I.COMPARATIVE LAW, CONSTITUTIONS, POLITICS AND BUDGET SYSTEMS

5.2. Presidential and semi-presidential governments

The key characteristic of a presidential system is that the head of State is directly elected by the people, in clear contrast to monarchies. Under a “pure” presidential system, the directly elected head of State, by constitutional design, is also the head of the executive. All executive power is vested in one person, not a collective body such as a Cabinet of ministers. However, the president’s room to manoeuvre in budget matters is constrained by the extent that the legislature dictates the “rules of game” of budget management by adopting laws or imposing other rules.

A “pure” presidential system operates in the United States and other countries on the American continent. The United States president’s powers are “balanced” by those of a House of Representatives, a Senate, and a judiciary. This form of government is characterised by very strong separation of powers.

In a semi-presidential system, the head of State – the president – is also directly elected. However, the executive is divided between the head of State and the head of government, the prime minister (who is usually the leader of the majority political ruling parties at the time of legislative elections). The president may have strong powers, specified in a written constitution. Finland, France,17 and Korea have adopted a model in which the prime minister is formally appointed by the president after approval or election by Parliament. In contrast to the Westminster system, any elected parliamentarians usually must resign from Parliament to become a Cabinet minister – the two functions are perceived to be incompatible.

5.3. Parliamentary republics

In several respects, parliamentary republics are similar to semi-presidential systems. The major difference is that the president is not directly elected by citizens. The presidents of such countries generally have weaker constitutional powers. Germany and Italy are examples. In these countries, the head of the Cabinet of ministers (e.g. the Chancellor in Germany) plays the politically dominate role and speaks for the parliamentary majority. Cabinets are formed mainly from parliamentarians (who must resign from Parliament), although non-elected officials may be appointed.

5.4. Relationship between forms of government and budget system law

The relative strength of executives and legislatures varies considerably according to the form of government. Under a pure presidential system, the separation of the legislature from the executive is specified in the constitution. By adopting laws, the legislature can reinforce its supremacy over the executive in budgetary matters.

I.COMPARATIVE LAW, CONSTITUTIONS, POLITICS AND BUDGET SYSTEMS

In parliamentary systems there is less separation of the executive and the legislature. Provided discipline within the ruling party or parties is maintained, the government can propose laws to Parliament, which adopts them with relative ease. Maintaining party discipline is easier in two-party systems than in multiparty systems, where reaching and maintaining a consensus within the coalition parties that make up the government can be troublesome. In both systems, however, the main effective tool that Parliaments have for “controlling” the executive is to propose a vote of no-confidence in the government and cause its collapse if the vote succeeds. This happens rarely in parliamentary monarchies that have first-past-the-post electoral systems. In such countries, in budgetary matters, the executive holds the “power of the purse”, even though, constitutionally, Parliament is said to be supreme in money matters.

A detailed comparison of specific budget powers embodied in primary law is provided in Part III. On the basis of budget-related laws, the legislatures in the countries with a strong separation of the legislative and executive branches have strong powers in relation to budget processes, including powers to:

●Specify the timing of submission of the draft budget to the legislature.

●Decide, for the annual budget and the medium-term budget framework, the levels of the aggregates for revenues, spending, and new borrowing.

●Ensure that plenty of time is allowed for budgetary debate in the legislature.

●Specify the nature, form and duration of the appropriations for annual budgets, as well as the supplementary information required to accompany the draft annual budget law.

●Amend the executive’s draft budget, possibly without any legal constraints, for both total expenditure and the composition of spending programmes.

●Prevent the executive from withholding spending, once the annual budget is approved (i.e. provide the executive with weak or no powers to cancel or defer spending approved by the legislature).

●Decide on the number, size, and uses of extra-budgetary funds, by adopting specific laws.

●Limit to the maximum the executive’s ability to manipulate government funds outside the purview of the legislature.

●Require substantial ex post budgetary information, including an audit of the financial accounts and an annual performance review of budget execution relative to the approved budget.

●Define the main roles of a supreme audit institution and require that it serves primarily the needs of the legislature.

I.COMPARATIVE LAW, CONSTITUTIONS, POLITICS AND BUDGET SYSTEMS

●Require officials from the executive to defend budgetary outcomes before committees of the legislature and to report on identified cases of financial mismanagement.

A number of the above differences – between a country with an executivedominated Parliament (the United Kingdom) and a country with a very strong separation of executive and legislative powers (the United States) – are illustrated in Table I.2.

Table I.2. Differences in selected budgetary powers of the executive and the legislature

Executive

I.COMPARATIVE LAW, CONSTITUTIONS, POLITICS AND BUDGET SYSTEMS

It appears that when the legislative and executive branches are strongly separated, there is a greater tendency for legislatures to specify the content, detail and powers contained over the budget system in primary law (Figure I.3). In countries with political systems with a strong separation of powers, the legislature is reluctant to delegate law-making authority (Epstein and O’Halloran, 1999). Their strong powers are upheld by the courts. In contrast, delegation of law making by Parliaments, or maintenance of existing law-making powers by executives, is strong in countries with a weak separation of the executive from Parliament. In such countries, the representation of the government on parliamentary committees allows the executive to maintain those powers. A strong committee system has been found to derive from the larger constitutional context, with committees established in part to oversee executive agencies and thereby limit the powers of the executive (Epstein and O’Halloran, 2001).

Figure I.3. Separation of powers and the need to adopt budget-related laws

Presidential

Increasing

Although the strength of the legislature’s powers in budget management is particularly strong in countries with strong legislatures relative to executives, the relationship is not necessarily one to one (as drawn in Figure I.2 for illustrative purposes). Other factors influencing the need for a country to regulate the budget system by the adoption of law include:

●The political system, particularly: 1) whether there is a bicameral or a unicameral system. the existence of a bicameral system in a Parliament, in which the second chamber also has strong powers in relation to budgeting, swings the balance of budgeting powers towards the legislature relative to a