Visualizing Budgets - OECD presentations.pdfVisualizing Budgets How to share government budgets on the web Derek Eder @derekeder Open Data Web Developer Owner of Data Made & Co -Founder

Visualizing Budgets How to share government budgets on the web

Derek Eder @derekeder Open Data Web Developer Owner of Data Made & Co-Founder of Open City Chicago, IL United States

What are we trying to do? 1. Show how the taxpayer’s money is spent 2. Explain the functions that government performs 3. Increase citizen participation 4. Further an informed debate on government priorities

What are we working with?

Image source: http://www.ibtimes.com

2013 United States Federal Budget

Transitioning from paper to the web

PDFs and eBooks Interactive websites

The user: an average citizen

How has this been done so far?

Comparing across departments

Death & Taxes 2014 USA Federal Budget Poster http://www.timeplots.com/products

Estonia 2011-2013 State Budget Bubble chart http://meieraha.eu

Open Oakland 2012 Oakland, CA Budget Sankey diagram http://openbudgetoakland.org/2012-2013-sankey.html https://github.com/adstiles/openbudgetoakland

New York Times 2011 USA Federal Budget Treemap http://www.nytimes.com/interactive/2010/02/01/us/budget.html

Comparing over time

Solomon Kahn 1976 - 2013 USA Federal Budget Treemaps for many years http://solomonkahn.com/us_budget/

Arlington Visual Budget 2008 - 2018 Arlington, MA Budget http://www.arlingtonvisualbudget.org/ https://github.com/goinvo/Visual-Town-Budget

Look at Cook 1993 - 2012 Cook County, IL Budget http://lookatcook.com https://github.com/open-city/look-at-cook

State of Working Washington 2002 - 2013 Washington State Budget http://stateofworkingwa.org/budget/ https://github.com/datamade/look-at-washington

Checkbook NYC 2010 - 2013 New York City Budget http://www.checkbooknyc.com/ https://github.com/NYCComptroller/Checkbook

What we’ve learned so far 1. Avoid flashy interfaces that obscure the data; use simple charts and tables 2. View and compare departments and over time 3. Provide simple descriptions 4. Allow users to share links to a specific view

What no one has done yet • highlighted significant changes and given them context • shown performance metrics in context with budgeting amounts

(this is hard!) • answered the question: “why are we spending our money on this?”

How we get there

It’s a measurement problem

Image source: http://en.wikipedia.org/wiki/Tape_measure

Examples of what we can measure crime and recidivism rates along with police and jail budgets debt to income ratio along with total budgets total cost of healthcare for government employees

It’s also a visualization problem

How’s Business? http://howsbusinesschicago.org

Getting it right will take time 1. It will be an iterative process, so start trying now 2. release more open data on government processes 3. test out different metrics, share what works and what doesn’t 4. catalyze development by open sourcing the code

Learn from, and contribute to open source Arlington Visual

Budgethttps://github.com/goinvo/Visual-Town-Budget

Look at Cook (that’s mine!)https://github.com/open-city/look-at-cook

Checkbook NYChttps://github.com/NYCComptroller/Checkbook

Thank you

Derek Eder @derekeder Open Data Web Developer Owner of Data Made & Co-Founder of Open City Chicago, IL United States

LESSONS LEARNED FROM

EVALUATIONS OF REGULATIONS 9th Annual Senior Budget Officials Meeting on Performance and

Results

Session 2: Evaluation and policy-making: How do results impact upon

resource allocation and budgeting?

7 November 2013

Berlin, Germany

Christiane Arndt Programme Leader Measuring Regulatory Performance OECD

Three core levers at disposal of government

1. Regulation 2. Monetary policy 3. Fiscal policy

2

Reviews of regulations

• aim to improve the design of regulations by assisting policy

makers to identify and consider the most efficient and effective regulatory approaches including non-regulatory alternatives

• analyse the evidence for the costs and benefits of regulation to society and of alternative means of achieving policy goals and identify the approach that is likely to deliver the greatest net benefit to society

improve evidence-base for political decisions

3

2012 OECD Recommendation of the Council on Regulatory Policy and Governance

4

The Recommendation emphasises the importance of: • systematically evaluating the impact of regulations ex-ante

and ex-post • evaluating the performance of regulatory policy and reform

programmes and the public authorities applying the regulations

Ex-ante Regulatory Impact Analysis (RIA)

5

• identifies policy goals and evaluates if regulation is necessary and how it can be most effective and efficient in achieving those goals

• assessment of economic, social and environmental impacts • includes quantification of budget impacts in most OECD

countries

Challenges

6

RIA has been adapted de jure by most OECD countries, but a big implementation gap in many countries persists:

• RIA is often undertaken too late in the policy process • realistic alternatives are not assessed • no consultation or only pro forma consultation • bad quality of assessment • focus on quantifying burdens, neglecting other often more

important costs and benefits

Lessons learned

7

• strong regulatory oversight body, well-trained staff and good data necessary to ensure quality of assessment

• clear forward planning and procedures for early public engagement to ensure transparency and public engagement

• high-level political support to get buy-in from policy-makers

Ex-post analysis of regulations

8

• few countries systematically analyse the stock of regulation • more frequent is partial analysis focusing exclusively on

regulatory burdens • few countries look systematically at

o achievement of underlying policy goals o unintended consequences o more efficient solution to achieve the same objective

Why is ex-post analysis not widespread?

9

• policy-makers may concentrate on solving today’s problems and on implementing their campaign promises

• financial resources and experts are scarce • review fatigue • resistance from groups that benefit from the regulation

Effort versus impact: which tools?

10

Potentially low return

Ø SunsettingØ Regulator stock management Ø Red tape targetsb

Ø RIS stock-flow link

Ø Broad redtape cost estimationØ Regulatory budgets and one-in one-

outa

Ø Frequent stocktakes

Potentially high return

Ø Known high cost areas and known solutions from past reviews

Ø Regulator management strategies where weak in the past

Ø Periodic stocktakes

Ø In-depth reviews Ø Embedded statutory reviewsØ BenchmarkingØ Packaged sunset reviewsH

igh

effo

rtLo

w e

ffort

Source: presentation by Gary Banks during the 5th Expert Meeting on Measuring Regulatory Performance in Stockholm, Sweden (June 2013)

• See also the report on ex-post evaluation by the Australian Productivity Commission

Lessons learned

11

• focus on high-impact review tools • plan for ex-post evaluation already ex-ante • establish a standing capacity with reference to regularly

undertake reviews • assess the impact of regulation together with other policy

tools

Further information

12

• Contact at OECD: o Christiane Arndt, Programme Leader Measuring

Regulatory Performance, Email: [email protected], Tel.: +33 (0) 1 45 24 76 56

o Antonia Custance Baker, Economist / Policy Analyst, Email: [email protected], Tel.: +33 (0) 1 45 24 93 22

• Our website: www.oecd.org/gov/regulatory-policy

Meiji University Graduate School of Governance Studies

Hideaki TANAKA [email protected]

9th OECD/SBO Meeting on Performance and Results

Reviews and Budgeting in Japan

7/11/2013

1

1. Overview on Japan's experiences

A lot of efforts to strengthen results-oriented management have been done since the turn of the century. 2002 Policy Evaluation Act and performance report based on the Act 2004 Pilot project on performance budgeting 2007 Introduction of regulatory impact analysis 2008 Budget structure modification 2009 Government-wide "Program Review" 2010 Review sheets and program review by line ministries

Budget process gradually transparent and performance information put in the budget process, but still several problems

2

2. Policy Evaluation Act 2001

Chapter 1 (Articles 1-4) : General rules Purpose: promote the objective implementation of policy evaluation, reflect the results of this evaluation in the planning, provide the public with information on policy, ensure the government's proper discharge of its obligation Chapter 2 (Articles 5) : Basic guidelines for policy evaluation Details stipulated in the guidelines Evaluation criteria: necessity, efficiency, effectiveness, fairness, priority Evaluation methods: Project Evaluation, Performance Evaluation, Comprehensive Evaluation Chapter 3 (Article 6-11) : Evaluation by ministries A basic plan for policy evaluation, operational plan, ex-ante and ex-post evaluation, evaluation report, reflection of evaluation results in policy making and budget Chapter 4 (Article 12-18): Evaluation by Min. of Internal Affairs A plan by MOIA, power to ask submission of materials and investigation, evaluation report, recommendation Chapter 5 (Article 19-22) : Miscellaneous rules Report to the Diet, promoting research on methods of policy evaluation

3. Legal budget structure

3

4. Subsidy to R&D Agency

By line

Ministry of Economic Trade, and Industry

d. Travel for moving

2. Building & capital

3. SME support program

Item is the unit of appropriation by the parliament Transfer of money between items : parliament's approval Transfer between lines : Finance Minister's approval

By organization

1. Common expenditure

d. Retirement benefit

e. Travel

1-3 Conferences

1-1 General administration

1-2 Research

c. Salaries for part-timer

a. Basic salaries

b. Various benefits

By item By sub-item

Total number of items of this ministry: 42

4

4. Modification of the budget structure

Policy Areas

(Item) Support for small and medium-sized enterprises

(Sub-item) General administration (Sub-item) Economic reform (Sub-item) Support for small businesses (Sub-item) Transfer to the Special Account

(Item) Subsidy for the agency (Item) Information technology

(Item) Industrial technology

FY2007 Budget

(Item) Ministry of Industry (Item) Common expenditure

(Item) Manufacturing support Services industry policy

(Item) Trade policy

(Item) Capital expenditures for manufacturing

FY2008 Budget

(Item) HR development

(Item) Manufacturing

(Item) Services industry

HR development

Trade policy

Manufacturing policy

The new system 1. Number of units for the General Account from 603 to 790 (31% increase) 2. Policy Area are not indicated in the Budget Paper

5

5. Flood of evaluation practices

5

Cabinet Office

Parliament

Ministry of Internal Affairs

Line Ministries

Board of Audit

Evaluation for cross-cutting issues

Evaluation by themselves Program Review by themselves

Audit & Performance audit

Red lines: regulated by Policy Evaluation Act

Report

Supervise

Ministry of Finance

Budgeting & Budget Execution Survey

Parliamentary Review

Program Review

6

3. The first task of GRU is to implement "Program Review" (PR). GRU organizes task forces and asks them to review various government programs and agencies. Each task force consists of DPJ backbenchers and private experts (10 -20 people).

1. "Government Revitalization Unit” (GRU) is set up under the cabinet office, and its members are prime minister, responsible minister, finance minister, academics and business people (6 politicians and 5 others), supported by its secretariat.

4. Debates go on between task forces and officials from relevant ministries like an open public hearing. They are broadcasted live through the Internet. 5. GRU requests spending ministers to accept task forces' recommendations, often abolish, but no legal obligation

2. GRU's mission is to reform budgets, institutions and public administration and review the role of government .

6. Program Review by DPJ Gov. in 2009

7

7. Political show of Program Review

7

Round table

TV Budge Examiner (MOF)

Chair (politician)

Deputy ministers Officials

Reviewers (private) Audience

Reviewers (politicians)

1st Round : 9 days in Nov 2009 Review about 450 programs by 3 task forces Done one month before the next year's budget proposal 2nd Round : 8 days in April and May 2010 Review about 250 programs by 2 task forces Focus on government agencies and outsourced services 3rd Round: 8 days in October and November 2010 Reexamine programs already reviewed and review special accounts

8

8. Criteria of Program Review

Budget should be cut?

Is it necessary for public?

Should the central government do it?

Is it needed in the next year?

Improvement needed?

No

Reform Outsourcing

Abolish yes

Local government

yes

Cut

yes

No

Wait

9

9. Battles between reviewers and officials

10

10. Results of the Program Review

10

1. Wasteful spending and programs revealed, more transparent 2. Experiment of participatory budgeting, review not by budget examiners in MOF but outsiders 3. Difficulties of MOF, audit office and other relevant agencies to scrutinize various spending and programs 4. Savings are much smaller than expected, thus not enough to finance additional spending, actually ended in larger deficits (saving target by ministry not introduced) 5. Ministries cannot explain performance and efficiency of relevant programs clearly (lack of performance information) 6. Ministers do not always exercise their political leadership to cut wasteful programs and reallocate resources, rather defend their budget

A problem of asymmetry of information between guardian and spenders is identified

11

11. Further development of reviews

11

2. Program Review incorporated into the budget process The new budget process Ministry's self-assessment → Open process of reviews by outside experts → Publication of Review Sheets → Public comment on Review Sheets → Ministry's budget requests to MOF based on the results of reviews

1. "Review Sheets" introduced in 2010 Details of Government's all programs and projects described in "Review Sheets", the total number of sheets about 5,000 Public can get information of government's programs and some problematic programs are found by public

12

12. Information written in Review Sheet

12

1. Name of program/project, relevant policy managing the program/project 2. Relevant Ministry, bureau, division, writer of sheet 3. Type of account, relevant law, regulation and order 4. Purpose of program/project, summary of program/project 5. Way of implementation (direct, outsourcing, subsidy, lending) 6. Amount of expenditure (four years, initial and supplementary budget, final disbursement), Details of budget 7. Outcome and output indicators and their results (three years) 8. Unit cost and estimation method 9. Necessity of government's intervention and budget 10. Degree of efficiency and effectiveness, similar program/project 11. Summary of self-assessment 12. Opinions of outside experts and internal task force, improvement based on these opinion 13. Recipients of resource

13

13. Budget process and participatory budgeting in 2013

13

Review by external experts by

either internal process or open process

Review by Ministry of Finance

Publication of final

Review Sheets Assessment by the Committee and recommendation to MOF Until

December

Assessment by the task force of line ministries

Publication of preliminary

Review Sheets

Self-assessment by divisions of line ministries

September

April |

May

August

Budget request by lime ministries

June |

July

Administrative Reform Committee

(Prime Minister, Finance Minister, relevant ministers

and private experts)

Fiscal year : April to March

Collection of public opinions and Sending them to relevant ministries

Audit and other reviews

Nomination of experts and advise

14

14. Reviews and FY2014 GA Budget request

14

Ministry

No of Programs FY2012

Terminate Downsizing Total Request

for FY2014 No Amount No Amount

Cabinet Office 133 1 ▲110 26 ▲1,316 393,415

Finance 43 - - 30 ▲759 390,591

Foreign Affairs 277 6 ▲83 92 ▲33,635 517,496

Education 407 21 ▲19,942 166 ▲23,145 5,641,333

Social Welfare 676 3 ▲329 117 ▲22,465 18,029,062

Agriculture 350 6 ▲1,175 57 ▲2,438 1,859,388

Economic & Industry 334 38 ▲23,592 33 ▲2,846 314,841

Construction 418 20 ▲2,451 75 ▲6,214 3,670,706

Environment 290 21 ▲280 86 ▲843 298,525

Defense 416 - - 51 ▲4,132 2,618,231

Others 378 3 ▲161 110 ▲14,169 1,125,025

Total 3,722 119 ▲48,023 843 ▲111,962 34,858,613

Million Yen, Total Expenditure of General Account for FY2012 (except debt service) =68.3 Trillion Yen

15

15. Overall assessment on Japan's experience

15

Remaining problems 1. Too much evaluation and duplication, and writing an evaluation report is becoming a goal of evaluation 2. Performance information and Review Sheets are not always clear to public and often self-justification by line ministries 3. Little incentive to use performance information, little commitment by senior officials and ministers, less accountable to the parliament

Improvements 1. The importance of evaluation has been realized among civil services. 2. A lot of data of programs have been provided to public. 3. Performance information is gradually put in the budget process.

16

16. Unfinished business

2. Hard budget constraints and managerial freedom to allocate resources would create incentives for an organization to review programs and expenditures with performance and results, while maintaining accountability.

1. The tension between guardian and spenders is a traditional problem which undermines the efficient allocation of resources. In order to solve this problem you have to alter rules of budget game, incentives and roles of players in addition to change bureaucratic culture of too much control and compliance.

Evaluation and Policy Making: How do Results Impact upon

Resource Allocation and Budgeting

Paula Darville

Head of Management Control Division Budget Directorate, Ministry of Finance, Chile

November 2013

PERFORMANCE BUDGETING CHARACTERISTICS

• Is implemented through a Management Control System.

• The system´s objective is to provide performance information and introduce practices to improve the quality of public expenditure.

• Performance information about: • Improving resource allocation

• Improving the use of resources

• Improving transparency

Monitoring and Follow up • Performance Indicators (1993) • Strategic Definitions (2001) • Monitoring of Social Programs (2013) Evaluation • Ex ante (2000) • Ex post:

– Evaluation of Public Programs (1997) – Impact Evaluation (2001) – Agency Evaluation (2002) – Evaluation of New Programs (2009)

Institutional Wage Incentives Mechanisms • Management Improvement Program (1998) • Incentive to Physicians(2003) • Institutional Efficiency Goals(2007)

EVALUATION AND MANAGEMENT CONTROL SYSTEM

• Started 2000 with preparation of 2001 Budget.

• Standard format to submit public programs for funding (2005 – 2009).

• Performance questions (ex-ante): • Are programs/policies likely to achieve their aims? • Have programs/policies been designed cost-effectively?

• Gathering relevant information for the budget elaboration

(diagnosis, potential and target population; focusing and selection criteria; aims; expected results; costs, among others), based on logical framework.

EX ANTE EVALUATION

EX ANTE EVALUATION

Programs submitted to ex ante* evaluation 2008 - 2013

Year Type of programs

2008 2009 2010 2011 2012 2013 Total

Social programs 75 54 85 55 44 49 362

New 48 18 20 26 30 24 166

Reformulated 27 36 65 29 14 25 196

Not social Programs 24 40 50 22 30 24 190

New 14 16 17 7 21 13 88

Reformulated 10 24 33 15 9 11 102

Total 99 94 135 77 74 73 552 Since year 2012, the Ministry of Social Development performs the ex ante evaluation of social programs (new and reformulated). Source: Dipres.

6

EX POST EVALUATION

• Performance Questions: – Have programs/policies operated as planned? – Were public goods and services provided transparently? – Did programs/policies achieve their aims? – Was the set of programs/policies in an area consistent? – Are things improving?

EX POST EVALUATION

• Started 1997.

• Assesses ongoing programs against their stated aims and expected results.

• Budget-related.

• Performed by independent evaluators selected by public tendering (panels of experts or universities and consulting firms).

• Evaluators with authority to request information, commission studies.

• Counterpart in ministries/agencies are in charge of programs.

• Reports to Budget, full disclosure to Congress and the public.

Performance Category Effects

Good performance None

Adequate performance Commitments must be made to deal with weaknesses identified in the evaluation.

Under performance

The program must be submitted to an ex ante evaluation for the next budget formulation, in order to improve its overall design.

No Demonstrated Results Commitments must be made to measure the result of the program.

EX POST EVALUATION • Programs are classified, according to results of evaluation, in

performance categories.

The role of Congress :

• Permanent Special Budget Commission: Senators and

Deputies

• The Special Commission recommends a list of programs and institutions to be evaluated, through a protocol of agreement between Congress and Government signed during the discussion of the Budget Project Law each year

• The Commission acts as a mechanism which allows strengthen transparency. All information on results from evaluations, indicators of performance and achievement of its goals is sent to the Congress along with the Budget Project Law each year.

EX POST EVALUATION

TYPES OF EX POST EVALUATION

• Evaluation of Public Programs – Review consistency in design, execution and reporting. – Based on logical framework methodology.

– Performed by panels of 3 independent experts, selected by public tendering.

– Final reports in 6 months. – Directly connected to the budget cycle.

• Impact evaluations

– Assess program effectiveness on basis of impact measures.

– Methodology includes extensive data collection, more sophisticated evaluations techniques (CBA, CEA), control groups.

– Performed by consulting firms, universities, selected by public tendering.

– Final reports in 1-11/2 years.

TYPES OF EX POST EVALUATION

• Agency Expenditure Evaluation – Assess consistency of ministry/agency portfolio of programs in

relation to agencies mission and objectives. – Search for duplications, inconsistencies, opportunities to generate

synergies and savings.

• Evaluation of New Programs - Design of the evaluation at the beginning of each new program. - Establishing control groups for the evaluation, based on

randomized trials whenever possible. - Establishing an international advisory committee to periodically

review and assess the process of evaluation.

EX POST EVALUATIONS: 1997-2013

( ) = in progress

EVALUATION LINES 1997 - 1999

2000 - 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

Evaluation of Public Programs (EPG) 80 94 13 14 16 20 18 10 19 15 299

Agencies Evaluation (ECG) 19 2 4 7 5 5 1(3) 0 (6) 54

Impact Evaluations (EI) 30 7 14 12 8 14 (9) (11) (2) 107

Evaluation of New Programs (EPN) 5 4 3(2) 0 0 14

Total Programs/Agencies 80 143 22 32 35 38 41 30 30 23 474

• During 2006 – 2013 total budget evaluated has reached 56% of the 2013 total central government budget. The programs and institutions evaluated in this period reported in terms of budget over US$32.299 millions.

13

Evaluation of Programs (EPG - Impact)

EX POST EVALUATION

Effects Variation (%) 2012-2013

Variation (%) 2013-2014

Good performance 11% ..

Adequate performance 26% 5%

Under performance 12% -63%

No demostrated Results 2% 5% Total 18% -29%

(

- NATIONAL FUND FOR SCIENTIFIC RESEARCH (Evaluation of Public Programs 2013) - Performance Category: Adequate

RESULTS & EFFECTS

The program seeks to promote the development of basic scientific research in the country.

The program contributes to the development of scientific research in Chile in quantity and quality. Indeed, about 80% of research is published in high quality journals, which compares favorably to the average country (40%). Also, between 2009 and 2012, the amount of research in the country grew due to an increase in the program budget (89%), which expanded the number of projects funded in 69%, maintaining the number of publications per project (around four per project ).

For 2014, the budgetary effect will be an increase of resources.

DESCRIPTION

EX POST EVALUATION: EXAMPLES

- MICROCREDIT PROGRAM (Evaluation of Public Programs 2013)

- Performance Category: Under Performance

RESULTS & EFFECTS

The program intends to reduce barriers to credit access for low income micro entrepreneurs by subsidizing the operating costs of micro- credit loans.

A case study raised in the context of the assessment delivered signals that beneficiaries have access to credit, regardless of the program. Additionally, beneficiaries have no access to improved credit conditions (rates), for unsubsidized operations.

For 2014, the will be no change in the amount of resources. Ex ante evaluation.

DESCRIPTION

EX POST EVALUATION: EXAMPLES

-NEIGHBORHOOD JUSTICE (Evaluation of Public Programs 2013)

- Performance Category: No demonstrated results

RESULTS & EFFECTS

The program seeks to a) solve local conflicts among residents of some areas of Santiago and b) guide or counsel people when the problems are beyond neighborhood level.

The results of the evaluation show that there is not sufficient evidence to determine whether its performance is satisfactory. In this regard, only partial results were measured in the 2011-2012 period: 59% of cases reached some kind of resolution, and 34% dropped out; however, there is a lack of benchmark information to based judgment about these results.

As a result of the evaluation, resource allocation was conditioned to an impact evaluation.

DESCRIPCIÓN

EX POST EVALUATION: EXAMPLES

Evaluated programs and institutions Compliance with corporate agreements: 1999-2012

Ministry Achieved Partially Achieved

Not Achieved

Transfer of Achieved

Total N° of Commitments

Valid by June 2012

Ministry of Agriculture 98% 2% 0% - 645 Ministry of National Defense 98% 1% 1% - 154 Ministry of Economy 97% 2% 1% - 336 Ministry of Education 96% 3% 1% - 933 Ministry of Foreing Affairs 99% 1% 0% - 168 Ministry of Finance 100% 0% 0% - 107 Ministry of Internal affairs 90% 5% 4% 1% 333 Ministry of Justice 97% 2% 1% - 270 Ministry of Planning 95% 3% 1% 1% 619 Ministry of Minning 100% 0% 0% - 49 Ministry of Public Works 90% 5% 5% - 151 Ministry of Health 92% 7% 1% - 151 Government General Secretariat Ministry 92% 0% 0% 8% 273 Presidential General Secretariat Ministry 100% 0% 0% - 31 Ministry of Labor and Social Security 95% 1% 0% 4% 277 Ministry of Transport and Telecommunications 99% 1% 0% - 92 Ministry of Housing 89% 8% 3% - 244 Ministry of National Assets 73% 20% 7% - 41 Ministry of Energy 100% 0% 0% - 33 Ministry of Natural Resources 91% 6% 3% - 89 TOTAL 95% 3% 1% 1% 4.996

• Started in 2012 with the creation of the Ministry of Social Development (MDS).

• The MDS monitors: • Diagnosis (objectives) • Targeting • Performance: design and accomplishment • Resources management

• Budget Directorate developed a pilot initiative in year 2012,

monitoring 67 no social programs. The process monitored as well: • Design (objectives) • Targeting • Performance • Resources management

MONITORING

EVALUATION 2011-2014

• Gradually moving towards getting information that supports the budget preparation.

• Focusing primarily on performance in the dimensions of effectiveness and efficiency.

• Corporate agreements focused on performance indicators and follow up once a year.

• Strengthening ex ante evaluation.

• Strengthen ex ante evaluation, allowing a better integration with the budget formulation process. Encourage its use as an input of ex post evaluation.

• Focus ex post evaluation on measuring intermediate and final results. Encourage a more effective use in budgeting. Improve the selection of programs to evaluate and strengthen budgetary effects.

Gobierno de Chile | Dirección de Presupuestos del Ministerio de Hacienda 20

ACHIEVEMENTS AND CHALLENGES

Thank you

Addressing government-wide political challenges within a

performance framework

Christian Kastrop

German Federal Ministry of Finance

9th Annual SBO Meeting on Performance and Results Berlin, 7-8 November 2013

Bundesministerium der Finanzen

Berlin

Potential government-wide challenges

2

Demographic change

Social cohesion

Climate change (mitigation / adaption)

Transition to renewable energies

Natural disasters (prevention / relief)

Public debt (containment / reduction)

Maintaining international competitiveness

…

Bundesministerium der Finanzen

Berlin

Example: Demographic change in Germany

3

Men Women

1950

Age

2008 and 2060

Age

Men Women

Upper boundary of „medium“ population scenario 2060 Lower boundary of „medium“ population scenario 2060

Thousand individuals Thousand individuals Thousand individuals Thousand individuals

Source: German Federal Statistics Office

Bundesministerium der Finanzen

Berlin

Example: Demographic change in Germany

4

Old-age dependency ratio • is projected to almost double

from 2010 to 2060 (StatBA)

Number of persons of employable age • will decline from 43 million in

2010 to approx. 31 million in 2060 [assuming annual net migration of 100.000] (StatBA)

Age-related public expenditure • is projected to increase by

5.2% of GDP from 2010 to 2060 in Germany (EU Ageing Report)

Sustainability reporting essential as an early warning mechanism in order to ensure sustainable public finances in the long run.

Bundesministerium der Finanzen

Berlin

Tackling government-wide challenges early on: The Federal Government‘s demographic strategy

The Federal Government has launched an inter- departmental demographic strategy in April 2012.

5

The strategy’s key policy areas:

- strengthening the family as a community;

- motivated, skilled and healthy work;

- independent living in old age;

- quality of life in rural areas and integrative urban policy;

- securing the foundations for sustainable growth and prosperity;

- maintaining the state’s capacity to act.

Bundesministerium der Finanzen

Berlin

The impact of demographic change on public finances

0%

50%

100%

150%

200%

250%

300%

350%

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

In %

of G

DP

Variants T- and T+ in the no-policy-change scenario

Projection of the German debt-to-GDP ratio, assuming unchanged policies and ignoring the impact of legislative constraints (2000 – 2060)

Source: Werding / ifo 2011

6

Current policies are not sustainable in the long-run

T-: Pessimistic base variant T+: Optimistic base variant

Underlying assumptions on demographic, labour market & other macro-economic developments vary

Bundesministerium der Finanzen

Berlin

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

40%

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

% o

f GD

P

year-2010 level

T+

T–

Further, inter-departmental policy action needed

Aggregate expenditure ratio projection (2000 – 2060)

Source: Werding / ifo 2011

7

T-: pessimistic base variant T+: optimistic base variant

If current policies remain unchanged, the aggregate expenditure ratio will rise significantly In light of the rising fiscal pressure due to demographic change, improving the efficiency and effectiveness of public expenditure becomes increasingly important.

Bundesministerium der Finanzen

Berlin

Early on, inter-departmental policy action required:

1) Implement credible fiscal rules that strengthen fiscal discipline

2) Develop further institutional mechanisms that increase inter-departmental efficiency and effectiveness of public spending and revenue both in the short and longer term, such as strategy reports, review processes

3) Implement structural reforms that put social security branches on a fiscally sustainable path

4) Encourage thinking past legislative periods by strengthening the role of long-term sustainability reporting in the budget process

5) Fertility / migration… policy-oriented specific elements?

How to ensure “value for money” against the background of demographic change?

8

Bundesministerium der Finanzen

Berlin

Potential government-wide challenges

9

Demographic change

Social cohesion

Climate change (mitigation / adaption)

Transition to renewable energies

Natural disasters (prevention / relief)

Public debt (containment / reduction)

Maintaining international competitiveness

…

Bundesministerium der Finanzen

Berlin

Questions for discussion

10

How to best address government-wide challenges within the budgetary / fiscal policy scope? Strategy reports? Thematic spending reviews? Fiscal stress tests? Inter-departmental working groups on long-term spending performance? Different challenges require different policy designs (e.g. PISA).

How to foster an exchange of information within government / a shared vision?

Particularly relevant at the beginning and end of a legislative period: How to institutionally put a check on policies that have no negative consequences in the short-run, but are costly, inefficient or even counterproductive in the long-run?

…?

Bundesministerium der Finanzen

Berlin

Thank you very much for your attention!

11

Experience and Lessons from the Netherlands

Peter van den Berg Director Budget Affairs Directorate Netherlands Ministry of Finance

SBO meeting Berlin, Nov 7th 2013

How helpful is performance info in the budget? Lessons: + Program structure useful for accountability and managerial flexibility + Performance information is helpful for internal steering and oversight (e.g. agencies) - Performance information seldom plays a role in allocation by polioticians - Input information and policy instruments remain vital to Parliament - The budget cannot be the comprehensive and objective ‘mother of all policy documents’ - A supply side oriented, uniform approach to performance information is no recipe for use

voettekst 2

Rely on multi year ex-post policy evaluation for assessing effectiveness

instead of Relying on PI use in annual budgetary cycle

PB lessons and reforms 2011: Accountable Budgeting reform •Add more detailed financial information •More selective use of policy information and indicators in budget documentation •Renewed emphasis on policy evaluation

voettekst 3

2 september 2013

Sub‐central governmentperformance: what to measure

and how?

Discussion Group3:Governing from afar:performance budgeting andrelations across levels of

government

AnttiMoisioGovernment InstituteforEconomic Research (VATT),Finland

Introduction

• AgeneraltrendinOECDcountrieshasbeentowardsgreaterdelegationofspendingresponsibilitiestosub‐nationallevelsofgovernment

• However,thediscretionaboutthelevelofsub‐centralresources(taxingpower)andhowtospend(spendingautonomy)variesconsiderablybetweencountries

• Inallcountries,thefinancialcrisisandthesubsequentfiscalconsolidationhasincreasedtheneedformeasuring andcomparing theefficiencyoforganisational units inpublic sector

Promoting public sector efficiency and effectiveness

• Byinitiating andaccelerating structural reforms:– Reorganisation ofpublic service provision(health care,education)

– Local government reforms• shifting responsibilities between government levels• municipal andregional merger reforms

• Byincreasing theuse of”market mechanisms”inpublic service provision

• Bytightening thefiscal rules• Byboosting theuse ofperformance indicators inpublic sector

Performance measurement: the input‐output‐effect ‐model

Source: O. Myllyntaus/Kuntaliitto

Productivity (O/I) Effectiveness (V/O)

(C/O)

Cost effectiveness (C/V)

Profitability (R – C)

Unit cost

Inputs Outputs Effects

Costs(C)

Physical amounts

(I)Products

(O)Profits

(R)Client/user

effects(V)

Important definitions

• Productivity:output(s)/input(s)• Efficiency:productivity ofobserved unit compared tothemost

productive unit(s)(varying between 0‐100%)– Technical efficiency:theability ofunit toproduce maximum output

with given inputor toproduce with minimum input– Cost efficiency: theability ofunit toproduce with minimum input

• Technical efficiency• Allocative efficiency:ability toproduce

• Production function: Defines thetechnological relationship betweenthequantities ofoutputs yandinputs x.Forexample y=f(x1,x2)

• Cost function: Function that defines therelationship between outputsyandinputprices w.Forexample TC=c(w1,w2,y)

• Effectiveness: Theultimate goal ofpublic services (better health,better learning andeducation level,higher welfare)

Examples of inputs in education

• Physical resources (quantity andquality)• Buildings,equipment,teaching material,books

• Humanresources (quantity andquality)• Number ofstaff (teachers,aides,administration,maintenanceetc)

• Quality ofstaff (education,experience,ability)• Number ofteaching hours

• Non‐school ‐factors– Student background (parents’education,incomes,labourmarket status

• Theeffect onstudent achievement isimportant– Other pupils (peers)– Friends

Examples of outputs in education

Achievement tests onlearning are thebest availableif testing has been performed withstandardised testsandthedataisavailable foralarge number ofschools/students

Other possible output/effectiveness indicators:number ofteaching hours, number ofgrades,dropout rate,numberofstudentsadmittedtofurtherstudies,labourmarket statusafter school,incomesafter school

7 November 2013 Trolle Klitgård Andersen, Deputy Director General, Agency for the Modernisation of Public Administration, Denmark

How can IT processes facilitate – or transform – the effective use of performance information in the budget process?

AGENDA

• Introduction to Budget, Accounting and Monitoring Processes

• Financial Management Functions supported by IT systems

• IT support of Central Government Budgeting and Accounting

• Financial Management IT systems Architecture and integrations

• Deviation and Benchmarking

General IT systems for Financial Management is provided to Central Government Agencies by Ministry of Finance. In addition Agencies can have Agency-specific IT systems that can integrate with the General IT systems

THE BUDGET PROCESS

Budget preparation • Drafting the budget

(recorded in the State Budget System) • Budget negotiations

• Approval by parliament

Establishing budget authority • Appropriations in the budget are given

to ministries

• Budget authority are given to entities (ie. Agencies and departments and their divisions and sub-divisions)

BUDGET AUTHORITY

• The Budget Authority for an Appropriation is recorded in the Central Government Accounting System

• Each Agency can have the Budget Authority for one or more Appropriations

• For every Appropriation the Spending Agency must provide an estimate of the expenses and revenues specified on month

• Each Agency presents an annual Financial Report covering all Appropriations for operating expenditure and enclosed accounts for other Appropriations

ACCOUNTING PROCESS

Budget execution • Done by each entity and recorded in Navision

Stat or other local ERP-systems approved by MOF

• Recorded according to unified ”chart of accounts”

Monitoring Budget & Internal Control • Data submitted to the Central Government

Accounting System • Monthly budget reports to be approved by

Agencies • Quaterly budget reports to be approved by

Ministries • Quaterly budget estimates and explanatory

notes (on deviations) to be submitted to MoF

FINANCIAL REPORTS FOR AGENCIES

• Agencies and Ministry Departments have to present an Annual Financial Report by mid April

• The Financial Report covers: • Review of Performance Agreement with Ministry

• Accounts and Balance Sheet for Operation Expenditure

• Enclosed accounts for other Appropriations

• Management statement on validity and internal controls

• Presented to Ministry, Auditors and MOF by mid April

• Published at the same time

CENTRAL GOVERNMENT ACCOUNTS

• Compiled on the basis of the monthly recorded accounts from the Agencies

• Only one balance sheet – but not consolidated (Balance sheets for Agencies are presented in their individual Financial Reports)

• Presented to Parliament in April

Auditors report covering Central Government Accounts and all Agencies Financial Reports is presented to Parliament in November Final approval by Parliament approx. 1½ year after the fiscal year

FMIS Business intelligence model

8

SLS - Payroll system

INDFAK

Travel reim- bursement system

Navision Stat Local data warehouse

OLAP Cubes

SKS reporting

SKS – central accounting system

SB – Central budget system

The consolidated level The local agency level

FMIS: Architecture

9

Decentralised systems used by Agencies

IT SYSTEMS FOR BUDGETING AND ACCOUNTING

SB

State budgetting

SKS Consolidated

accounts/ reporting

Navision Stat

Local ERP system

• Appropriation structure

• Budget estimates and accounting structure

• Local budgetting • Local accounting

• Agency data on consolidated accounts • Revised budget estimates

• Central Government Accounting data at consolidated level

Bench marks

Central Government

accounts

HRTrainingSalery HR

MgmtWork timerecording

ActivityMgmt.

TravelMgmt.

DebtorsCreditors

GeneralLedger Accounts Budgeting Reports

CentralGovernment

Accounts

StatisticsAnalysis

FinanceAct

Civil Service Pensions

PENSAB SLS +HR Løn eRecruting

Campus

SKSNavision Stat

INDFAK

RejsUdNavisionStat

ØS-LDV

SB

Expendi-tureDB

ISOLAHR-Meter

WageNegotiat.

DB

Financial Managements Functions

Current IT systems provided by Ministry of Finance

CURRENT IT-SUPPORT OF FM-FUNCTIONS

IT SUPPORT OF LOCAL BUDGET PROCESS

• Local Budget processes and work-flows is currently not supported by a General Central Government IT system

Matching the local and central logic and needs

can be a challenge

• Work is currently being done on analyzing if it would be beneficial to implement IT support for local needs. The aim of this would be

Economizing it-use

Supporting work flow standardization

11,5

12,0

12,5

13,0

13,5

14,0

14,5

15,0

15,5

16,0

Q1 Q2 Q3 Q4

Mia. kr. Budget

Regnskab

Deviation explanations

Forecasts and actual expenses (2012)

Backward Forward 1. Accounting deviation -30,1 -40,0 2. Accural /periodic deviation -35,0 57,6 3. Change of activity 23,0 -45,0 4.Change of price 30,0 9,0 5. Less important 10,0 20,0 Sum of deviations - 2,1 1,6

Benchmarking (rent per FTE)

Ministerområder undtagen FMN og UM (kilde: SKS)

Benchmarking (rent per FTE)

1. kvartil

70 bedst placerede virksomheder (kilde: SKS)

Benchmarking: Performance on financial forecast accuracy

Note: Measured as percentage difference between financial forecast and actual expenses. Operating costs. 1st quarter 2013.

”New budget process?”

FL

Internal budgets

Management document

Activities

FURTHER INFORMATION

Ministry of Finance

Agency for the Modernisation of Public Administration

Mr. Trolle Klitgård Andersen

E: [email protected]

COMMENTS ON THE DISCUSSION GROUPS’ RESULTS

NOWOOK PARK

CENTER FOR PERFORMANCE EVALUATION & MANAGEMENT

KOREA INSTITUTE OF PUBLIC FINANCE

1

ISSUES Big political challenges – What role for performance information? Performance information: what has it been good for? Governing from a far: performance budgeting and relations across levels of government How can IT processes facilitate – or transform – the effective use of performance information in the budget process?

2

BIG POLITICAL CHALLENGES Government-wide challenges require a government wide-performance and results framework to identify relevant policy tools and appropriate roles of spending ministries and agencies

• Who will initiate the government-wide framework? • Central budget authority, prime minister’s office, presidential

committee? • What are essential elements of the framework?

• Strategic planning • Performance information • Accountability and incentive mechanism

• What are success factors? • Strong challenging function of capable central agencies

3

BIG POLITICAL CHALLENGES (CONT’D) Korean experiences

• Government wide M&E framework for various policy issues • Low fertility and aging population issues • Green energy • Enhancing employment rates • Etc…

Observations • The M&E system has been successful in inducing ministries’

efforts to address the policy issues • Dangers of promoting irrelevant efforts among line ministries

• Line ministries try to show they are doing something for the initiatives but relevance of their efforts are often questionable.

• Duplicative M&E systems among central agencies

4

PERFORMANCE INFORMATION Use of performance information

• Resource allocation • Managerial accountability • Program improvement

Different purposes may require different approaches in using performance information

• For resource allocation purposes, linking performance information to individual or organizational accountability may be counter-productive.

• For program improvement purposes, linking performance information to individual or organizational accountability may be important.

5

PERFORMANCE INFORMATION(CONT’D) Korean experiences

• For resource allocation purposes,10% budget cut rules for ineffective programs are imposed in principle.

• The crosscutting program evaluations are used for program consolidation and improvement purposes

• Use of performance information among line ministries becomes an essential elements of program management.

• Timely engagement and establishing accountability in program management need to be improved

Observations • Frequent rotation of government officials is an obstacle in

establishing accountability structure. • As a corollary, capacity building is also hindered. • Without high level decision maker’s engagement, the scope of

performance information use is limited.

6

GOVERNING FROM A FAR Link between the central and local governments

• What is optimal degree of decentralization? • Pros and cons of block grant programs vs. specific grant

programs • For block grant programs, defining and measuring policy

goals are not easy. • However, block grant approach may be desirable to enhance

policy effectiveness because it may allow local governments to use their local information more effectively.

• How about unfunded mandate? • Capacity issues of local governments in running M&E

systems

7

GOVERNING FROM A FAR (CONT’D) Korean experiences

• For the Block grant for fiscal equalization purposes, the soundness of local government’s financial management was monitored and evaluated

• For the specific grant programs, the central budget authority and relevant central ministries are running their M&E systems.

Observations • For grant programs with higher level of local government’s

discretion, running effective M&E systems is difficult. • Lack of capacity in local governments is a bottleneck. • Recently, the proper division of financial burden between the

central and the local government becomes an issue. • E.g., Free childcare program

8

IT & PERFORMANCE INFORMATION IN THE BUDGET PROCESS IT’s contribution

• Availability of timely performance information • Reducing the cost of producing performance information • Increasing availability of performance information in terms of

its scope and variety • Making performance information more visible and binding

Challenges of using IT in performance budgeting • Because monitoring and evaluation process involves informal

communications among stakeholders, using IT in the M&E process may be challenging.

• Strategic approaches in opening performance information to outside stakeholders may be needed.

9

IT & PERFORMANCE INFORMATION IN THE BUDGET PROCESS (CONT’D) Korean experiences

• Initially, performance information was supposed to be included in the newly integrated financial management information system (IFMIS) in mid 2000s.

• However, its integration was delayed until 2010. • Detailed performance information through IT system is available

within the administration but not to the public. • Recently, performance information dashboard has been in the

process of development for quarterly monitoring purposes. • In order to enhance timely intervention in the program

implementation process Observations

• For the effective use of IT system, change management and capacity building are essential.

10

THANK YOU! NOWOOK PARK [email protected]

11

Using international benchmarks to understand competitiveness Chris Mullin Deputy Director, Government Performance and Open Public Services Cabinet Office, UK [email protected]

International benchmarks provide insight on the UK’s position in the global race

Growth, alongside deficit reduction, is the UK Government’s top priority

David Cameron regularly emphasises the importance of “the global race”

The Plan for Growth set out a range of ambitions to increase UK competitiveness

The UK highlights two sets of international benchmarks as useful tools for gauging competitiveness: • World Economic Forum Competitiveness Report • World Bank Ease of Doing Business

World Economic Forum Global Competitiveness Report

By stripping back the red tape that was smothering businesses, we’ve put Britain back in the World Economic Forum’s Top Ten for competitiveness David Cameron, March 2013

Report covers 148 economies

World Economic Forum Global Competitiveness Report (2)

12 “pillars” are weighted according to economy’s stage of development

Over 100 sub-rankings, drawn from a range of datasets

Heavy use of Executive Opinion Survey

World Bank Ease of Doing Business Index

185 economies are ranked on their ease of doing business – with a strong focus on the regulatory environment

This index averages the country's rankings across 10 areas, based on a detailed study of laws and regulations, with expert input

The UK has put in place a comprehensive policy package

Cutting corporate taxes to 20%

Access to Lending

One-In-Two-Out, Red Tape Challenge and drive to reduce EU regulation

Roll-out of superfast broadband

Transport infrastructure programme

UK exports programme

Support for small and medium sized businesses and start-ups

Rankings have informed the UK’s approach, but have been just one of many considerations

Using benchmarks offers some clear benefits

Rankings are important in the global race

They promote international learning

They can support a common cause around which policy and agencies can unite

They provide a focus for domestic policy

Benchmarking allows countries some insight into their performance relative to other countries,

Allows countries to learn from best practice. A more efficient global economy is good for everyone.

Supports a more joined-up, holistic approach to domestic policy

Domestic policy can focus on building on strengths – and addressing weaknesses – identified in the reports

But it is important to recognise their limitations

The quality, timeliness and relevance of data

is highly varied Many of the measures

are very subjective

Where measures are weak, there is a risk of

gaming

Too much emphasis can make the rankings seem more important than the fundamentals

Rankings are sensitive to methodological changes such as

sampling, aggregation and weighting

Chris Mullin

([email protected])

Dr. Michael Thöne

FiFo Institute for Public Economics, University of Cologne Finanzwissenschaftliches Forschungsinstitut an der Universität zu Köln

The use of national and international

outcome benchmarks in driving policy

Michael Thöne, Managing Director FiFo Köln

Lead Presentation at the

9th Annual Senior Budget Officials Meeting on Performance and Results

Berlin, 8 November 2013

Overview

Successes motivate increased use of benchmarks

Is Benchmarking mainly successful in simple cases?

What role for benchmarking?

Deepening

Widening

Dr. Michael Thöne 2

Successes motivate increased use of benchmarks

PISA: an exemplary milestone achievement

•At least for Germany:

•Pre-PISA: Decades of ideological debates on schooling lead to circular institutional reforms to and fro.

•First Pisa-Report (2001): A “sputnik shock”

•Post-Pisa: Discussion focusses on student achievements. Reforms reflect these priorities. Resulting in clear, of course not undisputed improvements.

Many examples of good outcome or output

benchmarks in other policy fields

As an instrument of information benchmarks are almost indispensable

for policy analysis.

Keeping up with the Joneses

A strong motivator also among governments

Dr. Michael Thöne 3

Is Benchmarking mainly successful in simple cases?

• Implementing benchmarking when it is simple to implement is, of course, a good idea.

• “Simple” here means politically simple:

• Taking up benchmarking when

– it is flattering (“we’re looking relatively good”) or

– a useful instrument of self-commitment, especially in view of domestic opposition (“see how bad we’re looking”).

• Dropping benchmarking when

– it turns less flattering (“the others are improving stronger”) or

– self-commitment turns into self-binding (“we’re still looking bad but we have new priorities”).

• Still, simple benchmarking is better than no benchmarking.

• But simple benchmarking is not a policy driver.

Dr. Michael Thöne 4

What role for benchmarking?

Can and should benchmarking play a bigger role in driving policy?

Two important factors:

Deepening of Benchmarking

Widening of Benchmarking

Dr. Michael Thöne 5

Deepening

• Deepening of Benchmarking would mean:

= Decreasing the degree of voluntariness

= Increasing commitment

(≠ turning it mandatory)

• Possible ways

– Integration into results-oriented budgeting (e.g. as indicators in public service agreements and service delivery agreements)

– Delegation to independent institutions ( PISA)

• Main challenge: Ownership of policy objectives

Dr. Michael Thöne 6

Deepening: Ownership of Policy Objectives

Politicians

Administration

Academia

Society / Electorate

Dr. Michael Thöne 7

Benchmarking information is often produced for, but little used in the political decision-making process.

Widening

Widening: Should we strive for the application of benchmarking in all policy fields?

A systemic across-the-board approach analogous to performance budgeting?

Two problems:

1. Internal dimension

– Biases between measurable and immeasurable objectives

– Measurable objectives are favoured where competition dominates

– Immeasurable objectives are favoured where rent-seeking plays an important role

Dr. Michael Thöne 8

Widening: The external dimension

2. External dimension

• Benchmarking as many policy fields as possible leads – implicitly or explicitly – to benchmarking or the macroeconomic aggregates.

• Macro-policy abounds with comparative evaluations (IMF, OECD etc.), but not with benchmarking.

• European Semester e.g. addresses each country individually and differently. Why?

– Political priorities are different. Difficult, but smart benchmarking can cope with that.

– Policy capabilities are different. More difficult, but smart benchmarking might even cope with that.

– Countries play different roles in a coordinated policy field. Benchmarking makes little sense / is impossible .

Dr. Michael Thöne 9

One conclusion

Cooperation and integration work best when everyone/every country concentrates on its own comparative advantages.

Cooperation and integration are the “natural enemies” of “deep benchmarking”

Benchmarking increasingly must be restricted to fields where everyone strives for the same objectives, independently of one another.

Dr. Michael Thöne 10

Dr. Michael Thöne

Finanzwissenschaftliches Forschungsinstitut an der Universität zu Köln FiFo Institute for Public Economics, University of Cologne

Vielen Dank

The use of national and international outcome benchmarks in driving policy

Dr. Michael Thöne [email protected]

Managing Director

www.fifo-koeln.de

USE OF NATIONAL OR INTERNATIONAL BENCHMARKS Zsuzsanna Lonti / Christiane Arndt OECD Government at a Glance

ISSUES TO BE CONSIDERED

• National or international benchmarks • Outputs or outcomes • The attribution problem • What are the shortcomings of international benchmarks? • Comparison over time • Examples

OUTPUT MEASURE – DOCTORS’ CONSULTATION PER PERSON

Source: OECD Health data 2010

0

2

4

6

8

10

12

14

16

2008 2000

Measure of productivity/efficiency of health care delivery

OUTCOME MEASURE – LIFE EXPECTANCY AT BIRTH

0

10

20

30

40

50

60

70

80

90

Years 2008 1960

Source: OECD Health data 2010

Measure of population’s health

OUTPUT – ENTRY AND GRADUATION RATES FOR SECONDARY EDUCATION

0

10

20

30

40

50

60

70

80

90

100

Graduation rates from upper secondary programmes designed to prepare students for tertiary-type A education

Entry rates into tertiary-type A education

Access to tertiary-type A education for upper secondary graduates (2011)

Source: Education at a Glance 2013

OUTCOME – EMPLOYMENT RATES BY TYPES OF EDUCATION

0

10

20

30

40

50

60

70

80

90

100

Tertiary education Upper secondary and post-secondary non-tertiary Below upper secondary

OECD Education at a Glance 2010

The more education an individual has, the more likely he or she is to find employment

Employment rates as percentage of population by levels of education in 2008

Ministry of Finance Sweden

Government Offices of Sweden

Comments on Value for Money report – Sweden 2013 Charlotta Eriksson

Ministry of Finance Sweden

Government Offices of Sweden

Reforms

• A top civil servant in the line ministries • Strengthening policy development in the

line ministries • Streamlining policy evaluation • Introducing spending-review • Service sharing by agencies

BUILDING ON BASICS

FINAL REPORT OECD STUDY

VALUE FOR MONEY IN GOVERNMENT

DIRK KRAAN

Berlin, 8 November 2013

The OECD Value for Money Study: background

• Participants: 13 advanced OECD countries • Aim: description of recent reforms in the organization of central

government that are interesting for other countries from the perspective of value for money

• Products: initial report “Public Administration after New Public Management”, 5 country assessments (Australia, Denmark, Netherlands, Norway, Sweden) and final report “Building on Basics” (44 reforms)

• Information: 3 questionnaires (2010), missions to 5 countries and statistical data from OECD statistical databases

• Value for Money team: Gwen Carpenter, Rex Deighton-Smith, Joanne Kelly, Valentina Kostyleva, Dirk Kraan, Joop Vrolijk, Joachim Wehner.

Tools

• Uniform language to describe national institutions, summarized in glossary

• Snapshots of the public administration: 4 government tasks: Policy development Administrative policy execution Administrative supervision and regulation Support services 3 types of government organizations Core ministries Arm’s length agencies Independent agencies

Selection of reforms

Criteria • Interesting from the Value for Money perspective; emphasis has

shifted in the course of the study to savings • Fitting into the current trends towards “Basic Government” Factors that drive implementation • Political support for the shift from back office (administration) to

service delivery (front office) • The need for savings as a consequence of the global financial crisis • Caveat: the reforms are worthwhile for their own sake, because they

improve the efficiency of government

Three periods of public administration reform since the 1980s

I Receding government: 1980-1990 II New Public Management: 1990 – 2005 III Basic Government: 2005 - now

Receding government 1980-1990

• Catch phrase: “Government is the problem, not the solution” • Characteristics: Deregulation Privatisation Decentralisation Consolidation (expenditure reduction) Fiscal alleviation

• Inspiring countries: US, UK • Theoretical underpinnings: Supply side economic, Public Choice

Theory

New Public Management (NPM) 1990-2005

• Catch phrase: “Let managers manage” • Characteristics: Separation of policy execution from policy development Relaxation of standards of operational management Steering and control of executive agencies on the basis of

outputs Budgeting on the basis of outputs (performance budgeting) Outsourcing of intermediate production Stimulating of competition among service providers by allowing

private suppliers to provide publicly financed services • Inspiring countries: Australia, New Zealand • Theoretical underpinnings: Business Administration

Basic Government (2005-now)

• Catch phrase: “More front office, less back office” • Characteristics:

Smaller core ministries focusing on policy development and evaluation A more logical and transparent separation of tasks between levels of

government Better integration of executive and professional expertise in policy making

(vertical integration) Sharing of process units and amalgamation of executive agencies

(horizontal integration Integration of administrative supervisory and regulatory authorities Support service sharing Concentration of standard setting for operational management Less politicians and political advisors Better and more professional steering and financing of executive agencies

• Inspiring countries: all countries participating in the study, but differentiated • Theoretical underpinnings: Institutional Economics, Public Administration

The reforms of Building on Basics imply partly a revision of the most problematic results of NPM

• Standard setting for operational management is policy making that involves a trade off between quality and costs of support services

• Steering of agencies requires a permanent performance dialogue because performance is hard to measure, targets are changing continuously and financial sanctions lead to perverse incentives

• Financing of agencies requires insight in inputs because, lacking prices, costs can only be assessed on the basis of inputs and output targets are no outcome targets (capacity budgeting)

• The budget is a financial document, not a policy document. Financial policy makers, including parliamentarians, are interested in the costs of policy instruments and inputs of public production

• Outsourcing of specific assets can lead to dependence on private monopoly

Next steps

• Some reforms of “Building on Basics” are currently still under review for fact checking by the countries where the reforms occurred

• “Building on Basics” will be discussed in the Advisory Committee for the project in the beginning of next year

• “Building on Basics” will be published in the spring of 2014

Ministry of Finance, Norway

1

Value for Money

OECD Berlin 8 November 2013

Pål Ulla Deputy Director General

Budget Department

Ministry of Finance, Norway

2

Outline

• Overall framework

• Implementation of spending reviews • Automatic cuts of productivity dividends • Medium-term expenditure framework

• Other proposals

• Short conclusion

Ministry of Finance, Norway

3

Overall framework

Important background information of the government structure and earlier reform.

44 different reforms of which Norway is discussed for

10

Ministry of Finance, Norway

Implementation of spending reviews

Very sympathetic to the idea Closely linked to the budget preparation procedure. Publication of the reviews. Lead to concrete savings options and no option to increase expenditure.

In Norway these processes have been used • Program review • (4 % expenditure reductions?) • Larger reforms (pension etc) Creating a spending review unit within the Ministry of Finance?

Ministry of Finance, Norway

Automatic cuts of productivity dividends

• Cuts shall cover all ministries and agencies • Political sat annual cuts

• Increase in number of produced • Increase in quality of the services • Unit cost reductions

• Not one clear common cut for all ministries; a more

focused approach is needed.

• Learn from the Swedes (and the ones that invite us to come)

Ministry of Finance, Norway

6

Medium-term expenditure reviews

• A targeted structural non-oil deficit.

• Assessing pro and cons of adapting a fixed multi-year

expenditure framework • Adopting a pay-as-you-go rule for the tax revenues.

• A fixed multi-year expenditure framework for spending

ceilings for each ministry.

• New policy initiatives are specified and the budgetary consequences in the budget year and the out-years are shown (camel-nose detector), but they are not included in an expenditure framework.

Ministry of Finance, Norway

7

Other proposals - relevant topics

• Strengthening of regulatory policy (impact assessment)

• Co-ordination across ministries (less ministers as a part of the establishment of the cabinet, strong co-ordinations arrangements)

• Shared support services • Standards of operational management

Ministry of Finance, Norway

8

Other proposals - relevant topics (cont.)

• Digitizing the public sector • Standards of internal audit • Independent supervisory and

regulatory authorities

Ministry of Finance, Norway

Short summary Impressive piece of work/well written Be aware the national context: • Government as a consortium • Ministry of Finance is not superior to the other ministries • Decentralization versus centralization Need some small clarification such as: • Who are the arm’s-length and who are the independent

agencies? Look forward to further work: • Cross topic papers: most important topic • Medium-term expenditure framework; why and how

9

Ministry of Finance, Norway

Pål Ulla Ministry of Finance,

Norway

Thank you for listening to me

STEERING AND FINANCING OF AGENCIES (CHAPTER 12)

COUNTRY WHERE THE REFORMS

OCCURRED: SWEDEN

• Performance targets should be set, monitored and evaluated in a year-round performance dialogue

• The officials who are responsible for steering should be the same officials who develop policy for the agencies

• The dialogue becomes more meaningful because both parties have good understanding of the policy area

Reform 1: Output steering on the basis of permanent performance dialogue

• Should be kept apart from steering outcomes: Financing is annual, steering is continuous Financing requires efficiency expertise, steering requires

policy expertise Financial sanctioning of performance leads to perverse

incentives • Should be based on robust rules for the fixed and

variable costs of the agency’s required production capacity in the light of the estimated needs for its services (capacity budgeting)

• Agencies should be required to provide information on the input mix and the input costs that allow the owner minister to assess the capacity costs of the agency

Reform 2: Financing on the basis of capacity needs

Discussion on Future Work

Christian Kastrop

9th Annual SBO Meeting on Performance and Results Berlin, 7-8 November 2013

Bundesministerium der Finanzen

Berlin

Where are we now?

• Focus of the 2013 meeting: Adding a policy-oriented perspective on P&R – How to communicate P&R, how to involve citizens?

– How to address government-wide challenges?

– The effects of national and international outcome benchmarks in driving policy

2

Bundesministerium der Finanzen

Berlin

The performance and results network’s future work (I)

• Possible future topics: – The role of national audit institutions

– Taking a closer look at links to the revenue side, e.g. tax expenditures, subsidies

– What role can P&R play as a prevention / reaction mechanism to future crises?

– Evidence-based fiscal / economic policy

– Aspects of P&R within levels / agencies of state

– …?

3

Bundesministerium der Finanzen

Berlin

The performance and results network’s future work (II)

• Additional possible future output: – Development of guiding principles / best practice guides (?)

– Development of policy papers based on closer co-operation between small groups of countries on selective issues (?)

– Increasing the frequency of meetings to two per year / and or one meeting plus a workshop on a specialized topic (?)

– …?

• Name of the network: – Is the name of the network still adequate?

– “Network on Efficiency and Effectiveness of the Public Sector” (?)

4

Bundesministerium der Finanzen

Berlin

Thank you very much for your attention!

Good Budgetary Governance: from Best Practices towards OECD Principles

Ronnie Downes Acting Head - Budgeting and Public Expenditures, OECD

SBO Network on Performance & Results

Berlin, 7-8 November 2013

• Budget reports (7 in total) – Pre-election – Long-term sustainability

• Specific disclosures – Non-financial assets – Contingent liabilities

• Integrity & accountability – Audit – Parliamentary scrutiny – Public availability on internet – Promote public understanding

OECD’s starting point

Since 2002 …

• OECD Senior Budget Officials – Regional networks: LAC, CESEE, Asia; also CABRI liaison – Thematic networks: Performance & Results; PPPs; Budget

Accounting (Accruals); Independent Fiscal Institutions; Health Budgeting

• Budget Reviews / Public Governance Reviews • Restoring Public Finances, 2011, 2012 • OECD Survey of Budget Practices & Procedures,

2007, 2012-13

Developments & Priorities in budgeting

• from annual to medium-term budgeting • heightened focus on management of fiscal risks • from inputs to outputs, performance and impacts • from MoF to independent institutions • greater engagement of parliament and citizens • budgeting as an instrument of public governance

OECD Public Governance framework

Fiscal rules MTEF

Strategic public sector

HR

Strategic priorities

Performance, Evaluation &

VFM Participation Transparency

& Openness

Fiscal Risks & Sustainability

Top-down Budgeting

Managing complex

risks

Integrity & anti-

corruption

ICT & e-govt

Strategic centre of

government

Delivering government objectives

Quality of Regulation

Budgeting & PFM

Coordination across levels of

government

Public service

innovation

Citizen engagement

Open procurement

Setting norms across OECD

Country experiences • OECD Networks • Surveys • Country reviews • Studies and analysis • Gathering and

exchanging knowledge

Good practices • Pooling knowledge • guidance tool • flexible

Recommendations & Principles • “locking in” what has

been learned • OECD norms • Governments adopt • Commitment to

respect

Elements of Good Budgetary Governance (draft)

Quality, Integrity &

Independence

Performance, Evaluation &

VFM Participation Transparency

& Openness

True, full & fair budget

accounting

Fiscal objectives

Medium-term clarity

Strategic plans &

priorities

Performance, evaluation &

VFM

Transparency, openness & accessibility

Participation, Inclusiveness

& Realism

Fiscal Risks & Sustainability

Top-down budgeting

Elements of Good Budgetary Governance (draft)

Performance, evaluation &

VFM

Transparency, openness & accessibility

Participation, Inclusiveness

& Realism

• budget reports throughout the cycle • accessibility: open data • support transparency, integrity

initiatives

• beyond access to understanding and influence • parliament vs. citizen prerogatives? • Citizen’s Budget • beyond ex post to ex ante engagement • realism: trade-offs, opportunity costs, VFM

• performance-informed approach? • simplicity • tracking and benchmarking • link to national plans and priorities • regular evaluation and review • periodic comprehensive review

Your views?