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Parliaments in the age of austerity

Parliaments in the age of austerity

April 24th 2015

                                                                    George Kunnath 

Westminster Foundation for Democracy plays a central role in strengthening overseas parliaments - including support to parliamentarians in navigating the challenging terrain of fiscal management.  WFD's George Kunnath says that the age of austerity highlights the essential role that parliaments can play in exercising democratic accountability, oversight and scrutiny in the use of public funds.  

  Parliaments in the age of austerity

 by George Kunnath, WFD's head of programmes

Parliaments should be the focal point for debates and policy dialogue on austerity.  A brief glance at the headlines shows that the British election campaign is dominated by public spending cuts and discussion on public spending and the deficit – the issues that could determine which party comes to power and which policies the UK will follow over the next five years.  In times of global recession the Greek crisis demonstrates not only the complexity for governments in controlling budget deficits and gaining lenders’ confidence, but also the key role that parliaments play. 

Austerity is the state of reduced spending and increased frugality in the financial sector.  Governments introduce austerity measures to reduce expenditures in an attempt to shrink growing budget deficits. The increased level of borrowing and slowing down of economic growth due to the recession have resulted in a widening of the gap between the budget deficit and national revenues. Simply put you’re not earning enough to make the payment on your mortgage. 

                                                               WFD's Western Balkans team 

Increasingly in Eastern Europe WFD is being asked to assist parliaments in the complex environment of economics, finance and European integration. Many of the countries are forced to develop austerity measures to reduce public spending while at the same time improving their institutions to the required European Union standards. Here the role of parliaments is becoming more critical for the following reasons:

1.       The formation of government:  in parliamentary democracies the critical question arises from whether parliament can form a majority government to lead the nation during the difficult times of austerity. Austerity requires courage and in some ways it’s easier to be in opposition because an austerity government is never going to be the good guy. Cuts imply hurt and pain. Some may lose their job security and social benefits, others face higher taxes while receiving fewer services.

2.       Secondly citizens expect their parliaments to protect them from the adverse effects of austerity - including instability in times of adversity.

The key challenge for any parliament during periods of fiscal constraint is to retain people's trust.  It can do this in the following ways:  

1.       By example.  All good leaders lead from the front. Most parliaments agree to cuts in their own budgets to demonstrate that the institution is not exempt from reform during hard times.  A demonstration of solidarity. The UK Parliament and the devolved assemblies have all taken similar actions. However the Independent Parliamentary Standards Authority decision to award MPs an 11% salary increase in 2015 while the rest of the civil service experience a 1% increase upset much of the public because the perception created was that the Parliament and politicians play by a different set of rules and undermines the building of trust.

2.       Providing effective oversight. It’s one thing for the parliament to pass the budget, but a responsible parliament needs to oversee it implementation and exercise rigorous scrutiny.

Legislative strengthening partners like WFD can develop programmes that help parliaments build trust with their citizens. This includes focusing on developing budget analysis skills and assisting committees to ask the right questions and engage with civil society organisations, public and private sectors and citizens. Development partners should also realise that sustainability in austerity is about helping the parliament do more with less. Parliamentary programmes should be appropriately funded not over or under funded.

Some of the way that parliamentary programmes can assist is by:

·         Helping parliaments reduce the amount of outsourced research and expertise by developing the in-house research and analytical capacity. Strengthening parliamentary research units or budget offices are good areas to start work.

·         Working more closely with CSOs that have this capacity to act as 'watch dogs' and make submissions to committee inquiries.  Creating advisory boards for committees with CSO representatives where the standing orders of some parliaments permit this can be effective. 

WFD’s Western Balkans programme demonstrates innovations in these areas through its Western Balkans Network of Parliamentary Committees of Economy, Finance and European Integration. The Western Balkans programme also is currently helping the Serbian Parliament establish a parliamentary budget office modelled on the Scottish Parliament’s Financial Scrutiny Unit. The programme assist parliamentary committees conduct oversight of: 

-       The use of EU Instrument for Pre-Accession (IPA) Funds by the executive;

-       Progress towards a common energy market;

-       The reduction of state aid and promotion of foreign direct investment;

-       Budgets and state audit institutions reports.