Into Open Daylight: Lessons on taxation and the state from 18th century France

Into Open Daylight: Lessons on taxation and the state from 18th century France

…The first steps to be taken by a Minister of the Finances, in the career which he has to run, would be influenced by the obligation he would lie under of bringing into open daylight the whole of his administration. Darkness and obscurity are favourable to indolence; public disclosure of our conduct, on the other hand, can only become an honour and a recompence to us, in proportion as we have felt the importance of our duties, and have determinately fulfilled them. Such a statement of accounts might likewise put every person who is concerned in your Majesty’s counsels, in a situation to study and to attend to the state of the Finances; a species of knowledge important in itself, and having either connection with, or relation to, all deliberations of moment. -Jacques Necker, Minister of Finance, France, Compte Rendu, 1781

The end of the ancién regime* in France was brought about by numerous factors. At least one of the most important was the monarchy’s handling of public finances and broad public demands for reform. The challenges of the era were wound up with debates over the role of the state in the economy, with laissez-faire economists on one side and mercantilists and statists on the other.

These debates were not academic: France was engaged in ruinous wars around the globe in its contest for dominance with Britain, while also facing difficult economic conditions at home. Some of the latter were induced by reforms that threatened traditional interests, and others by bad weather and policies that undermined food security. Revolutionary fervor was fed by high taxation and inflation, especially soaring bread prices, along with the perceived indifference of elites to the needs of the people, distilled in the famous if apocryphal words of Marie Antoinette: “Let them eat cake!”

In these conditions, it may seem remarkable that Louis XVI’s finance minister, Jacques Necker, managed to achieve a kind of “rock star” fame during his years of service. Few modern ministers of finance can claim this kind of stature. He served several times in the government, including in the fateful last term of 1788. The king felt compelled to bring him back into government that year after dismissing him, due to Necker’s enormous popularity.

An early visionary on budget transparency

As the quote that opens this post makes clear, Necker also understood his role as a public communicator in “rock star” terms. Publicity, he argued, is a corrective, a mechanism for building support for difficult choices. In a particularly modern vein, he argued that opening up the government’s financial accounts would build public confidence in the regime. The Swiss banker also apparently believed that more transparency would improve the government’s credit position with investors.

Necker not only published the first royal financial accounts (the Compte Rendu), perhaps the world’s original take on a “citizens budget,” but also sought to institutionalize the practice. His support for transparency originated in his view of England, which he believed enjoyed “great credit” because of the publicity given to the government’s public finances, and the annual presentation of the government financial accounts to parliament. Indeed, it is difficult to find any modern argument for fiscal transparency that was not in some measure anticipated by Necker’s Compte Rendu.

It may also seem incredible today, but France’s published financial accounts of 1781 was a bestseller and was translated into multiple languages. Author Robert Harris estimates it was more widely read than Rousseau’s Social Contract, though of course it did not do as well over the longue durée.

Widespread concern for fair taxation

This is one indication of the centrality of taxation and expenditure at the time. Necker understood that 18th century French citizens were increasingly concerned about the fair administration of taxes and willing to mobilize around the issue. The overwhelming importance of fair taxation across all social classes is clear if we review the most well-known formal protests (remonstrances) of the period leading up to the revolution, as well as the cahiers de doléances of 1789 (the “grievance books” compiled by various groups across the country in the year the revolution began.)

In Blois, a city in central France, even the nobility noted in their cahier:

A tax is a partition of property. This partition ought not to be otherwise than voluntary; in any other case the rights of property are violated: Hence it is the indefeasible and inalienable right of the nation to consent to its taxes. According to this principle, which has been solemnly recognized by the king, no tax, real or personal, direct or indirect, nor any contribution whatsoever, under whatsoever name or form, may be established except with the consent and free and voluntary approval of the nation.

These were increasingly common beliefs that eventually found expression in the “Declaration of the Rights of Man and the Citizen,” the seminal cri de coeur of the revolution, which had this to say about taxes, transparency, and fiscal accountability:

  • A common contribution is essential for the maintenance of the public forces and for the cost of administration. This should be equitably distributed among all the citizens in proportion to their means.
  • All the citizens have a right to decide, either personally or by their representatives, as to the necessity of the public contribution; to grant this freely; to know to what uses it is put; and to fix the proportion, the mode of assessment and of collection and the duration of the taxes.
  • Society has the right to require of every public agent an account of his administration.

These demands for tax reform (as well as participation and accountability) were motivated by the unfairness of the existing system, manifest in the fact that many members of the nobility and others who could pay for the privilege were exempted from tax. At the same time, punitive taxes on salt and other taxes fell heavily on ordinary people.

We know how it all ended; the failure to reform public finances to assure greater transparency, public participation, and equity led to the eventual overthrow of the Bourbon monarchy in what we now call the French Revolution. This may be interpreted as a cautionary tale about the demise of states that do not address a growing clamor for fairness and public participation in public finances.

However, the more nuanced lesson is the construction of a new idea of citizenship that ultimately made revolution possible. This is the inspiration for the title of Simon Schama’s epic chronicle of the French Revolution, “Citizens,” from which I have drawn much of the framing here. The book is a complex tale of culture, politics, economics, and the spread of ideas among a highly literate population. (Schama claims literacy in 18th century France exceeded that in 20th century America.) A critical facet of the debates during this period was the erosion of the notion of the French as defined by membership in rigid social classes, exemplified by France’s “estates,” (nobility, clergy and the rest) and the rise of an ideal of popular sovereignty—a more direct relationship between citizens and the state.

States, citizens and taxation

Note how taxes, which we too often dismiss as technical and dull, were central to the dynamism of the era, the undoing of the monarchy, the rise of new ideas regarding citizenship, broad public mobilization, and—in Schama’s memorable phrasing—the “improvisation of a nation.” To tax is to define the ambit of the state—its roles, its responsibilities, and the reach and limits of its authority vis-à-vis the citizenry.

Just as taxation is therefore not dry and technical, but alive with the fundamental issues of the day, so too is this particular history, which has been reinvented in numerous tax protests over the years in France—most recently by the gilets jaunes (“yellow vests”). The spirit of tax resistance that animated the yellow vests in 2018 was in part about the unfairness of the modern tax system.

As scholar Alexis Spire has shown, the French tax system continues to permit the wealthy to dodge taxes, while enforcing the law more strictly for the middle and working classes. The 2018 resistance in France echoed the cries of the 18th century as the yellow vests denounced “King Macron” and brought revolutionary dress back into style.  Macron responded with a “grand débat” reminiscent of the great regional debates in the eighteenth century, and even the cahiers de doléances were revived.

As Faulkner quipped, “The past lives on. It’s not even past.” If we have lost sight of the urgency of taxation as core to our agenda for governance and development, there is no time like the present to rediscover it.

* The ancien régime was the political and social system of the kingdom of France from the late Middle Ages until the French Revolution in 1789.


The Budget Bibliophile’s Bookshelf: An International Human Rights Day Reflection on Public Finance, Economic Policy, and Human Rights

The Budget Bibliophile’s Bookshelf: An International Human Rights Day Reflection on Public Finance, Economic Policy, and Human Rights

Nolan, A., R. O’Connell and C. Harvey (eds.) (2013). Human Rights and Public Finance. Budgets and the Promotion of Economic and Social Rights. Portland, OR: Hart Publishing.

Nolan, A., R. O’Connell and C. Harvey (eds.) (2013). Human Rights and Public Finance. Budgets and the Promotion of Economic and Social Rights. Portland, OR: Hart Publishing.

Balakrishnan, R. and D. Elson (eds.) (2011). Economic Policy and Human Rights. Holding Governments to Account. London and New York: Zed Books.

The words ‘public finance’ and ‘government budget’ tend to call to mind images of men in grey suits, large books full of numbers and a sense of boredom. Yet, raising and spending public resources is among the most important and influential functions that governments play, and one that has important consequences on people’s well-being, including how much tax they pay and what services they get. In general, public debates around public finance and government budgets focus on dry arguments about levels of public debt and fiscal deficits, the possible reactions of financial markets to government policies, and the impact that such policies will have on economic growth. It’s no mystery, then, that regular citizens are usually not active and engaged in such debates, despite the impact that choices made during the budget process can have on their everyday lives. Just think of the austerity policies adopted by – or imposed on – a large number of governments in the aftermath of the global financial crisis that started about a decade ago, and their impact on levels of poverty and inequality.

The two books reviewed here were published a few years ago, but I decided to review them now anyway because they carry an important message. They argue that a different world is possible, in which public finance and government budgets are instead inspired by and aimed at the realization of human rights for all. They take existing international human rights laws and instruments, which have been approved and ratified by most governments, and show how the principles that they are based on – and the obligations that they create for governments – can be used to guide fiscal policy decisions. In particular, they draw on specific provisions in the International Covenant on Economic, Social and Cultural Rights (ICESCR) which have a direct bearing on the responsibilities of governments to promote people’s well-being in all its various dimensions.

Both edited volumes started as collaborative projects, bringing together academics, practitioners and advocates from different countries and different backgrounds, and attempting to bridge the gap between human rights approaches based on the disciplines of law and economics. In fact, while traditionally human rights work has mostly been a field for lawyers, in recent years an increasing number of progressive economists have started using human rights approaches and instruments to construct frameworks for economic and fiscal policy decisions that are alternative to the ones put forward by the predominant neoliberal one.

Human Rights and Public Finance” was published two years later than “Economic Policy and Human Rights”, but I think it provides a stronger discussion of some of the theoretical and conceptual underpinnings. In fact, one of its most important contributions in my view is setting out in Part 1 of the book (Chapter 1-4) the foundations for considering the policy and budgetary implications of upholding human rights. For example, Chapter 1 clarifies what it means in practice for governments to use ‘maximum available resources’ – an expression used in Article 2(1) of the ICESCR – for the progressive realization of

Balakrishnan, R. and D. Elson (eds.) (2011). Economic Policy and Human Rights. Holding Governments to Account. London and New York: Zed Books.

human rights, based on the concept of ‘fiscal and monetary space’ and arguing that governments could do a lot more than usually recognized to generate additional resources. Chapter 2 outlines some of the key elements of human rights-based budget analysis, providing examples from two challenging areas, namely preventing backsliding in human rights realization through the use of ‘retrogressive measures’ – for example in times of crisis – and dealing with privatization and other ways to involve the private sector in the delivery of public services. Chapter 3 importantly argues for the need to open up budgetary decision-making to citizen participation and to contestation and debate, if budgets are to be an effective instrument for human rights realization. And Chapter 4 focuses on the role that taxation can play in human rights promotion, analyzing its functions in resourcing investment, addressing inequality and promoting accountability and responsive government.

Other parts of the book address some of the governance challenges of linking human rights and public finance, and some examples of applying the conceptual framework to specific groups like children and women and to social housing in Ireland and spending cuts in the UK.

Economic Policy and Human Rights” is simpler in its structure and slightly narrower in its purpose. It looks at two countries (USA and Mexico) and at five policy areas: fiscal and monetary policies; public expenditure; taxation; trade policy; and pension reform. For each area, and in each country, chapter authors assess government policies against some criteria drawn from the literature and international economic and social rights instruments, and presented in the introductory chapter. These are: (a) progressive realization of human rights; (b) the use of ‘maximum available resources’; (c) non-retrogression; (d) the obligation of states to guarantee minimum essential levels of satisfaction of each right; (e) non-discrimination against specific groups or categories of people; and (f) the promotion of accountability, participation and transparency in the formulation and implementation of government policies.

The empirical chapters provide some pretty stark evidence of the limited efforts governments undertake to guarantee the realization of their people’s economic and social rights – rights that they themselves supported and ratified in international treaties and conventions. For example, fiscal policies are shown to care much more about fiscal deficits and debt repayments than about social spending, and to favor richer strata of the population. Central banks in both countries have prioritized keeping inflation very low – lower than probably justified in economic terms – over stimulating the creation of more jobs. The chapters on taxation also show how the two governments under scrutiny tend to tax little (compared to similar countries), do so in ways that often favor rich individuals and corporations, and allow for significant tax evasion and avoidance to go undetected and unpunished. In most areas, while some level of transparency exists, opportunities for participation are few, and existing accountability mechanisms are less effective than desired.

In summary, I think that the two books really helped break new ground in linking topics that are often treated separately, and do so in ways that provide interesting conceptual discussions and empirical evidence on matters that are of the utmost importance in thinking about government policies and their impact on people’s lives. They question the predominant paradigm underpinning fiscal and economic policies across many countries, and provide an alternative vision that at least deserves to be looked at and discussed.

Two important issues seem to be mostly missing from the two books. The first one is the lack of a clear analysis of why most governments have not yet incorporated human rights concerns in their fiscal policy decision making processes, despite the fact that they have ratified the relevant treaties and conventions decades ago. Considering and tackling the technical and political challenges that prevent governments from taking a more direct and concerted approach in the realization of economic and social rights could have helped generate a better understanding of how to turn the authors’ vision into practice. The second issue relates to addressing the challenge of assessing trade-offs and making choices in a world of limited resources. Human rights are universal and indivisible, but what if even ‘maximum available resources’ are insufficient? Which rights should be given priority? And which other areas of public spending should be the first ones to be singled out for reductions and reallocations?

In any case, these two volumes introduce ideas and debates that deserve to be further researched and brought into the public finance mainstream, if we are to ensure that public resources are used for the public good.

No Taxation Without . . . Notice and Comment

No Taxation Without . . . Notice and Comment

Over the past several years, the International Budget Partnership (IBP) has increasingly emphasized the importance of governments providing reasons for their budget decisions and actions (here, here and here). Government reasons sit at the nexus of two of our core beliefs about open budgets: that governments must be transparent, and that they must engage the public meaningfully in their budget choices. When government agencies provide public reasons, they are legitimating public debate about those choices and signaling a willingness to accept criticism and revisions. This is the essence of democracy.

In part, standards for public reasons about government decisions are set by law and by the courts. In the United States, the Administrative Procedures Act (APA), and subsequent case law, require all government agencies to follow certain minimum practices for providing reasons for their actions, and for engaging the public in decision-making. Falling short of the APA is considered “arbitrary and capricious” behavior by government and can invite litigation.

Failure to follow these rules has been at stake in important court cases against the Trump administration in the last few years, on issues as varied as the environment, the census, immigration and health insurance (see for example the U.S. Census case, and the Keystone Pipeline case). Other countries ranging from Germany, Kenya, Hong Kong, and South Africa also have legislation and/or case law that lays out similar requirements for agency administrative action.

While these standards are usually not thought to have much to do with budgeting, they do in fact relate to rules and regulations issued by national treasuries or ministries of finance. These kinds of rules are often not budgetary in nature, but they can be. For instance, rules for calculating tax liabilities have a direct bearing on revenue collection and therefore on the size of the annual budget.

It so happens that this has emerged as an evolving area within administrative law in just the last decade in the United States, with courts in recent years beginning to adopt a stricter review of the U.S. Treasury’s tax regulations. An important source of arbitrary action by the U.S. Treasury has been the use of temporary rules that are legally binding and that are issued either without any notice and comment period, or with a request for comment issued at the same time as the binding temporary rule. A “notice and comment period” is one mechanism of inviting the public to offer its views on a new government policy before it is introduced. By failing to invite comment, or by only inviting comment when a rule is put into effect, the Treasury denies the public a chance to comment and tips the scales in favor of acceptance of the rule.

Treasury has typically claimed that much of its rulemaking is exempt from the APA, allowing it to avoid notice and comment rules, but it has not normally justified the need for such exclusions. One estimate suggests that the U.S. Treasury has eschewed standard APA procedure in about 40 percent of recent rulemaking. The failure to follow the APA, and to provide reasons for doing so, ultimately promotes arbitrary and undemocratic behavior.

Things are beginning to change.  In 2011, the U.S. Supreme Court found that tax issues should be treated like other regulatory issues, in a case that the Treasury Department actually won (requiring medical residents to pay taxes). This decision made it clear that Treasury regulations should fall under the APA and standard doctrines of deference.

Following this precedent, in 2015, the courts duly overturned a Treasury regulation under the “hard look” doctrine, which is a type of scrutiny that is routinely applied to other federal agencies. The regulation in question concerned the taxability of compensation issued in the form of stock. The courts found that Treasury failed to identify a factual and reasoned basis for taxing such compensation.

Then again in 2017, the courts overturned another Treasury rule, this time on the tax treatment for stock in so-called “inversions,” where large US companies merge with smaller foreign companies and shift their residence to the foreign country (often to avoid taxes, as discussed briefly in a previous blog). In this case, the courts found that Treasury acted within its statute and reasonably. However, it also found that its practice of issuing temporary binding rules without prior notice and comment periods violated the standards for public participation in the APA.

Interestingly, in 2019, the cumulative weight of these decisions spurred the U.S. Treasury to issue a public statement affirming its commitment to follow the APA. Among other promises, the Treasury recognized the need to be more forthcoming about the reasons for issuing temporary rules with immediate effect: “the Treasury Department and the IRS will make their reasons for issuing such immediately-effective regulations clear by including a statement of good cause in the preamble.”

This brief history indicates the ways in which broadly accepted legal standards for public justification across government can and increasingly do apply to fiscal issues. While the scope for the application of such standards to expenditure may be less clear, there is a considerable amount of expenditure policy that is also made through agency action, such as determination of eligibility for social programs. Indeed, the courts specifically took on the expenditure issue in a recent APA case on Medicaid (a public health insurance program), finding (among other things) that cost savings alone would not constitute an adequate public justification for a government agency decision to change eligibility rules.

The writing is on the wall: we are going to see more and more government action subjected to scrutiny on grounds of reasonableness and participation in line with evolving legal standards. This is good news for budget advocates, although much work remains to be done to set reasonable standards for what counts as adequate justification and what amounts to sufficient public participation.

Under Pressure:  Navigating the Politics of Health (Reflections from COPASAH Global Symposium 2019)

Under Pressure: Navigating the Politics of Health (Reflections from COPASAH Global Symposium 2019)

As civic space shrinks around the world, how can those working with marginalized communities navigate complex systems of power and exclusion?  This question was the subject of much debate at the first Global Symposium of The Community of Practice on Accountability and Social Action in Health (COPASAH), where practitioners, activists, community members and academics gathered to discuss issues of citizenship, governance and accountability in health.

IBP played a key role in the symposium, helping shape the framework as well as leading two sessions on strategic approaches to address challenges in fiscal governance and health.  To ground the conversation, IBP partners working on health issues from India (SATHI), Kenya (CEDC) and Nigeria (JDPC) – part of our Strengthening Public Accountability for Resources and Knowledge (SPARK) program – were able to add their real-world experiences.

IBP was also an active listener throughout the event; we identified the following key themes and takeaways:

Transforming the Politics of Accountability

Pre-symposium sessions focused on India, specifically:  Nikhil Dey and Aruna Roy (MKSS) and several other Indian activists and academics discussed the potential trajectory of social change processes as civic space closes not only in India but across the world.

The conversation emphasized citizen mobilization as a key driver of progress in India.  Particularly for marginalized groups, collective action has made problems visible and, in some cases, generated a meaningful response from the political system.  Additionally, the institutionalization of Right to Information, legal recourse, and public works programs like NREGA contribute to sustainable reform by creating pathways for citizens to advocate for rights and entitlements.

Beyond Citizenship

We must be careful about what we mean when we talk about “citizens” and “citizenship”. The concept of “citizenship” reinforces the entitlements of individuals, with regards to health and other social and economic rights.  This notion, however, excludes individuals and groups without pathways to claiming citizenship in any given state. Due to the often systematic denial of legal rights to stateless groups, there is a need to deepen global discussions on protecting the rights of these populations to health and other services.

Thinking and Working in (Eco)Systems

When thinking about the politics of accountability, we must be mindful of the systems that enable or inhibit its realization.  This is particularly true with respect to the intersection of service delivery and accountable governance, and even more so with the recent incursion of poorly regulated private sector providers in the delivery of health services, which has created an accountability vacuum in healthcare delivery.  An approach that looks more broadly at the accountability ecosystem and how it relates to health systems will allow reformers to identify and focus on actors, spaces, and mechanisms that can shift towards more inclusive practices.

Implications for Civil Society

There are no simple or direct ‘solutions’ to achieve accountability.  We must accept the realities of a longer journey of working to strengthen and democratize public finance, service delivery, accountability systems, and norms and discourses.  If systems function the way they do because of the current balance of power, then the shifting of power should be central to our approaches.  Building countervailing power through collective mobilizing, organizing, and engaging is an essential way of providing marginalized groups (and most citizens, more broadly) the political agency to influence decisions and ensure those with authority and power are held to account.  While civil society must root our work in people and communities, it needs to have an eye for building broad-based movements of actors across sectors and disciplines.

CSOs can play a role in bolstering and knitting together often disparate instances of collective action.  One example could be the bringing together of communities and front-line health service providers, who may share common challenges resulting from weaknesses and accountability gaps in the broader health system.  It is equally important to channel that action and engagement through strategic approaches.

The implication for CSOs is to fill the role of convener, connector and critical friend to citizens, civic actors and government reformers.  We must recognize that “measurable” changes – those that can be counted and put in a report – are ultimately not shifting the systems producing inequitable outcomes.

In addition, we must recognize that social accountability work requires enormous investments from those participating. Furthermore, individuals who work in these spaces may face harassment and abuse from powerful interests.  Civil society, organizers and practitioners need to incorporate this reality into their strategies and activities.

Learning by Doing (and Sharing)

There is a broader need for a learning agenda that helps untangle complex dynamics and unpack strategic options available to progressive reformers.  While the debate around the use of Randomized Control Trials in accountability spaces rages on, rigorous, participatory approaches can, if deployed more often, address our collective learning needs.  This is part of the agenda for SPARK, which is supporting action research work (in partnership with IDS Sussex and the Accountability Research Center).  Further, platforms like COPASAH can continue to provide space for sense-making and interpretation of evidence, experiences, and new ideas.

The Big Picture

As we move forward, we must be mindful of the temptation to celebrate quick-win reforms without also paying attention to whether the processes that deliver them are inclusive and participatory.  Amitabh Behar, the head of Oxfam India, cautioned that civil society shouldn’t abandon a focus on democracy as civic space shrinks and populist and authoritarian politics grow. We must continue to prioritize working – at the margins – to democratize spaces, strengthen accountability, and build citizen collective action, and strive toward the equitable outcomes we know are possible.


*All authors are staff at the International Budget Partnership:  Brendan Halloran is Head of Strategy & Learning; Samir Khan is a Program Officer with the Strategy & Learning team; Kenny Oleru is a Program Officer with the SPARK team in Nigeria; Mokeira Nyagaka is a Research Analyst & Trainer with IBP-Kenya.


Garbage In, Garbage Out: How performance information in budgets is failing us, and what we can do about it

Garbage In, Garbage Out: How performance information in budgets is failing us, and what we can do about it

When I was in Kenya in 2012, I remember a sense of excitement about the government’s plan to introduce program budgeting.  This is not the kind of thing that elicits heart flutters outside of the public finance community, but it can certainly quicken the pulse of some of our PFM colleagues.

To be honest, I was not sure that program budgeting was going to work in Kenya, but I thought that it would be a step toward achieving two things the country’s budget process badly needed.

First, it would force the government to explain itself.  A program budget implies at least a narrative around the budget that tries to justify the allocation of funds to specific areas.  It is hard for citizens (and even legislators) to engage in reasoned debates with government about a bunch of tables without a clear sense of what the government is trying to do with the money represented by the figures in those tables.

Secondly, it could prompt a more rigorous attempt to define “what the government is actually trying to do” in terms of concrete outputs.  Program budgeting demands at least some attempt to measure, with indicators and targets, what government is producing with the money it receives.  While imperfect, such performance information is also essential to any good conversation about budget priorities.

Although program budgeting in Kenya did amount to a step forward in both these ways, it was also riddled with inconsistencies.  Programs were constantly in flux, outputs and objectives were hard to understand or track, and performance indicators lacked baselines and seemed to change in random ways from one budget year to the next.  I left Kenya at the start of 2018, but these challenges continue, as documented in analysis carried out as part of our budget credibility initiative by the Institute of Public Finance (IPF-Kenya).

Program budgeting, and more broadly the inclusion of performance information in budgets, is not unique to Kenya.  Versions of these reforms have been tried around the globe, from the rich countries of the OECD, to a wide array of middle and lower-income countries in Latin America, Africa and Asia.  Recent estimates suggest as many as 80 percent of African countries are in some stage of program budgeting reform.

In a paper prepared with the World Health Organization last year, we demonstrated a number of challenges facing countries that have tried to implement program budgeting with a focus on the health sector.  This work raises concerns about the quality and consistency of the performance information, and particularly performance indicators, that are included in government health budgets.  We highlighted this issue in our four country case studies from Brazil, Indonesia, Mexico and the Philippines.

But the more I have looked at the quality of performance information around the world, across different sectors and countries, the more depressed I become.  It is simply impossible in many countries to make any sense of the performance information in the budget, which regularly contradicts information in other sources, or cannot be linked to spending information due to inconsistencies in names, indicators, targets, baselines, and so on.

Our recent assessment of irrigation budgets in five countries confirmed these findings in Kenya and Brazil, but also in Albania, the Dominican Republic and Mozambique.  To take just one example from the Dominican Republic, a target for water flow varied across four different documents from 716.76 m3/s in the 2013-2017 sector agency’s strategic plan, to 207.75 m3/s in the original version of the national multi-year plan, to 277.25 m3/s in the sector agency’s accountability report, and 407.75 m3/s in the 2018 update to the national multi-year plan.  What is one to do with such numbers?

Partner work on budget credibility in some of the countries already mentioned, but also Argentina and Ukraine, found gaps in linking spending to performance data, even when both kinds of information were available.  We find that nonfinancial targets are met when budgets are not spent, that targets are not met when budgets are spent, and that at times targets are exceeded or underdelivered by very substantial margins even when spending is not radically different from the budget.  What should we make of all of this?  At a minimum, my sense is that performance data alone without narrative justification from government that explains why targets are met or not is simply not that useful.

I should clarify that not all countries that have performance information have program budgets; that is really beside the point.  All countries that include performance information in their budgets are supposedly including it to improve the discussion about budget priorities and implementation between executives, legislatures and the public.  There is no other reason to include such information in the budget, whatever form of budget it is.

Yes, performance information is also used for internal management purposes in government, but internal management demands a wider and somewhat different set of performance information that need not all be published.  Published information is public information, and that is who it is for.

So, what should we make of this?  Scores of countries introduce new information that holds the promise of shifting the budget conversation toward outputs and outcomes, better linking money to services – and most of it is incomprehensible, inconsistent, or totally useless.

One interpretation is that the introduction of performance information in budgets is driven by international technical assistance, and takes the form of “isomorphic mimicry”: the fancy name for copying other people so you look good, while imitating principally the form and not the function of seemingly successful innovations.  Whether this is so or not, there is no question that these reforms are almost entirely technical in nature, driven from the top by budget offices with little public input.  There is therefore a fundamental mismatch between the supply and the demand for reform, which leads to bells and whistles with no one to ring or blow them, a point I made about cutting edge public finance reforms in Kenya some years ago.

If we think about the performance information in the budget as primarily speaking to the public, then it should be the case that this information actually addresses public concerns.  Otherwise, there is unlikely to be all that much interest in it.  And if there is no interest in it, how does it serve the purpose of improving the conversation about the budget?  No one owns the indicators, no one is accountable for meeting the targets…and no one cares.

It follows that if performance information is going to make any difference, it should be selected and decided upon through a public process.  If what this performance information measures actually matters to the public, there is likely to be more ownership all around, including from legislative representatives who should be reviewing this data whenever they are deliberating about the budget, and from the media, that should be reporting on it.

Is seeking public input into the programs and performance indicators that government agencies use pie in the sky?  The Mexican government did not think so.  In 2016, the Mexican finance ministry led a government-wide public consultation on existing indicators. Citizens were encouraged to submit comments on the current performance framework. The government received over 200 submissions which informed discussions with agencies about revising their indicators.

If performance information in budgets is going to be more than a shiny gewgaw, we will need much more of this kind of citizen input around the world.  Otherwise, the practice of incorporation of such information into the budget will be viewed as a cynical ploy to appear transparent and accountable, while avoiding both.  And that will likely lead governments to trash the whole experiment.  Garbage in, garbage out, indeed.