Transcript Australia’s Experience in Utilising Performance Information in Budget and Management Processes Mathew Fox Assistant Secretary, Budget Coordination Branch Department of Finance and Administration Australian Government.

Australia’s Experience in Utilising Performance
Information in Budget and Management
Processes
Mathew Fox
Assistant Secretary, Budget Coordination Branch
Department of Finance and Administration
Australian Government
1
Description of Performance System
• Australia’s current budgeting and management
arrangements have been in place since the mid to late
1990’s.
• Current arrangements evolved from the budgetary
reforms associated with the National Commission of
Audit (1996), an independent review commissioned
by the then incoming Government.
• Key features:
•
Strong legislative foundations.
•
Financial Management and Accountability Act
1997 and Commonwealth Authorities and
Companies Act 1997.
Description of Performance System
•
Strong legislative foundations cont’d
Charter of Budget Honesty Act 1998, which
provides the whole-of-government framework for
the transparent conduct of fiscal policy.
• Full accrual budgeting (including accrual
appropriations) and reporting.
• Outcomes and outputs resource management and
performance framework.
•
• Under Australia’s devolved framework, performance
management is generally the responsibility of individual
Ministers and their departments and agencies.
Description of Performance System
• The Department of Finance and Administration’s role in
performance management:
• Finance provides guidance on performance
management policies relating to budget reporting
and requirements for government statutory
authorities and companies.
• For budget reporting, Finance issues guidelines to
agencies, which recommend the level of
performance reporting which is to be provided in
agencies’ supporting information at Budget.
• More broadly, Finance provides Government with
advice on whole-of-government expenditure
priorities, including advice to Cabinet and Ministers
on the performance of agencies and programmes.
Measurement and Assessment of Results
• Agency outcomes and outputs are the foundation for
performance information.
• Finance and agencies will review this year,
outcomes for all general government sector
agencies to ensure that outcomes information is
consistent with the framework and appropriate to the
needs of Government and Parliament.
• Departments and agencies are largely responsible for
measuring and assessing the performance of outcomes
and outputs.
• At Budget and in annual reports, agencies are
required to report at the outcome level.
• Annual report requirements also require that
agencies report, at a minimum, on an organisational
basis as well.
Measurement and Assessment of Results
• At present there is little use of performance targets and
results during budget decision making and the
performance of agencies against performance targets is
not formally reviewed during the budget process.
• A further challenge is that the nature of Commonwealth
expenditure is not always amenable to the outcomes
and outputs framework, for example the
Commonwealth has less direct involvement with the
delivery of health and education outcomes than many
other countries do.
Integrating and Using Performance Information in the
Budget Process
• The influence of performance information on decisionmaking and resource allocation in the budget process is
mixed.
• Agencies prepare Portfolio Budget Submissions and
Annual Reports provide a comprehensive report to the
Government, Parliament and public on funding and
performance by outcome and output.
• These documents provide public information on
performance targets at the beginning of the year and
a report against these at the end of the year.
• This information is not well integrated into the
decision making phases of the annual budget
process.
Integrating and Using Performance Information in the
Budget Process
• There is currently no mechanism, and no incentives, to
ensure that performance information is taken into
account on a standard basis when the Government is
making budget decisions.
• There are separate initiatives that are helping to move
in this direction:
• Recently revised format of new policy proposals,
with a focus on risk and implementation aspects.
• Current work to assess programme review
arrangements and examining options for reform.
Integrating and Using Performance Information in the
Budget Process
• Reviews are a central feature of the budget process.
This is also an area where performance information can
be used to significantly inform budget decision making.
Reviews encompass a range of activities:
• A process for automatic review of programmes that
have been designated as lapsing by the Cabinet;
• A ‘targeted reviews’ process intended to focus on
government priority areas, including addressing
long-term fiscal pressures identified in the
Intergenerational Report 2002-03; and
• Specific reviews commissioned by the Cabinet to
address particular issues in the context of new policy
decisions or development of new policy.
Reporting of Performance Information
• Departments and Agencies are required to make
performance information available to Government,
Parliament and the public.
• Budget papers (such as Portfolio Budget Statements)
and Annual Reports provide the most common source
of this information.
• At present this information is not well connected with
the budget decision making phase of the budget
process.
Reporting of Performance Information
• Despite the availability of this information, Cabinet and
Ministers tend to use other information, and in
particular, information on new policy proposals and
reviews contained in Cabinet Submissions and Portfolio
Budget Submissions when making decisions.
• While often related to publicly available material, this
information is not typically made public, and is of
variable quality and usefulness.
• Ministers also rely on: advice from Finance, specific
reviews, either prepared by an interdepartmental
committee established specifically for that purpose,
or external reviews (for example, by the Productivity
Commission).
Key Challenges
• Key challenges are to:
•
ensure that the link between programmes, outputs
and outcomes are clear and measured effectively.
• ensure that Government focuses on performance
information by better integrating it into the decision
making phase of the Budget.
• A major challenge in introducing a systematic approach
to programme reviews will be to ensure that it adds
value to Government considerations, uses agency
resources efficiently and does not become a
mechanistic exercise.
Solutions
• Better integration of performance information into the
decision making phases of the budget process is a long
term challenge that will require long term effort from
Finance and agencies.
• Continued focus on improving existing framework –
Finance / agency review of outcomes, developing more
systematic approach to the review framework.
• Finance’s work on reviews seeks to make the review
framework more coherent, better targeted to
Government priorities, and more systematic than
current review arrangements.
Lessons Learned and Impact
• Two recurring themes in establishing good performance
information that Australia has faced is:
• The quality of performance information in relation to
agency contributions to outcomes and outputs; and
• The limited use of the performance information for
decision making in the budget context.
• It is important to ensure links between programmes,
outputs and outcomes are clear and measured
effectively – particularly if this performance information
is to inform budget decision making.