Policy tool: Participative budgeting

Participative budgeting facilitates fiscal openness and has grown in popularity over recent decades. It allows the participation of citizens in the conception and/or allocation of public finances. An OECD survey on government efforts to promote open and inclusive policy making in 25 countries (2009) found that close to half of the respondents saw open and inclusive policy making as “important” or “very important” in increasing citizens’ trust (43%). Empirical evidence also suggests that public participation in budgeting has a positive impact on trust and confidence. For example, PytlikZillig et al. (2012) looked at participatory budgeting discussions in Lincoln, Nebraska where residents were invited to provide input to city officials on budget decision making. Feedback from residents indicates the public welcomes the invitation to participate in governance and, in addition, the members of the public who participate in Lincoln’s budgeting input activities have high levels of trust and confidence in government. An example of participative budgeting in Ireland is provided in Box 5.2.

Box 5.2. Participative budgeting in Ireland

In 2015, the government instituted a new process of National Economic Dialogue (NED), a formalised process of consultation and debate with societal interests to enhance the whole-of-year budget development process. The NED was conducted on 16-17 July 2015: the mid-year timing was chosen so that “the discussions during the Dialogue about where our resources should best be allocated, and how to accommodate the many demands and pressures for increased resources, can then inform the work of the government in deciding on Budget measures and the legislature in considering the Budget later in the year. By launching the NED, the government has indicated its willingness to strengthen transparent stakeholder participation in the ex ante budget phase. The NED process was broadly perceived as a success, and the NED was re-convened in June 2016 by the newly appointed government.

Source: Downes and Nicol, 2016.

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