Legislative Checks and Balances under Information Asymmetry

By Junki Kim Chief, National Assembly Budget office(NABO)

Vienna, 17, April 2015

7th Annual Meeting of OECD Parliamentary Budget Officials

& Independent Fiscal Institutions

Contents 1. Evolution of Relationship

2. Access to Information

3. Instituting Own Information Systems

4. A Case Study: Gaining Access to Tax Data

5. Ongoing Struggles

6. How to Reduce Information Asymmetry

7. Beyond Information Asymmetry

1

2

Evolution of Relationship

Information Asymmetry between the Legislative and the Executive

The question of “ How can the legislative check and balance the

executive?”

has been one of the most disputed issues

The executive holds information advantages

Global trend to strengthen the role of the legislature

National Assembly Budget Office(NABO) was established in 2003 in order to

strengthen the legislature’s budgeting and fiscal control over the executive

3

Evolution of Relationship

Source: National Assembly Budget Office

Information Transparency

Info

rmat

ion

Disc

losu

re

Monopoly of Information

Evolution of Relationship

Executive Dominance Strengthen the Legislature

11.2

85.9

69.1

463

3,708

03 04 05 06 07 08 09 10 11 12 13 14

Budget Adjustment influence rate

Numbers of media reports regarding NABO

Cooperative Governance

Information Asymmetry

Opening of

NABO

Access to d-Brain System

Access to Tax Statistics

The 10th Anniversary of NABO

Establishment

4

Access to Information

Statutory Provision to Information

National Assembly Budget Office Act(Article 10) Authority to request necessary information with the permission of the Speaker of

National Assembly

Framework Act on National Tax(Article 85(6), Amended, Jan. 2010) Authority to request relevant Tax Statistics from the National Tax Service

Systematic Approach to Data

d-Brain(Digital budget and Accounting System) 2007

An integrated national fiscal information system that supports on-line processing

of the entire fiscal activities of the central government including budget and

fiscal information

NABO acquired the access d-Brain in September 2008

Instituting Own Information Systems @ NABO

VIVA NABO-EFIS

DB Management System Information Sharing System

COSTEM/RARIS Budget DB

Archives budget documents

Includes detailed plans for

over 3,000 budgetary projects submitted by ministries

Accumulates reports by

Special Committee on Budget & Accounts Listing over 13,962 items

Serviced since Mar. 2009

Economic & Fiscal Information System

Provides frequently used

data for economic & fiscal analysis Based on the Open-API

System (linked to BOK, Statistics Korea etc.) Listing 520,275 items

Serviced since Feb.2015

Vital Information Valuable Agora

Intranet system for

knowledge sharing and organizational learning Accumulates reports,

publications from inside/outside of NABO and press responses Listing 31,275 items

Serviced since 2005

COST Estimation systeM/ Research & Analysis Request Information System

Facilitates electronic cost-

estimates and research requests by Assembly members Accumulates cost

estimates and research reports Serviced since 2006

5

6

Case Study: Gaining Access to Tax Data

SEPT-DEC 2009

SEPT 2009

MAR 2011

2012-2013 Strengthening Data Security Set-up Guidelines for using data Establishment of Security Systems

Renewed Conflicts with the NTS NTS refused to provide data due to allegation that NABO used data for other purp

JAN 2010

MAR 2011

Introducing the Authority to Request Tax Statistics Revision of Framework Act on National Tax(Article 85(6))

Challenges : NTS resisted tax information disclosure Support of Assembly members and Standing Committee staff members Framing the issue on increasing transparency of the tax admin.

~2009 Limited Tax Information of the legislative Screening of the revenue estimation of the Government remained imprecise Difficult to respond adequately to requests by Standing committees and Assembly M

Launch a Project to Revision of Tax Law Launch a Project to Revise the Tax Law

7

Case Study: Gaining Access to Tax Data(cont)

Outcomes of Tax Information Disclosure

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

07 08 09 10 11 12 13 14

GOVERNMENT

NABO

Revenue Estimation Errors(%)

43.6 41.7 43.8 45.8

60.8

71.5

56.9

68.3

0

10

20

30

40

50

60

70

80

90

07 08 09 10 11 12 13 14

Cost Estimates Performed/ Total Cost Estimates Requested(%)

8

Case Study: Gaining Access to Tax Data

Key implications from the case study

Statutory Provision to Information is Crucial!

But how do you achieve this?

Assert Legitimacy for Information Disclosure

Build systematic cooperation with Congressmen and Committee

staff

Build Trust with key members of relevant Ministries

9

Ongoing Struggles

In spite of all these efforts, Ongoing Struggle between the legislative

and the executive persists over information disclosure

Inherent tension in relationship due to conflicting goals between NABO and

the executive branch

The establishment of NABO was aimed at providing a foundation for checks and

balances against the Executive by analyzing budget and related policies from

the perspective of the legislative

Extremely difficult to ask for voluntary disclosure of information by the

executive

10

How to Reduce Information Asymmetry

Align Objective Functions

Increasing needs for coordinating activities of the public sector in pursuit

of similar public goals

Because of the increasing complexity, diversity of social values and the

dynamic nature of the process, the executive no longer dominates policy

making process

Establish Systematic Approaches

Systems for accumulating and sharing information

Services for consolidating and synergizing diverse information sources

11

Beyond Information Asymmetry

Strengthen Professionalism

Capacity to distinguish between gems and stones out of materials

presented by administrative agencies

Ability to cross check and screen the most reliable information

Analytic competence

Broaden Networks

With ever-increasing number of organizations and interest groups

involved in policy making process, the executive should make more

efforts to disclose relevant information voluntarily