How critical is the Parliament’s role in budget discipline?

The parliamentary control of expenditure of the government that Bangladesh and other democracies exercise has evolved over eight hundred years through ups and downs in many democracies.

However, 250 years ago, a successful American revolution against the British colonial rule ushered in a new era for the people's right to authorise and scrutinise the annual expenditure of the government through their representatives in the parliament.

An efficient exercise of the power has contributed immensely to healthy and sustainable economic growth in many countries and is still helping the measures for human development.

Countries that fail to reform and develop the procedure to exercise efficient parliamentary control over the government's expenditure face governance crises and fragile democracies as well. Increase in grafts and waste of public money has become a part of governance. In such aberrant statecraft the rule of law becomes a travesty. People in power remain unaccountable for their activities which ultimately makes them desperate to earn revenue and spend it inconsiderately in the name of development.       

The desperate attempts by Great Britain to earn additional revenue from its American colonies to recoup the huge loss the Royal exchequer incurred due to the Seven Years' War against France from 1756 had thus backfired and led to American independence.

The British won the Seven Years' War that spanned five continents. But the British exchequer was drained empty to keep the war machine running for this long period.

The British policymakers, therefore, came up with an idea to recoup the loss and to free Britain from deep debt. The British parliament began imposing a series of taxes on American colonists to help pay for those debts.

The Stamp Act of 1765 taxed people in colonies on virtually every piece of printed paper they used, from playing cards and business licenses to newspapers and legal documents. Americans strongly protested the Act and launched violent agitation labeling it an attempt to muzzle the freedom of press. The protester also denied paying tax saying that they didn't have any representation in British parliament that imposed the tax through the Stamp Act.

In their defence, they referred to the Magna Carta, a royal charter the King signed in 1215 that imposed some restrictions on the king including the one that the king could not impose taxes without the approval of the "common counsel" of the Kingdom.

Britain wanted to bulldoze the raging protest. Moreover, the British went further by enacting the Townshend Act in 1767 which imposed taxes on essentials such as paint, paper, glass, lead and tea.

The British government felt the taxes were fair since much of its debt was accumulated fighting wars on behalf of the colonies. The colonists, however, disagreed and launched violent protests.

These two acts aimed at collecting taxes fueled the American revolution against the British which resulted in the independence of the United States of America.

The principle—no taxation without representation—got wide acceptance in American democracy and many other countries across the globe including Bangladesh which was once part of the British colony in the Indian-subcontinent. 

Procedure in Bangladesh

When Finance Minister Mustafa Kamal will be unveiling a set of tax proposals and planned allocations of resources for ministries and divisions on Thursday seeking their parliamentary approval, it will officially uphold the people's rights to authorise and scrutinise the government's annual expenditure through their representatives in the House.

Like his predecessors in Bangladesh and counterparts in other democracies, he needs to explain his plans to the Parliament on how he wants to earn revenue and spend it as well. His entire plans need the authorisation of the Parliament.

The pronouncement made in the Constitution in article 83 that "No tax shall be levied or collected except by or under the authority of an Act of Parliament" upholds the sovereignty of the people. In a democracy, the parliament is formed with representatives elected by the people and it acts on behalf of the people.

Therefore, every finance minister wants to win over the people with his budget—a public proclamation by the State of its projected and actual expenditures.

The statement provides vital evidence of where a state sets its priorities—whether on the poor and marginalised people or not.

The process of allocation of resources to different ministries and divisions and purposes is essentially a political, rather than a purely technocratic one. The party in power needs to allocate the resources in conformity with its electoral pledges. 

In an ideal democracy, it is none, but a body of people's representatives that examines the proposals and proposes necessary changes if they find the plans arbitrary and against the people's interest.

The responsibility of the treasury bench lawmakers is heavier as they need to check if the proposals are in conformity with the party's electoral pledges to ensure good governance and economic development.

Then they approve it. Thus, in an indirect democracy, people's representation is ensured in making the budget of the government.

So, it largely depends on the capacity and efficiency of lawmakers to ensure that the Parliament approves a good budget. Efficiency in parliamentary functions put pressure on bureaucracy to draft good budgetary proposals and ensure their timely and efficient implementation.

If the Parliament and dozens of standing committees are not efficient, it cannot hold the government accountable for expenditures and failure to efficiently implement the budget that plays a crucial role in the process of governing, fulfilling economic, political, social, legal and administrative functions.

In Bangladesh, the situation does not reflect the practice of parliamentary control over the government expenditure in ideal democracies. 

The reality

In 2011, then finance minister AMA Muhith first introduced a slogan for the budget of FY 2012. The cover page of his budget speech had a slogan that read: "Towards Building A Happy, Prosperous and Caring Bangladesh."

Every year since then, the finance minister's budget speech has been carrying a slogan of some hopeful words. Of them "Prosperity" has become a buzzword used at least in four budget speeches.

The reality exposed by the pandemic however depicts a different picture. The phrase "Caring Bangladesh" used in the slogan of the FY 2012 budget speech is somehow not visible much. The buzzword "Prosperity" does not look so bright. How much did the successive 10 budgets contribute to building a happy, prosperous and caring Bangladesh?

In times of crises, when people suffer, the role of a state determines whether it is a caring state or not. When a huge number of people left Dhaka last year losing their jobs, and sources of their livelihoods, the state was not seen playing a strong and effective role in reducing their sufferings.

Millions of people engaged in the service sectors are still struggling to recoup the financial losses incurred due to the pandemic shutdown. The authorities did not have shortage of money and food grains, but it lacked efficiency in distribution. This is why the financial assistance given by the prime minister remained unutilised. When tens of thousands of SMEs are struggling to remain afloat due to the financial crisis, the stimulus for them remains undistributed.

During the health emergency, the health ministry has been proven more inefficient than others to implement development projects and provide people with medical care. People's frantic efforts to find ICUs for their critically sick families during the second wave of Covid this year exposed the poor condition of health care.  Alleged corruption in spending public money has been much talked about during the crisis.

Similar to the overwhelmed healthcare system, children are paying the cost. For more than a year, all educational institutions remain closed. The fear is that students will carry the virus home and spread it fast, putting even more pressure on the healthcare system.

Online classes were introduced keeping the schools under lock and key. But it exposed a wide digital divide between the rich and the poor families' learners.

Is this an image of a caring state? What about the buzzword "prosperous"? Prosperous means successful in material terms; flourishing financially; bringing wealth and success. When the majority of the population faces economic hardship, a country cannot be called "prosperous".

The country recorded remarkable economic growth in the last one decade. But it has become a jobless growth. People could not get equal benefits of the growth resulting in an increase in inequality. Mega projects are being implemented with alarming escalations in cost. None is held accountable for this mishandling of the peoples' money.    

The Parliament, tasked with the constitutional duty to monitor expenditure of the health ministry and all other ministries and departments of the government, demonstrated inefficiency to discharge its fundamental duties.

Economists and political analysts blame the prevailing political culture for low quality of parliamentary functions.  

MPs are apparently guided by their highly partisan mindset. Ruling party MPs blindly support all the budgetary proposals and speak little about failures of the administration to properly implement many development projects. They discuss little about the unreasonable delay and cost escalation of projects. On the other hand, opposition MPs vehemently oppose the entire budget. The situation has worsened in the last few years following two parliamentary elections of 2014 and 2018 which were questionable on grounds of their fairness. The role of the opposition bench declined after the two elections that gave the ruling party more than two-third majority in the house.

Apart from budget sessions, MPs are supposed to oversee activities of various ministries round the year through parliamentary standing committees on the ministries. But the committees are not functional too as MPs, who are chiefs and members of the committees, do not want to make the ministers unhappy by examining and questioning alleged waste of money and grafts in development projects.     

In an ideal democracy, parliamentary practices play a crucial role in improving overall governance. But in Bangladesh, the situation is different. There is a wide gap between promises by the party in power and reality.  

The present political culture makes the procedure for parliamentary authorisation of the annual budget just an official formality, nothing more. This is what happens when MPs forget their role in the budgeting process.

Shakhawat Liton

Shakhawat Liton is Deputy Executive Editor of The Business Standard