Budgeting in Australia: Peer Review 29th Annual SBO Meeting 2-3 June 2008 Gerhard Steger

General remarks Australia has a bright budget situation: Budget surplus for nine of past ten years As of 2006, no net debt Australia is on the asset side of budget life Result of long lasting sound fiscal policy and budget reforms Budget surpluses being transferred to funds for covering future liabilities New funds: disbursement of earnings AND capital – difference to budget expenditure ?

Issues for discussion Some questions remain: Fiscal rules: principles versus targets Accrual budgeting Outcomes and outputs Role of department of finance Human resources management Reducing red tape within government

Fiscal rules: principles versus targets Fiscal rules based on principles, not on targets Expenditure in Australia has grown rapidly during the last years Might there be a need for combining both: principles AND targets to assist each other ?

Accrual budgeting Introduced 1999/2000 Decision – making almost exclusively on cash Budget is enacted on accruals Both aspects nearly disconnected More pragmatic attitude towards detailed application of accruals (less orthodox focus to concentrate on the real advantage of accruals) ? How to get stakeholders on board in favor of pragmatic accruals ?

0utcomes and Output Catalyst to increase focus on results Make outcomes more relevant (concrete, measurable) in order to use them really for decision making Use performance information to steer budget and administration How to get politicians (ministers and members of parliament) to use performance information as an important tool ?

Role of department of finance „Traumatic period“ a decade ago Lesson for other countries: MoF should have the grip on line ministries to a reasonable extent Otherwise MoF lacks necessary information and influence to effectively exert its „shadow function“ How to combine merits of „traditional“ functions with a reform-minded attitude of MoF ? Let line ministries act freely as long as they stick to their obligations but watch them closely to intervene asap if necessary

Human resources management Each agency makes its own arrangements Lack of public service-wide collective agreements Danger of increased human resources- costs as agencies compete for staff ? Combination of collective agreements with performance based bonuses ?

Reducing Red Tape within Government Very important issue to promote efficiency and effectiveness However: How to prevent the rise of a new anti-bureaucracy bureaucracy? Combine reducing red tape with budget restraints for all ministries to push them towards reduction of bureaucracy?