Result oriented reforms in the Netherlands: theory versus practice

1. Result oriented reforms in the Netherlands: theory versus practice Maarten de Jong Budget Affairs Directorate Netherlands Ministry of Finance (Also affiliated to Erasmus University Rotterdam )

2. Contents • NPM & performance movement • Performance budgetingexperience 2002-2012 • Deliveryapproach in the Netherlands 2007-2010 • Lessonsfrom a difficultprocess • Accountablebudgeting reform • Policyevaluationpractice • Finalthoughts

3. Currentfiscalcontext Netherlands • Questionoftenasked these days: • HOW HELPFUL ARE PERFORMANCE BUDGETING AND PERFORMANCE MANAGEMENT IN CREATING FISCAL SPACE?

4. New Public Management – performance movement ‘A goal without a plan is just a wish’ Antoine de Saint-Exupéry The Origins of Program Budgeting in the Netherlands

5. New Public Management – performance movement From a budgetaryperspective: Budgetinfrastructure Servische delegatie

6. Resultorientedbudgetingreforms in the NL Budgetinfrastructure Servische delegatie

7. Performance budgetingexperience 2002-2012 For eachpolicyarticle (poliy program) these questions had to beanswered : Fiscal Consolidation in the Netherlands

8. Performance budgetingexperience 2002-2012 Performacebudgeting ‘asintended’ (Safety program Ministry of Transport 2011) Fiscal Consolidation in the Netherlands

9. Performance budgetingexperience 2002-2012 Fiscal Consolidation in the Netherlands

10. Deliveryapproach in the Netherlands 2007-2010 Inspiredby UK Fiscal Consolidation in the Netherlands

11. Deliveryapproach in the Netherlands 2007-2010 Examples of prioritiesfromgovernmentcoalition: • 3.Bringingcloser a solution to the conflicts in the Mid-East • 20. Annualgrowth of 5% for public transport byrailroad • 51. Reduce nr. of stolen bikesby 100.000 compared to 2006 Fiscal Consolidation in the Netherlands

12. Lessonsfrom a difficultprocess • Aim for realistic mid-term (two years) and end results (four years) as the first year of government, it is usually too early for reporting • For some high-profile political goals, the central government’s role may turn out to be a rather passive one and may therefore not qualify • It may not always be feasible to use the intentionally stable structure of the budget for political priorities that are more unstable by nature • Since every line ministry wants to be included in the government’s top priorities, some priority goals may just reflect “going concerns”. Ambitious cross-cutting goals may help commit several ministries at once. • When working with cross-cutting goals, agree on a clear accountability structure between line ministries to prevent stove-piping and unclear ownership • Mobilize the knowledge of line ministries early on in the process when formulating quantitative goals. This process should not be left to political leaders and top civil servants Fiscal Consolidation in the Netherlands

13. Lessonsfrom a difficultprocess Just a classification (de LancerJulnes 2008): Reassurance: Government shows it is doing what it is supposed to do with the taxpayers’ money. Compliance: Agencies demonstrate that they comply with performance measurement regulations. Program learning: Learning from results may lead to program changes or maybe just to a better informed dialogue. Enlightenment: Externally, enlightenment can lead to mobilization and put an issue on the political agenda. Internally, enlightenment can lead to more informed decisions and better-educated stakeholders; this can generate new insights and challenge previously held perceptions. Legitimization: Performance information can be used to rationalize, justify or validate current, past and future courses of actions and decisions (including funding levels). Fiscal Consolidation in the Netherlands

14. Lessons from a difficult process • Strong emphasislineministriesoncompliance and legitimization Fiscal Consolidation in the Netherlands

15. Lessonsfrom a difficultprocess • Howhelpful is PI in budgeting? • + Program structureusefulforaccountability and managerialflexibility • + Performance information is helpfulforinternal steering and oversight (e.g. agencies) • - Performance informationseldomplays a role in allocationbypoliticians • - Input information and policyinstrumentsremainvital to Parliament • - The budget cannotbe the comprehensive and objective ‘mother of all policydocuments’ • - A supplysideoriented, uniform approach to performance information is norecipeforuse Relyonmultiyear ex-post policyevaluationforassessingeffectiveness instead of Relyingon PI use in annualbudgetarycycle

16. Accountablebudgeting reform • Add more detailedfinancialinformation • More selectiveuse of policyinformation and indicators in budget documentation • Renewedemphasisonpolicyevaluation

17. Accountablebudgeting reform • More detailedfinancialinformation in budget

18. Accountablebudgeting reform • More selectiveuse of policyinformation and indicators in budget documentation Budgetinfrastructure Servische delegatie

19. Accountablebudgeting reform • Programs in which the dominant role of government is a trulyexecutiveone, seem most fit for performance budgeting and management (some 20-25% of our budget) Impact of Gvt. ondesiredpolicyoutcome? SignificancefinancialcontributionGvt. ? Decisive Is policyexecutedbyGvt. agency? Limited Decisive Gvt. Stimulates Limited Yes Gvt. Executes No Gvt. Regulates Gvt. Finances

20. Accountablebudgeting reform • Number of performance indicators per ministry following Accountable Budgeting reform (2013) voettekst

21. Types of Evaluations III Savings and reform options I Ex ante Evaluations II Ex post Evaluations Cost Benefit Analyses PolicyReviews Costeffectiveness studies Impact Evaluations OtherEvaluations Accountablebudgeting reform SpendingReviews ComprehensiveSpendingReviews List savingsoptions Renewedemphasisonpolicyevaluation

22. Policyevaluationpractice –policyreviews • Unit of analysis is government program and its goal as stated in budget • Self assessment with mandatory involvement of independent expert and Min. of Finance • Multi annual evaluation agenda in which each objective is evaluated every 4-7 years voettekst

23. Policyevaluationpractice - spending reviews • Independent, non-political working groups (civil servants and external experts); • Chaired by senior officials not responsible for the policy; • Non veto: ideas may not be blocked by other members working group; • Choice of policy options is decision by Cabinet; • Reports are sent to parliament and are downloadable for wider public. • Special Case Comprehensive Spending Review 2009/2010 (in addition to above): • One compulsory spending reduction option of 20%.

24. Comprehensive Spending Review 2009/2010 (i) • Financial crisis provided a real sense of urgency • for fiscal consolidation: • The 2007 budget surplus changed into to 5.5% GDP budget deficit • Assignment by council of ministers: • “Provide insight into different cutback options and their effects” • 20 SpendingReviews covering a broad range of policy areas. • 75% of governmentspending was included.

25. Politicaluse of SpendingReviews 2009/2010 • Substantial influence of Spending Review Reports on 2010 election programmes of Dutch political parties % uptake measures from Comprehensive spending review in election programmes Political parties

26. Finalthoughts

27. Finalthoughts • Culturalaspectsshouldnotbeoverlooked • Evaluationcapacitybutalsomentality: • Selection of appropriate staff: mixture of analytic and research capacity (introvert) and staff with the ability to network, deal with resistance and able to operate in a fluid environment (extrovert) • Resultorientation in formulating and substantiatingpolicyproposals (a PB structurecan help strengthenthisawareness) • Performance planning and monitoringought to enhanceratherthaneroderesultorientation of motivated public professionals

28. Finalthoughts • Performance management (orbudgeting) is not and end in itself • Intensifying a performance dialogueis more important than the technicalities of the system chosen • Although we mayprefer performance assessment to betied to our budget calendar, systems and formats • ourultimate goal shouldbe to stimulate more: • Dialogueabout performance and results, • Preferablylinked to budgetarydecisions • At any level in government

29. Thankyou! Maarten de Jong m.jong@minfin.nl +31 6 25021897