Can an “Independent” Public Body be Truly Independent?
Posted by Richard Allen
Independent
central banks in many countries are under threat from governments that want to
bring them under a tighter rein. Independent fiscal councils have been
abolished by governments that see their independence as an unacceptable threat.
Independent auditors are having their autonomy and remits curtailed by
governments that are concerned about opening themselves up to scrutiny. Does
this signal that governments, while paying lip service to the ideas of
transparency and accountability, only accept these ideas on their own terms,
and suitably diluted for public consumption? What are the failures of the
executive branch—inadequate public accountability, for example—that
independent public entities are deemed to fill? How well have the entities
concerned filled these perceived gaps?
These are legitimate and complex questions but are the subject of several research studies, including an ongoing study of fiscal councils by FAD. In this article we focus on a narrower question: what do we mean when we say that a public sector entity is “independent” and how can we measure its degree of independence? It seems fair to say that, for entities operating in the public sector such as central banks, audit institutions, accounting standards boards, and fiscal councils, there can be no absolute standard or guarantee of independence. “Independence” is a relative term, and one that depends for its legitimacy on the quality of political institutions and public perceptions, as well as legal and financial considerations. It is possible nevertheless to set out the conditions that make it more likely that an institution such as a fiscal council or an accounting standards board is able to operate independently of the government.
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