1. 1 Experiences of Using Performance Information in Budget Process 27 th Annual Meeting of Senior Budget Officials Sydney, June 5 th 2006 Teresa Curristine Budgeting and Public Expenditures Division OECD

2. 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. 3 PART 1: Introduction

4. 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. 5 PART 2: Key Challenges and Lessons Learned: Individual Countries’ Experiences

6. 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. 7 Canada Lessons 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. 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. 9 Denmark Challenges: performance contracts ●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

10. 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. 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. 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. 13 United Kingdom Challenges 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. 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. 15 Korea Lessons 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. 16 PART 3: General Insights and On-going Issues

17. 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. 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. 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