Results Based Budgeting (RBB) in Australia - Evolution and Practice

1. Results Based Budgeting (RBB) in Australia - Evolution and Practice John Martin DirectorDevelopment Initiatives

2. Results Based Budgeting in Australian Government • Introduction • A brief history of Australian government budget reforms: 4 periods • 1976 -1983 • 1983-1996 • 1996 – 2007 • 2007 - present • Evaluation Strategy 1987: led by Dept of Finance (budget agency) • Results based budgeting • introduced in 1999-2000 Australian Government Budget • Outputs, Outcomes and Performance indicators • Accrual accounting introduced at same time • 2008: Operation Sunlight review – aims to increase openness, transparency & governance • Evolving “best practice”

3. Introduction • Personal career as • development practitioner • aid analyst in AusAID • budget reform from a Dept of Finance perspective • Results based budgeting • Monitoring and Evaluation strategy

4. Brief history or Australian budget reforms Rationale • Accountability • Decision making • Learning

5. Brief history or Australian budget reforms • Reform is not new • Been underway since 1976 • 4 key periods • Linked to politics and state of economy • Not a smooth process • Budget reforms part of broader public sector reforms • Paradigm shift arising from global economic crisis

6. Australian budget reforms: Period 1 1976 Royal (Coombs) Commission Three themes • Responsiveness to the elected government • Improved efficiency and effectiveness, including through more results-based management and less prescription • Community participation

7. Australian budget reforms: Period 2 1983 Reforming the Australian public service • Difficult economic times • From compliance to performance control • Program budgeting – specify program objectives and targets for appropriations • Flexibility in public sector budgets • 1987 evaluation strategy: centrally driven by Department of Finance and budget processes

8. Australian budget reforms Period 3 1996 – 2006 • Results Based Budgeting: Outputs & Outcomes • Accrual based budgeting • Less prescriptive processes • More private sector engagement and processes • Devolved responsibility to Agencies

9. Brief history or Australian budget reforms Period 4 2006/7 to present • Operation sunlight – reform agenda for budget and financial management • June 2008 Murray report – review budget transparency • Dec 2008 Government response to Murray Report • Reforms coordinated by Department of Finance and Deregulation (DOFD); DOFD & Treasury responsible • Agency responses underway e.g. 2009-10 Portfolio Budget Statements introduce Programs • 6-pronged Reform agenda is on-going process

10. Operation Sunlight • What is it? • Government’s reform agenda to improve the openness and transparency of public sector budgetary and financial management and to promote good governance practices • Key objectives • The Murray report • Government response

11. Objectives of Operation Sunlight • Tightening the outcomes and outputs framework • Changing the Budget Papers to improve their reliability and usefulness • Improving the transparency of Estimates • Expanding the reach of budget reporting • Improving the inter-generational reporting • Improving the financial framework

12. Operation Sunlight concerns • Need to improve transparency and accountability of the Budget • Address problems with Outcomes • Need for better targets/results • Poor descriptions of appropriations • Need better setting out of resource use • Need for Program reporting • Better treatment of budget implications on future generations

13. Long Term Modelling Implementing Implement Agreed Implement Agreed Operation Murray Recommendations Murray Recommendations Sunlight Long Term Improving the Improving the Outcome Improving Improving Transparency Budget and and Financial Financial Framework Budget Papers Budget Papers of Estimates Reporting IG Reporting IG Reporting Framework Framework SP 3.1 SP 4.1 SP 6.1 SP1.1 Implementing Implementing Compact of 1965 Compact of 1965 Outcomes Review* Outcomes Review* Special Accounts Special Accounts non non - - cash cash SP 6.2 SP 2.2 SP1.2 Net Cost Net Cost Program Reporting* Program Reporting* Targets / Results* Targets / Results* of Services of Services SP 2.3 SP 4.3 SP 6.3 SP 1.3 Accounting Accounting Contingency Contingency Appropriation Appropriation AFM AFM Harmonisation Harmonisation Reserve Reserve Descriptions* Descriptions* SP 6.4 SP 1.4 Other Other Resource Statement Resource Statement Appropriation Appropriation Issues Issues SP 2.5 Redesign the PAES / Annual Report Redesign the PAES / Annual Report Redesign of the PAES / AR Redesign of the PAES / AR Operation Sunlight Agenda

14. Accountability Reporting structures

15. Example • Education, Employment & Workplace Relations Portfolio (formerly DEST & DEWR) • Outcome 3: Higher education • Outcome 3: A growth in skills, qualifications and productivity through funding to improve teaching quality, learning and tertiary infrastructure, international promotions of Australian education and training sectors, and partnerships with industry

16. Evolving “Best practice” • RBB is part of integrated measure of reforms • Responsive to changes in government and ideology • Single budgetary and reporting system • Has champions • Flexible • Agreement on objectives & performance information • Clever identification of intermediate outcomes and PI • Adequate resourcing • Human resource development • Carrot and stick