Counting the cost of election promises

Political parties here still not subject to independent costing of election undertakings

We are in the lead-in to an election and political parties are working on their election manifestoes. The forthcoming election may give voters an opportunity to influence the economic policies to be pursued over the rest of the decade. It will present a challenge to parties and the voting public to get to grips with the complex problems facing Ireland.

While political parties will strive to make their manifestoes look as attractive as possible, it may be difficult for voters, in the short space of a campaign, to establish the credibility and achievability of the proposals being put forward.

Over the last 40 years, elections have been fought increasingly over competing manifestoes and programmes for government that have become progressively more sophisticated.

The 1973 Coalition had its 14-point programme. The 1977 Fianna Fáil manifesto promised to reduce or eliminate a range of taxes but, during the election campaign, the media did not scrutinise its economic feasibility. As it turned out, the incoming government, unfortunately, honoured its election promises and the result was a public finance crisis that took a decade to resolve.

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Since the 1970s a number of changes have occurred. Firstly, the media has played a very important role in questioning politicians about the cost of individual proposals, thereby introducing an additional degree of transparency. The second, related change began in the 1980s, with parties having major items of their manifestoes costed by the department of finance. This exercise is executed on a confidential basis and proposals are not disclosed to the government of the day.

However, while individual elements of party manifestoes are now costed by officials, there is no process for independently assessing the economic coherence of the suite of promises in a manifesto. For example, while an individual tax change might be sustainable, the effect on the economy of implementing all items in a manifesto could be much more damaging. This will not become apparent from a piecemeal assessment.

The Netherlands has implemented what is probably the most sophisticated system of independent oversight of political manifestoes, a task that is undertaken by the widely respected Netherlands central planning bureau (CPB). The independence and technical competence of the CPB is accepted in Dutch society, even though it is technically part of the ministry of finance.

Over the last 20 years, the system has evolved so that all parties submit their manifestoes, well in advance of an election, for assessment by the CPB. It is not compulsory to do so but, in past elections, parties that did not participate were pilloried by the media for their lack of transparency.

In 2012, the CPB assessed 10 manifestoes as part of the election process, up from eight in 2006.The increase in the number of manifestoes to be assessed reflected both an increase in the number of parties and the acceptance by all parties that they need to submit their manifestoes for independent scrutiny.

The evaluation undertaken by the CPB goes far beyond costing individual elements of a manifesto, as it evaluates the overall economic and environmental coherence of the proposals. The publication of the CPB report attracts major media attention in the election campaign, ensuring the electorate as a whole is informed as to the conclusions. After the election, the CPB helpfully also publishes a summary of its report in English.*

Undertaking such an evaluation is hugely onerous as it involves a combination of significant economic expertise, independence of mind on the part of the staff doing it, and significant time pressure. Generally, the CPB has assigned two individuals to assess each manifesto, to make it clear that each party is treated independently, and it may assign up to a fifth of its staff to this task in an election year.

This evaluation process has also influenced the conduct of Dutch election campaigns. Parties have adjusted the nature of their manifestoes to ensure they can be readily assessed using the economic tools available to the CPB. However, some election proposals can prove a challenge to economic analysis, such as a manifesto proposal to tax headscarves.

On the positive side, this process provides the electorate with a degree of reassurance that they understand what promises each party is making about economic policy and the likely consequences of implementing those policies. However, while the CPB is hugely respected, the process places a very heavy responsibility on it, given that what it says may affect the outcome of an election.

To move from costing individual elements of a manifesto to a full economic analysis would be challenging in Ireland. The Irish Fiscal Advisory Council (Ifac) might seem an obvious candidate; however, as it has only a handful of staff, it would not be able to evaluate proposals coming from the multiplicity of parties and groupings in Ireland’s increasingly fractured political landscape.

Given the time pressures, the heavy responsibility such a task imposes and the importance of demonstrable independence, it may be that such a task could only be undertaken by a consortium of, say, Ifac, the Economic and Social Research Institute and the Department of Finance. To develop such an approach would take time and resources. As a result, in the forthcoming election, we will have to rely on the costings of individual measures undertaken by the department and a less formal evaluation by the media and independent commentators of the likely global impact of the parties' manifestoes. * http://iti.ms/1u3uJsN