Creating independent State institutions

One of the concerns that has arisen over the last decade is the ability of the public service to perform the role of an independent institution that is not influenced by political figures.

Increasingly, our institutions have had questions asked about their independence or at least their simple ability to appear so. The Central Statistical Office and their myriad problems, including proper funding to get appropriate “housing” to deliver timely and accurate data, is a case in point. If economic information is not believable or accepted by stakeholders, then the society has a problem.

Recently we have had several stakeholders publicly stating their lack of belief in the data published on unemployment and the rate of increase, or acceptance of the report on Household Budget Survey and the findings of poverty and inequality.

In democratic societies, such situations can be solved by a review of the procedures of the institution, the methodology used, and a consistency check of the data collected. In our case, and in a number of other countries, institutions that owe their good fortune to the magnanimity of politicians in power have now been viewed as not the optimal position. Several countries including the United Kingdom (UK) have adopted a very new approach to the provision of very critical but potentially contentious information sets.

The Office for Budget Responsibility (OBR) is such an advisory, non-departmental, public body that was established by the UK government to provide independent economic forecasts and ‘independent’ analysis of the public finances as background to the preparation of the UK budget.

It was officially set up in May 2010 following the then general election and was positioned on a statutory base by the Budget Responsibility and National Audit Act 2011. The main duties of the OBR are forecasts of the economy and public finances, evaluation of the Government’s performance against its fiscal target, sustainability and balance sheet analysis, evaluation of fiscal risks, scrutinising tax and welfare policy costing. There is an additional role of the office which is to advise if the stated policy of the Government is expected to meet its targets.

The idea of an independent institution has caught on in several countries. The OBR is one of a growing number of independent fiscal institutions (IFIs) that were set up around the world to deliver nonpartisan analysis of public finances and fiscal policies.

The International Monetary Fund (IMF) estimates that there were 39 national IFIs (or ‘fiscal councils’) in 36 countries in 2014. The number of IFIs increased significantly after the global financial crisis, and then again more recently when the membercountries of the Eurozone were required to have such bodies.

In 2014 the OECD recommended a set of principles for independent fiscal institutions covering local ownership, independence, mandate, resources, relationship with the legislature, access to information, transparency, communications and external evaluation.

We need to note that the size, role, and structure of individual IFIs can differ significantly from country to country. A review of the establishment of these IFIs reveals that their size, role and structure are dependent on whether the institution is linked more closely to the legislature or to the executive; whether it undertakes its own forecasts or merely comments on those of the government; whether it formally assesses fiscal rules; whether it provides policy advice; and whether it costs individual policy measures, and, if so, government measures only or the proposals of other legislators or political parties? Critically for us is to be seized with the idea and conceptualise the significant impact on governance, ethical behaviour (potential to reduce of corruption in the public space) and most importantly the possibility of getting data and economic forecasts and ‘independent’ analysis of the public finances from a source in which stakeholders have confidence.

How would we respond to an “independent” body providing, not only its independent forecast, but based on that forecast, recommend how much policy needs to be tightened or loosened to have a decent chance of meeting that goal? Here we imagine stakeholders would have a mechanism to engage the independent body privately if there are queries, and, in so doing, avoiding the spectacle of voicing loss of confidence. This certainly would add to confidence if such formal procedures accompany the establishment of an institution.

There will be nay-sayers who will state that this will not work in Trinidad and Tobago, that we like everything just so. Perhaps the real challenge is to find it within ourselves to raise to achieve more than we think we are capable.

We must strive to unleash the creativity with steely determination to create new avenues that will enhance governance and boost the confidence of our people in our institutions.