TABLE OF CONTENTS
Table of Contents |
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Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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Part I. Comparative Law, Constitutions, Politics and Budget Systems . |
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1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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2. Budget processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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2.1. Budgeting: a five-stage process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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2.2. How are the different legal frameworks for budget |
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systems organised? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3. Can economic theory explain the differences? . . . . . . . . . . . . . . . . . . . . . |
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3.1. New institutional economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3.2. Law, economics and public choice theory. . . . . . . . . . . . . . . . . . . . . . |
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3.3. Constitutional political economy: budgetary rules |
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and budgetary outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3.4. Can game theory help? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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4. Can comparative law explain the differences? . . . . . . . . . . . . . . . . . . . . . |
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4.1. Families of legal systems and the importance |
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of the constitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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4.2. Absence of norms for constitutions partly explains differences |
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in budget system laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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4.3. Hierarchy within primary law also partly explains differences |
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in budget-related laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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4.4. Not all countries complete all steps of formal |
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law-making processes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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4.5. Greater use is made of secondary law in some countries . . . . . . . . |
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4.6. Decisions and regulations of the legislature are particularly |
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important in some countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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4.7. Customary law and coalition agreements are relatively |
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important in some countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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4.8. Are laws “green lights” or “red lights”? . . . . . . . . . . . . . . . . . . . . . . . . |
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5. Forms of government and budget system laws . . . . . . . . . . . . . . . . . . . . . |
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5.1. Constitutional or parliamentary monarchies . . . . . . . . . . . . . . . . . . . |
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5.2. Presidential and semi-presidential governments . . . . . . . . . . . . . . . |
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5.3. Parliamentary republics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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5.4. Relationship between forms of government |
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and budget system law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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Part II. Comparisons of OECD Country Legal Frameworks |
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for Budget Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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2. Different purposes of the legal frameworks for budget systems . . . . . . |
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2.1. Legal necessity?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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2.2. Budget reform: when is law required?. . . . . . . . . . . . . . . . . . . . . . . . . |
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2.3. Elaborating on the budget powers of the legislature |
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vis-à-vis the executive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3. Differences in the legal framework for the main actors |
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in budget systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3.1. Legislatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3.2. Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3.3. Judiciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3.4. External audit offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3.5. Sub-national governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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3.6. Supra-national bodies and international organisations . . . . . . . . . . |
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4. Differences in the legal framework for budget processes . . . . . . . . . . . . 86 4.1. Budget preparation by the executive . . . . . . . . . . . . . . . . . . . . . . . . . . 86 4.2. Parliamentary approval of the budget . . . . . . . . . . . . . . . . . . . . . . . . . 94 4.3. Budget execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 4.4. Government accounting and fiscal reporting systems . . . . . . . . . . . 114
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Part III. Is There an Optimum Legal Framework
for the Budget System?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
1. Have standards for the legal framework of budget systems
been drawn up? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 1.1. Normative and positive approaches to budget law . . . . . . . . . . . . . . 126 1.2. Limited guidance from normative constitutional economics . . . . . 126
2. Who should set and monitor legally binding standards?. . . . . . . . . . . . . 127 2.1. Role of politicians and bureaucrats . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 2.2. International transmission of budget system laws . . . . . . . . . . . . . . 128
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2.3. International organisations as standard setters . . . . . . . . . . . . . . . . 129 2.4. Monitoring standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
3. Principles to support the legal framework of budget systems . . . . . . . . 132 3.1. Authoritativeness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 3.2. Annual basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 3.3. Universality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 3.4. Unity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 3.5. Specificity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 3.6. Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 3.7. Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 3.8. Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 3.9. Stability or predictability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 3.10.Performance (or efficiency, economy, and effectiveness) . . . . . . . . . 150
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Part IV. Case Studies of Selected OECD Countries. . . . . . . . . . . . . . . . . . . . |
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Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
Korea. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283
New Zealand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
Four Nordic Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Spain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445
List of boxes
I.1. Comparative law: Aspects of relevance for budget system law . . . . . 34 I.2. Purposes of constitutions and characteristics of statutes . . . . . . . . . . 36 I.3. Hierarchy of laws: The example of Spain . . . . . . . . . . . . . . . . . . . . . . . . 39 I.4. Steps in making law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 II.1. Purposes of budget system laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 II.2. New Zealand’s State Sector Act 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 II.3. France: Legal requirements for budget information . . . . . . . . . . . . . . . 95 II.4. Finland: Legal requirements for annual report and annual accounts. . . 116 III.1. The OECD Best Practices for Budget Transparency. . . . . . . . . . . . . . . . . . . 130 III.2. Constitutional norms for external audit: Extracts from the INTOSAI
“Lima Declaration” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 III.3. Ten principles for a budget law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
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III.4. Possible minimum legal norms for budget reporting . . . . . . . . . . . . . . 145 III.5. Ingredients of legal norms for external audit . . . . . . . . . . . . . . . . . . . . 148 III.6. Ingredients of legal norms for government agencies . . . . . . . . . . . . . . 149
List of figures |
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I.1. The roles of Parliament and the executive in the budget cycle . . . . . . |
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I.2. Different models for organising the legal framework |
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of budget systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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I.3. Separation of powers and the need to adopt budget-related laws . . . |
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II.1. Density of legal framework for budget systems |
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in 25 OECD countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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II.2. Budget reforms and changes in budget laws . . . . . . . . . . . . . . . . . . . . . |
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List of tables |
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I.1. |
Delegated legislation and separation of powers . . . . . . . . . . . . . . . . . . |
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I.2. |
Differences in selected budgetary powers of the executive |
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and the legislature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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II.1. Legal frameworks for budget systems: 13 OECD countries . . . . . . . . . |
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II.2. Reasons for changes in budget system laws: Selected countries . . . . |
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II.3. External audit legal frameworks: Selected differences. . . . . . . . . . . . . |
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II.4. Legal requirements for the date of submission |
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of the budget to the legislature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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II.5. Legal requirements for submission of annual report |
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to the legislature: Selected countries . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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III.1. Stages of the budget cycle and legal instruments . . . . . . . . . . . . . . . . . |
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