Independent Fiscal Institutions in Comparative Constitutional Perspective

Abstract

Independent Fiscal Institutions (IFIs), also known as independent budget offices, fiscal policy councils or independent fiscal watchdogs, have become a feature of the regulatory landscape since the global financial crisis. This paper analyses their proliferation and seeks to situate them in their constitutional and institutional environment. The paper begins with an assessment of the two competing rationales for their existence: first, the rationale of overcoming deficit bias in advanced western democracies (through institutions of de-politicisation), and second, the rationale of overcoming information asymmetry on two planes – elector/government fiscal information asymmetry and legislature/executive information asymmetry (strategies of re-politicisation). The paper then analyses the legal and technical design features of two IFIs: the UK Office for Budget Responsibility (OBR) and the Australian Parliamentary Budget Office (PBO). We hypothesise that whatever their origin, IFIs will seek to add functions, that these will include both inward-facing functions (e.g. official economic forecasting) and outward-facing functions (e.g. election policy costings), and that this expansion is likely to be facilitated by inter-party competition. We conclude that the IFI is best understood as a distinctive attempt to devise a fiscal self-binding mechanism in the interests of securing intergenerational constitutional justice.