Sandra KAISER Austrian Budget Reform Paris/January 12th, 2015
Contents Overview of the Austrian budget reform - A. Design and Concept - B. Medium Term Fiscal Framework - C. Budget Structure - D. Accrual Budgeting and Accounting - E. Performance Budgeting The Austrian and French approaches a comparison 2
A. Design and concept General remarks Pilote stage Learning from others Keep it digestible Minimize complexity Training Look for alliances Create win-win-situations Align interests 3
A. Budgetary Reform in Austria weaknesses of the former system: - no binding medium-term perspective - main focus on inputs - purely cash-oriented accounting system Primary motivation: Improving budgetary decision-making central elements of the reform: - multi-annual approach - output-orientation - accrual-based system - more flexibility and responsibility Budget as a comprehensive steering instrument for resources & outputs & outcomes 4
A. Implementation timeline 1999/ 2000 Pilot stage 2000-2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Federal Budget law 2013 Screening of international benchmarks Informal reform committee 1 st unanimous decision in Parliament 2 nd unanimous decision in Parliament IT Testing phase of both systems (accrual and cash) Implementation of 1 st stage Federal Budget Law 2013 incl. Budgetary Framework Implementation of IT changes/ new system Trainings and Education of Employees Opening Balance Sheet Implementation of 2 nd stage Annual Report Preparation: 6 years Implementation: 6 years Total Reform (excl. pilot stage): ~ 12 years (2003-2014) 5
A. Austrian Federal Budget Reform at a glance Budgetary discipline and planning: binding medium term expenditure framework Result-oriented management of administrative units Flexibility for line ministries through full carry-forward of unused funds possibilities without earmarking Performance Budgeting New budget structure: lump-sum budgets Accrual budgeting and accounting new budget principles: outcome-orientation; efficiency; transparency; true and fair view 6
B. Medium-term Expenditure Framework (MTEF) Aims: Commitment to medium-term fiscal discipline and improved medium-term planning for ministries Compliance with EU rules and national rules Design: Legally binding (Act of Parliament) expenditure ceilings for 4 years 5 rubrics (headings cover several ministries) and about 30 budget chapters (ministry specific) 2 kinds of ceilings: nominally (~75%) and variable
B. Expenditures 2014 by rubric R 4 14% R 3 17% R 5 9% R 0,1 11% R 2 49% R 0,1 R 2 R 3 R 4 General Government Affairs Court Security Employment Social Services Health Family Education Research Art+ Culture Economic Affairs Infrastructure Environment 8.1 bn 36.9 bn 13.1 bn 10.8 bn R 5 Financial Management Interest 6.9 bn Total expenditures 75.8 bn 8
B. MTEF - Conclusion Clear commitment to medium-term fiscal discipline, in exchange for: increased flexibility and improved medium-term planning for ministries 9
C. New budget structure Objectives Greater transparency and accountability (to Parliament and general public) Greater flexibility for the line ministries Improved governance and efficiency in public administration through consistent structures for the budget, the organisation and civil servants 10
C. New budget structure Total Budget Rubrics MTEF: 5 Rubrics enacted by Parliament binding within public administration Budget Chapters Global Budgets Detail Budgets ~ 30 ~ 70 global resource frameworks instead of more than 1000 appropriation line items ~ 231; shown in the budget Cost Accounting flexible steering tool, easily adaptable to specific requirements Transparent budget structure as a prerequisite for other reform elements
C. New budget structure - example Total Budget Headings Rubric: 1 General Government Affairs Budget Chapters Chapter: 11 Interior (MoI) enacted by Parliament binding within public administration Global Budgets Detail Budgets 1 st and 2 nd levels Global Budget 11.02 - Security Detail Budget 11.02.01 - Police Detail Budget 11.02.01.09 Police Department Vienna Transparent budget structure as a prerequisite for other reform elements 12
D. Accrual accounting and budgeting as of 2013 Operating Statement Statement of Financial Position (Balance Sheet) Cash Flow Statement 13
D. Relevance of Accrual Accounting and Budgeting Accruals do NOT replace cash but provide additional perspectives. forecasting and resource allocation process Use of resources (operating statement): Part of the annual budget Parliament votes on two perspectives: cash + operating statement Comparison of assets and liabilities (annual balance sheet) 14
D. Budget document - example Chapter 25 Family and Youth Affairs MTEF expenditure ceiling for 2014 Receipts expected and expenditures 2014 Cash flow statement Operating statement 15
D. Accruals in European countries (status as of March 2013)* Budget (Appropriations) Full accruals: UK Full accruals (modified): Austria, Iceland, Switzerland Cash + (modified): Belgium, Estonia, Italy, Norway, Portugal, Sweden Full Cash: Czech Republic, France, Germany, Hungary, Latvia, Lithunania, Poland *Source: OECD accruals survey, 2013 16
D. Accruals in European countries (status as of March 2013)* Financial Statements Full accruals: Estonia, France, Latvia, Lithuania, Poland, Slovakia, Sweden, UK Full accruals (exceptions): Austria, Iceland, Switzerland Cash (Transitioning to Accruals): Belgium, Czech Republic, Hungary, Portugal Cash: Germany, Italy, Luxembourg, Norway *Source: OECD accruals survey, 2013 17
E. Performance budgeting on the different budget levels Budget Chapter Mission statement Max. 5 outcome objectives, at least 1 gender objective Annual Budget Statement Global Budget 1 5 primary activities Global Budget 1 5 primary activities Global Budget 1 5 primary activities Gender is included Objective s and Activities Detail Budget G Detail Budget e Objective s and Activities Detail Budget n Objectives and Activities Detail Budget d Objective s and Activities Detail Budget e Objective s and Activities Detail Budget r Objective s and Activities Detail Budget i Objective s and Activities Detail Budget n Objective s and Activities Detail Budget cl. Objective s and Activities Explanatory budget documents P e r f o r m a n c e C o n t r a c t s 18
2nd Stage as of 2013: Performance Budgeting Objectives and benefits E. Performance Budgeting Establishes comprehensive link between outputs & outcomes and available budgetary resources Facilitates priority setting in policy-making Strengthens performance accountability Enables transparent presentation of results achieved by the government and public administration 19
Austrian Budget Reform & French Budget Reform a comparison of approaches (from an Austrian angle)
Accrual system France Austria Budget NO YES Financial Statement YES YES 21
Similarities standard setting board, reform partner France Strong commitment of Court of Audit Austria Reform alliance with Court of Audit legal framework constitution constitution legal principle The objective is to achieve a "fair view" of the State's assets and liabilities and financial situation. true and fair view of the financial condition of the Federal Government new Budget law LOLF BHG (Federal Organic Budget Act) level of budget reform central government level central government level step-by-step several stages (3) several stages (2) design of the reform comprehensive comprehensive time frame for implementation multiannual approach IT-system 5 years 6 years multi-year expenditure ceilings (3years) integrated information system (ERP) medium-term expenditure framework (4 years) integrated information system (ERP) 22
Implementation parameters* France (central level) Austria (central level) Accounting maturity 89% 73% IT maturity 90% 74% France is a forerunner, already very close to IPSAS Austria is making good progress *source: EPSAS study final pwc report, published in October 2014 23
Conclusion The Austrian Federal Budget Reform is a comprehensive reform addressing the whole system and not only specific elements involves cultural change within public administration as well as on the political level shares many characteristics with the French budget reform 24
Thank you for your attention! Contact address: Sandra Kaiser Advisor on budget reform Austrian Federal Ministry of Finance Directorate for Budget and Public Finance Johannesgasse 5 1010 Vienna s.kaiser@bmf.gv.at Tel: +43 1 514 33 502009