Peter Saunders Department of Finance and Deregulation Australia 1 March 2011

1. Expenditure and Strategic Reviews – An Australian PerspectiveAsian Regional Seminar: Kuala LumpurPromoting Fiscal Sustainability • Peter Saunders • Department of Finance and Deregulation • Australia • 1 March 2011

2. Australian Background • Government structure • Budget process • Evaluations

3. Origins of Strategic Reviews • Introduced in 2007. • The Department of Finance and Deregulation manages strategic reviews as part of the Australian Government’s broader performance and accountability framework • Complement decentralised evaluations conducted by agencies – but are typically broader/more strategic • A small number of high level strategic reviews every year. • The emphasis is on major policy and spending areas focusing primarily on the overall efficiency, effectiveness and appropriateness of programs.

4. Efficiency Strategic Reviews • Initially, based on three principles: • Policy Alignment Effectiveness

5. Expenditure Reviews • A new Government was elected in 2007. • Faced immediate budget pressure and needed to make room for its own new commitments. • The new Government established an Expenditure Review Taskforce in February 2008 to identify cost savings in existing programs to relieve this pressure.

6. Expenditure Reviews • Ad-Hoc expenditure cuts have been conducted in past. • Reviews typically focus on: • Finding savings in the previous Government’s programs; • Looking for overlap and duplication; • Public Sector management, and • Aligning with key priorities of the new Government.

7. Key Review Concepts • Appropriateness • Effectiveness • Efficiency • Integration • Performance Assessment • Strategic Policy Alignment

8. Current Review Environment • Expenditure Review taskforce was wound down April 2009, once the larger, easier and noticeable programs were examined and associated savings were identified. • These savings were included in the 2009-10 Budget . • Ad hoc reviews and budget savings options continue • The Key Review Concepts have now been incorporated into Strategic Reviews.

9. Parliament Question Time Estimates Citizens The Media Academia

10. Developing Strategic Review Topics? • Department of Finance and Deregulation develops a broad list of possible Strategic Reviews. • Undertaken in discussion with the Departments of the Prime Minister and Cabinet and The Treasury. • A prioritised selection of important Strategic Reviews (5 or 6 each year) is recommended to Cabinet for endorsement. • The Government may also commission a Strategic Review at any time.

11. Management of Strategic Review • Strategic Reviews undertaken by Finance department. • Terms of reference (review scope) agreed to Ministers. • Establish a Review Team, from existing Finance staff and people from relevant agencies. • May require leader with special skills and experience • May need expert consultants/advisers • Form Reference Group of senior agency officials to meet periodically and discuss review progress. • Ensure effective and wide consultation (within government at least) – but maintain necessary confidentiality.

12. Completion of StrategicReviews Completion of StrategicReviews • Drafts of review report sent to relevant agencies for comment • Final Strategic Review report presented to Government. • Further consultation with affected agencies. • Finance and relevant agencies may present a separate follow-up document making recommendations to Government as part of the Budget process • content and timing depends on post-review negotiations and on views of Ministers.

13. Examples of Strategic Reviews • Administration of Australian Government Grant Programs • Australian Government Climate Change Programs • Future Directions for Australian Government Service Delivery; • Future Directions for Shared Services across Australian Government; • Indigenous Expenditure across Australian Government; • Indexation Arrangements; and • Job Capacity Assessment Program (employment capacity review).

14. Outcomes of these reviews • Expenditure Reviews: • Savings of $A 3.2 billion over 4 years announced in the 2009-10 Budget. • Improvements in the administration and delivery of Government programs. • Strategic Review – Job Capacity Assessment: • Savings of $A 383 million over 4 years. • More efficient and accurate assessments for Disability Support Pension and employment services.

15. Challenges ahead • Open Government • Making the review increasingly ‘strategic’ • Reaction to government pressures and issues • Cross-portfolio programs

16. Learning from Canadian Experience • Four year cycle – complete assessment of all direct program spending in each Canadian government agency • Assess expenditure based on: • Effectiveness and Efficiency • Value for Money, • Aligned with Canadian government responsibilities. • Identify lowest priority/ lowest performing 5 per cent.

17. Key Messages • Strategic Review and Expenditure Reviews only two of several review tools used by the Australian Government. • These reviews hold a key role in ensuring that larger, more important government programs are reviewed and improved as government circumstance, and priorities change. • In Australia, Expenditure Reviews have been useful in identifying government savings in times of budget stress. • Strategic Reviews built around the concepts of: appropriateness, effectiveness, efficiency, integration, performance assessment, and strategic policy alignment.

18. Conclusions and Questions • Peter Saunders • Department of Finance and Deregulation • Australia • 1 March 2011