Auditor general: State budget becoming increasingly opaque

Auditor general Janar Holm.
Auditor general Janar Holm. Source: Siim Lõvi/ERR

The state budget has become more and more of an opaque, user non-friendly document down the years, says Auditor General Janar Holm. The latest state budget act's explanatory memorandum was 440 pages long, Holm notes.

This has also been exacerbated by the decreasing significance of the Riigikogu in the state budgetary process, Holm said, twinned with a rising cognitive dissonance as the budgetary documents increase in complexity.

Not merely a dry accounting document

The National Audit Office (Riigikontroll) has long shared the concerns of the Riigikogu and the public that anyone leafing through the state budget would need a thorough knowledge of accounting, not to mentioned plenty of spare time to compare various voluminous financial materials.

"The state budget should not be merely an accounting document, however, but should provide a basis for management decisions," Holm wrote on the audit office's blog, ERR's online news in Estonian reports.

"The budget should be a lever for guiding the country's strategic development," he added, noting that many MPs have complained to his office over the years, both those in office and those in opposition, over the lack of clarity and engagement in the process and the budget itself.

Riigikogu almost out of the picture

"Nonetheless, after a year of debate on a crucial national issue (which took place in June 2016 - ed.), the Riigikogu itself approved changes to the state budget framework law, which resulted in an even greater reduction in the substantive role of the Riigikogu," Hom said, noting it increased complexity rather than reducing it.

The Auditor General also said that, with the new budget structure, MPs are largely out of the picture with regard to the proposed amendments to the state budget.

"This is because the law no longer has budgetary lines delineating the raising of sums. How can an MP make a proposal to switch raising money, for example, between prisons and the courts, or vice versa, if there is just the one and only expense entry accounted for under current law?" Holm opined.

Lack of clarity on what money goes where

Holm also noted that there was once a time when the budgetary lines set out in Estonian law revealed how much money was being allocated to specific ministries, now no longer so much the case.

"Nowadays, such a hasty conclusion cannot be made by reading the numbers. Within the new budget picture, cash and non-cash costs have been put on the one line.

For example, it should be borne in mind that a budgetary line may also include an estimated depreciation charge. And I'm not even going to mention the times when money matters were clear – when plus meant plus, or minus, meant minus, or no money."

Latest state budget act had a 440-page explanatory memorandum

Holm also questioned the worth of reading the 2020 State Budget Act at all, supported as it is by a 440-page explanatory memorandum, but with no systematic and well-reasoned explanation of what and why the state spends money on and how it affects Estonia's development.

Holm also said a major problem is frequent changes in the structure of the budget and the presentation of information in the explanatory memorandum, making straight comparisons between years not always possible, making it: "... difficult for the Riigikogu to assess the government's use of money and to place new requests for money in the context of current spending. The state budget should follow the same rule of thumb as presenting statistics."

Holm added that during the ongoing state budget review, which assesses how on point state budget expenditures are and identifies opportunities for cost savings, it would be prudent for the government to review the actual state budget format, as well as that of its explanatory memorandum.

"If the central document guiding the country's strategic development can be understood by decision-makers and the public, this will provide an opportunity to make better decisions," says Janar Holm.

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Editor: Andrew Whyte

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