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Performance budgeting: Current issues and ambitions, Ronnie Downes, OECD
The document discusses current issues and ambitions surrounding performance budgeting, highlighting the gap between theory and practice. It outlines various approaches to performance budgeting, the challenges involved, and recent OECD reforms aimed at improving performance data engagement among parliamentarians and the public. The document emphasizes the need for streamlined performance indicators, managerial accountability, and the importance of aligning budgeting with strategic government goals.
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Performance budgeting: Current issues and ambitions, Ronnie Downes, OECD
- 1. Performance Budgeting: Current issuesand ambitions Ronnie Downes Deputy Head, Budgeting and Public Expenditures OECD Asian SBO Bangkok, Thailand, 17-18 December 2015
- 2. Performance Budgeting –Simple in Theory… € ₩ $
- 3. …Difficult in Practice 11.5 2 2.5 3 3.5 4 4.5 5 Pay cut for head of programme/organisation Programme transferred to other… Negative consequences for leaders' evaluations Programme eliminated More staff assigned to programme/organisation New leadership brought in Budget freezes Budget increases More training provided to staff assigned Budget decreases More intense monitoring in the future Poor performance made public No consequences 2007 2011 What happens when performance objectives are not met?
- 4. Some approaches toPerformance Budgeting • PRESENTATIONAL APPROACH – Show outputs, performance indicators separately from the budget document – Easy – but effective? • PERFORMANCE-INFORMED BUDGETING – Include performance metrics within the budget document – Involves re-structuring of budget document – more engaging? • DIRECT (FORMULA) PERFORMANCE BUDGETING – More direct linkage between results and resources; contractual models – Involves extensive re-working of budget lines – is it worth it? • also: MANAGERIAL PERFORMANCE APPROACH – Focus on managerial impacts and changes in organisational behaviour – Less emphasis on link to budget allocation
- 5. The institutional andprocedural context for Performance Budgeting is developing • Link to KNIs? • Standardised PB? • Structures? • PB Agreements?
- 6. • Transparency • Accountability –Government (achieving strategic goals?) – Organisational (delivering on our mandate?) – Managerial (delivering my targets?) • Austerity – Inform difficult government decisions, cuts • Efficiency – Allocative (where resources have best effect) – Operational (value-for-money, “more with less”) • Culture-shift (focus on results and delivery) Performance information is used for a variety of purposes
- 7. Information on outcomesand impacts is not (yet?) widely used • Inputs? • Outputs? • Outcomes? • Ratings? • Efficiency? • Horizontal themes?
- 8. Some challenges remainis using Performance Information; other challenges are being addressed Accurate timely data Relevance for budget Info overload Performance culture Too bureaucratic Lack of PB guidance
- 9. Some perennial problems •Quality, relevance and objectivity of performance information • What’s the proper response to Poor Performance? – More resources, or fewer? • “Gaming” of performance targets – An issue where the target corresponds weakly to the public service objective – “Outcomes” are better targets than “outputs” – but harder • Engagement by politicians, public and bureaucrats • Any real impact on policy-making and accountability?
- 10. Recent OECD-wide reforms:improving engagement • Performance data should not be an internal, bureaucratic concern • It could – and should – excite the interest of parliamentarians and the public – Quality of debate, clearer political messages – Emphasise continuum of policy-making: resources, activities, outputs, impacts – Grounded in government-wide plans, strategies
- 11. European “pioneers” –case of the Netherlands • Link to fixed multi-year spending ceilings • 2001: Detailed performance targets, monitoring, reporting – Key Objectives agreed as part of coalition agreement • Experience of recent years: “information overload” • Too much data – administrative burden • Too “industrial-scale”, “mechanistic”, “technocratic” • Not used by parliamentarians or by public • Not useful in identifying savings quickly • 2011, 2013: Accountable Budget Reform – more streamlined approach – Differentiated, selective use of performance information – Interpretative “Policy Conclusion Statement” for each programme
- 12. Streamlining of performanceindicators in France 46% 19% 35% Efficiency for the citizen Quality of service Efficiency for the taxpayer Between 2014 and 2015 : -17% objectives, -19% indicators
- 13. US approach: AgencyPriority Goals • GPRA Modernization Act 2010 – Inspired in part by UK experience: PSAs • Emphasis is primarily MANAGERIAL not BUDGETING – Identification of Agency Priority Goals and Goal-Leaders – Move to quarterly reporting – Government-wide Performance Improvement Council and dedicated website • Successful in creating internal ‘ownership’ and commitment to performance targets
- 18. Wellbeing indicators –“the Rule of Three?” 1. Economic indicators – Competitiveness – Potential growth 2. Social / Inclusive indicators – Poverty, inequality, relative income – Health, Education – Cultural life 3. Sustainability indicators – Environment – Human and physical capital – Fiscal and Societal Resilience Examples: France, NZ, OECD
- 19. Lessons learned aboutgood and bad practice? a) use ready-made performance data from policy cycle b) clear programme logic linking inputs, outputs, outcomes c) seamless link to government-wide strategy and goals d) avoid information overload – the “vital few” indicators e) Include national and international benchmarks f) organisational, managerial accountability for results – Establish routines of behaviour within organisations g) audited and auditable performance targets h) citizen- and CSO-accessible data
- 20. Current Work bythe OECD • Develop a broader conception of “performance” – Whole-of-government concept – Centre of Government – leadership and coordination – HR: accountability of organisations and senior executives – Open government aspects: societal accountability • Analysis of “what works” in OECD countries – 2016 Survey of Budgeting Practices and Government Performance • For discussion: What are the Asia-specific experiences of performance budgeting successes and challenges?
- 21. Budgeting within fiscal objectives OECD Recommendationon Budgetary Governance Quality, integrity & independent audit Performance, Evaluation & VFM Comprehensive budget accounting Effective budget execution Alignment with medium-term strategic plans and priorities Performance, evaluation & VFM Transparency, openness & accessibility Participative, Inclusive & Realistic Debate Fiscal Risks & Sustainability Capital budgeting framework