prime Minister who is shackling the PBO. It is the Joint Committee on the Library of Parliament. Look at the membership of the Committee. The Committee is co-chaired by Liberal Senator Sharon Carstairs. There are 8 Conservative members of the Committee, 6 Liberal members, 2 Bloc members, and 1 NDP member.

That makes for 9 opposition members and 8 government-side members. If it is indeed true that the Prime Minister desires to shackle the PBO, my math tells me that even if he did exert control over all government-side members of the Committee, the Prime Minister would still be one vote short. Moreover, the Liberal Co-Chair of the Committee has been a lead voice in the debate.

If the Official Opposition is indeed interested in 'unshackling', then I hope to see this position manifest itself in the Committee. I'm also curious about what position Committee members from other parties will take. I'll be watching.

Thursday, October 8, 2009

The Swedish Fiscal Policy Council

I was just opening up a forgotten pile of mail on my desk and found the 2009 report of the Swedish Fiscal Policy Council. What's that? Glad you asked.

See here:
The council assesses the extent to which the Government's fiscal-policy objectives are being achieved. These objectives include long-run sustainability, the budget surplus target, the ceiling on central government expenditure and that fiscal policy is consistent with the cyclical situation of the economy. The council also evaluates whether the development of the economy is in line with healthy long-run growth and sustainable high employment. Additional tasks are to examine the clarity of the Government's budget proposals and to review its economic forecasts and the economic models used to generate them. Finally, the Council should try to stimulate public debate on economic policy.
The site also says they do this with an 8 member council, assisted by a secretariat with only 2 employees. That's pretty thin for such an ambitious agenda. But from what I can tell they are doing a great job with what they have.

The Swedes started their Council about the same time as the PBO started up. It's like they're twins! As the Economist said, independent budget offices are a great way to build fiscal credibility for a country's government.

Editorial in the Star

Today in Canada's largest circulation daily paper there is a big editorial in support of the PBO. Read it in the Star here.

One interesting nugget--the Committee is meeting today, apparently. (At 1pm-3pm EDT--so it is happening right now! They are 'in camera' though, so no webcast.)

I wonder whether the committee unanimity will continue? As the Star notes, the opposition members are actually a majority on the committee. If Mr. Ignatieff really wants to 'unshackle the watchdog', he should simply chat with the Liberal committee members, for it is this committee that is doing the shackling, not the Prime Minister directly.

I like the Star's line of reasoning here:
Unfortunately, however, funding of the PBO could be derailed by an arcane dispute. Page has been lobbying to make all his reports public – not only those he undertakes on his own but also those done at the request of individual legislators. Senators and MPs believe they are entitled to ask that research be done on a confidential basis. While that's true, they shouldn't hold the PBO hostage over it. Surely protocols can be negotiated to let Page do his sums and release the findings with minimal delay, if not instantly. It's all public money.
Even better is the point that--no matter who is right about what the current legislation allows the PBO to do--we ought to stay focused on what the legislation should say:
At root, PBO independence and transparency is in the public interest. Prime Minister Stephen Harper should have given the PBO more authority from the start. Unless this mess is resolved, Parliament should revisit the law establishing the office.
The goal here is to have a transparent, adequately funded, and free-to-have-its-own-unmolested-website PBO. Let's get that done.

Wednesday, October 7, 2009

Hey Nik Nanos

A thought about what would help bring more public interest and pressure to bear on our Parliamentarians about the PBO. We already know that lots of economists support the PBO. That's nice, but not enough.

Wouldn't it be nice to see a poll about public support/trust in the PBO? Maybe not enough of the public is aware of the PBO. I'm no pollster, but I have a sneaky suspicion that the hot/not hot numbers for the PBO would be pretty good. Moreover, while many politicians might be happy to disregard a bunch of economists, they might be less happy to hurt an institution with demonstrated broad public support.

Budget Officer in BC?

An opposition MLA in BC introduced a Private Member's bill (M 201) in the BC legislature on August 31st. Here is what Bruce Ralston said:
This bill amends the Budget Transparency and Accountability Act to create the independent budget officer, an officer of the Legislative Assembly. The independent officer's mandate is to provide objective, timely analysis and updates to the Legislative Assembly about the estimates of government, the state of the province's finances and trends in the B.C. economy, to undertake research regarding the province's finances when requested to do so by certain standing committees and members of the assembly and to provide estimates of the cost of proposals contained in legislation.

The independent budget officer is entitled to a right of access to data necessary for the performance of his or her mandate.

I move that this bill be placed on the orders of the day for second reading at the next sitting after today.

I can't find the text for bill M101 online, but that sounds good to me. Do any other provinces have anything like a PBO?

(Hat tip again to Vaughn Palmer / Vancouver Sun)

The Economist likes Independent Budget Officers

In September, the Economist magazine published an editorial arguing in favour of independent budget officers. They draw a parallel to central banking, which has benefited over the past 20 years from a move toward greater independence.

Here is the core of their argument:

Hence the importance of the other approach: appointing independent budget monitors. Politicians will not (and should not) outsource tax and spending decisions to unelected technocrats, but all countries should have independent bean-counters to pass judgment on their fiscal plans. Even without statutory power, such bodies have an impact. New cost estimates from the CBO, for instance, recently changed the terms of America’s health-care debate. These bodies should not just assess politicians’ plans, but offer simulations of different fiscal paths. Britain’s Tories want to copy the CBO model.

They are right. No politician likes being second guessed, but the greater fiscal credibility that such rules and institutions provide actually increases a finance minister’s room for manoeuvre. It also helps central bankers, by assuaging investors’ fear that bankrupt governments will resort to printing money. Credibility will not magically remove the difficult budget choices that lie ahead. But it is an important place to start.

Hat tip to Vaughn Palmer/Vancouver Sun.

More support of the PBO from the OLO

Another big piece in the Globe today by John Ibbotson that features the PBO. Ibbotson interviews Michael Ignatieff on recent goings-on in Ottawa. Ibbotson mentions that an emerging focus of the Official Opposition is the PBO.
“All I can hold on to is: What is my job?” he said Tuesday in an interview with The Globe and Mail. “And my job is to stand up on behalf of Canadians and say: ‘What the heck are the facts, here? What are you doing with the public finances?' That's why the Parliamentary Budget Officer matters.”
Ibbotson is again (like on Saturday) a little skeptical of this strategy, because of what he perceives as the complexity of the issue. It is true, the details are complex, but so are they with every public policy story.

The details of the 'tainted tuna' affair of 24 years ago were also complicated. But that story dominated the media for weeks. (I have an American acquaintance who told me she arrived in Canada during the 'tunagate' media firestorm. Seeing that the biggest problem in our society was what to do about the tuna--that hadn't actually made anyone sick--she decided she had found a fairly safe and nice place to live!) The story was driven not by the details, but by the principles of transparency and accountability; concepts which are easy to grasp.

In any case, if you're going to do a public policy story then this one about the PBO doesn't strike me as hard to get: "The budget watchdog is being muzzled. That oughtta stop."

I'm encouraged by the issue arising in Parliament. Some economists have asked me 'what should we do next?' We have already raised awareness that a large number of economists across the country support the institution of the PBO. However, we are economists, not elected representatives. We can recommend, advise, and cajole; it is up to our elected MPs to act.

While it is great that the Official Opposition has taken up the cause with some vigour, I encourage MPs from other parties to add their voices of support--in public; in the House. I have heard from some of you privately, but hearing your support in the open would be more helpful.

If I have missed recent statements from MPs of other parties, please do pass them along and I'll be happy to post about them as well.

I'll close this post by repeating the call to action in the original Open Letter that was signed by more than 130 prominent economists from coast to coast:
We call on Parliamentarians of every party to pursue the following actions in support of the Office of the Parliamentary Budget Officer:
  • Ensure adequate funding to carry out its mandate
  • Independence by making the PBO a full Officer of Parliament
  • Public reporting of all analysis.

Tuesday, October 6, 2009

Ignatieff takes up the cause

On Monday in Question Period, Liberal leader Michael Ignatieff took up the cause of the PBO. In today's Star, he is quoted as asking the Prime Minister:
"Will they unshackle the parliamentary budget officer? Will they provide him with the resources he needs and open the country's books so that Canadians can finally get the truth about the nation's finances?" Ignatieff said in the Commons on Monday.
I am happy that some Parliamentarians are taking up the cause. I know there are MPs from other parties who feel strongly about this issue as well. Let's hear from them, too!

I should note, however, that there seems to be a difference of opinion within the Liberal Party. John Ibbotson noted on Saturday that Liberal Senator Sharon Carstairs (who co-chairs the Committee responsible for the PBO) is one of those pushing a restrictive interpretation of the PBO's mandate:
“I think Mr. Page went down to Washington and saw the Congressional Budget Office and thought, ‘This is what we should be doing,' ” Senator Sharon Carstairs of Manitoba said. “And maybe it is what he should be doing. But as parliamentarians, we are sworn to uphold the laws of Parliament. And this is not his legislative mandate.”
In that way, it is the Liberals as much as the Prime Minister who are doing the 'shackling' of the PBO. As I have said before, my layman's reading of section 119 of the Act does not uncover anything that requires the PBO to refrain from putting his reports out to the public. If anyone wishes to show me how it is legislated that the reports not be made public, I'd be happy to hear that. In the absence of such evidence, I remain with the position that the muzzling of the PBO is just one interpretation of the legislation; a choice that has been made by the Committee.

I'm glad that the Leader of the Official Opposition is on the case. However, I hope Mr. Ignatieff will ask the same question of Senator Carstairs that he asked of the Prime Minister.

UPDATE: An article on the G&M website suggests Mr. Ignatieff is meeting with Mr. Page today.
Liberal Leader Michael Ignatieff raised concerns of a structural deficit in the House of Commons Monday and is meeting with Mr. Page this afternoon to discuss the future of the budget office, which is facing its own financial issues.

Monday, October 5, 2009

PBO piece in the Globe and the 'contrary to our system' argument

There was a long think-piece on the PBO in the Globe and Mail on Saturday. In case you missed it, here is John Ibbotson's article. A fairly fatalistic tone.

Ibbotson did one of those interactive interviews 'live' on the Globe website today here. He laments that the Canadian political atmosphere is much more "closed" than the American one, which thrives on open debate.

Let me pick up on one thing at the end of the Saturday article.
One point of view holds that the office should never have been created in the first place, that in our system of government it is Parliament itself that holds the executive to account and that independent agencies should be discouraged.
This is an argument that I have heard from a couple of prominent people whom I respect. I don't think it stands much scrutiny, however.

Is the point that our system is currently in a state of perfection? Really? Or that our system is so fragile that a small itsy-bitsy movement toward transparency would cause it to wither? Which is it--we're perfect as is, or fragile as glass?

In my view, our system is not static; its DNA frozen in the BNA. It has evolved in many different ways since 1867--you don't need to be a male landowner to vote these days, for example. And we get a secret ballot, to boot. (Although this latter change was thought contrary to the "manly spirit of the British people" at the time.)

So, given that our system has evolved and is evolving, a better argument must be made than simply that it doesn't fit our system, since that is a moving target. A better argument should be based on the merits: does the PBO improve or make worse our system? Why exactly?

As argued in the open letter, I believe that the PBO has much better incentives to produce neutral, credible fiscal forecasts than do other institutions in our society. If this comes at some cost to the purity of our existing system, then a) I'd like to understand better exactly what those costs are and b) I would have to be convinced that those costs are greater than the benefit provided by the PBO.