Helping lawmakers hold policies up to the light

Helping lawmakers hold policies up to the light

Perhaps there is no better time than now to address one of the fundamental flaws in the Thai democratic system.

We adopted the British parliamentary system although we lacked the strength of civil society to ensure proper separation of power between the executive and legislative branches. This fundamental flaw was indeed what ignited the large political demonstration in the first place, when the executive (the government) abused its power by passing the controversial blanket amnesty law apparently with the legislature unable or unwilling to withstand the decision.

If this analysis is correct, the natural and democratic way to resolve the situation is to strengthen the legislative branch to perform better. I would like to call this legislative reform, and argue that it is the most relevant reform of this time.

While inadequate checks and balances by the legislature over the executive can cause all kinds of political problems, as exemplified by the amnesty law above, this article will focus only on the spending of tax money by the executive.

In my earlier writing in this newspaper (the full content can be found at http://tdri.or.th/tdri-insight/pb17/) I introduced an initiative currently under way in setting up an independent budget analysis unit called the Thai Parliamentary Budget Office or Thai PBO.

The unit will help level the playing field between the legislative and executive branches in the decision over how tax money should be spent. Unlike the executive branch which is equipped with a wealth of data and analytical support from various governmental divisions, the legislative branch does not have its own division to help analyse budget bills.

The TPBO will help fill this gap and provide the legislature with the necessary fiscal and budgetary expertise needed to either challenge or endorse budgetary bills proposed by the cabinet. By design, the unit is to be accountable to the legislature or the parliament but independent of the executive.

In theory, a full-fledged parliamentary budget office (PBO) has three key functions. First, it offers an independent public revenue forecast over both the short- and long-term horizons. This exercise contributes to the parliamentary and public debates whether the executive’s forecasts are intentionally over-optimistic, which pave the way for the executive to set budget spending that might be too large, ending up eventually with unacceptable rises in public debt. Fortunately, Thailand seems to have no problem in this area, as past revenue forecasts tended to be in line with ex-post actual revenues.

The PBO’s second function is the cost of fiscal measures, when such measures involve relatively large but uncertain fiscal costs. In the past decade or so, Thai political parties were able to get away with winning elections through making and honouring expensive campaign promises, by obscuring the true cost of their promises.

The prime example is the ultra-expensive rice-pledging scheme, which was ill-conceived from the beginning.

Given the government’s withholding of accounting details, the scheme's cost becomes difficult to estimate and is open to manipulation. It is hard for parliamentary members to challenge the government as most of them lack the capacity to estimate the costs. A PBO can help fill this gap.

Given the resources, a Thai PBO would help MPs estimate the expected costs of the scheme under various assumptions. In this fashion, a PBO contributes to the cost of other populist policies. Since populist policies are expected to be prevalent in Thai politics for quite some time, knowing how much they cost to the public enables voters to make informed choices when they enter the ballot box.

The third function of a PBO is analysis of economic impacts of selected fiscal measures. This is a less traditional function, and usually only PBOs with sufficient resources perform this function on a regular basis.

Two examples of fiscal measures in Thailand are good candidates for this PBO function: the proposed construction of high-speed rails by the current government and the Thai Khemkhaeng policy under the Democrat-led government during 2008-2011.

Both programmes are claimed by the respective governments to offer economic benefits in excess of their fiscal costs. Both suffer from widespread suspicion over their true economic values. A PBO can offer its own investigations of the economic benefits of such programmes.

In summary, a Thai PBO will contribute greatly to high-quality parliamentary debates on fiscal costs. An important by-product of such debates is the public will also learn how to evaluate government policies. This will help speed up the process of vote-and-learn where democratic voters can reward and punish political parties based on their long-term performance.

In the next article, I will lay out more details how to actually exploit the current atmosphere of reform in pushing forward the setting up of a permanent PBO in Thailand.


Somchai Jitsuchon is research director of the Thailand Development Research Institute.

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