Marc Robinson Performance-Based Budgeting: Theory and Practice

 Multiple models of PBB  But for government-wide application, one core model ◦ Programme budgeting ◦ Programme performance informs budget decisions ◦ Better prioritization, more pressure to perform ◦ Selective “add-ons” (e.g. targets) possible (see later)  No mechanical link between performance & funding ◦ Case-by-case consideration  Challenge: ensure budget takes performance into account PBB means funding mechanisms which use formal performance information to link funding to results (outputs and/or outcomes), with the aim of improving efficiency and effectiveness.

 PBB is too often a paperwork exercise ◦ With no significant impact on the allocation of resources ◦ Notion of “presentational” PBB is nonsense  Challenge of making performance information count  Performance scrutinised during budget preparation ◦ “Performance dialogue” between MOF & spending agency  Reduce barriers to resource re-allocation ◦ Rigidity in many budget systems (“non-discretionary” spending ◦ Job protection & other barriers to shifting funds ◦ Funding conditional on performance in selected cases

 Outcomes matter most, but often hard to measure ◦ E.g. research, national security, economic development ◦ External factors, complex (non-standardized) outputs  MT and LT time frame for achieving some outcomes  Vagueness about intended outcomes  What to do? ◦ Greater clarity about intended outcome ◦ Improve outcome measurement, recognizing often MT and LT ◦ More impact evaluation (but selective) ◦ But acknowledge that some outcomes can’t be measured ◦ Enhance output quality measures (including user satisfaction)

 Formula funding has quite limited applications  Target-setting ◦ Clearly distinguish between objectives and targets ◦ Targets need to be “SMART”, and agencies held accountable for achieving them ◦ Caution in setting targets for things over which one has very limited control