A Right of Old: Parliament and the Budget

The budget is often called “politics cast in numbers“. Approving the budget is one of the most important rights of Parliament, because it determines the focal points of governmental policy.

One of the most Ancient and most Important Powers of Parliaments

And it is one of the oldest powers: The development of parliaments goes back to the power of assemblies of noblemen and estates to approve moneys for the ruler and his/her armies.

The budget power was the starting point for the development of modern parliamentarianism. It all began, at the latest, in England with the Bill of Rights of 1689, which stipulated that Parliament was to approve funds annually to “His Majesty the King”.

Once Approved, the Budget Is Called Federal Finance Act

The National Council approves the budget in two steps: in spring the budget framework is adopted, which sets, or adjusts, the ceilings for expenditures for the next four years. And in autumn the Federal Finance Act states explicitly who may spend what amount for what purpose. In accordance with the major budget reform of 2013 the budget is no longer limited to mere figures and amounts but clearly defines for each area of the federal administration what measures are to be financed and what targets are to be reached.

The Federal Finance Act addresses all federal institutions, not the citizens. In other words: an old-age pensioner continues to have a rightful claim to his/her pension even if no funds for this purpose are envisaged in the budget. If this is the case, the National Council may confront the need to pass a law approving the budget overrun.

The Financial Framework and the Budget in the National Council

In spring, the Federal Government presents to the National Council the draft of a four-year financial framework which forms the basis for the Draft Budget. The latter has to be submitted to the National Council at the latest ten weeks before the inception of the next fiscal (=calendar) year. The draft is presented by the Minister of Finance in his/her “Budget Speech”.

Referred to the Committee after the “Budget Speech“

After the budget speech the draft usually undergoes a “first reading“ and is then referred to the Budget Committee, to which the Constitution entrusts the preliminary deliberation.

The Budget Committee discusses the draft in detail in the course of several sittings. Subsequent deliberation in plenary also takes several days. The individual parts (subdivisions, formerly called “budget chapters“), such as domestic affairs, foreign affairs, justice, are dealt with one after the other and finally put to the vote.

Redistribution of the Respective Powers of Parliament and the Administration

The Budget Reform has endowed the Administration with more flexibility in using budget funds. The Federal Financial Act no longer defines expenditures in every detail but rather contains what are called ”global budgets“. At the same time, however, the National Council assumes greater responsibility in the form of concomitant control of the use the taxpayers’ money. The administrative services have to present detailed reports to it at regular intervals, which also gives the Members of the National Council a basis for implementing administrative and legislative reforms, and may, when adopting the subsequent budget, modify focal points in administrative activities. The Constitution calls this the National Council’s ”participation in budget management”.

Under this provision the Budget Committee checks the work of the Finance Minister and his/her officials continuously.

The Budget Committee receives at regular intervals reports on the development of income and expenditure and on whether the aims set in the budget have been reached. This is done every quarter in respect of the approval of expenditures in excess of or outside the budget and the burden thus placed on future budgets, and annually regarding the sale of federal assets, the development of financial debts, federal guarantees and subsidies granted. 

The Budget and Europe

In recent years the coordination of the budgetary policies of the member states has become an important area of EU policy, since it is seen as an essential basis for the implementation of the political objectives of the EU. By international standards the Austrian National Council has a remarkably strong position. The Federal Government has to keep it informed on all important issues and impending decisions. Whenever a country is to be supported via the European Stability Mechanism ESM (“Euro rescue package“), the Minister of Finance may only give his/her consent if so authorised by the National Council. If a unanimous decision by the ESM is required this means that the National Council actually has the power to prevent any such action.

Control of Budgetary Management by the Court of Audit

Concomitant control by the National Council focuses on political aspects: the members discuss objectives and take decisions.

The detailed scrutiny of the economic aspects - called management control - is undertaken by the Court of Audit. The Court also prepares the Federal Balance of Accounts at the end of the fiscal year.

The Federal Council has no Voice in Budgetary Matters

The budget is discussed and approved only by the National Council, while the Federal Council cannot participate in passing the Federal Finance Act and the Budget Framework Act, nor in approving the Federal Balance of Accounts or laws regarding the federal financial debt, federal guarantees or the disposition of federal assets.