I.COMPARATIVE LAW, CONSTITUTIONS, POLITICS AND BUDGET SYSTEMS

In contrast, in France, the Council of State provides advice to the government on the legality of normative acts – both draft laws and draft decrees. It intervenes

– provides its advice – just prior to the consideration of draft laws or decrees by the Cabinet of ministers. Although the Cabinet is not obliged to accept the advice of the Council of State, its recommendations are influential, resulting in a high standard of regulation and, in principle, full consistency of primary and secondary legislation.

In pure presidential systems, all normative powers of the executive are a direct result of deliberate acts of delegation by the legislature. There is rigorous application of the separation of powers. In the United States, a presidential Executive Order lays out the executive branch’s internal procedures to ensure control of all regulations.

4.6. Decisions and regulations of the legislature are particularly important in some countries

If Parliament takes a decision, but not all the “concluding activities” (see Box I.4) are completed, the parliamentary resolution does not become a statute or formal law. Nonetheless, such decisions have the same impact as law. If the formalities associated with law making are not accorded the same importance as they are in countries with strong constitutional and legalistic cultures, parliamentary resolutions can be an important source of “quasi-law” governing budget procedures and processes. Such situations appear to arise particularly in parliamentary monarchies. Two examples are provided.

First, in the United Kingdom, the House of Commons adopts resolutions

– based on law – that have a similar impact to formal statute. For example, in 1998, the miscellaneous provisions of the 1998 Finance Act authorised the Treasury to draw up a Code for Fiscal Stability, to be approved by the House of Commons by resolution. The 1998 Act did not require approval of the Code for Fiscal Stability by the upper house of Parliament – the House of Lords. To become statute law, approval of both Houses of Parliament and the Queen’s assent is required. This was not the case for the Code for Fiscal Stability, which lays out very important fiscal reporting requirements.

Second, in Norway, according to the 1814 Constitution, every bill is first passed in the Odelsting, and then approved in the Lagting – these are separate chambers of the Parliament, the Storting.15 If the King assents to a bill, he appends his signature, and the bill becomes law. Many bills – including the budget regulations and annual budgets – are adopted by parliamentary decision, i.e. by the full Storting, without separate discussions taking place in the two chambers. Technically, resolutions of the Parliament are not formal law. However, their impact is identical to that of a law.

I.COMPARATIVE LAW, CONSTITUTIONS, POLITICS AND BUDGET SYSTEMS

Apart from parliamentary decisions, the regulations that govern the internal operations of legislatures can be particularly important for budget processes, especially where these concern the adoption of annual budgets as laws and the reporting of budget execution to Parliaments. In some countries (e.g. France, Spain), normative decisions governing parliamentary procedures are like statutes and require a constitutionality review. In other countries, such decisions do not have the status of law – they are regulations internal to the legislature, approved according either to their own procedures or those laid down in the law. In countries with bicameral legislatures, separate regulations govern the internal procedures of each house.

The degree of separation of executive and legislative powers is crucial as to the content and impact of internal regulations on budget processes. In countries like Italy or the United States whose legislatures have considerable independent powers, internal regulations are drawn up and approved exclusively by parliamentary (congressional) bodies. In Italy, the Constitutional Court has explicitly declared that is not necessary for parliamentary regulations to be reviewed for their constitutionality (Pizzorusso, 1988, p. 85). Since the executive is excluded constitutionally from interfering with the drawing up of internal rules, legislatures in such countries can use them for expanding their budget powers. For example, the United States Senate has established a “filibuster” rule, which requires a supermajority of senators (three-fifths) to approve the closing of a debate on any issue. Unless this rule is waived, budgetary decisions taken by Congress not only require a majority but a large political consensus (Blöndal et al., 2003, p. 21). This rule can lead to long delays in approving annual appropriation bills.

In contrast, in parliamentary countries of the Westminster tradition, parliamentary regulations (Standing Orders) are heavily influenced by the government, either directly (where the Treasury prepares a first draft) or indirectly (by influencing the key parliamentary committee, which is dominated by members of Parliament from the ruling parties of government). Standing Orders – not statute law – limit any important role in the budget process being played by the Parliaments of such countries. Two examples illustrate the extent to which Parliament’s powers are restricted by its “own” regulations:

●United Kingdom. Standing Order No. 54 limits debate on the budget estimates in the House of Commons to three days (a separate law excludes the House of Lords entirely from any discussion of the government’s proposed tax and expenditure estimates in the budget).

●New Zealand. Any proposal by Parliament to amend the government’s draft budget can be overridden by the government if it considers that the amendment would change the government’s agreed fiscal aggregates, or the composition of proposed expenditures, in more than a minor way. This so-called “financial veto” is specified in Standing Order No. 312.

I.COMPARATIVE LAW, CONSTITUTIONS, POLITICS AND BUDGET SYSTEMS

4.7.Customary law and coalition agreements are relatively important

in some countries

Customs can be defined as practices that emerge outside legal constraints and which individuals or organisations spontaneously follow in the course of their interactions, out of a sense of legal obligation (Parisi, 2004). Whenever customary rules are granted legitimate status in a legal system, they acquire the same effect as other sources of law, though they would be subordinate to formal legislation (Parisi, 2001). Customary law derives its force from:

●The consistent occurrence of a uniform practice.

●A belief that adherence to it is obligatory, without necessarily being formally incorporated into any written body of law.

In some countries’ budget systems, notably those of the United Kingdom and its ex-colonies, customary sources of law play a role. Several examples may be cited. First, the establishment of the Cabinet – the all-important body for budget decision making – has no legal basis, i.e. there is no legally binding document that specifies Cabinet’s roles and responsibilities in budgetary matters. Second, the royal prerogative in the United Kingdom – the powers unique to the executive that the courts recognise it possesses for the purposes of carrying out the business of government – is another source of extra-legal influence. Several of H.M. Treasury’s powers – including specifying the structure of appropriations and controlling expenditures – are derived from the royal prerogative (Daintith and Page, 1999). Third, Cabinet minutes or Treasury Concordat are extra-legal documents that also guide budgetary processes in countries with Westminster parliamentary systems.

In several continental European countries with coalition governments (e.g. Germany, the Netherlands), prior to the formation of a new government, the political parties about to govern draw up a “coalition agreement”. Such pacts specify the political and economic agenda of the government that is valid for the life of the government. Because of their limited duration, such agreements cannot be regarded as customary law. Also, because of their nonbinding nature – they are voluntary agreements – they cannot be considered a source of law. Nonetheless, in some cases, they provide detailed rules for aspects of the budget process and, at least for their duration, have the same impact as law.

As an illustration, the government of the Netherlands drew up a detailed set of macro-fiscal stability rules (Blöndal and Kristensen, 2002, Box 1). By voluntarily adhering to the rules, the general government deficit was turned to a surplus in the 1990s. Thus, the impact of the coalition agreement was identical to that which would have been achieved by a law of limited duration prepared by the government and adopted formally by the Dutch Parliament.