Legal and Institutional Frameworks Supporting Accountability in Budgeting and Service Delivery Performance. Veronika Meszarits, Mostar, 4-6 Dec 2007

Transcription

1 Legal and Institutional Frameworks Supporting Accountability in Budgeting and Service Delivery Performance Veronika Meszarits, Mostar, 4-6 Dec

2 Supporting performance accountability Introduction Three approaches implemented in Austria - Outsourcing - Flexibility agencies - Reform of budgetary rules Conclusions 2

3 Supporting performance accountability Introduction 3

4 Which framework to support performance accountability? (1/4) Changing requirements on state activities A changing understanding of state activities: serviceorientation, citizen-orientation and market-orientation A demand for more efficiency in state activities An increasing demand on the state for reforming the administrative structures A demand for consolidating budgets and sustainable fiscal policy on EU level An EU demand for more competition through elimination of protectionist intervention of the national states. 4

5 Which framework to support performance accountability? (2/4) Classical view of public administration: integration reduces administrative costs, facilitates oversight and control, encourages coordination, and promotes uniformity in the provision of public services What about performance? 5

6 Which framework to support performance accountability? (3/4) New public management, public choice theory, managerialism: centrally-controlled organisations - lack initiative, - are slow to adapt to changing conditions and - are not adequately responsive to the interests of these they serve. functional integration is inefficient because it values - compliance over performance and - uniformity over initiative 6

7 Which framework to support performance accountability? (4/4) Improving quality, efficiency and effectiveness in budgeting and service delivery performance through 1. Decentralisation: power to decide and act autonomously 2. Accountability: with autonomy responsibility for decisions and activities increases 3. Control: responsibility needs to be managed successfully through new system of controlling Move from bureaucracy to management 7

8 Supporting performance accountability Three possible solutions implemented in Austria 8

9 Characteristics Austrian public sector end of 1980ies Public sector: large, no separate subsidiary organisations Public administration: large, vertically-integrated, centrally-managed ministries Budget formulation: highly legalistic, input-oriented regime Performance-orientation: weak, bureaucratic organisational culture hardly any focus on efficiency and performance High tax burden, demand for downsizing state programmes and activities as well as personnel and administrative costs 9

10 Supporting performance accountability in Austria External solutions: 1) Starting early 1990s: Corporatisation = hiving off, outsourcing of discrete parts of ministries into independent units Internal solutions = promoting efficiency and competition within government: 2) Late 1990s: creation of flexibility agencies, quasiautonomous entities 3) 2009 & 2013: fundamental budget reform including a medium-term expenditure framework, performance budgeting, accrual budgeting and accounting 10

11 Supporting performance accountability Hiving off/outsourcing 11

12 Outsourcing in Austria: legal and institutional framework (1/2) Decentralisation: transfer of tasks from public administration to public and private entities operating at arm s length of the government Institutional and legal framework: - 100% owned by competent ministry - set up by law either as private limited company or specific public entity - autonomous financial management: financial flows in/out of the state budget based on different activities and parameters - autonomous personnel management exceptions for inherited staff from parent ministry 12

13 Outsourcing in Austria: legal and institutional framework (2/2) Corporate governance: - Management or chief executive accountable to supervisory board - Supervisory board: chaired by civil servant from parent ministry, at least one member from MoF Grand scale: bodies, - Shift of 55% of government employees incl. Austrian Post and Austrian Railways: ; Universities:

14 List of examples Cultural and educational institutions: Universities, Zoo of Schönbrunn, Schönbrunn Castle, federal theatres, federal museums, Spanish Horse Riding School Services of general economic interest, infrastructure: Austrian railways (ÖBB), post and telecommunications, state press, federal real estate management (BIG), ASFINAG (highway construction and operation) Support services and others: Federal computer centre (BRZ), federal debt management (ÖBFA), unemployment service (AMS), Statistics Austria, 14

15 Objectives and expectations on political level More efficiency and cost-effectiveness in the provision of public services - more autonomy of the management greater accountability and responsibility - output oriented steering and control - accrual accounting Substantial relieves to the federal budgets Reduction in the number of state employees Facilitation in meeting the Maastricht criteria (public deficit and total public debt) 15

16 Case study: outsourcing infrastructure investment (1/3) Highways: ASFINAG Austrian Railways: ÖBB Federal Real Estate Management: BIG Co-ordination of strategies and investment plans together with Ministries of Infrastructure and Finance 16

17 Case study: outsourcing infrastructure investment (2/3) Figures of 2005, in m Highways Rail Real Estate Company ASFINAG ÖBB BIG State ownership 100% 100% 100% Total assets 11,361 19,720 4,183 Total operating revenues 1,226 97% tolls 5, Investments 971 building 159 maintenance 2, build./planning 135 maintenance Total staff 2,500 47, * 17 * 367 thereof state employees working for BIG

18 Case study: outsourcing infrastructure investment (3/3) ADVANTAGES In some cases infrastructure investment does not appear in the federal budget Autonomous financial management facilitates handling of large, multi-annual investment projects Efficiency gains through incentives created in a market economy: - Cost-consciousness of the users - Competition - Customer-orientation and better services - Increased profitability through rationalisation measures 18

19 Outsourcing POSITIVE lessons learned Improvements in efficiency and effectiveness due to Increased flexibility in financial and personnel management Faster and leaner decision-making processes Faster modernization Increased transparency in costs and services Better customer-orientation Cultural change 19

20 Outsourcing - CONCERNS Limited parliamentary control - moving government function off budget, reduced control power of the parliament Question of hollowing out of government? No relief on budgets In some cases higher personnel and administrative costs (e.g. due to loss of synergies) Continuing influence of the state 20

21 Outsourcing RECOMMENDATIONS Careful planning and concept: - Selection of activity: is there a market? - Clear goals and objectives - Evaluation of alternative measures - Solutions for structural problems - Involvement of future management Implementation of adequate, market-oriented structures Controlling system Corporatisation manual since

22 Supporting performance accountability Flexibility Agencies 22

23 Pilot project: flexibility agencies Decentralisation: selected government agencies under a new management regime with increased flexibility and accountability while remaining within the ministries When: since 2000 Scale: currently covering 16 agencies, 0.2% of total federal budget expenditures in 2007 How: - additional article in the Federal Budget Law with constitutional status - negotiated on a case-by-case basis in a 4-year contract between the agency, the parent ministry and the MoF 23

24 Flexibility agencies 4 prisons Educational institutions: Security academy, federal institute for further education State archive Central registration office Legal advisor for the federal state (Finanzprokuratur) 4 agencies of the agricultural ministry 2 agencies of the defence ministry: printing office, forest management 24

25 Flexibility agencies Reasons for set-up Consolidation of responsibilities regarding tasks, resources and results More operational autonomy for the operational manager increases performance accountability Cost and performance orientation Medium term budget and work plans Pilot project basis for further reforms 25

26 Flexible agencies - performance agreement 1/2 Core: Multi year performance agreement defining Accountability for performance: - Key target: balance between expenditures and revenues - Definition of outputs/outcomes and performance indicators - Agreement is published Autonomy in budget management - Autonomous shift of budget appropriations - Carrying-forward of budget appropriations 26

27 Flexible agencies - performance agreement 2/2 Core: Multi year performance agreement defining Some flexibility in personnel management - Performance based payments or additional training for employees within certain ceilings - However: no flexibilisation of human resource management Quarterly controlling by advisory board Evaluation after the programme 27

28 Flexibility agencies - evaluation Autonomy leads to more accountability and better performance results Positive improvements of balance: cost reductions, increases in revenues Cultural change - cost-consciousness - concentration on core activities - increased motivation and individual accountability of employees frees innovation and creativity potential 28

29 Supporting performance accountability Reforms of budgetary rules 29

30 Reforms of the budget process in 1996 (1/2) Possibility of a two year budget process - Longer term perspective - Constraints on future spending Top down approach in the budgeting process - Global amounts of expenditures and revenues - Pre-set spending limits - Better reflection of priorities 30

31 Reforms of the budget process in 1996 (2/2) Introduction of controlling - Monthly controlling reports - Budget programme and report for the medium term Some end-of-the-year flexibility - to prevent December rush Introduction of performance indicators into budget documents 31

32 Austrian federal budget reform 2009 & Key Facts HOW: Changes of the Federal Constitution and the Federal Budget Law WHEN: Implementation in two stages: 2009, 2013 WHY: Strategic objectives: - macrolevel: fiscal policy improvement - on microlevel: better governance THROUGH: MTEF, Performance Budgeting, Accrual Accounting and Budgeting 32

33 Reform elements as of 2009 performance accountability (1/2) Objective: Each minister as his/her own finance minister Measures: Introduction of a MTEF (medium term expenditure framework): fixed expenditure level for 5 sub-ceilings for 4 years No more contingency reserves flexibility: carrying forward of unused funds, no earmarking 33

34 Reform elements as of 2009 performance accountability (2/2) Outcomes: Improved budgetary discipline and planning More autonomy including greater accountability for line ministries to reach fiscal policy objectives Incentive to an efficient use of appropriations since unused appropriations remain within the ministry 34

35 Structure of the MTEF 1: legal affairs & security 2: labour, social affairs, health & family 3: education, science, arts & culture 4: business, infrastructure & environment 5: interest on debt, liquidity 35

36 Reform elements as of 2013 performance accountability (1/2) Objectives: Increased efficiency, performance orientation, transparency, true & fair view Measures: integration of performance and results information into the regular budget process strengthening of ministries departments and agencies through relaxed input-control and operational authority introduction of accrual accounting and budgeting 36

37 Reform elements as of 2013 performance accountability (2/2) Outcomes: Move from input- to output-oriented budgeting Chief executives as managers not bureaucrats/administrators Improved quality of financial information for policy making Strengthened role of the Parliament through easier check of performance and policy implementation 37

38 Supporting performance accountability Conclusions 38

39 Conclusions supporting performance accountability Clear definition of roles and responsibilities: which decisions to be taken on which level Decentralization of decision-making as a possibility to consolidate resources, tasks and responsibilities Creating incentives for the management Adequate controlling 39

40 Supporting performance accountability Thank you for your attention Contact address: Veronika Meszarits Assistant to the Director General Budget Directorate, Austrian Federal Ministry of Finance 40