The 2006 Federal Accountability Act gave legislative birth to the position of Parliamentary Budget Officer. As this new institution started to walk and talk, the Conservatives who gave life to the PBO have appeared increasingly unhappy with where their progeny has walked and how it has talked. Since the current PBO, Kevin Page, will soon reach the end of his term, Canadians are now pondering what should happen next to the young PBO.
The PBO serves Parliament by providing an independent source of economic analysis, and also cost estimates of legislative initiatives. With better information to scrutinize the financial decisions of the government the PBO enhances the ability of Parliamentarians to hold the government to account. Moreover, the PBO provides a source of credible cost estimates for new initiatives proposed by Parliamentarians, allowing them to contribute more to policy debates. The government has the vast and deep resources of the Ministry of Finance for these tasks; the PBO helps Parliament keep pace.
The PBO’s mandate has emerged as a key front in the debate over its future. Finance Minister Jim Flaherty has expressed concerns that Mr. Page has “wandered” and suggests the PBO mandate needs to be reconsidered. Other voices worry that a change in mandate may put a straitjacket on the PBO that will limit the PBO’s effectiveness.
The exact terms of the current PBO mandate are laid out in the Parliament of Canada Act. The mandate tasks the PBO to “provide independent analysis to the Senate and to the House of Commons about the state of the nation’s finances, the estimates of the government and trends in the national economy.” As mandates go, this one is the economic equivalent of “A Mari Usque Ad Mare” – it is very broad.
With a broad mandate, the PBO has much discretion over which projects to prioritize. For some tasks, such as putting price tags on legislative initiatives and providing baseline budget forecasts, the PBO has unique capabilities and provides valuable information not available elsewhere. These tasks are where the PBO give Canadians the biggest return, and without this information the quality of our fiscal debates would suffer.
Another lingering aspect of the debate is the independence and funding of the PBO. Currently, the PBO reports to the Library of Parliament instead of reporting directly to Parliament like the Auditor General and other Officers of Parliament. This is more than a petty squabble over organization charts. In 2009, the concerns about independence became relevant as both the PBO budget and the ability of the PBO to communicate its findings came into question. The current funding of the PBO allows for only a small staff, and without the freedom to communicate the value of the PBO’s reports is diminished. A more independent, well-funded PBO could be more effective in serving Parliament.
In a democracy, there should be tension between the independence of appointed officials and the breadth of their mandates. Having unelected officials with unlimited mandates raises the risk of treading upon the democratic responsibilities of our elected officials. So, the more independent an unelected official becomes, the more attention should be directed to the official’s mandate to ensure the democratic tension is properly balanced.
A compromise emerges. A revamped, more tightly focused PBO mandate could be introduced while at the same time the PBO is made more independent as a full officer of Parliament with secure funding. The result is a narrower, but deeper PBO. Such a compromise would give Canadians and their Parliamentarians better information to make their decisions and it would give the PBO the tools to deliver on its promise.
Kevin Milligan is associate professor at UBC Vancouver School of Economics