Why is transparency about public expenditure so elusive?
| DOI | 10.1177/0020852311429931 |
| Published date | 01 March 2012 |
| Date | 01 March 2012 |
| Subject Matter | Articles |
International
Review of
Administrative
Article
Sciences
International Review of
Administrative Sciences
78(1) 30–49
! The Author(s) 2012
Why is transparency about public
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expenditure so elusive?
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DOI: 10.1177/0020852311429931
ras.sagepub.com
David Heald
University of Aberdeen Business School, UK
Abstract
Fiscal transparency is fundamentally important but difficult to achieve. The conceptual-
ization of transparency has to be more sophisticated than current rhetoric implies.
Analytical tools relating to the generic concept of transparency can be applied to
public expenditure. Achieving transparency about public expenditure presents chal-
lenges that require explicit strategies in the context of what can be very different
sets of local conditions. This article identifies the specific meaning of transparency
about public expenditure, defined in terms of the four directions of transparency:
inwards, outwards, upwards and downwards. It identifies barriers to the effective trans-
parency of public expenditure, characterizing these as intrinsic or constructed. Tackling
these barriers, especially those constructed by policy actors, constitutes a route
towards more effective transparency, not only about public expenditure itself but
about surrogates for it. It is not just quantity that matters: different varieties of trans-
parency will have differential effects on the achievement of public policy objectives. How
transparency mechanisms are structured will therefore shape their impact on public
policy – on efficiency, on equity and on democratic accountability.
Points for practitioners
Public expenditure transparency is fundamentally important, but elusive. The difficulty
stems from technical complexities and from the political process. Governments that
genuinely wish to improve public expenditure transparency must address intrinsic bar-
riers (such as low public understanding of budgeting numbers and their relationship to
national accounts) and desist from building constructed barriers (such as misleading
spinned numbers and substituting surrogates for direct public expenditure). It is not just
the quantity of transparency that matters: different varieties of transparency will have
differential effects on the achievement of public policy objectives. How transparency
mechanisms are structured will shape their impact on public policy – on efficiency, on
equity and on democratic accountability.
Corresponding author:
David Heald, University of Aberdeen Business School, Edward Wright Building, Dunbar Street, Aberdeen
AB24 3QY, UK
Email: d.heald@abdn.ac.uk
Heald
31
Keywords
barriers to transparency, directions of transparency, fiscal transparency, good gover-
nance, public accountability, public expenditure management, varieties of transparency
1. The claims of transparency
Claims made about transparency, and in the name of transparency, are pervasive in
current public debate. Transparency is often presented as a public virtue, which it is
discreditable or inadvisable to oppose. Usually, transparency is something that the
advocate wishes to impose on someone else or some organization, often a public
one. The presumed relationship is asymmetric, with transparency demanded on
issues about which the demander would not expect to have to reciprocate. Making
claims about transparency appears to be consistent with a very wide range of
ideological views and substantive policy proposals. ‘Transparency’ slips easily off
the tongue and pen, often in tandem with ‘openness’, without it being clear whether
these represent different concepts or are synonyms used for emphasis.
Transparency is much acclaimed but its effects are more ambiguous than is sug-
gested by contemporary portrayal.
Justice Brandeis’ famous claim that ‘sunlight is the most powerful of all disin-
fectants’ (Freund, 1972) has great rhetorical power but does not advance the anal-
ysis very far. It does, however, prompt an important distinction as to whether the
expectation of transparency as sunshine is to drive out corruption or whether the
goals are greater efficiency and effectiveness from the use of public resources and/or
enhanced legitimacy and accountability of public institutions. This raises the ques-
tion as to whether the dominant political concern in a particular country is, on the
one hand, about reducing corruption or, on the other, about increasing efficiency,
effectiveness and legitimacy. The optimal configuration of transparency would be
expected to differ between these two cases.
Although concerns for transparency – not necessarily using the word – have a
long history (Hood, 2006), current claims for transparency target both ‘public’ and
‘private’ activities and personal and professional actions. Few political speeches or
media interviews about public policy now omit an appeal to transparency as a non-
negotiable consideration. Some of these appeals re-clothe enduring interests and
ideas in fashionable garb, much like earlier appeals to ‘democracy’ or ‘account-
ability’. Some project transparency as the solution to governance problems, the
imprecision of both concept and mechanisms giving it the appearance of panacea,
making it difficult to counter.
Notwithstanding that part of the transparency phenomenon is political and
media knockabout, something important has happened. Transparency is associated
with developments in auditability and disclosure (Power, 1999). It is influenced by
technological change (e.g. growth of the internet and surveillance technology) and
by media developments (e.g. concentration and trivialization). It is linked to the
changing nature of the state and particularly to the way in which a self-contained
32
International Review of Administrative Sciences 78(1)
state, directly undertaking production and redistribution (positive state), has to
varying degrees been replaced by a regulatory state (Majone, 1997). This is char-
acterized by greater reliance on indirect means of achieving public policy objec-
tives, thus more dependent on reliable information flows between organizations
and less on hierarchical command-and-control within them. Transparency is often
believed to address deficits in trust, credibility and legitimacy, although there are
contrary views: for example, O’Neill (2006) views transparency as destructive of
trust, particularly in professional expertise.
This expanding public profile of transparency is stimulating the development of
a diverse academic literature, exemplified by the number of disciplines, topics and
methodologies represented at the First Global Transparency conference, held at
Rutgers University in May 2011. In terms of the role of transparency in public
administration, influential voices have been Mitchell (1998), Hood (2001), Roberts
(2006), Bovens (2007) and Piotrowski (2007). There is no space in this article to
summarize
such
contributions,
but
indebtedness
to
these
precedents
is
acknowledged.
The central argument of this article is that the way in which transparency mech-
anisms are structured will shape their impact on public policy – on effectiveness on
equity and on democratic accountability. The article sheds light on the transpar-
ency of both process and substance in relation to public expenditure, the outflow
side of the public budget. It uses the experience of the United Kingdom, which
scores highly on international rankings of fiscal transparency, as a vehicle for
highlighting generic issues, including the dangers of placing too much weight on
measurable indicators in the absence of an explicit conceptualization of fiscal
transparency.
The article is structured in the following way. This section has considered the
claims made for transparency, which is often presented as an imperative. Section 2
provides a conceptualization of transparency which is useful in considering the
specifics of transparency in a fiscal and public expenditure context. Section 3 intro-
duces the role of transparency in the fiscal domain. Having established this back-
ground and the tools of analysis, attention turns in section 4 to transparency about
public expenditure. Section 5 highlights why recourse to surrogates for public
expenditure must be monitored. Finally, section 6 concludes the analysis of why
public expenditure transparency is elusive, while articulating some general princi-
ples that should influence practical steps to increase transparency towards levels
achieved in best-practice countries.
2. The conceptualization of transparency
Heald (2003) focused on a transparency trade-off between the ‘value of sunlight’
(e.g. flushing out incompetence and corruption) and the ‘danger of over-exposure’
(e.g. avoiding excessive politicization or dysfunctional surveillance). While this
formulation provides a valuable starting point, it is incomplete because it does
not distinguish varieties of transparency. In particular, it formulates the design
Heald
33
problem in terms of ‘too much or too little transparency’ rather than ‘desirable and
undesirable (mixes of) varieties of transparency’. Prat (2005) highlighted the dam-
aging effects of the ‘wrong kind of transparency’.
As shown in Figure 1, Heald (2006a) conceptualized the ‘directions of transpar-
ency’ as upwards/downwards (the vertical dimension) and inwards/outwards (the
horizontal dimension). The vertical dimension can be thought of in principal–agent
terms. Transparency is a mechanism through which the principal can exercise sur-
veillance over the actions of an agent. If...
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