1. Introduction –
The Austrian Federal Budget Reform Friederike Schwarzendorfer Budget Directorate
Tallinn

2. Austrian Fiscal Equalization (including the role of the MoF)
Austria: Federal system
- Cooperative federalism, closely interlinked
Federation: 3 levels of Government
- Federal Government
- 9 State Governments
Local Gov. = Municipalities
- additional: Social Security Authorities
All Governments:
- Budgetary Autonomy
- Supervision of Municipalities by Länder Governments
Competences:
- Legal framework: Federal Constitution of Austria

3. Austrian Fiscal Equalization (including the role of the MoF)
Fiscal Constitutional Law - constitutional framework
Federal Intergovernmental Fiscal Relations Act:
- tax sharing
- intragovernmental transfers
- cost bearing
Main goal:
fiscal equity
MoF: negotiations with other stakeholders; collecting most of the taxes, which have to be shared and transferred.

4. The Austrian Ministry of Finance-Overview
Overview: the Austrian MoF

5. The Austrian Ministry of Finance: Function, Staffing
Going into detail:

6. The Austrian Ministry of Finance: Function, Staffing
Functions, Duties and challenges of the MoF:
The MoF serves as an strategic executive institution in the area of customs, tax- management, economic policy, budget affairs and international financial institutions concerning the federal state of Austria. A tight cooperation with our nine provinces has to be kept alive.
Budget consolidation as crucial condition for a positive economic development and for an ongoing accomplishment of the consequences of the financial crisis.
Constancy of the levy of taxes, combating of black economy: through controls; conforming to the law: fair relationships of clients.
Increase the efficiency of E‐Government‐projekts
Despite of the demographic development: the MoF can further fullfill its duties.
Effective combating of tax-fraud

7. The Austrian Ministry of Finance: Function, Staffing
Staffing of the MoF:
Directorate Generale II Budget and Public Finances:
106 persons

8. Contents The Austrian Federal Budget Reform:
Motivation and Strategic Approach
1st Stage as of 2009
2nd Stage as of 2013
New Budget Structure
New accounting system (including IPSAS)
Performance Budgeting including Gender Budgeting
Result-Oriented Management of Administrative Units

9. Budgetary Reform in Austria
Primary motivation: Improved budgetary decision-making
Addresses the following weaknesses of the current system:
No binding medium-term perspective
Prevailing focus on inputs
Control monopoly of classic cameralistics
The budget as a comprehensive steering instrument for resources & outputs & outcomes
Implementation in two stages: 2009 and 2013

10. Amendment of the Constitution
National objectives for public finances (as of 2009)
Macroeconomic equilibrium
Sustainable public finances
Gender equality
Medium-term expenditure framework (as of 2009)
New budgetary principles (as of 2013)
Outcome-orientation incl. gender budgeting
Efficiency
Transparency
True and fair view

11. Overview 1st and 2nd Stage of the Federal Budget Reform

12. Medium-Term Expenditure Framework (MTEF)
MTEF law sets expenditure ceilings
for 4 years
for 5 headings (headings cover several ministries) and
for about 30 budget chapters (ministry specific)
MTEF = binding for budget planning and execution:
heading level: n+1 to n+4
budget chapter level: n+1 (& n+2)
2 kinds of ceilings:
nominally fixed: ̴ 75% of expenditure
variable according to predefined indicators for expenditure areas with high exposure to economic cycle, depending on tax receipts, refunded by EU, and payments from due liabilities
Rolling forward planning: n+4 is added annually

13. Win-Win-Situation for Budget Stabilisation and Ministries
Clear commitment to medium-term fiscal discipline,
in exchange for
increased flexibility and improved medium-term planning for ministries, since:
unused funds at the end of the year may be carried forward to future periods
same rules apply for receipts over budget during the current year
no earmarking of these reserves

14. Expenditures

15. Experiences
Parliament, public and line ministries get a long term perspective for discussing and planning
Line ministries meet their expenditure limits
According to the new flexibility granted they are able to build up reserves to be used in the upcoming years
Amendments to the MTEF law for the current year are to be discussed in parliament and in public and therefor are to be avoided
Learning process for the line ministries to shift their attention from the yearly budget law in autumn to the MTEF in spring
Drafting the yearly budget law as a technical procedure

16. Contents The Austrian Federal Budget Reform:
Motivation and Strategic Approach
1st Stage as of 2009
2nd Stage as of 2013
New Budget Structure
New accounting system (including IPSAS)
Performance Budgeting including Gender Budgeting
Result-Oriented Management of Administrative Units

17. Austrian Federal Budget Reform - 2nd Stage, as of 2013

18. New budget structure Objectives:
Greater transparency and accountability (for parliament and public)
Greater flexibility for the line ministries
Improved governance and efficiency in the administration through consistent structures for the budget, the organisation and personnel

19. New budget structure

20. Budget Chapters (BC)
Budget Chapter (BC): Every BC has to be completely distributed to different global budgets (GB). Global Budget (GB): Budget line, only as special case: one BC = one GB. There are 3 – 4 GBs in each BC, describing the expenditures and outcome objectives for the main tasks of each BC. Each GB is further divided into different Detail Budgets. First level Detail Budget: Oriented by entities and used for transferring budgetary responsibility to executive entities. One First level Detail Budget has to be completely distributed to different Second level Detail Budgets, if this is voluntarily chosen. Second level detail budget: Is used for transferring budgetary responsibility to executive entities if this seems appropriate for a better steering at the operational level.

21. Integration of Organisational, Budget, and Performance Management Structures

22. Budget structure budget chapter 13 Ministry of Justice

24. Performance Budgeting
Objectives and Benefits of Performance Budgeting
Establishes comprehensive link between outputs & outcomes with existing budgetary resources
Facilitates priority setting in policy-making
Strengthens performance accountability
Enables transparent presentation of results achieved by the government and its administration for the public and the parliament

25. Performance Budgeting
Objectives and Benefits of Performance Budgeting
Establishes comprehensive linkages between outputs & outcomes with existing budgetary resources
Facilitates priority setting in policy-making
Strengthens performance accountability
Enables transparent presentation of results achieved by the government and its administration for the public and the parliament

26. Impact-Oriented Budget Management – Definition of Roles
Minister (Chief Budget Officer): responsible for performance budgeting and performance controlling on ministry level
Budget managing bodies: responsible for budget management of their “detail budgets” including implementation of measures to achieve performance objectives
Ministry of Finance: defines the framework for impact-oriented budget management incl. performance budgeting
Federal Chancellery: responsible for performance controlling on federal level
Court of Audit: responsible for annual financial statements, audits, advisory role to the government. New element: recommendations from recent audits may be included in the budget statement on global budget level

27. Performance Budgeting on the Different Budget Levels
P e r f o r m a n c e C o n t r a c t s

28. Steering administrative units according to results
Units receive global envelopes plus intended results and are responsible for achieving those results
Each unit receives a 4 year plan on a rolling basis that integrates resources and results
Incentives: unused funds are carried forward within the relevant unit; premiums for civil servants, if financial and performance goals are reached
Sanctions: if violations of budget regulations occur, Ministry of Finance can deduct the respective sum from the ministry‘s envelope; line ministry is forced to accord projects with the Ministry of Finance on a reduced financial level

29. The Austrian Federal Budget Reform
is a comprehensive reform addressing the whole system and not only specific elements
is more than a mere change of managerial, budget and accounting rules
involves cultural change within the administration as well as on the political level (setting priorities, defining measurable objectives, transparent decision-making, etc.)

30. Thank you for your attention!
Contact address:
Friederike Schwarzendorfer
Deputy Director General
Directorate for Budget and Public Finance
Austrian Federal Ministry of Finance
Tel: