Building blocks for adopting Performance Budgeting in Canada

1. Building blocks for adopting Performance Budgeting in Canada Bruce Stacey – Executive Director Results Based Management Treasury Board Secretariat, Canada

2. Canada’s Expenditure Management System (EMS) Renewal was geared towards ensuring management excellence and fiscal credibility • In 2003, the first roll out of performance budgeting requirements to departments in the form of – Program Structures, financial and non-financial information • In 2005, the MRRS Policy was formalized by Cabinet and an implementation plan was developed • In 2007, the Expenditure Management System Renewal was formally articulated to build on the work done so far. The goals: • Aggregate fiscal discipline (i.e. control of overall growth in spending) • Effective allocation of all government resources to areas of highest relevance, performance and priority • Efficient and effective program implementation • A new program evaluation policy will shortly be approved and will focus on evaluation from a value for money perspective 2

3. EMS renewal is supported by three key pillars • All spending must be managed to results/outcomes that are transparent to Canadians • Have clear measures of success • Be formally assessed and evaluated systematically and regularly • Demonstrate value for money • For new spending proposal : Up-Front Disciplineto manage overall spending growth. New proposals must: • Include clear measures of success • Provide solid information about how the proposal fits with existing spending and results – i.e how do they fit into the program structure • Provide reallocation options for funding • For existing spending: Strategic Reviewsassess all existing programs and spending over a four-year cycle to ensure alignment with overall priorities, as well as relevance, effectiveness, efficiency and economy • Spending/programs must demonstrate measurable results in support of priorities • Decision-making must rely on objective evidence-based information

4. Management, Resources and Results Structure (MRRS) Policy: The foundation of the renewed EMS • Represents a common approach to the collection, management, and reporting of performance information • Provides detailed information on all government programs • Establishes the same structure for both internal decision-making and external accountability • Links resources to results for each program - planned and actual • Has made program implementation excellence a much greater focus of Senior Management

5. The Program Activity Architecture • Policy requirements for Strategic Outcomes incl: • Performance Measures Strategic Outcome* Accountability levels to Parliament (Estimates & Public Accounts) *require TB approval, incl. major & minor changes • Policy requirements for each program activity element include: • Program title & description • Expected results • Performance measures • Planned & actual expenditures • Target & actual results • Governance Program Activities* Departmental PAA: reflect the inventory of all the programs of a department depicted in their logical relationship to each other and to the SO(s) to which they contribute **require TBS sign-offl Sub-Activity Level** Sub-Sub Activity Level** Lowest Level programs

6. DEPARTMENTS Management Tool Reflects full mapping of programs Better alignment of resources & priorities More evidence based reporting Improve program performance Common basis for planning and reporting inside and outside PARLIAMENT Reporting Tool Stronger accountability for spending and results Budget Plan Finance PCO MRRS enhances decision-making not only for central agencies, but also for departments and parliamentarians More logical and consistent basis for interaction TBS Informed decisions on investment choices based on priorities and value for money MRRS Policy Objective: Development of a common, government-wide approach to the collection, management, and reporting of financial and non-financial performance information - to provide an integrated and modern expenditures management framework 6

7. MRRS Implementation: An incremental approach based on lessons learned since first attempt in 2003 • Implementation of MRRS consists of five steps: • Departments develop fully articulated structures for their Program Activity Architectures (PAA) • (2006 ) • Departments identify/define Performance Measurement Frameworks & Governance Structures for their entire PAAs • (2007) • Departments create, capture and use MRRS information systematically • (2008 and onwards) • TBS develops and rolls out a system to capture the standardized departmental performance information • ( 2009 and onwards) • Embed MRRS information in all expenditure management processes • ( 2009 and onwards)

8. Some progress has been made on the information systems issue • In 2003, an attempt was made to build a system but under the tight timelines available, the system was not built in a sustainable manner • We have since developed a new integrated financial component of the Expenditure Management Information System (EMIS) • We are in the process of adding a results component to this • Lessons learned are: • Systems to deal with the entire end to end performance budgeting process are not available • Systems to deal with hierarchical program structures are not available or simple to design • It is important to spend a considerable amount of time upfront articulating roles and responsibilities, business processes and requirements

9. End State: Integrating performance information into the decision-making process Responsible and Effective Spending Aggregate Fiscal Discipline Effective government-wide allocations Operational Efficiency and Effectiveness EMS Renewal Outcomes Integrated Cabinet Budget Decision-Making Annual Strategic Periodic Reviews Results-focused MCs and TB Submissions (integrated information on new and existing spending) EMS Renewal Outputs & Inputs Strategic Advice to Cabinet to Support Decision-Making for Results Expenditure performance management, oversight and accountability Renewed Evaluation Function MRRS/PAA (Program Activity Architectures and related performance measurement information) Renewed Audit Function Financial management, control and oversight Strengthened Information Base to Support Departmental Management, Decision-Making and Reporting for Results