Surpluses, Budgets, Parliament, and Accountability Down Under (Australia): some random thoughts

I am in Australia as “Accenture-Crawford School Distinguished Visiting Professor” at Australian National University in Canberra. Many thanks to both Accenture and the excellent Crawford School of Public Policy.

I’ve been doing a fascinating series of meetings, seminars and lectures with academics and senior public servants from across the Australian federal (commonwealth) government. I have had generous access to the ‘corridors of power’ including with a wide range of Prime Ministers and Cabinet (PM&C) officials, Department of Finance and Deregulation (DOFR) officials, and the Clerk to the Senate. And many academic colleagues have been helping me get my head around Australian Federal Government procedures.

Here’s a few, fairly random, thoughts about it:


I was fortunate enough to be here where the minority Labour Government announced it’s 2012 Budget.

I won’t go into the distractions – there’s two highly controversial scandals in train about the Speaker of the House and a (former) Labour MP and trade union official (sexual harassment charges, using Union credit cards for purchasing prostitutes, that sort of thing). But they did somewhat overshadow the Budget in the media.

The central thing that leaps out about Australia’s economy and fiscal position is that most European politicians would sell the Granny and children to have Australia’s “problems”.

Mainly because of continued demand for raw materials exports to China, Australia’s economy came through what they call down here the “Global Financial Crisis” or GFC pretty unscathed. Growth is at about 2% and rising, unemployment at about 5%, the current Government deficit is well below 3% of GDP and the total debt below 10% of GDP. (Australia could definitely join the Euro!).

There are however signs of potential problems: house prices are dropping in some areas (e.g. Melbourne) due mainly to oversupply; demand from China may be slowing down; international financial instability is affecting exchange rates; etc.So it’s not all rosy.

All the more strange then that Australian politicians have managed to get themselves locked into an arms-race about who can best produce a “real” surplus in the federal Budget. Even if there were no economic waves on the horizon they don’t need a surplus, given the size of their debt mole-hill.

But there are potential problems coming their way and some flexibility in the Budget could help smooth these out. So why the fixation with a surplus? It seems something of an historical accident that the two main political blocks – Labour and the Coalition (of Liberals and Nationals) – seem to have stumbled into this position and I haven’t yet seen any intellectual justification for it – it’s just assumed to be axiomatically a “good thing” to have a surplus.


The Budget process makes for a fascinating case.

Although, as in Britain, Parliament can do very little to change the contents of the Budget presented by the government in office, how the Budget is scrutinised before it’s enacted is very different.

Australia’s bicameral Parliament has evolved into very different roles. Although the Senate is supposed to be the junior partner of the two houses it has taken to itself the main role of scrutinising the Executive (which is based in the House).

(The Senate is elected by full PR and rarely has a majority for any one Party).

This is most evident around Budget time: next week the Senate scrutiny Committees (8 of them) begin hearings on the detailed proposals in the Budget. By all accounts these are gruelling times for departmental officials who get thoroughly and sometimes aggressively grilled about any and every aspect of spending but the also results the spending is meant to, and does or does not, achieve.

Although Australia sticks formally to the ‘Westminster’ convention of accountability of public servants through Ministers to Parliament this Budget Scrutiny process seems to drive a ‘coach and horses’ through that particular myth.

I haven’t yet had time to delve into the documentation enough, but it certainly appears from what I’ve been told that this is now effectively embodied in various codes and standard operating procedures, so that in practice there is a lot more direct accountability of public servants to Parliament than there is in Westminster (although even that has changed way beyond the simplistic doctrine).

There may be some lessons here for the UK: especially about the scrutiny role of the Upper House; about Budget processes; and also about accountability of Civil Servants to Parliament. I’ll be writing more about this in due course – especially as our very own House of Lords Constitution Committee gets into its inquiry about the last of these questions.

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