Support the OPBO

Full allocation for PBO in federal budget

2010-03-08T21:38:00.001-08:00

Here is the word from this week's Hill Times:

After a dramatic year of struggling with the House and Senate Speakers and the Parliamentary Librarian, Canada's Parliamentary budget officer will receive the full planned $2.8-million budget he was promised, according to the 2010-2011 main estimates.

"We are very pleased that our budget is back to the original planned level," budget officer Kevin Page told The Hill Times in an email. "This will allow us to do a better job at carrying out our legislative mandate."

It's not a complete victory, though:

Mr. Young's [the Parliamentary Librarian] office said the PBO's $2.8-million funding would be maintained throughout the 2010-2011 fiscal year. Mr. Page said that "given recent history ... there should be a separate line for the PBO" under the Library of Parliament's funding.

Moreover, if you look back to the original three demands of the 'open letter', you'll note that adequate funding only satisfies one of the three demands. The other two outstanding complaints--public reporting and independence--seem to have settled down for the moment, but are not completely resolved.

But, let's call this a victory. Thank you to all of the economists and other interested citizens who supported this initiative. Collectively, I think we helped to do some good here.

I'll keep this blog up, both as an archive of the initiative and also as insurance against any future political pressure on the PBO.

So, go now in peace. We may have dispersed, but we will be watching.

Can the private sector do it?

2010-01-09T15:20:00.000-08:00

There was some interesting back and forth through the fall about whether the private sector could fulfill the role of the PBO. I argued no.

But, in the UK, it strikes me that many aspects of what the PBO does in Canada are currently covered very well by something called the Institute for Fiscal Studies. The IFS doesn't do macro forecasting, but they do look at the budget balance on a monthly basis. They also do extensive evaluations of the annual budget, and of particular policies. The IFS is a registered charity, with very diverse funding sources.

We have lots of thinktanks in Canada, and some really interesting and well-done work comes out of them now and again. But, I think even people from our leading thinktanks would agree that none in Canada reaches the combination of academic and policy credibility that has been accumulated by the IFS. Some might come close on particular items, but not with the scale or depth of the IFS.

So, why don't we have an IFS in Canada?

In my view, an important aspect is geography. In London, you have the business, academic, and political centres of the country all accessible by a short tube ride. (Even Oxford and Cambridge are only an hour by express train.) Someone could hold office hours with students in the morning, attend a workshop over lunch at the IFS, then give a presentation to government or business officials in the afternoon--and then be home for dinner. Hard to do in Canada.

By the way, when I visited the IFS for a couple of days in the Fall I heard that the Canadian PBOfficer had been in London the previous week. The Conservatives have proposed a similar institution for the UK should they win the next election expected this year, and people in the UK are interested to hear the Canadian experience. It will be interesting to watch what happens in the UK.

(Speaking of elections in the UK, wouldn't it be cool to announce results with all candidates together in person like they do in the UK? Love those big party ribbons they wear. It would be so fun to watch the daggers emanating from the eyes of the losing candidates.)

So, to sum up, the IFS experience suggests that it might be possible for the private sector to perform many of the roles now allocated to the PBO. However, we might have to geographically shmoosh Ottawa, Toronto, and Montreal together in order to get the required convergence of factors. Moreover, the PBO is clearly doing things now that were not being provided by the private sector pre-PBO, so I don't know why we would expect the Canadian private sector to suddenly change what they do in the absence of the PBO.

An upside to not being independent?

2010-01-09T15:14:00.000-08:00

This week, we learned that the Parliamentary Budget Officer will continue to report even though Parliament has been prorogued. In the Globe, it was reported that this is possible for the PBO because it lacks independence.

The fact that Mr. Page is able to release such reports is due to the unique structure of his office. The Parliamentary Budget Office operates as a division of the Library of Parliament. Mr. Page has expressed concern about this arrangement, arguing that he should be an independent Officer of Parliament. There are currently eight such officers – including the Auditor-General, the Privacy Commissioner and the Conflict of Interest and Ethics Commissioner.

This is a cute quirk, but it doesn't change my mind that on balance there is more to be gained from independence than being a vassal of the Library of Parliament.

Is the cheque in the mail?

2009-12-07T13:38:00.001-08:00

In this week's Hill Times, we learn that the funding for 2010-11 hasn't been completely locked down yet. Things looked promising last week. Is no news good news?

Two weeks ago, Mr. Young [the Parliamentary Librarian] told the committee that he will recommend the Speakers ask for the $2.8-million budget for the PBO. The committee agreed. There was no talk about staffing and Mr. Young refused to answer The Hill Times' questions on that.

"It is essential that the PBO be allowed to hire within our planned budget," Mr. Page wrote to The Hill Times in an email.

"We have many projects underway for Parliamentarians that are being driven by the efforts of staff under secondment—infrastructure, budget implementation impacts, costing of sentencing reform, estimating potential output and structural budget balances, long-term economic and fiscal projections. All these projects for Parliamentarians and more are under risk if staffing is not secured," stated Mr. Page.

If I had to guess (from a position entirely out of the loop and three time zones away), I'd say that all is well. The last we heard the 2.8 million is going through and I don't see anything here that tells me differently. This article seems like more of a 'we haven't forgot about this' story from the Hill Times--which I think is useful. We haven't forgotten about it here, either.

Does the PBO offend Canada's system of responsible government?

2009-12-04T23:35:00.000-08:00

The other day I had lunch with UBC Historian Michel Ducharme. I asked him about the argument (previously discussed here and here) that the PBO is contrary to our system of parliamentary government, or that it undermines responsible government.

I have not found those arguments persuasive, but I wanted to talk to someone who can speak from expertise. He kindly gave me a quick remedial course in parliamentary government. The thoughts below are mine--so don't blame Michel if you disagree.

The Canadian system of responsible government has at its core a close connection between the executive power (exercised by ministers through the crown) and the legislative branch (parliament). This connection comes from ministers being members of parliament, either in the House of Commons or the Senate. Ministers must command the support of the majority in the House of Commons. If they do not, they must resign. In this way, ministers (and the executive power they hold) are responsible to the people through the House of Commons. Because of this connection, there cannot be conflict between the executive and legislative branches.

Contrast this with the United States. The Treasury Secretary wants to get a budget passed. The Treasury Secretary is part of the executive, but has no role in the legislature. If the budget isn't passed by the legislature, then there is conflict. For example, the government shuts down like it did in 1995. In Canada's system, this is impossible because the same people control both the executive and legislative branches. In Canada, if a minister cannot be supported by Parliament, s/he is no longer the minister.

This is the essence of responsible government--the minister is responsible to parliament, not to a president or sovereign.

Now, on to the PBO. Does the PBO interfere with this connection of responsibility between minister and parliament?

No. The PBO provides information to all parliamentarians. This information is used by parliamentarians to help decide if they should continue to support the minister. In this way, the PBO is a tool. The PBO no more disrupts the responsibility of the minister to parliament than does a computer or a pencil. Computers and pencils help parliamentarians do a better job in deciding whether to support the minister. So does the PBO.

If, as a counterfactual, the PBO were required to sign off on the budget, then there would be a problem. In this situation, either the minister would now be responsible to the PBO (which usurps the responsibility of ministers to parliament) or the PBO would become a de facto member of the executive (which cannot be, since responsible government requires the executive to be members of parliament). Either way, this would violate important features of responsible government.

However, so long as the role of the PBO is merely informational (as it is now), then all the PBO does is to allow Parliamentarians to do a better job in their role of holding the executive to account.

So, let's review. The PBO is indeed a change to how our democracy works. But we have always evolved, so that's ok. Moreover, not only does the PBO not offend parliamentary responsibility of ministers, but by providing better information to parliament it actually enhances the notion of parliamentary responsibility that lies at the core of the Canadian system.

Budget for 2010 looking good

2009-12-03T11:56:00.000-08:00

Good news to report from Ottawa. According to the Hill Times (subscription), it looks like the PBO will get the requested $2.8 million to run the office. (Not the Office, the office!)

A year after a nasty public fight erupted over Parliamentary Budget Officer Kevin Page's budget, Parliamentary Librarian William Young will ask the House for the PBO's requested $2.8-million annual budget in the 2010 main estimates, say MPs.

During a closed-door meeting last Thursday at the Joint Library of Parliament Committee, Mr. Young told MPs and Senators that he would recommend to the House and Senate Speakers that the Parliamentary Budget Office get the $1-million budget increase he wants in the next fiscal year, Parliamentarians told Civil Circles.

"We had a little push and pull, give and take, but at the end of the day, the meeting was constructive," said NDP MP David Christopherson (Hamilton Centre, Ont.). "We had a meeting of the minds. We had agreement on what will go forward and hopefully, at the very least, the fiscal concern around the PBO's ability to do the job as it needs to be done has been addressed and anything that surfaces between now and next year's go around remains to be seen."

So, that sounds good. How does that measure up against the demands of the 130+ economists who signed the open letter in the summer?

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.

I'd call that one out of three. The first demand seems to be satisfied. The second, not yet. For the third, the communications of the PBO seem to be constrained by the Parliamentary Librarian, as far as I can see. But I'm happy to be corrected if I'm wrong on that.

Big decision on the PBO this week

2009-11-23T18:54:00.000-08:00

This week, the Joint Committee on the Library of Parliament will meet on Thursday. It will be in camera, which, in a fun linguistic twist means nearly the opposite of on camera.

The Committee will discuss the Estimates for 2010-2011. Will the PBO get the $2.8 million? The Hill Times tells us it will be 'rocky'.

Kevin Page has told us he'd rather shut down the shop than run it on a shoestring.

The Government side does not have a majority on the Committee. We have seen statements of late by all Opposition parties in support of the PBO. Who will carry the day?

What's so good about the CBO?

2009-11-23T13:50:00.000-08:00

Anyone watching the US healthcare debates over the last 6 months should have developed a strong appreciation for the Congressional Budget Office. At different points in the summer, the two sides were each on the defensive as the CBO's costing of different initiatives either helped or hurt the case for reform.

What was interesting to me is that I read very little in the way of attacks on the credibility of the CBO during these debates. This NPR article on the credibility of the CBO suggests a lot of "screaming" on both side of the aisle, but in my view it is more whinging than strong criticism--attacking the CBO was not a central part of either party's strategy. Both sides more or less took their lumps when it came to the CBO. And remember here, this is not a polity that is averse to character assassinations and attempted credibility-destruction.

This credibility was born of legislated independence and nurtured by a history of solid research and good leadership. Clearly, the PBO isn't there yet. But I think the CBO is indeed a nice target for what an effective PBO might offer.

But don't take my word for it. Just check out what they do here. There is even a blog. (Can you imagine the reaction of the Library of Parliament and certain Parliamentarians if Kevin Page had a blog? The legislation does not mention a blog! The legislation! Sedition!)

Is the Canadian Parliamentary System blissfully perfect?

2009-11-23T11:55:00.000-08:00

Over at Worthwhile, there is an interesting comment thread on the PBO following the Fraser Institute piece published last week. The Fraser Institute authors posted a comment here.

Even assuming the PBO is a more reliable source of policy analysis than other organizations, its efforts are of little practical value in the Canadian political context given the institutional environment. Unlike the US where the Congressional Budget Office (CBO) is more influential, Canada’s government operates in a parliamentary system. As in many parliamentary systems, the Canadian legislature has limited powers to change the submitted budget (see IMF study). Generally, parliamentarians can only approve or reject the incumbent government’s spending proposal, while the legislatures in the US government are free to change every aspect of the budget proposal. Policy analysis performed by the CBO is more likely to be used effectively by individual members of congress to adjust proposals accordingly.

This is the old 'accountability is foreign to Westminster Parliamentary Democracy' argument that I discussed previously here.

Let me extract two points of their argument:

1. The PBO would not be exactly like the CBO therefore no parallels to the CBO may be drawn.

2. Canada's Parliamentary system has the advantage that the executive is directly accountable in Parliament--The Finance Minister has to stand up and defend his/her policies.

Point #1 is an all or nothing argument. If not exactly like the CBO, then the PBO is not worthwhile. I see the PBO as adding tremendous value by pricing both government and opposition policies. The use of this information is different in Canada than the US, it is true. In the US this information might be directly incorporated in the bill through the legislative process. This wouldn't likely happen in Canada, since policies are more or less presented as done deals.
However, would pricing information influence debate in the Commons or in the public about a policy initiative? Would it improve the value of that debate? I argue yes. Parliamentary democracy does not mean that there must be no debate once the Finance Minister speaks. Having a well-informed debate in Parliament and in public is, in my view MORE important in Canada's parliamentary system since bad policy proposals can ONLY be influenced by debate rather than legislative horse-trading.

Point #2 is a non-sequitur. Yes, it is a good thing that we have direct accountability of the executive. But we're not canceling Question Period here. We can have executive accountability as well as other channels of accountability. Yes, under the current system we can vote against a government that offers bad policies, once every five years (less for minorities of course). But I like a system that has a little more democratic responsiveness than that; where there are more channels for accountability than quinquennial elections.

But introducing another channel of accountability must surely diminish the power of the direct channel through Parliament, right? Perhaps. So what? I'm willing to make that trade if it makes our democracy function better. As I said previously:

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?

My argument is that we can add some extra channels of accountability to our system without wrecking it. Our system has evolved substantially since 1867. Let's evolve some more with an effective PBO.

Defending the PBO, again

2009-11-19T11:37:00.000-08:00

There is an anti-PBO op-ed in the National Post today. I don't agree much with it, but I will outsource the commentary to Stephen Gordon. I endorse Stephen's words.

Let me pick up on one point. The Fraser Institute authors claim the following.

In addition to the multitude of private organizations supplying economic forecasts and fiscal projections, others still go to great lengths to scrutinize the accuracy of government budget numbers and assess its fiscal policies and programs. These include think tank institutions (including our own), lobbyist groups, and professional and academic economists. In a sense, the government already has multiple “watchdogs” keeping it honest and disciplined.

Where are these watchdogs? Have you seen them? Where are the detailed, credible, timely, and transparent costings of government and opposition tax policy initiatives? I don't see them. Not at the Fraser Institute, not elsewhere. I don't mean opinion pieces. I mean solid, objective, transparent policy work.

Speaking for myself, I am one of those academics who has a great interest in matters of public finance. But, with the other demands on my time (teaching, publishing, committee work, and once in a long while some leisure) I seem barely capable of writing one blog post a week, let alone doing fully costed pricing analysis of policy initiatives. The incentives are simply not there for me to spend my time on being a fulltime watchdog.

I am not convinced that the PBO guys are going to be better macro forecasters than anyone else. On that point, I have some sympathy for the Fraser Institute argument. But that's not what we're paying the PBO to do. We're paying them to a) translate those macro forecasts into fiscal projections and b) price policy initiatives coming out of Parliament.

I just don't see anywhere else in Canada that you have 5 or 6 economists devoted full time to these tasks, with access to the data necessary to do it. Yes, banks and thinktanks do produce the occasional report. But this is far short of what can be done by even a small fulltime staff dedicated to this task.

The three million dollars that the PBO costs is a rounding error on a budget of $260 billion. In fact, let me do the math. It's 0.00154% of 260 billion. In terms of time, the federal government spends 3 million every 6 minutes. I think it is worth spending 0.00154% of our federal budget to monitor and study how the other 99.99846% is spent.

Let me leave with one more quote from the National Post piece:

Indeed, this switch has minimized the government’s ability to fudge budget numbers for political advantage.

Were these Fraser Institute guys even around in the Fall of 2008?

Upping the Ante

2009-11-03T10:08:00.000-08:00

The Parliamentary Budget Officer has apparently said that if he doesn't get the budget increase he requested, he will recommend shutting down the office. (Note that I wrote office with a lower-case 'o', lest I transgress the legislation and enrage those who are worried about me calling the office an Office.)

Here's what's on the CBC website.

Parliamentary Budget Officer Kevin Page says he will recommend the government shut down his operation of monitoring Ottawa's financial performance if he does not get more resources to do the job.

Page told the House of Commons finance committee he still has not been told whether his annual budget will increase to $2.8 million, which he says he needs to do his work. His office had a budget of $1.8 million in the past fiscal year.

He said several of his staff members are on loan from other departments, and if he doesn't receive a critical mass of qualified personnel he will recommend closing the office.

Drama.

Complying with legislation

2009-10-30T11:32:00.000-07:00

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."

Keeping Secrets Hurts Democracy

2009-10-26T12:56:00.000-07:00

. . . 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.

The Office

2009-10-12T13:09:00.001-07:00

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

2009-10-12T12:32:00.000-07:00

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:

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.
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

2009-10-12T11:55:00.001-07:00

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?

2009-10-12T11:07:00.001-07:00

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

2009-10-12T10:42:00.000-07:00

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.

The Swedish Fiscal Policy Council

2009-10-08T14:53:00.000-07:00

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

2009-10-08T11:32:00.001-07:00

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.

Hey Nik Nanos

2009-10-07T19:08:00.000-07:00

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?

2009-10-07T13:16:00.000-07:00

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

2009-10-07T13:09:00.000-07:00

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

2009-10-07T08:51:00.000-07:00

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.

Ignatieff takes up the cause

2009-10-06T08:56:00.000-07:00

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.

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

2009-10-05T19:23:00.000-07:00

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.

Response in defence of Library of Parliament Committee

2009-09-24T14:05:00.000-07:00

In Monday's Hill Times, there was a response to last week's piece by Jean-Marc Tremblay. The article is here, but it is subscription only. The response is from B. Thomas Hall, who is identified as a past clerk to the Library of Parliament Committee.

Mr. Hall disputes many of Mr. Tremblay's claims about the Committee and the OPBO.

It is clear that Mr. Tremblay used some sharp--perhaps overly so--language in his piece last week. This generates the content of much of Mr. Hall's response.

However, the general thrust of Mr. Hall's argument is about the interpretation of the current law and how the PBO should act in order to be in compliance with the current law. I don't have any particular insight about the interpretation of the law, but I do observe that interpretations do seem to differ.

The question that interests Mr. Hall is how the PBO should behave in order to be in compliance with the law. That is an important issue--people should follow laws. No question there.

What interests me, however, is a different question: what should the OPBO look like? My observation having been a consumer of data from budget offices from other countries is that a greater degree of independence seems to be a good thing. I like that they can have a website and a blog and communicate things directly to citizens without the direct oversight of a Parliamentary Committee or the Librarian of Parliament. If that is not possible under the current law, then the current law should be changed.

Does the OPBO have the right to make its research public?

2009-09-15T15:36:00.000-07:00

The signatories of the open letter in support of the OPBO demanded that the Officer be allowed to report his research directly to the public.

Senator Carstairs of the Library of Parliament Committee has accused the Parliamentary Budget Officer of breaking the law. A recent piece in the Hill Times by retired public servant Jean-Marc Tremblay argues, on the other hand, that the Officer does have the right to make the research public under the existing law. Here is a partial link to the article--it's subscriber only. But here is a taste of the argument.

In [a previous Hill Times] article, Sen. Carstairs claims that Parliamentary Budget Officer Kevin Page does not have the right to make his reports public and that he "should respect the law and the job description under which he was hired."

It is unfortunate and ironic that the Library of Parliament Committee members and the co-chair (Sen. Carstairs) have unanimously arrived at such ridiculous conclusions, for even a cursory read of the Federal Accountability Act does not reveal any such requirement on the Parliamentary budget officer to not make reports public. Maybe Sen. Carstairs could have spent a bit more time analysing the irony of her statements—that the Parliamentary budget officer, mandated to ensure accountability and transparency, should be less transparent and less accountable, and not release reports publicly.

--

Sen. Carstairs' statement that the Parliamentary budget officer should respect the law is also curious; because it is a direct accusation that he violated the law. How ironic that a kangaroo court be set up against the PBO, without any fair trial comes to this conclusion, without citing any legal opinion from any legal counsel; when one of the country's top legal firms, McCarthy Tetrault has opined that the PBO is in no violation of the Parliament of Canada Act or the Federal Accountability Act, and that nobody can use administrative controls, such as those imposed by the committee in its reports to triumph the spirit of the legislation. If Sen. Carstairs really means what she is saying, then it would be more appropriate for her to seek legal recourse.

Mr. Tremblay argues that the mandate to stop making things public is an administrative decision made by the Committee; a choice they have made rather than one mandated by law. He argues, in rather salty language, that this was a questionable choice. I am a layman in the matter of law, but my reading of the Federal Accountability Act Section 119 does not find anything that requires the Officer to refrain from making reports public.

The OPBO and EI reforms

2009-08-24T11:00:00.000-07:00

The Hill Times has an editorial that touches on the PBO. It's subscription only, but the PBO part of the editorial is in the 'free' paragraph.

The Liberal Party has asked Parliamentary Budget Officer Kevin Page to analyze the Conservative government's cost projections on the Liberals' proposal for employment insurance and they want the results by the end of this month. Thankfully, they want the PBO to make it public, as it should be, but let's not kid ourselves here—this is yet another act of partisanship, something that's definitely not needed and especially on this topic.

In my view, this is exactly the kind of thing that a well-funded OPBO could and should do. That's exactly what the CBO did in the United States on health care proposals. It contributed a lot to the discussion there. Having a timely, credible assessment of a Conservative and Liberal EI proposal would help voters sort through the issues.

Now, I share the skepticism of the editorial in two respects. First, the timeline is a little tight--especially with the meagre resources given to the OPBO. Second, it is ironic that the Liberals want this made public, yet Liberal committee members (along with the members of other parties) voted to muzzle the PBO.

But, just because there are political points gained by the Liberals by having their proposal priced by the PBO does not mean there are not gains for the public. In fact, that's the point here: we align what's in the political interest of the party with the interest of the public. Both the party and the public benefit by having a neutral, non-partisan price tag attached to policy proposals.

The private sector chimes in

2009-07-27T12:27:00.000-07:00

I've been on vacation, so I'm just now catching up with some of the stories about the OPBO.

An interesting one in today's Hill Times. Douglas Porter of BMO says that the OPBO is important because of the lack of credibility of numbers that come through the political filter.

The government's economic reports and forecasts have become too politicized and there should be a source of impartial numbers on the economy and country's finances, says Douglas Porter, Deputy Chief Economist at BMO Capital Markets.

Mr. Porter said the economic numbers put out by the Congressional Budget Office in the United States are more detailed and trustworthy than what is typically available in Canada. The CBO, which was founded 35 years ago, is well established in the U.S. political landscape and has a solid reputation for "high-quality, low-profile work." Its numbers provide a solid basis for debate on economic matters.

"The whole process in Canada has just become so political," Mr. Porter said. "Every budget number, even when we had a surplus, is used as a target by the opposition or a bragging point for the government. And unfortunately that just made the whole process a little less useful to analysts in general, because we don't know for a fact that the latest estimate is a true estimate, and how much of it is a political message."

Mr. Porter is not entirely uncritical of the OPBO, though:

Mr. Porter said that although the Parliamentary Budget Officer—a new, smaller entity which was created to serve a similar purpose to the CBO—is doing a "solid job" as far of the analysis it has provided, it hasn't had a long enough track record to tell whether it is truly reliable. He said he would prefer the PBO, which since its inception last year has been a constant source of headlines because of its provocative reports and ongoing disputes with the government over its mandate, "turned down the volume a bit" and maintained a lower profile like its American counterpart.

That's fine. I didn't sign the open letter to defend every operational decision that has been made at the OPBO. I signed it because I think the changes proposed by the committee would leave the OPBO unable to fulfill its potential.

Why independence matters

2009-07-18T13:30:00.000-07:00

Here is a quote from a story in the Hill Times from May 25, 2009 (sorry no link; it's a pay site).

But even with such a formalized process, the PBO would still have to deal with an innovation that the rest of the world has taken for granted for the better part of two decades: a website.

"You know," says Page, "we fought hard to get that website. They didn't want us to have a website. They thought it was breaking with tradition."

This is precisely why the OPBO needs to be independent. If the OPBO has to devote resources and time for internal fights with the Library of Parliament over the existence of a website--without which it cannot effectively communicate to the public--then it needs to be independent of the Library.

Here is what UWO Professor Emeritus Michael Parkin said about the CBO in the United States in an email to me:

One of the strengths of the CBO is its email service. I receive a daily (almost) email with links to the latest CBO web postings. This service is extremely valuable and leads me to data and analysis that I would otherwise miss. Perhaps OPBO already provides such a service. If it does, it should be better advertised. If it doesn't, it should start such a service. Researchers, teachers, and journalists -- not to mention MPs -- would all benefit from it.

The OPBO is pretty new and small-scale, so it doesn't generate enough output right now to justify a daily email. But Prof. Parkin's point that communication directly with the public is of great service and enhances the value of a budget office is one that I endorse.

Parsing Language

2009-07-18T05:19:00.001-07:00

Kady O'Malley parses the language in the open letter and my opening post.

. . . the site’s creator, UBC economist Kevin Milligan, consistently uses “OPBO”, which stands for “Office of the Parliamentary Budget Officer” . Now, this could be just a semantic quirk, but it may reflect a subtle attempt to move the debate away from the individual who currently holds the job — the embattled but unbowing Kevin Page — to the office itself, focusing on policy, rather than the personalities involved.

My intention is not to be subtle. I simply wanted the broadest group of signatories possible. There is certainly a group of economists who like the Office and think the current Officer is doing a great job. However, perhaps there is also a group who like the Office but have some questions about the current Officer. I have no idea which group is bigger, and if there are even any people in the second group. But, I wanted both sets of economists to feel comfortable signing the letter.

Some have also questioned the use of the word 'Office' because it does not appear in the enabling legislation. I don't think it is unprecedented to have a different 'trade name' than legal name for a public institution--legal names can be cumbersome or lack descriptive character. In this case, I am quite sure that the PBO sits in an O, so why not call that shop the OPBO. Moreover, the official website--presumably vetted by the Library of Parliament--calls it the OPBO. I simply borrowed what was on the official website.

National Post Opinion Piece

2009-07-17T21:04:00.000-07:00

Here is a link to an opinion piece I wrote in Saturday's National Post to introduce the open letter and to respond to Bill Watson's piece. The open letter also appears on their website--so we can guess that it will appear in the print version too.

Globe Letter to Editor by Senator Carstairs

2009-07-17T20:32:00.000-07:00

Senator Sharon Carstairs had a letter to the editor in the Globe and Mail today in defence of the Joint Committee of the Library of Parliament, of which she is a co-chair.

Let me pick on two of the points she makes.

The second type of report is that requested by a committee or individual parliamentarian. They are therefore not released by the PBO, but by the requesting party. The report on the cost of the Afghanistan war was requested by Paul Dewar, and it would have been immediately released by the MP.

I wonder how the Senator knows what Mr. Dewar would have done with the report? In the future, should we rely on the conjecture that MPs 'would' release reports? I don't find that satisfying--but perhaps I don't fully understand what the obligations are here.

We also believe he should respect the law and job description under which he was hired.

This point has been made on many blog posts as well--the claim is that the Officer has 'over-reached' his mandate. I am not a lawyer or an expert on public administration, so I have no opinion on whether these claims are true.

However, I think the more important and larger issue that is raised by the open letter is what the OPBO should look like--if the current law doesn't allow for independence from the Library of Parliament Committee and public reporting of analyses, then perhaps the current law should be improved so that Canadians can benefit from an effective OPBO.

Links to media stories on OPBO

2009-07-17T20:18:00.000-07:00

There has been lots of coverage of our open letter so far. Here are a few articles / posts I have seen.

Canada.com: Economists seek independence for parliamentary budget officer.
David Akin: Free Kevin!
Kady O'Malley: 134 (and counting) economists agree.
Worthwhile Canadian Initiative: An open letter in support of the OPBO.
Inkless Wells: That wasn't so hard
Kelly McParland: The Economists are Revolting!

National Post Op-Ed on Friday ?Saturday?

2009-07-16T20:10:00.000-07:00

According to the Editor, we should have an Op-Ed piece in the National Post on ~~Friday~~ Saturday. (update: I received notice on Thursday it would appear 'tomorrow'--perhaps it was pushed to Saturday.)

Signatories

2009-07-16T18:20:00.001-07:00

The list of signatories to the open letter as of July 15th can be found (pdf) here. The 134 names on the list include 15 Past-Presidents of the Canadian Economics Association and 7 Canada Research Chairs.

If you would like to add your name to the letter, please post your name, city, and affiliation (if any) in the comments. The comments are moderated, so it may take a day or two for your name to appear.

Lettre ouverte à l'appui de BDPB

2009-07-16T18:00:00.000-07:00

English version available here.

La liste complète des signataires de la 15e Juillet est disponible (pdf) ici. Ajoutez votre nom ici.
---

Le Bureau du Directeur Parlementaire du Budget (BDPB) a été créé en 2006 avec pour fournir un avis indépendant sur les finances de la nation, ainsi que pour soumettre au gouvernement des prévisions fiscales trimestrielles. Le BDPB fait maintenant l'objet d'une attaque bipartisane, ayant comme but de limiter sa capacité à communiquer avec les Canadiens et à fonctionner efficacement. Nous signons cette lettre en appui à cette nouvelle institution innovatrice et nécessaires. Notre appui découle des trois raisons suivantes.

Tout d'abord, le BDPB est en mesure de produire des projections financières indépendantes, détaillées et crédibles. Le ministère des Finances dispose d'un personnel d'economistes très talentueux, mais dans le cadre de notre système parlementaire, ils sont restreints par les prises de la position politique du ministre des Finances. D'autres groupes d'économistes, tant à l'intérieur qu'à l'extérieur du gouvernement n'ont ni le mandat ni les ressources suffisantes pour produire efficacement des projections financières et des évaluations du coût des initiatives gouvernementales. Sans le BDPB, des informations importantes et indispensables sur la situation financière du Canada seraient perdues.

Deuxièmement, le BDPB contribue à élever le débat démocratique au Canada. Suffisamment appuyé, le BDPB pourrait produire des estimations crédibles sur les recettes fiscales ainsi que sur les dépenses gouvernementales au Canada, à la manière de ce qui se fait aux États-Unis avec le Congressional Budget Office. Idéalement, cela permettrait aux parlementaires de se concentrer davantage sur le mérite des initiatives économiques du gouvernement, plutôt que de laisser le débat se réduire à des disputes sur le merite d'hypothèses économiques différentes. Au moment où beaucoup s'interrogent sur le niveau du débat politique au Canada, il est utile de profiter de l'appui d'une institution démocratique qui améliore les discussions.

Troisièmement, le BDPB a afiché dans sa courte existence des succès enviables. Par exemple, les prédictions du BDPB sur les conséquences fiscales de la présente récession semblent fiables. Cette crédibilité a été durement gagnée, et serait encore plus difficiles à recréer. Nous devons donner au BDPB l'occasion de bâtir sur ses succès.

Nous appelons les parlementaires de tous les partis à mettre en application les actions suivantes et à appuyer le Bureau du Directeur Parlementaire du Budget:

* Assurer un financement suffisant pour s'acquitter de son mandat
* Garantir l'indépendance du BDPB en faisant un Haut Fonctionnaire du Parlement
* Effectuer la publication de tous les rapports d'analyse.

(Merci à Benoit Dostie, Jean-Yves Duclos, et Steeve Mongrain pour l'aide avec la traduction.)

Open Letter in Support of OPBO

2009-07-16T17:30:00.000-07:00

Ce texte est également disponible en français ici.

A full list of signatories (as of July 15th) is available (pdf) here. Go here if you wish to add your name.

---

The Office of the Parliamentary Budget Officer (OPBO) was established in 2006 with a mandate to provide an independent authority on the finances of the nation and to submit the Government's quarterly fiscal forecasts to analysis. The OPBO has recently come under bi-partisan attack, with proposals to limit the ability of the OPBO to communicate to Canadians and to operate effectively. We write in support of this nascent, innovative, and necessary institution. Our support stems from three underlying reasons.

First, the OPBO can produce independent, detailed, and credible fiscal projections. The Department of Finance has a very talented economic staff, but under our Parliamentary system these economists are restrained by the political stance of the Finance Minister. Other groups of economists both inside and outside government lack either the mandate or the resources to effectively produce detailed fiscal projections and costing of government initiatives. Without the OPBO, important and vital information about Canada's fiscal position would be lost.

Second, the OPBO contributes to elevating democratic debate in Canada. A properly supported OPBO could put out credible estimates of fiscal revenues and expenses, as happens in its older sibling institution in the United States, the Congressional Budget Office. Ideally, this allows Parliamentarians to focus more on the merits of government economic initiatives, rather than allowing the debate to degrade into quibbling over differing economic assumptions. In a time when many are questioning the prevailing standard of political debate in Canada, we must support an institution that improves democratic discussions.

Third, the OPBO in its short existence has a commendable record of success. For example, the OPBO's predictions of the fiscal consequences of the current recession appear prescient. Such credibility is hard-earned and harder-still to recreate if discarded. We should allow the OPBO the opportunity to build on its success.

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.

Independence

2009-07-15T21:00:00.000-07:00

One of the important aspects of the current debate about the OPBO is the degree to which it should be independent.

The Netherlands Bureau for Economic Policy Analysis, which is similar in many ways to the OPBO, has an interesting FAQ about independence:

CPB is a research institute that is independent with respect to content, but at the same time is formally part of the central government. This ambiguous position, which we share with the other planning offices, often raises questions.
CPB does not find this position to be constraining. Succeeding Ministers of Economic Affairs have respected and, if necessary, defended CPB's independence, even at times when they could not agree with the conclusions drawn by CPB. Most politicians accept and appreciate CPB's independence. This enables us to work for the Cabinet and for the opposition at the same time. After all, politics takes decisions regarding the chosen policy, whereas CPB - on demand or on its own initiative- seeks to clarify the economic effects of specific policy proposals.

I think the last sentence is key. It is up to our politicians to make the decisions, but they can make better decisions if they have solid numbers on which to base their decisions. And that is what an effective OPBO can do.

About the CBO

2009-07-15T10:16:00.000-07:00

The Congressional Budget Office in the United States was established in 1974. Here are some interesting things from its factsheet.

Funding of USD 44.1 million in Fiscal Year 2009.
Staffed by 235 people.
Mission to provide "Objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget"

In contrast, Canada's OPBO has only a handful of employees and funding of just over $2million per year.

There are surely important differences between the needs of a congressional and parliamentary system, so direct comparisons might not be appropriate. However, the need remains for independent analyses of budget proposals from either the Government or the Opposition side of the House and the OPBO is a great way to do so effectively.

Leaks about PBO report

2009-07-14T21:33:00.000-07:00

A story in The Hill Times on Monday discusses who leaked last week's OPBO Economic and Fiscal Statement (pdf). I don't really follow the subtleties of the politics involved here, but you can read more about it here by Paul Wells and here by the National Post.

What does seem clear to me is that the idea of passing everything through the MPs and committee members rather than directly to the public is not a trouble-free way to proceed. This episode seems like a good advertisement for OPBO independence.

Open letter update

2009-07-14T21:12:00.000-07:00

We now have 129 signatories to the open letter. The text of the letter will be 'launched' here (and also in a media outlet, if we can find an interested one) over the next few days.

Criticism of the OPBO

2009-07-14T20:38:00.000-07:00

William Watson (an economics professor from McGill) argued against the OPBO in the Post last week. He makes two main arguments. First, that any Finance Minister who 'fudged' the numbers would pay a political price from voters. Second, that the OPBO likely doesn't have any particular advantage in making macro forecasts.

It's good to have a public discussion on the role of the office and I'm glad that Bill has contributed.

On the first point, I agree that discipline from voters is the ultimate check on bad behaviour by politicians. However, I wouldn't want to rely on it as the only one. Myself, I think well-designed institutions (such as the OPBO) can also contribute to improving the incentives and ultimately behaviour of politicians.

On the second point, I agree that the OPBO likely has little advantage over others in making (or re-weighting as Bill suggests) macro forecasts. However, that is not the only thing that the OPBO does or could do. Taking macro forecasts and making fiscal projections from those forecasts seems like something that would pay low private returns--I don't see a large incentive for private institutions to put a lot of effort into it. Moreover, beyond fiscal forecasts, the OPBO is charged with pricing policy initiatives. (See, for example, this pdf released today from the CBO in the US.) I don't see non-government groups of economists having the expertise, the data access, or the incentives to do this kind of work.

Myself, I think it's always an interesting and useful question to ask whether the private sector could replace a particular public sector role, and to think carefully about why or why not. In this case, however, I think that the 'public good' aspects of providing credible, unbiased fiscal information make the laissez-faire argument difficult.

Quick update

2009-07-08T00:36:00.001-07:00

We already have 110 signatories, including 12 previous CEA presidents and at least 6 Canada Research Chairs.

I will be on vacation for a few days, but will move to publicize the open letter next week.

Thanks to everyone who has supported this initiative so far.

Some more news items

2009-07-07T14:53:00.000-07:00

Here is Don Martin in today's National Post:

[Kevin Page] was appointed last year to provide the government with transparent, honest, fiscal insight. The reward for delivering on that with such embarrassing effectiveness is to be choke-chained.

His office budget remains crimped far below what was promised and is required. When his performance was put to a committee last month, MPs from both major parties scolded him for issuing his reports publicly without giving them time to study the details in private first. Evidently transparency has its limits.

That’s why a contrite Mr. Page scheduled his report’s release for Wednesday, two days after MPs on the finance committee were given the copies they promptly leaked to journalists.

[...]

His baseline conclusion is that the Canadian economy has hit bottom hard, with a modest, slow-moving recovery beginning right about now and culminating in 2014 when it again reaches its maximum potential.

That would indeed be an ugly reality, but Kevin Page was not appointed to spin or sugarcoat.
The government, supported by all parties, should give this unassuming parliamentary officer the tools to do his thankless work properly. Given his current forecasting, we can only hope he ends up being wrong.

As well, here is an article about the projections in the Globe and Mail.

Support the Office of the Parliamentary Budget Officer

2009-07-06T20:18:00.000-07:00

This blog has been established to build support for the Office of the Parliamentary Budget Officer of Canada.

The purpose of this blog is support of the Office of the Parliamentary Budget Officer. The current Officer is Kevin Page. He may or may not be doing a great job--people may disagree. The point here is to support the institution of the Office itself.

The author of the blog is Kevin Milligan, who is an Associate Professor of Economics at UBC.

An open letter is being prepared and will be posted here shortly. Email me at supporttheopbo@gmail.com to learn about the open letter.

Watch this blog for more information in the days that come.

The Report of the Standing Joint Committee on the Library of Parliament

2009-07-06T20:12:00.000-07:00

Here is a .pdf of the Report on the Operations of the Parliamentary Budget Officer within the Library of Parliament, by the Standing Joint Committee on the Library of Parliament.

The key recommendations are below. I have bolded particularly interesting words.

Recommendation 1
That the Speakers of the Senate and the House of Commons direct the Parliamentary Budget Officer to respect the provisions of the Act establishing his position within the Library of Parliament. The Parliamentary Budget Officer reports to the Parliamentary Librarian and, as a senior official of the Library, it is his responsibility to participate fully in management activities and to work closely with the Library’s other service areas.

Recommendation 6
That the Speakers of the Senate and the House of Commons instruct the Parliamentary Budget Officer that a response to a request made by a parliamentarian or a parliamentary committee in accordance with the legislated mandate shall remain confidential, until the confidentiality is lifted by the parliamentarian or the parliamentary committee making the request.

Recommendation 8
That, on the understanding that any increase of the budget of the Parliamentary Budget Officer is conditional on compliance with all other recommendations in this report, after due process and validation, the Speakers of the Senate and the House of Commons, in collaboration with the Parliamentary Librarian, submit to the Treasury Board a proposal to increase the budget of the Parliamentary Budget Officer for 2009–2010 to $2.8 million, without reducing the current financial resources of the rest of the Library of Parliament.

Media stories on the OPBO

2009-07-06T20:00:00.000-07:00

There have been a lot of stories on the OPBO over the past few months. I will try to 'catch up' with some of these in order to provide some context. I don't know how long these links will remain active, but they all work as of now.

Canwest, Dec. 8th 2008: "Parliament's Budget Office has its budget frozen"

The Hill Times, Jan. 19, 2009: "Bringing truth to budgeting"

The Hill Times, Feb. 9, 2009: "Parliamentary Budget Officer should be reined in, say Liberal and Tory MPs"

Canadian Press, Jun. 16, 2009: "Give the Parliamentary Budget Officer More Money: Committee"

Ottawa Citizen, Jun. 16, 2009: "Budget Officer, Parliamentary Library urged to bury the hatchet"

Toronto Star, Jun. 17, 2009: "Put tether on budget watchdog, MPs urge"

Edmonton Sun, Jun. 17, 2009: "Committee returns Page to Library"

National Post, Jun. 18, 2009: "The muzzling of Kevin Page"

Toronto Star, Jun. 24, 2009: "Do Tories want watchdop or lapdog?"

Toronto Star, Jun. 27, 2009: "Our democracy is being eroded"

Globe and Mail, Jun. 30, 2009: "Why is Kevin Page left twisting in the wind"

Globe and Mail, Jul 2, 2009: "Misplaced confidentiality"

Winnipeg Free Press Editorial Today

2009-07-03T08:44:00.000-07:00

Today's Winnipeg Free Press has an editorial on the OPBO situation. It is very supportive of the OPBO.

Here is their description of the problem:

His loyalties, though, have not served his office well. Conservatives and Liberals, on the committee that oversees Mr. Page's office, have lined up to squelch this outspoken analyst, whose work is to feed information requested by various parliamentary committees. The joint Senate-Commons committee responsible for the Library of Parliament, through which Mr. Page reports to the speakers of both chambers, has offered Mr. Page the $2.8 million budget he requested on the proviso he no longer immediately releases his updates and forecasts publicly, leaving that disclosure to the committee.

It seems the Liberals, who as Official Opposition should be the most rabid of watchdogs, well understand that an insider with a little bit of power has the most dangerous bite of all, and better to emasculate this one while not in government. The united front they and the Tories have formed to effectively neuter Mr. Page is a crass example of political expediency.

Here is their call to action:

[Mr. Page] should turn down the nefarious $2.8-million offer and soldier on, for however long the prime minister sees value in having a parliamentary budget officer who actually believes in transparency and accountability.