Creation of PBO would show India’s maturation as a democracy: Sahir Khan
Canadian public servant Sahir Khan served over five years from 2008 onward as the country’s first Assistant Parliamentary Budget Officer. Sahir has provided budgetary and financial analysis on various aspects of public finance in Canada. He advocates for transparency in public budgets by strengthening the legislature through establishing a Parliamentary Budget Office (PBO) which is responsible for independent assessment of proposed public programmes and financial forecasts.
Following the stint as a deputy to Canada’s first Parliamentary Budget Official Kevin Page (and a veteran government fiscal official within Canada’s Privy Council Office as Cabinet Secretary, Ministry of Finance and Treasury Board), he co-founded the Institute of Fiscal Studies and Democracy at the Ottawa University, a think tank described as a place “sitting at the nexus of public finance and state institutions”, where he currently works as Executive Vice-President.
Sahir has previously also served at the Privy Council Office, where he provided the Prime Minister with analysis and advice on budget, tax and expenditure management issues.
Since the public finance executive has been instrumental in various financial analyses for both executive and legislative branches of the Canadian Government, he says that it is “interesting time for India to have a PBO led by a strong leader”. In the wake of the Indian General Elections 2019, Sahir speaks to Delhi Post on why Independent Fiscal Institutions (IFIs) including a PBO can bring back some of the “lost credibility of institutions” and should “definitely” be listed in the manifestos of political parties.
Delhi Post: As the former Assistant Parliamentary Budget Official in Canada and a public finance expert, how significant do you think is the establishment of a Parliamentary Budget Office?
Sahir Khan: PBOs are part of a family of organisations often referred to as Independent Fiscal Institutions (IFI). These IFIs can take the form of fiscal councils that focus on the government’s compliance with fiscal rules and are accountable to the executive branch or PBOs that are accountable to the legislative branch and typically have broader mandates to include independent fiscal and economic forecasting, costing, budget and appropriations analysis and party manifesto certification/costing. Regardless of the type of IFI, these organisations typically release their reports to the public.
Globally, there are about 40 IFIs; a number that is growing, with Africa leading the way. These IFIs belong to either the OECD (Organisation for Economic Co-operation and Development) or World Bank (GN-PBO) networks of peer organisations that help to set operating principles and practice standards while supporting each other in a professional capacity.
Unlike supreme audit institutions that tends to look backwards on fiscal matters (and with a lag typically associated with the audit cycle), PBOs can provide parliamentarians with timely in-year fiscal and economic analysis and decision-support that is delivered while a bill, policy or procurement is still being debated in committee or either chamber of the legislature.
Delhi Post: Can you throw light on the achievements and challenges of Canada’s PBO-DPB as a budget watchdog?
Sahir Khan: The former Canadian Senator, Hon. Hugh Segal, once said that the role of the PBO is to help restore the “powers of Parliament that are falling into disuse”. This is to say that parliamentarians often struggle to discharge their Magna Carta rights insofar as they can find it difficult to hold the government to account, provide oversight on the government, and provide informed consent when voting on money bills (e.g. budget, appropriations bills).
Through the PBO’s efforts to provide parliamentarians with a second (or only) data point through costing major bills, military procurement, timely budget analysis, independent fiscal and economic forecasts, appropriations analysis and long-term fiscal sustainability analysis, the PBO has made a significant impact in the way that Canadian parliamentarians undertake their work.
Ultimately, if the PBO has been successful, it is by introducing a financial and economic language to the work of Parliament. While initially viewed as disruptive, this enhanced language has enabled parliamentarians to integrate credible analysis into the workings of their committees, private member’s bills and in the two chambers of Parliament themselves.
Delhi Post: Other Commonwealth/post-colonial countries have well established PBOs including Canada, Australia, South Africa and Kenya. The UK Parliament has an IFI, the Office of Budget Responsibility, and a number of full-fledged PBOs are under development, particularly in Africa. Does it mean that it is an opportune time for India to implement a PBO?
Sahir Khan: We see the continued growth in the establishment of IFIs, including PBOs, across a range of political systems and around the world. However, what may be of most interest to India is that PBOs are now a recognisable feature of analogous parliamentary systems.
There appear to be a few common triggers among these initiatives. There is often some sort of crisis of public confidence coupled along with a recognition that parliaments struggle to discharge their constitutional obligations with respect to government oversight, debate and deliberations over fiscal matters and the need to scrutinise budgets and appropriations. In Westminster-like systems, there is a ‘massive asymmetry’ of information and resources between executive and legislative branches.
Politicians, civil servants and even stakeholders may view the introduction of a PBO with either suspicion, trepidation or both. However, the community of IFIs has matured significantly over the last decade, particularly in the Westminster context. This is an outcome that all politicians, government and opposition, as well as their stakeholders should welcome.
Elections are often the best time for the political parties to think about it. Majority Governments rarely want to empower Parliament. Minority Governments may neither but sometimes, they have to. Elections are an important opportunity where parties make big commitments and we are seeing around the world, the decline in public confidence in institutions. Putting PBO in place, to some extent, is opportunity for nations to reconsider their trust. And creating a PBO in one of the world’s largest democracy would be a very important signal of continued progress and maturation of India’s democracy. PBOs can help level the playing field for parliamentarians and enhance confidence within the branches of government and, ultimately, with citizens.
It is a contribution to creating a stronger legislature. The theory is that a stronger legislature means a stronger government and a stronger government means a stronger democracy. It is only within the aspirational opportunity within an election that a party through its manifesto can make a deeper commitment to citizens on how taxpayers’ money is spent.
Delhi Post: Take us through the role of the civil society, academia, and political parties when it came to the establishment of the PBO in Canada.
Sahir Khan: In 2008, the Canadian PBO was a relatively new type of organisation, particularly for a Westminster-type political system. Seen as much more consistent with a US Congressional-style legislature, the PBO was viewed by many stakeholders as disruptive, with both positive and negative connotations. However, for Kevin Page and I, in switching from the Privy Council Office to serving Parliament, we went from the nadir of financial information to, what appeared to be, the very bottom.
It wasn’t long before we realised that Parliament was in very much the same situation as civil society, academia, media and opposition parties; that is, on the outside looking in. The asymmetry of information and resources became starkly apparent. However, within its legislation, the PBO had the right to certain financial and economic information. It also had the opportunity to collaborate with other researchers, including academic, as well as the ability to communicate with stakeholders.
The collaboration with academia gave the PBO leverage while responding to the needs of parliamentarians also created a symbiotic relationship with the legislature. Effective communications with stakeholders, including media, helped to introduce a non-partisan financial and economic language to the debates of the day. All of these relationships had to be carefully managed to ensure that the PBO remained scrupulously non-partisan, credible and competent.
PBOs should not be viewed as a threat to the existing power relationships within the ecosystem but, rather, as a necessary tool to ensure that parliamentarians and their stakeholders are able to integrate fiscal and economic considerations into their mandates and decision-making.
Delhi Post: As a Think Tank, can you elaborate on the work of IFSD?
Sahir Khan: The IFSD has been funded by the Province of Ontario to undertake applied research and student engagement in public finance and its intersection with public administration, politics and public policy. The IFSD undertakes its work in Canada at all levels of government as well as abroad, leveraging partnerships and key relationships with organisations such as the World Bank, OECD, IMF and US National Governors Association.
Its international work tends to focus on planning, development and training with respect to the institutions, including both governments and legislatures, engaged in the consideration, allocation, planning and oversight of public finances. We provide training, in collaboration with the Government of Canada’s Treasury Board, to federal public servants on the “black box” of Canadian federal financial cycle and cabinet decision-making.
Delhi Post: Are there any new and innovative practices that PBOs are adhering to worldwide and in particular in Canada?
Sahir Khan: At the annual meeting of the World Bank and OECD communities of PBOs (or IFIs), we consistently see new and innovative approaches to supporting parliamentarians. Sometimes the innovation comes in the form of novel research methodologies, staff recruiting technique, data analysis and visualisation, software tools and approaches to communications.
However, what may be more interesting, today, is that these offices tend to adhere to the OECD’s principles for IFIs as well as the GN-PBO’s practice guidelines for topics such as Budget Analysis. While a long way from the mature practice standards of supreme audit institutions, PBOs are rapidly normalising their operating models to provide enhanced stability and predictability to their respective political environments. Such professionalisation can only improve the perception that such organisations are acting in a manner that is disciplined, non-partisan and credible.