Overview of Presentation

1. Experiences of Using Performance Information in Budget Process27thAnnual Meeting of Senior Budget OfficialsSydney, June 5th 2006Teresa CurristineBudgeting and Public Expenditures Division OECD

2. Overview of Presentation • Part 1: Introduction • Part 2 : Key Challenges and Lessons Learned: Individual Countries’ Experiences • Part 3 : General Insights and On-going Issues

3. PART 1: Introduction

4. Performance Information (PI) in the Budget Process • Widespread trend : 75% of OECD countries include non-finance performance data in budget documentation • Long-term trend: 40% of countries working on outputs for over 10 years • Constantly evolving: 35% of countries introduced a new initiative in past year • The road from incremental towards results-based budgeting: long and difficult

5. PART 2: Key Challenges and Lessons Learned: Individual Countries’ Experiences

6. AUSTRALIA Challenges and Lessons Learned • Two recurring challenges faced in establishing good PI • The quality of PI in relation to agency contributions to outcomes and outputs • The limited use of PI for decision making in the budget context • Need to ensure links between programmes, outputs, and outcomes are clear and measured effectively • Need a more systematic and better targeted approach to programme review framework

7. CanadaLessons Learned • There is no end point on results based management – persistence over many years is required and you never get it “right” • You need central leadership to build capacity • A detailed understanding of the programme base is essential -it is very easy to lose and not easy to get back • Everybody knows about cultural barriers but don’t underestimate the challenges with systems • You need a common whole-of-government planning and reporting framework if you want to do real strategic planning and reporting

8. Canada (continued) • There is no substitute for evaluation -but you need to give it some backbone and support • Demands from Parliamentarians and the external auditor for better public PI is needed and good. • There is no managing for results without sound management practices – you need clear expectations and annual assessment

9. Improving measurement of targets Avoiding goal distortion Making cross-cutting targets work Dealing with fragmented performance information Resistance against a very centralized and systematic approach Transparency can create pressure for more resources No direct integration between PI and the budgets DenmarkChallenges: performance contracts

10. Denmark (continued) Lessons Learned: Performance contracts • Focus on outputs and outcomes (external targets and objectives) • Merge performance contracts with director contract • Limit number of output targets (5-10) but many measures • Analysis of the “hierarchy of tasks and activities” as a condition • Focus on distribution of costs (ABC) • Review targets and objectives in yearly reports

11. Lesson Learned: direct performance budgeting • Be aware of perverse effects • Need to fine-tune the grants and simplify the model • Pay attention to expenditure control

12. The Netherlands: Lesson Learned • Limit and focus performance information • Use appropriate information for level of discussion (main issues) • Integrate policy analysis better in budget cycle • Improve quality and independence • “Fruitless search for certainty” • Efficiency must be promoted with other instruments

13. United KingdomChallenges and Lessons Learned • Taking a top-down approach • Need for consultation • To focus on outcomes • Too limit the number of targets • Delivery • If you cannot measure how you are doing you cannot improve delivery • Importance of rigorous delivery planning and reporting • Measurement • Consider measurement issues when linking PI with budgeting • Systematically assess data risks and perverse incentives

14. United Kingdom (continued) • Performance management should reflect local priorities • Key agents: Consultation and ownership • Assess what will the effect be on the frontline • Decisions should be informed by evidence and analysis at the outset (performance evaluations) • Cross organisational co-operation • Performance information should permit decentralised decisions (measure outcomes)

15. KoreaLessons Learned • Importance of sequencing • Need for Leadership • Reorganization of government can be useful • Separation of service delivery and policy formulation • Balance between centralization and decentralization • Patience

16. PART 3: General Insights and On-going Issues

17. General insights from experts meeting • Contextual variables – No one “best” model. • Importance of leadership • Importance of consultation • PI used to inform budget decision along with other information • PI does not generally appear to significantly change resource allocations • Within government more communication based on language of results • Many efforts to bring PI to attention of politicians and the public

18. On-going issues and challenges • Continuing to struggle with integrating PI into the budget process in a systematic manner. • Improving quality of PI and data gap • Balancing centralised and decentralised implementation approach • Providing appropriate information for different users and at different stages of budget process • Developing and using PI between different levels of government • Convincing politicians to use PI in decision making

19. Conclusion • Today cannot imagine budget system without performance information • PI has proven useful but not met expectations –problems remain • Have we gone too far or not far enough? • Countries evolving their performance approach rather than discarding • There is a need for more realistic expectations and greater efforts to get all stakeholders on board