Budgeting and democracy

Question 1

Budgeting and democracy

Answer 1

The big decisions made at budget times are very political. The overall level of spending, and taxation to finance that spending, are two of the major items that define politicians’ attitudes to society and the role of the state in national affairs. At a more detailed level, the incidence of taxation and thedistribution of the benefits of taxation determine to a large extent wherepolitical parties will get their support from and, conversely, where their opposition will come from.

Question 2

Limits on changing budgets

Answer 2

• Non-discretionary expenditures
• Receipts dependent on level of economic activity
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Question 3

National Legislatures and the Budget Process

Answer 3

• Information asymentry between executive and legislature
• Difference in powers of legislatures, e.g. US v Westminster systems
• Brazil—use of participartory budgeting to bring in citizens’ views

The politics of budgeting depends on the overall relationships between parts of the state and government institutions, and on the political processes that ruling parties choose to put in place to enable either elected representatives or members of the public to participate in budget decision-making.

Question 4

Is There a Single Best Method of Financial Management?

Answer 4

Any accounting system must provide information to allow the users of the information to make informed decisions. There are many different ways of making decisions and the information requirements will differ for each. The best system is the one that provides the information required in the simplest, most easily understood way.

• Line item—emphasis on control and stewardship
• Programme—managers gvien substncail automny except for a hard budget constraint
• when designing a method of budgeting and performance management, take account of the users of the system: what is appropriate at whole-of-government level may not work so well in a single institution.