Budget transparency – more complex than you’d think

By Tori Dykes

When talking anti-corruption, the most common buzzwords flung around by civil society activists, researchers and development professionals alike are transparency and accountability. Transparency is seen as so key to the fight against corruption that its arguably most important advocate took it as part of its name: Transparency International. It should thus not come as a surprise that the EU Horizon 2020 DIGIWHIST project also aims at increasing transparency, specifically in the realm public procurement. But how do we increase transparency, and how does this contribute to more accountable governance?

A significant part of the project involves the collection of publicly available budget data for both national- and local-level governments across the EU countries and beyond. DIGIWHIST relies on countries following through on their commitments to budget transparency in order to find the necessary data, but it’s evident that not all countries are pursuing budget transparency in the same way.

Budget transparency – and how to get it right

The OECD definition of budget transparency is “the full disclosure of all relevant fiscal information in a timely and systematic manner.” Thus, what’s important to consider when we talk about this kind of transparency is both how promptly the information in question is released, as well as how predictable and orderly its release is.

The digital era has transformed the practice of budget transparency significantly. Ideally, citizens who wish to inform themselves about their government’s budget simply need to access an online portal where they can find all of the desired information presented to them in an accessible, understandable format. Regular users of online media should, however, not be surprised that the reality of budget transparency is more complex than this. The extent to which it is realized varies radically today. Still, there are some examples of how to do digital budget transparency “right”.

The German government, for example, has two main portals for people to turn to. One is Bundeshaushalt-info.de, which allows visitors to explore the national budget via colorful infographics and interactive tables. The second is Govdata.de, the government’s official open data portal, where a simple search of “Bundeshaushalt” returns machine-readable versions of the national budget from 2012-2015. Both portals cater to diverse audiences, ensuring that everyone from casually interested citizens to dedicated data analysts (like the kind of people working on DIGIWHIST) can find the desired information in a form that works for them. On a more local level, a great example of this can be found in Spain. The Presupuestos de Aragón website offers visitors a variety of interactive tools and visualizations for understanding the Spanish autonomous community’s budget. Their open data portal, Opendata.aragon.es, also provides machine-readable budget documents for the years 2006 – 2017.

So how can we evaluate who is doing budget transparently well? One of the main organizations focusing on this is the International Budget Partnership, which conducts the Open Budget Survey. The survey tends to focus on more traditional aspects of budget transparency rather than solely on the digital aspect of it. It contains an index measuring countries’ budget transparency (amount, level of detail and timeliness of budget information), budget participation (opportunities for civil society and the general public to participate in the budget-making process), and budget oversight (capacity of institutions to influence how public resources are raised and spent). The most recent survey, published in 2015, saw New Zealand, Sweden, South Africa, Norway, and the United States leading the pack.

Another view on evaluating budget transparency comes from the Open Knowledge Foundation, which publishes a ranked government budget dataset. They have a specific focus on the availability of government data in digital forms, and rankings are based on nine different factors, such as whether budget data is openly licensed, if it is available online, and if it is machine readable. Because this index is more narrowly focused than the Open Budget Survey, it is hard to compare the two data sources, and they often have strikingly diverging rankings (for example, the Open Budget Survey ranks Russia 11th overall, while the OKFN rankings have Russia tied for 105th place). Thus when evaluating budget transparency, it’s important to be clear about what aspects of it you are specifically interested in.

Transparency – and then what?

Just having the data in hand does not mean the battle is won. More transparency does not automatically equal more accountability. On the contrary: exerting accountability via budget transparency is no easy feat. The mere existence and general availability of budget data does not mean that it is immediately possible to make observations on and draw meaningful conclusions from the data. First of all, the way the data is published is often problematic. It does no good for a country to boast that all of its budget information is published online if that information is buried in a difficult-to-navigate finance ministry site, or in a chaotically-organized open data portal. Other countries still exclusively publish budgetary information in PDFs or publish only select portions of their budget data in machine readable formats. This is prohibitive to organizations like DIGIWHIST who want to automatically extract and analyze budget data, as extracting information from PDFs is much more difficult and error-prone.

Second, the actual analysis of budget data and what changes in allocations from year to year actually mean can be challenging without sufficient contextual background. Huge changes can be explained away by departmental consolidations, and small shifts in numbers may actually be indicative of changes that warrant scrutiny – the point is, a casual observer of this data can’t necessarily look at it and understand what is happening and identify potential causes for concern.

Third, the budget data needs to be sufficiently detailed to be useful from an accountability perspective. For DIGIWHIST’s work with public procurement data, for example, it is not sufficient to know how much money is being allocated or spent by a single ministry. Since the project is interested in matching contracting authorities from procurement tenders with the specific government agencies to which they correlate, a deeper layer of detail is needed; budget experts refer to this as the “economic classification.” But not all countries release budget information at levels this specific, making it that much more difficult for organizations like DIGIWHIST to hold governments accountable for their budget allocations.

Though progress at times feels slow, there is a clear trend toward greater budgetary transparency in governments and better provision of structured, accessible data. Projects like DIGIWHIST help in furthering this push thanks to the pressure they place on governments to be more accountable. Their researchers make transparency and accountability more than just buzzwords and help citizens and civil society activsts in their fight against corruption.

This post was originally published as part of the DIGIWHIST project.

EU Aid and the Quality of Governance

Using a panel dataset on 103 developing countries, this paper empirically analyzes the impact of the European aid flows on quality of governance in aid recipient countries. The analysis employs aggregated Official Development Data as well as disaggregated project level data. The results show that while bilateral aid from the largest European donors does not show any impact, multilateral financial assistance from the EU Institutions leads to an improvement in governance indicators. These findings thus suggest that European development assistance can help to promote good governance if aid is allocated at the EU supranational level rather than at the national level of the member states.

EU Aid and the Quality of Governance

Using a panel dataset on 103 developing countries, this paper empirically analyzes the impact of the European aid flows on quality of governance in aid recipient countries. The analysis employs aggregated Official Development Data as well as disaggregated project level data. The results show that while bilateral aid from the largest European donors does not show any impact, multilateral financial assistance from the EU Institutions leads to an improvement in governance indicators. These findings thus suggest that European development assistance can help to promote good governance if aid is allocated at the EU supranational level rather than at the national level of the member states.

The Anticorruption Report. Volume 3: Government Favouritism in Europe

This volume reunites the fieldwork of 2014-2015 in the ANTICORRP project. It is entirely based on objective indicators and offers both quantitative and qualitative assessments of the linkage between political corruption and organised crime using statistics on spending, procurement contract data and judicial data. The methodology used in the analysis of particularism of public resource distribution is applicable to any other country where procurement data can be made available and opens the door to a better understanding and reform of both systemic corruption and political finance. The main conclusion of this report is that public procurement needs far more transparency and monitoring in old Member States, where it is far from perfect, as well as new ones and accession countries, where major problems can be identified, partly due to more transparency and monitoring.This policy report is the third volume of the policy series “The Anticorruption Report” produced in the framework of the EU FP7 ANTICORRP Project. The report was edited by Prof. Alina Mungiu-Pippidi, PhD from the Hertie School of Governance, head of the policy pillar of the project.

Print and e-book versions of all full reports can be purchased here.

Reviews for this publication

Public infrastructure projects and other types of government procurement almost everywhere in the world suffer from favoritism and corruption, if not outright criminality. The spoils always go to the people with the right connections, wealth, or the willingness to use or threaten violence. This is among the most difficult aspects of governance for scholars to study: those who talk don’t know, and those who know don’t talk. This slim volume summarizes detailed studies of favoritism in Bulgaria, Croatia, Hungary, Italy, Romania, Turkey, and Ukraine. A final chapter shows how criminal organizations in many countries—including Mafia-like groups in Bulgaria and Italy—infiltrate national and EU-level public spending projects. Each chapter is packed with a remarkably rich set of charts, graphs, and statistical analyses that capture how much corruption exists and how it works. These succinct and eye-opening quantitative estimates of what really goes on beneath the surface of government make for indispensable reading and should straighten out anyone who doubts that the powerful always find ways to reinforce their influence and wealth, even on the “cleanest” of continents.

Andrew Moravcsik, Professor of Politics and International Affairs, Princeton University in Foreign Affairs

Report on Germany on institutions in public procurement for the infrastructure sector

Germany has the highest public procurement expenditure in the EU, with an average of 370 billion euros a year between 2009 and 2013. The main objective of this report is to shed some light on the inner workings of the German public procurement system by providing a general overview of its historical development, the current trends in procurement spending and assessing potential risks for corruption. Given that Germany has two parallel procurement systems active at the time, one for contracts above the EU thresholds and one for the contracts underneath these limits, each one of them is evaluated separately. The lack of high quality tender-level data for the case of Germany made it impossible to base the risk assessment on objective indicators. Therefore, this report relies on different sources of data to determine the size of the procurement spending in the country, the manner in which it is allocated and the potential risks of corruption. The study concludes that the public procurement system in Germany – especially the one in place for contracts underneath EU thresholds – is vulnerable to corruption given its complex legislation that damages nation-wide competition, the lack of transparency in the awarding process, a clear or unified national legislation and the low utilization of e-procurement platforms.

Open Knowledge Foundation Deutschland

The Open Knowledge Foundation Deutschland (OKF DE) is the German Chapter of the international Open Knowledge Foundation Network (OKFN). It is an independent non-for-profit organisation founded in 2011 and dedicated to promoting open data and open content in all their forms – including public information, publicly funded research and public domain cultural content. It is an international leader in its field and has extensive experience in building tools and community around open material. OKF DE is a Think-and-Do Tank that combines legal expertise and technical know-how to advise government authorities and other organisations publish open data and help potential re-users to engage with it to create innovative new products and services. OKF DE works on technologies that enable greater transparency in public life and new spaces for citizen engagement and runs a variety of projects including www.offenerhaushalt.de, a visualisation of the German federal budget, www.offenesparlament.de, a tracking system for legislative activity in both chambers of the German parliament, and www.fragdenstaat.de, a platform for freedom of Information requests. OKF DE’s team has also contributed significantly to CKAN and Open Spending, a platform to publish, visualize and analyse budget and spending data. The database is a resource for the many individuals and groups who wish to discuss and investigate public financial information, including journalists, academics, campaigners, etc. OKF DE is part of an active global network, which includes Working Groups, Local Groups and Partners in dozens of countries around the world and in 21 EU Member States. OKF DE runs numerous events – from small hands-on policy workshops and code sprints, to large-scale conferences, including Open Knowledge Conference.

Top Berlin Airport Official Accused of Bribery

Barely six months into his contract as Head of Technology for the Berlin Brandenburg Airport (Flughafen Berlin Brandenburg GmbH (FBB)), Jochen Grossmann has been accused of demanding a half a million Euro bribe from a prospective contractor. This is only the latest in a long list of problems for the airport which is now estimated to be as much as €6 billion over budget and at least five years behind schedule (the FBB has actually declined to set a new opening date). Harmut Mehdorn, FBB CEO, has admitted that even more irregularities in the awarding of contracts could be found.

The notion that there might be more corruption in such a large-scale infrastructure project would come as no surprise to anti-corruption researchers. Indeed, recent research by the FP 7 ANTICORRP project showed that big infrastructural projects are prone to high levels of corruption. The concluding chapter of The Anticorruption Report Volume 1, Controlling Corruption in Europe stated: “Spending on new infrastructure projects, for example, allows the channelling of government resources to favourite companies either directly or through local or regional governments producing unnecessary outputs with high costs.”

While the corruption allegations are nothing new for a large infrastructure project, they are interesting in Germany which is usually held up as an example of good governance. The second chapter of the same ANTICORRP book placed Germany in a group of countries with relatively low risk of corruption, where control of corruption has largely been achieved and occasional incidences of corruption are handled successfully. Thus far, the case of the airport appears to be one where such incidences are being addressed quickly and publicly.

The FBB signed an Integrity Pact with Transparency Germany in 2005 and engaged local public procurement expert Professor Peter Oettel (Oettel is honorary professor at the Technical University Berlin and was former Head of the Department of Structural Policy for the city where he was responsible for overseeing public procurement) to work with TI in monitoring contract awarding for the airport. According to the FBB, this was the first time a German company took such a step, however, according to Transparency Germany; it took nearly a decade to convince the company to sign the pact.

The FBB also has an ombudswoman, an anti-corruption officer and an anti-corruption task force. The FBB reported the suspected corruption to public prosecutor in Neuruppin who then conducted a search of the office of two accused associates as well as the private premises of the chief suspect. The public prosecutor has described the situation as a “classic model of corruption in business dealings.” The task force is comprised of: legal experts, examiners from the FBB, outside legal experts, anti-corruption experts and a representative from Transparency International (TI) who will now review all the contracts awarded by Mr. Grossmann.

The bribery allegation against Mr. Grossmann, which emerged near the two-year anniversary of the cancelling of the open date, is the second publicised incident of corruption involving the airport in a little over a year. Last April, three men were charged with corruption after bribes were paid by firms wanting to secure airport contracts.

Corruption in public procurement will continue to be a key research focus for the ANTICORRP project, with the result of research on the impact of EU funds on control of corruption due later this year. A study released late last year by ANTICORRP researchers  Mihály Fazekas and István János Tóth compared public procurement processes involving EU funds and national funds in Hungary, Slovakia and Czech Republic and found that up to 1/3 of EU funds are touched by corruption.

ERCAS Hosts Berlin ECFR Scorecard Launch

ERCAS and the Hertie School of Governance hosted the European Council on Foreign Relations (ECFR) for the Berlin launch of the 2014 edition of their annual European foreign policy scorecard. ERCAS Director Professor Alina Mungiu-Pippidi introduced the event by discussing inadequate European maneuvering vis-à-vis Ukraine.

Professor Mungiu-Pippidi evoked the work of ERCAS with Ukrainian civil society coalition CHESNO and the recurrent question on the lips of young anti-corruption activists there: how many Orange revolutions does it take to get to the EU? “We have to consider what we can offer people who buy into the European normative discourse,” she said. “Nothing is more dangerous than to give the go ahead to people when you know there is no cavalry to back them up, and real politik will decide in the end. You can have one Orange revolution per week then and it’s still insufficient.”

The scorecard grades European foreign policy performance in 66 different areas: relations with the US, China, Russia, Wider Europe, Middle East/North Africa, as well as European performance in crisis management and multilateral institutions. Individual countries are also singled out as “leaders” or “slackers” depending on whether or not they help or hinder Europe’s overall interests. One impetus for starting the scorecard was to prompt a wider discussion about European foreign policy, beyond usual policy circles, and to track progress after the Lisbon treaty, however, as editorial director Hans Kundani noted, the “leaders” and “slackers” section provokes more debate than the rest of the scorecard.

On balance how effective was European foreign policy in 2013? ECFR gives Europe a B- average for relations with most regions, except Russia and claims “Foreign policy is back on the agenda.”  ECFR highlighted foreign policy successes last year in Iran and Kosovo as well as relative failures in Syria and worsening relations with Russia, and ranked France and the UK amongst the “leaders” and Germany and Greece amongst the “slackers.”

Much of the discussion in Berlin focused on Germany’s foreign policy role in the Ukraine and why the country found itself this year atop the list of “slackers”. The scorecard noted the federal elections last year as well as the fact that Germany undermined European attempts to reduce dependence on Russian oil as key reasons why it failed to impress this year.

To read more about the ECFR scorecard or do download a copy, please click here: http://www.ecfr.eu/scorecard/2014

Parliament Watch: a New Platform Empowers Citizens to Participate in Politics

Civil society initiatives to monitor government have been on the increase in the past years, especially with the rapid development and application of new ICTs to this field. One of such examples is Parliament Watch, originally implemented in Germany. Not only has the project successfully engaged German citizens to monitor their representatives regularly, it has also inspired similar projects in other countries.

One of the main features of Parliament Watch (abgeordnetenwatch.de) is that it offers a platform for accessing up-to-date information on the performance of representatives at European, Federal and, to some extent, even state and communal level in Germany. Users can find information on representatives’ voting records, participation in committees and other activities that they engage in next to their mandate. Before elections, Parliament Watch additionally provides information about all candidates running for election to legislative bodies at all levels.

But more than a platform with valuable information, the project has also become the main channel for communication between voters and representatives. Citizens can register and send direct questions to representatives on various topics. Comments are moderated, and users have to respect a code of conduct. This function of the project has been very successful in better connecting politicians and their constituency: about 90% of all representatives listed on the website answer questions from users, and all questions and answers are recorded and remain available to other users.  Since the project began in 2006, more than 123.000 questions have been submitted and over 100.000 received replies.

The website is visited by 10.000 users daily and has about three million page impressions monthly. On average around 2.000 questions are addressed through Parliament Watch every month. The founders of the platform argue that such an initiative was necessary in a “representative democracy with only a few elements of direct participation” such as Germany. The project is mainly financed through small, regular donations by members, sponsorships and one-off donations by representatives that wish to include some additional information to their profiles.

The project has definitely made an important contribution to empowering citizens to actively participate in politics in Germany. Now the founders also collaborate with organisations in other countries to support the implementation of similar initiatives. One such initiative is the Irish website candidatewatch.ie,  which has had 150,000 visitors during the latest Irish elections to the European Parliament. Similar projects have been initiated in Austria, Luxemburg, and lately the model has also been successfully implemented in Malaysia.

The picture featured above is from telegraph.co.uk and is credited to Getty Images.