Presentation by Ronnie Downes, OECD Secretariat, 11th OECD-Asian Senior Budget Officials Annual Meeting, Bangkok, Thailand, 17-18 December 2015.

1. Performance Budgeting:
Current issues and ambitions
Ronnie Downes
Deputy Head, Budgeting and Public Expenditures
OECD
Asian SBO
Bangkok, Thailand, 17-18 December 2015

2. Performance Budgeting – Simple in Theory…
€ ₩ $
   

3. …Difficult in Practice
1 1.5 2 2.5 3 3.5 4 4.5 5
Pay cut for head of programme/organisation
Programme transferred to other…
Negative consequences for leaders' evaluations
Programme eliminated
More staff assigned to programme/organisation
New leadership brought in
Budget freezes
Budget increases
More training provided to staff assigned
Budget decreases
More intense monitoring in the future
Poor performance made public
No consequences
2007 2011
What happens when performance objectives are not met?

4. Some approaches to Performance Budgeting
• PRESENTATIONAL APPROACH
– Show outputs, performance indicators separately from the budget
document
– Easy – but effective?
• PERFORMANCE-INFORMED BUDGETING
– Include performance metrics within the budget document
– Involves re-structuring of budget document – more engaging?
• DIRECT (FORMULA) PERFORMANCE BUDGETING
– More direct linkage between results and resources; contractual
models
– Involves extensive re-working of budget lines – is it worth it?
• also: MANAGERIAL PERFORMANCE APPROACH
– Focus on managerial impacts and changes in organisational behaviour
– Less emphasis on link to budget allocation

5. The institutional and procedural context for
Performance Budgeting is developing
• Link to KNIs?
• Standardised PB?
• Structures?
• PB Agreements?

6. • Transparency
• Accountability
– Government (achieving strategic goals?)
– Organisational (delivering on our mandate?)
– Managerial (delivering my targets?)
• Austerity
– Inform difficult government decisions, cuts
• Efficiency
– Allocative (where resources have best effect)
– Operational (value-for-money, “more with less”)
• Culture-shift (focus on results and delivery)
Performance information is used for
a variety of purposes

7. Information on outcomes and impacts
is not (yet?) widely used
• Inputs?
• Outputs?
• Outcomes?
• Ratings?
• Efficiency?
• Horizontal themes?

8. Some challenges remain is using Performance
Information; other challenges are being addressed
Accurate timely data
Relevance for budget
Info overload
Performance culture
Too bureaucratic
Lack of PB guidance

9. Some perennial problems
• Quality, relevance and objectivity of performance
information
• What’s the proper response to Poor Performance?
– More resources, or fewer?
• “Gaming” of performance targets
– An issue where the target corresponds weakly to the public
service objective
– “Outcomes” are better targets than “outputs” – but harder
• Engagement by politicians, public and bureaucrats
• Any real impact on policy-making and accountability?

10. Recent OECD-wide reforms: improving engagement
• Performance data should not be an internal,
bureaucratic concern
• It could – and should – excite the interest of
parliamentarians and the public
– Quality of debate, clearer political messages
– Emphasise continuum of policy-making:
resources, activities, outputs, impacts
– Grounded in government-wide plans, strategies

11. European “pioneers” – case of the Netherlands
• Link to fixed multi-year spending ceilings
• 2001: Detailed performance targets, monitoring, reporting
– Key Objectives agreed as part of coalition agreement
• Experience of recent years: “information overload”
• Too much data – administrative burden
• Too “industrial-scale”, “mechanistic”, “technocratic”
• Not used by parliamentarians or by public
• Not useful in identifying savings quickly
• 2011, 2013: Accountable Budget Reform
– more streamlined approach
– Differentiated, selective use of performance information
– Interpretative “Policy Conclusion Statement” for each programme

12. Streamlining of performance indicators in France
46%
19%
35%
Efficiency for the citizen
Quality of service
Efficiency for the taxpayer
Between 2014 and 2015 :
-17% objectives, -19% indicators

13. US approach: Agency Priority Goals
• GPRA Modernization Act 2010
– Inspired in part by UK experience: PSAs
• Emphasis is primarily MANAGERIAL not BUDGETING
– Identification of Agency Priority Goals and Goal-Leaders
– Move to quarterly reporting
– Government-wide Performance Improvement Council and
dedicated website
• Successful in creating internal ‘ownership’ and
commitment to performance targets

18. Wellbeing indicators – “the Rule of Three?”
1. Economic indicators
– Competitiveness
– Potential growth
2. Social / Inclusive indicators
– Poverty, inequality, relative income
– Health, Education
– Cultural life
3. Sustainability indicators
– Environment
– Human and physical capital
– Fiscal and Societal Resilience
Examples: France, NZ, OECD

19. Lessons learned about good and bad practice?
a) use ready-made performance data from policy cycle
b) clear programme logic linking inputs, outputs, outcomes
c) seamless link to government-wide strategy and goals
d) avoid information overload – the “vital few” indicators
e) Include national and international benchmarks
f) organisational, managerial accountability for results
– Establish routines of behaviour within organisations
g) audited and auditable performance targets
h) citizen- and CSO-accessible data

20. Current Work by the OECD
• Develop a broader conception of “performance”
– Whole-of-government concept
– Centre of Government – leadership and coordination
– HR: accountability of organisations and senior executives
– Open government aspects: societal accountability
• Analysis of “what works” in OECD countries
– 2016 Survey of Budgeting Practices and Government
Performance
• For discussion: What are the Asia-specific experiences of
performance budgeting successes and challenges?

21. Budgeting
within fiscal
objectives
OECD Recommendation on Budgetary Governance
Quality,
integrity &
independent
audit
Performance,
Evaluation &
VFM
Comprehensive
budget
accounting
Effective
budget
execution
Alignment with
medium-term
strategic plans
and priorities
Performance,
evaluation &
VFM
Transparency,
openness &
accessibility
Participative,
Inclusive
& Realistic
Debate
Fiscal Risks &
Sustainability
Capital
budgeting
framework