Study Visit to Vienna
The Role of the Austrian Parliament
in the Budget Process
Vienna, 2nd September 2014
Helmut Berger
Parliamentary Budget Office
CON TEN T
•
Institutional framework for fiscal governance in Austria
•
The Parliamentary Budget Office
•
Parliamentary Budget Procedures
•
Challenges of new budget formats and fiscal rules for Parliament
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A CTORS AN D RESPON SIBILITIES IN A USTRIA
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M AIN A CTORS OF FISCAL G OVERN AN CE
European Union
Budget
Office
Institute of
Economic
Research
Statistics
Austria
Parliament
Court of Audit
Fiscal
Council
Federal Government
Ministry of
Finance
Line Ministries
PMO
Austrian
Treasury
Austrian National
Bank
PARLIAMEN T N ATION AL AN D FED ERAL COUN CIL
•
The Austrian Parliament has two chambers, the National Council (183
members) and the Federal Council (61 members), who jointly represent the
legislative power. The Federal Councils major responsibility is the
representation of the Federal Provinces’ interests in the legislative process at
federal level.
•
The National Council has exclusive competence in budget matters. The
Federal Council has no decision rights in this area.
•
The Federal Council’s approval is necessary in case of intended change of
the distribution of competences as laid down in the federal constitution
restricting the competences of the Provinces.
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BUD GET A UTHORITY OF N ATION AL COUN CIL
•
The Minister of Finance prepares the budget bills and presents the drafts to
the National Council
•
The National Council can amend the budget at will or indeed prepare its own
budget without reference to the executive (e.g. if government does not
present a budget draft in due time)
•
The National Council approves the mid-term expenditure framework (Federal
Medium-Term Expenditure Framework Act), the yearly budget (Federal
Finance Act) and the Austrian Stability Pact
•
The National Council may also empower the Minister of Finance in the
Federal Finance Act to overrun the approved budget allocations under certain
circumstances and up to certain amounts
•
The National Council and especially the Budget Committee receives a
number of reports, supporting the budgetary steering and control function of
the National Council
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M IN ISTRY OF FIN AN CE
•
Macro-fiscal policy competence according to the Constitution and Organic
Budget Law
•
Overall-responsibility for the federal budget and overall-coordination (of
federal government but also with lower levels of government)
•
Preparation of draft budget bills (medium-term and annual)
•
Establishment of Budget rules
•
Agreement on overruns of budget allocations
•
Only Ministry of Finance may assume liability on behalf of the Federal
Government (statutory or contractual guarantees)
•
Only Ministry of Finance may incur financial debts (in compliance with
authorizations contained in the Federal Finance Act)
•
Reporting requirements to National Council
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LIN E MIN ISTRIES
•
Participation in the preparation of medium-term and annual budget bill
•
Execution of budget

Management and oversight of budget funds, and exercise oversight of
compliance with budget figures and the performance mandates

Prepare monthly budget forecasts

Participate in controlling

Management of re-allocations (depending on budget level)
•
Accounting of all business cases
•
Participation in the drawing up the federal financial statements
•
Developing and administration of policy areas
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FED ERAL PERFORMAN CE M AN AGEMEN T O FFICE
•
Established at the Federal Chancellery to support ministries in performance
budgeting and to overview performance information
•
Training, consultations, checklists and working tools
•
Quality assurance in terms of recommendations regarding compliance with
certain quality criteria like relevancy, consistency, comprehensibility and
verifiability
•
Reporting to Parliament the results of the internal evaluations
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A USTRIAN IN STITUTE FOR ECON OMIC RESEARCH
(WIFO)
•
The Austrian Institute for Economic Research (WIFO) is an independent
scientific institution that prepares all macroeconomic assumptions used in
the budget process.
•
WIFO is also engaged in a variety of economic research, both in Austria
and internationally.
S TATISTICS A USTRIA
•
Separated from Government Services in the year 2000
•
Independent and non-profit-making federal institution under public law
•
Federal Statistics is defined as a (non-personal) information system of the
government providing data on the economic, demographic, social,
ecological and cultural situation in Austria
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A USTRIAN COURT OF A UD IT
•
Set up by the federal constitution as an independent auditing institution on
a federal, laender and municipal level
•
Main functions and objectives
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
To verify that state funds are being correctly administered, including
state spend by public institutions and state funds used by private
institutions

To scrutinise whether resources available are being used
economically, efficiently and effectively

To Compile the federal financial statements

To Audit processes and financial statements of government bodies and
off-budget entities

To cooperate in preparing the financial debt statement by ensuring the
legality of debts and their correct entry in the ledger of financial debt
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FISCAL A D VISORY COUN CIL
•
Evaluation and forecast of the financial-political situation
•
Analyses of the effects of financial operations on the national economy in
connection with the indebtedness of all the public authorities
•
Analysis of the sustainability and quality of the budgetary policy of public
budgets
•
Presentation of written recommendations concerning the financial policy of
the public budgets in Austria taking economic conditions into consideration
•
Annual presentation of a report on the recommendations made to the
Federal Minister of Finance, which the Federal Minister of Finance is to
present to the National Council and Federal Government
•
The Parliamentary Budget Office and the Austrian National Bank participate
in the fiscal advisory council in an advisory function without a vote
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A USTRIAN TREASURY
•
Debt management office and acts in the name and for the account of the
sovereign
•
Wholly owned by the Republic of Austria, represented by the Federal
Ministry of Finance
•
The primary objective is to secure the government’s funding at the lowest
possible cost over the medium to long term while avoiding excessive risk
Ö STERREICHISCHE N ATION ALBAN K (O EN B)
•
Central bank of the Republic of Austria and as such an integral part of the
European System of Central Banks (ESCB)
•
A stock corporation and capital is held by the federal government a the sole
shareholder (rights are exercised by Federal Minister of Finance)
•
Fully independent and not bound by any instructions from institutions from
the European Union, the government or any other institution
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ESTABLISHMEN T OF THE
A USTRIAN PARLIAMEN TARY BUD GET O FFICE
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ESTABLISHMEN T OF THE N EW PARLIAMEN TARY
BUD GET O FFICE
•
Longstanding efforts to provide Parliament with immediate and governmentindependent budgetary expertise and to strengthen its position in relation to
government
•
New budget law confers former Parliament’s rights in budgetary matters to a
higher level of aggregation (73 global budgets instead of more than 1.100
individual budget lines) and requires additional technical knowledge
•
Strengthening of the parliamentary budgetary control:
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
Additional reporting requirements for the Minister of Finance

Establishment of the new independent Parliamentary Budget Office as a
pilot project to
=>
provide government-independent and objective analysis
=>
support Parliament, in particular the Budget Committee in
budgetary matters
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BASIC D OCUMEN TS
•
Political agreement between all the political parties represented in the
Austrian national assembly
•
Statement of the Budget Committee of the Austrian Parliament, 10th
November 2011 (1510 d.B. XXIV. GP)
Establishment without specific legal basis, based on the following principles:
PBO shall

Work independently and ensure high-quality expertise

Submit analysis to all political parties

Ensure transparency and publish results on parliament’s homepage
Planned staffing: in total 8 employees (6 academic experts, 2 assistants)
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M AN D ATE
To support Parliament in the budgetary process, in consulting and
enacting budget laws and exercising its oversight role.
Key tasks:
(1) To support the Budget Committee in form of written expertise, analysis and
short studies on budgetary matters presented by the government according
to Federal Organic Budget Act (e.g. draft fiscal framework and budget,
reports)
(2) To prepare brief information upon request of members of the Budget
Committee
(3) To support other parliamentary committees regarding impact assessment of
new legislation
(4) To consult the Parliament on performance budgeting and the effective
equality of women and men (gender budgeting)
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PROD UCTS AN D S ERVICES
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CATALOGUE OF PROD UCTS & S ERVICES (I)
Ongoing analysis:
Written expertise, analysis and short studies on all budget-relevant draft
documents presented by Government, in particular
•
Medium Term Expenditure Framework (MTEF)
•
Annual Federal Finance Act
•
Documents in connection with the European Semester (e.g. Annual Growth
Survey, Austrian Stability Programme, National Reform Programme)
•
Austrian Stability Pact
•
Fiscal Equalization Law
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CATALOGUE OF PROD UCTS & S ERVICES (II)
Ongoing analysis:
Support the Budget Committee to control budget execution. This includes
analysis of
•
Reports on budget controlling and of monthly reports on budget execution
•
Report on investment and financial controlling
•
Reports on outcome controlling
•
Subsidy reports
•
Reports on borrowing, assumption of liabilities, financial debt and currency
swap agreements
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CATALOGUE OF PROD UCTS & S ERVICES (III)
Analysis upon request:
•
Responses to budget related questions of the Budget Committee or its
members

Statements or short studies

Response in order of arrival of the request and depending on
personnel capacity
Analysis out of own initiative:
•
Analysis on certain budget relevant topics
•
Comments on impact assessements, in particular of financial
consequences of new legislation
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CATALOGUE OF PROD UCTS & S ERVICES (IV)
Recommendations on the improvement of budget reports and documents
and on development of budget laws
•
Participate in the evaluation and further development of the Federal
Organic Budget Act
•
Provide suggestions to the Budget Committee on how to further improve
budget documents and reports
•
Consultation services on performance and gender budgeting
•
Consultation regarding impact assessment of new legislation as requested
by committees
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PARLIAMEN TARY BUD GET O FFICE –
PRACTICAL EXPERIEN CES
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PREPARATION OF PARLIAMEN TARY BUD GET D EBATE
Budget Office prepared a number of documents in advance of the
Parliamentary budget debate:
•
Information on budget reserve system
•
Information on performance budgeting
•
Information on how to read the budget documents efficiently
•
Information on the European System of Accounts 2010 (ESA 2010)
•
Information on the Maastricht-deficit and the concept of a structural deficit
•
Information on the Maastricht-notification from March 2014
•
Information on opening balance sheet of central government 2013
Head of the Budget Office always participates in the meetings and may be
consulted in his role as an expert
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A N ALYSIS OF THE FED ERAL BUD GET FOR 2014
AN D 2015 AN D OF THE MTEF 2015 – 2018
•
In a ‚normal‘ year Parliament enacts
the federal budget for the following
year in October and the MediumTerm Expenditure Framework for
the next 4 years in April
•
Due to elections last autumn the
Federal Budget for 2014 was
enacted in May 2014 (until then
there was a provisional budget in
place)
•
At the same time the government
also enacted the Federal Budget for
2015 and the Medium-Term
Expenditure Framework for 2015 –
2018
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CON TRIBUTION
OF THE PBO
Parliamentary Budget Office conducted
•
Overall analysis of the budget
•
Analysis on each chapter of the budget
Main content of overall analysis
•
Overview of the budget documents
•
Risks in the budget
•
Economic environment
•
Revenues
•
Public debt
•
Chapters on important policy areas (e.g. pensions, education, health)
•
Banking sector (Hypo-Alpe-Adria Group)
•
Performance Budgeting and Gender Budgeting
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PARLIAMEN TARY BUD GET PROCED URES
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THE N ATION AL COUN CIL’S ROLE IN THE BUD GET
PROCESS
•
The Minister of Finance prepares the budget bills and presents the
drafts to the National Council
•
The National Council discusses the draft of the Federal Medium-Term
Expenditure Framework Act and the Federal Finance Act in three
readings
•
The National Council can amend and has to approve the budget acts
and Federal Medium-Term Expenditure Framework Act
•
The Minister of Finance may – under given circumstances – only
overrun the approved budget allocations after consultation with the
National Council
•
Furthermore, the National Council and especially the Budget
Committee receive a number of reports, supporting the budgetary
steering and control function of the National Council
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PARLIAMEN T AN D THE BUD GETARY CYCLE
Court of Audit: correctness of
budgetary execution
Draft Budget and MTEF
Federal Government
Parliament
Federal Ministries
execute budget
Independent
research councils:
Input for budgetary planning
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approves Report
from Court of Audit
decides on draft
budget and MTEF
PARLIAMEN T AN D THE BUD GETARY CYCLE
• The National Council approves the Austrian Stability Pact, the MediumTerm Expenditure Framework and annual Federal Budget
• The National Council exercises permanent budgetary control on the
implementation of the Federal Budget in the course of the fiscal year
• The National Council is informed by different reports on the fiscal
performance of the sub-national governments
• The National Council discusses the Stability Program and the National
Reform Program after submission to the European Commission
• The National Council deals with the recommendations of the European
Commission and the European Council
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THE BUD GET COMMITTEE
•
The Budget Committee prepares the approval of the Federal Medium-Term
Expenditure Framework Act, the Budget Finance Act and of all kinds of bills
regarding budgetary matters.
•
For this purpose the Budget Committee debates the bills. During these
debates the Minister of Finance and the responsible Line Ministers have to be
present and must answer any questions arising in respect of the budget
allocations.
•
As for the implementation of the Budget Finance Act, the Budget Committee
discusses and resolves so called Budget Accompanying Acts
(Budgetbegleitgesetze). These Budget Accompanying Acts change legislation
in various matters with financial impact as for instance laws on family grants,
social security or hospital funding.
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PRESEN TATION OF THE BUD GET BILL
GOVERNMENT
Minister of
Finance
PARLIAMENT
Council of
Ministers
Plenary: Budget
Speech
Plenary: First
Reading
Expert Hearing
BPO
Analyses
Budget Committee:
Debate
Plenary: Second
and Third Reading
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PRESEN TATION OF THE BUD GET BILL
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•
The Federal Government must present
the Budget Bill (Federal Finance Bill) to
the National Council at latest 10 weeks
before the end of the fiscal year
•
Members of Parliament may present a
budget bill only if the Federal Government
fails to do so
•
If the National Council has not passed a
Federal Finance Law the household is
managed according to the most recently
passed Federal Finance Law
•
The National Council may likewise vote on
temporary provisions by way of a Federal
Law
BUD GET S PEECH AN D FIRST READ IN G
FEDERAL GOVERNMENT
Minister of
Finance
PARLIAMENT (National Council)
Council of
Ministers
Plenary: Budget
Speech
Plenary: First
Reading
Expert Hearing
Budget Committee:
Debate
BPO
Analyses
Plenary: Second
and Third Reading
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BUD GET S PEECH
•
Parliamentary
proceedings start with
the budget speech by
the Federal Minister of
Finance
•
The budget speech is
a very high-profile
event; the whole
Federal Government
and the Federal
President are present
•
The speech presents the budget in broad political and economic terms as
well as highlighting specific initiatives
•
It generally lasts one hour; there is no immediate debate after the budget
speech
•
The period between the budget speech and the approval of the budget in
the National Council is approximately six weeks
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FIRST READ IN G
•
Traditionally, the first reading of the budget bill follows on the next
sitting day and has often the character of a very broad and general
debate on the Federal Government’s policies and performance
•
The entire day (10 or more hours) is devoted to deliberation of the
government’s budget proposal with sometimes more than 100 speakers
•
Members of Parliament either praise or criticise government’s proposal
in general terms or in a specific policy field
•
The Minister of Finance responds to these statements during the debate
or at the end of the day in general terms
•
At the conclusion of this debate the budget proposal is referred to the
Budget Committee for further scrutiny
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COMMITTEE PROCEED IN GS
FEDERAL GOVERNMENT
Minister of
Finance
PARLIAMENT (National Council)
Council of
Ministers
Plenary: Budget
Speech
Plenary: First
Reading
Expert Hearing
Budget Committee:
Debate
BPO
Analyses
Plenary: Second
and Third Reading
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COMMITTEE PROCEED IN GS – EXPERTS AN D MPS
•
Traditionally, the Budget Committee starts to consider the budget bill in
the week after the first reading
•
The Budget Committee will always hold a public hearing of experts
nominated by the parliamentary groups
•
In the course of the next – approx. 7 – sitting days, the committee holds
individual debates on each budget chapter (not public)
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COMMITTEE PROCEED IN GS – BUD GET A N ALYSIS
2014 OF THE PBO
• The Parliament Budget Office provides
the Budget Committee with a
comprehensive budget analyses
• This budget analyses has to be finished
until the beginning of the debate in the
Committee
• The Head of the Parliamentary Budget
office presents a short summary at the
beginning of the debate
• Additional information and summary
sheets are provided to facilitate a
budget overview
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COMMITTEE PROCEED IN GS – S CRUTIN Y AN D
A MEN D MEN TS
•
The parliamentary groups will – in addition to or as substitute for their
permanent members of the Budget Committee – nominate members with
expertise in the policy areas associated with each budget chapter
•
During these debates the Federal Minister of Finance and the responsible
Line Ministers have to be present
•
Each member can submit a limited number of short written questions to
the Federal Minister of Finance or to the Line Ministers that have to be
answered within four days
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•
The committee can amend
the budget bill in any way
•
In general only few budget
appropriations are amended
by Parliament
PLEN ARY: S ECON D AN D THIRD READ IN G
A PPROVAL OF THE BUD GET
FEDERAL GOVERNMENT
Minister of
Finance
PARLIAMENT (National Council)
Council of
Ministers
Plenary: Budget
Speech
Plenary: First
Reading
Expert Hearing
Budget Committee:
Debate
BPO
Analyses
Plenary: Second
and Third Reading
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PLEN ARY: S ECON D AN D
THIRD READ IN G
•
The report of the budget committee is considered in the plenary in the
second reading of the budget bill which will take 4 or 5 sitting days
•
Again, the debate will be structured along the budget chapters and will
very often have the character of a general political debate
•
Nearly all Members of Parliament take the floor
•
Members of Parliament usually move a lot of motions (resolutions)
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A PPROVAL OF THE BUD GET
•
Amendments of the budget bill will usually be moved by Members of
Parliament belonging to the parties in government
•
Usually, the National Council will vote on diverse Budget Accompanying
Acts. These change legislation in various matters with financial impact.
•
The budget is approved by the National Council by simple majority
•
The Federal Council will only be notified on the approval of the Federal
Budget Act by the National Council
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CHALLEN GES FOR PARLIAMEN T
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EN VISAGED RESULTS OF THE O RGAN IC BUD GET
LAW REFORM
• Improved steering capacities by performance information in budget
documents and accrual based budgeting and accounting
• More transparency on priorities
• Linkage of the decision on resources with envisaged results of government
spending
• More accountability for the results of government spending by performance
indicators and systematic internal evaluations
• Higher degree of budgetary discipline by a binding mid-term expenditure
framework
• More flexibility in the execution of the budget within fixed expenditure limits
• More incentives for an efficient use of resources due to the chance of
budget reserves
• More transparency on envisaged results of public activities and more
transparency on the status of public finances for citizens
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N EW AN D COMPLEX REGULATION S
• Completely new budgetary structure and performance budgeting changes
parliamentary possibilities of steering and controlling the budgetary process
• New budget rules confer additional powers to government and administration
• The new European fiscal governance framework with the European Semester
influences procedures and limits national budgetary scopes
• Federal budget reform envisages a central role for parliament
However,


Budget process is a highly complex mechanism
Large information asymmetries between government and parliament
Need to realign budget procedures and budget control in parliament
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N EW BUD GET S TRUCTURE
• New budget law confers former Parliament’s rights in budgetary matters to a
higher level of aggregation (70 global budgets instead of more than 1.000
individual budget lines)
• The new budget structure with global budgets and the operating statement
provides additional insights for Members of Parliament
• Higher aggregated budget allocations have an impact on the parliamentary
debate as it shall be more focused an the strategic approach instead of the
former detailed questions on minor budget allocations to specific budget lines
• Segregation of the discussion on the more strategic aspects of the MediumTerm Expenditure Framework (spring) and the yearly budget allocations
(autumn)
• Amendments are now only possible at a significantly higher level and require
highly developed technical skills
• Detailed information on budget allocations still needed for the political debate
Discussions on the adequate format of debate and documents
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PERFORMAN CE BUD GETIN G
•
With the new budget structure in addition to financial data Members of
Parliament were provided with performance information on the mid-term
outcome objectives envisaged by the Federal Ministries
•
Thus they had the possibility to discuss and question the strategic
approaches and political objectives in the Committee debate
•
Government presents a benchmark to measure performance
•
This caused a change in the way the budget was discussed
•
Performance budgeting and outcome orientation were acknowledged as a
major step forward but the current state was partly criticized
•
Some performance goals were underlined as extremely important, others were
considered as to general and not ambitious or concrete enough
a process has to be launched which should ultimately lead to a continuous
qualitative improvement of performance information
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A CCRUAL BUD GETIN G AN D A CCOUN TIN G
• Additional and new information on the consumption of resources for public
tasks
• Changes require experience and training in the accrual system
• Volume of information in some documents is doubled
• Major differences only in few budget chapters (e.g. interests for public debt)
because larger investments are outsourced and pension liabilities shown as
an off-balance item
• Cash perspective still dominant in the appropriation of budgets
• Government information may include different perspectives
• Differences between the cash and the accrual perspective are questioned
by some members of parliament especially in the monthly reports on the
execution of the budget
Practical use of additional information needs to be enhanced
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COMPLEXITY OF THE EUROPEAN FRAMEWORK
• Complex fiscal rules (e.g. structural balance) and different accounting concepts
require high technical knowledge
• Technical information in budget documents and reports of the Ministry of
Finance (e.g. on EMU-figures) must be interpreted
• European fiscal framework limits space for national fiscal policy
• Concepts of the European Union must be aligned with national fiscal policy
• European Semester requires adjustments in the national budget cycle
Need for additional technical information
National Parliament has to be more involved in the procedures with the
European Union
Harmonisation of dates and documents
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M AIN TAIN IN G THE O VERVIEW
• Extensive budget documents were considered as obstacles to a concise
overview as information was provided in a fragmented way and often was
partly not sufficiently explained in the supporting documentation
• A series of strategic documents outlines government objectives, planned
measures and performance indicators:
 Federal Finance Act with the explanatory Budget Statement
 Federal Medium-Term Expenditure Framework Act with the Strategy




Report Government Program
Austrian Stability Pact
Stability Program
National Reform Program
Consolidation Package
Fragmentation of information makes it difficult to get a sufficient
overview and to combine and cross-check documents
Members of Parliament insisted on missing relevant information and on
additional explanations
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A SSURIN G A CCOUN TABILITY
• More budgetary flexibility for government and administration requires additional
parliamentary control on the execution of the budget
• Reporting requirements to parliament were extended
• Format and significance of reports was questioned by the Parliamentary Budget
Office and the Budget Committee
• Obvious accounting mistakes in the transition period were questioned
• Reporting on achievement of performance goals had not yet started
• Debate on the Financial Statements should gain more importance and space
So far only limited experience with consequences of the changes in
respect of additional questions and the discharge of accounts
Implementation of the new system needs time and learning curves
in the Administration and in Parliament
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POSITIVE A SPECTS OF THE BUD GET LAW
REFORM
•
Task related global budgets improve the overview on total expenditure on a
policy area
•
Presentation of cash flows and consumption of resources in all budget
related documents
•
Balance sheet shows public assets and liabilities for the first time
•
Combination of finance and performance information provides additional
insight
•
Intensive discussion of performance information in the budget committee
and in the plenary
•
High significance of gender budgeting and gender equality in the
parliamentary debate
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POTEN TIAL FOR D EVELOPMEN T
•
Readability, practical use and layout of budget documents must be
improved
•
Significance and materiality of budgetary information must be enhanced
•
Number of task related global budgets should by increased or at least not
be reduced
•
Cross-sectorial areas (e.g. gender budgeting, climate protection, research
& development) must be better addressed
•
Cultural change needs additional efforts
•
Performance information must be further developed from a planning
instrument to a steering tool
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EVALUATION
OF THE BUD GET
LAW REFORM
Topics for a first internal evaluation
• Performance related information in the budget
• Impact assessment of new legislation
• Readability and significance of budgetary documents and reports
• Cost-benefit ratio of reports
• System of budgetary reserves
• Use of accrual budgeting and accounting
• Incorporation of the European Semester in the budget process
Some aspects of the organic budget law reform require
adjustments
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THAN K YOU FOR YOUR ATTEN TION
Contact:
Helmut Berger
Head of Parliamentary Budget Office
Parliament, A-1017 Wien, Dr. Karl Renner-Ring 3
Tel. +0043 1 40 110-2889; +0043 676 8900-2889
E-mail: [email protected]
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