A FAIR SHARE OF THE PIE OR PIE IN THE SKY: THE BUDGET AS AN INSTRUMENT OF PUBLIC POLICY TOT on Gender Responsive BudgetingSponsored by UN WomenRussian Presidential Academy on the Economy and Public Administration Moscow, 18-22 June, 2012Sheila Quinn, Gender Specialist, Ireland

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A FAIR SHARE OF THE PIE OR PIE IN THE SKY?

A radical concept – to consider that gender equality matters should be considered in the context of the budget

Gender equality is considered to be fundamental to human development that there should be no boundaries to finding the way to make it possible

This lecture will look at the response to GRB over the last 2 decades to demonstrate that the legitimacy of using the budget as a vehicle for progressing equality has been established.

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THE KING’S PURSE – BUDJET (MIDDLE ENGLISH)

The King was in his Counting HouseCounting out his money.

The Queen was in the parlour,Eating bread and honey.

The maid was in the gardenHanging out the clothesAlong came a blackbird

And ……..

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WHAT IS THE BUDGET?

A set of document, a set of laws, a plan for getting (revenue) and spending (expenditure)

The expression of the government’s fiscal policy

Government’s instrument to ‘correct’ the market, to impact on the economy

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WHAT IS THE BUDGET?

Price stability, inflation control, golden rule, economic growth, crowding out, aggregate demand, capital investment, distribution of income

Economic aid, children’s allowance, price of shoes, prescription charges, community health services, price of petrol – even the price of a pint.

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WHAT IS THE BUDGET?

The most important policy document

A reflection of the government’s priorities

Process involving a few – legislators and parliamentarian have limited input – public even less

To a large extent separate from policy making

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THE COUNTING HOUSE – FORBIDDEN TERRAIN

Finance – the pinnacle of portfoliosElitism of economicsLimited number of decision-makersCertainly not for the social agendaLimited communication with other

departments Imbalance between involvement of

on independent advisers and non public representatives

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TRADITIONAL VIEW OF THE BUDGET

Technical instrument of public finance management – value free, benefits all equally

Instrument of control – goal is to get optimum results – guided by concerns for economy and value for money

Competing priorities – scarce resources – need to ensure maximum public good

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CONVENTIONAL MODEL OF ECONOMY

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ASSUMPTIONS Households do not produce – merely consume Household treated as a unit – no cognizance of

bargaining roles within household Role of government is to redistribute income and

increase (if G is greater than T: deficit) or reduce (if T is greater than G: surplus) aggregate demand

Stock of natural resources, labour & social framework is taken for granted, required no work to maintain these resources

Economy is in equilibrium if savings + imports = investments plus exports

However, equilibrium does not guarantee full employment, absence of poverty & human development

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INTRODUCING GENDER INTO THE MODEL

Elson examines elements of applying gender disaggregation into the models Proportion of government spend to male/female headed

firms Patterns of investment & export behaviour by gender Patterns of income generation by gender Proportion of national income to household by gender Patterns of saving and spending within household by

gender Taxes & transfer payments differences by gender

Limitations of this approach: No focus of interplay within households and within firms –

units Ignores domestic reproductive work + voluntary

& community work, ie. the unpaid care economy

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CARE ECONOMY AS PART OF OUTPUT

Elson goes on to argue that it’s possible to incorporate the care economy into macroeconomic thinking by focusing on the circular flow of national output - as a product of the interaction of all three sectors:

Private sector commodity market Public service economy Household and community care economy

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mINTERDEPENDENCE IN CREATION OF NATIONAL WEALTH

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FLOW OF INCOME VS FLOW OUT OUTPUT However, care economy overburdened =

negative feedbacks to commodity and public service economies: work days lost, lower productivity due to ill

health, higher insurance costs, policing etc

Affect level of growth of output

This economists understand – recognise the need to invest in care economy either through public services or decent jobs

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Much of investment in care economy is best supplied through public services free at the point of delivery – historically the improvement in production from care economy has come through improvements in public services

Public service economy financed by taxes on formal sector commodity economy

When taxes do not meet the required investment – budgetary strategies reducing investment in public services

Avoid the deficit theory – however deficit can have positive and negative effects – so can be managed

One negative of deficit is reduction in public services – but does this have to happen?

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Investment in public sector services can have powerful positive impact on growth and thereby on private sector

Externalities: eg education raises productivity of individual but also others with whom that individual interacts (if I’m computer literate others save time by communicating with me via computer)

This implies that public expenditure on education should be treated as investment rather than consumption

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A key issue of aggregate budgetary policy is the extent to which a budget deficit is sustainable

This is often determined by computer macroeconomic model to project outcomes based on variables

Answers will depend on assumptions fed in

How increase in monetary supply affect inflation; increased borrowing on interest rates, increased interest rates deter private sector investmen

Negative feedback to economy from overburdened care economy not built into such models

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Other factors – less tangible impact sustainability of deficits: Climate of opinion, institutional structures

Organisation of financial markets and market sensitivity, organisation of wage negotiations, co-operative or competitive responses to budget, social bargaining

Social framework of norms, rules, values – social capital – assumed to be constant

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mECONOMIC THEORY – POLICY MAKING Budget-making essentially a political

exercise, based on public best interests & priorities

However, economic theorising (based on market interests & priorities) has gained a foothold

Autonomous economic man, golden rule, deadweight loss and displacement, deficit=bad, surplus=good

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CHANGES IN ECONOMIC THINKING

Some economists are beginning to pay attention to social capital – impact of rapid deflation and inflation on goodwill and acceptance of social norms which are recognised as necessary for functioning of economies

However, they do not connect the maintenance of social capital to women’s unpaid work in the care economy

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MOVEMENT TOWARD REFORM OF BUDGET GOVERNANCE

Countries are motivated by considerations of transparency and efficiency

The trend away from line item budgeting variations, including activity-based budgeting,

programme budgeting, outputs and outcomes budgeting.

• Broadly the approach involves the incorporation of performance information in the budget process, thus seeking to influence budget decisions.

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MOVEMENT TOWARDS PERFORMANCE BUDGETING

Aim is to allocate more money to activities that produce wanted results and less to those than do not.

Idea is that government should budget for actual or expected results – outputs and outcomes, rather than for inputs (personnel, supplies etc.

Budget system should link increments in spending to increments in results

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GENDER RESPONSIVE BUDGETING AS PART OF THE REFORM PROCESS IN AUSTRIA

Constitutional budgetary principle as of 2013: Outcome orientation including gender budgeting

Integrated approach: Gender dimension is considered on all budget management levels such as strategy report (medium term), budget chapters, global budgets etc

Does not mean to allocate separate budgets for men & women

Implementation of gender mainstreaming in budgeting Requires gender analysis definition of objectives formulation of activities in order to achieve the objectives,

and monitoring

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EQUALITY OR EXPEDIENCY

Every country, every company in the world is looking for growth wherever they can find it. It’s coming from the emerging markets … We historically think of those emerging markets as India and China and many others. But it is clear that women are an emerging market - DeAnne Aguirre, Snr VP, Booz & Company

By increasing women’s participation in the economy and enhancing their efficiency and productivity, we can bring about a dramatic impact on the competitiveness and growth of our economies – Hilary Clinton

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EQUALITY OR EXPEDIENCY

“Forget China, India and the internet: economic growth

is driven by women.”

The Economist

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WOMEN AS CENTRAL TO POVERTY REDUCTION AND DEVELOPMENT

Central and developing tenet of development thinking

International law points directly to all economic means, including the budget as a method of expediting equality

Gender Mainstreaming in place, but without a focus on spending gender mainstreaming is a blunt instrument

Without a focus on gender the budget as an instrument of redistribution is a blunt instrument

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GRB AS LIBERATOR

Framing gender issues in terms of an economic discourse, gender budgeting 'liberates' gender (and gender mainstreaming) from the 'soft' social issues arena and raises it to the level of macroeconomics, which is often thought of as technical, value-free and gender-neutral. Holvoet, Nathalie, (2006) Gender Budgeting: Its Usefulness in Programme-Based Approaches to Aid, EC Gender Help Desk

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THE BUDGET AS AN INSTRUMENT OF GENDER EQUALITY

Scores of budget initiatives all over the world Multilateral and intergovernmental

organisations pushing for budget reform Consensus between the two camps Several countries with legal obligation to

produce women’s budget statement Several countries legislated for GRB

Countries with positive duty to promote equality, including through budget process

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THE BUDGET AS AN INSTRUMENT TO ADVANCE EQUALITY

The Counting House is no longer forbidden terrain