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Enhancing Budget Transparency and Efficiency: The Dutch Experience

Explore the evolution of budgeting in the Netherlands from the 1970s to present, focusing on reforms, indicators, and performance assessment aimed at achieving political goals and efficiency. Learn from the successes and challenges faced by the Ministry of Finance.

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Enhancing Budget Transparency and Efficiency: The Dutch Experience

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  1. Performance budgeting and efficiency Raphael Debets MoF The Netherlands OECD meeting 2 May 2006

  2. Aristotle“Man is a goal seeking animal. His life only has meaning if he is reaching out and striving for his goals”

  3. Budget reforms in Netherlands • 1970’s • Top-down approach • Goals defined by Ministry of Finance • Disaster • 1997 • Regulations by Ministry of Finance • Policy objectives defined by line ministries • Indicators also defined by line ministries • Bottom-up approach, but questionable • 2004 • Evaluation by committee

  4. Initial goals? • More transparent budget/ annual report • Focus on political priorities • Better authorization and control by parliament • Way to achieve these political goals • More measurable goals • Instrument to achieve efficiency

  5. What are our results? The budget • Positive • Acceleration of annual report • September  May • Short and more political introduction due to policy agenda • Average 60 pages  15 pages • Better structure budgets: instruments  output • Reduction number of line items 800  140 ‘articles’ • But also negative results like …

  6. Negative: unreadable documents

  7. Negative: unclear policy objectives

  8. Negative: contribution of government intervention is unclear

  9. What are our results: indicators? • Regulation: “Every line item should have indicators” • Labour participation • 55-65 age must increase to 40% • What about the economic cycle?

  10. Perverse incentives • Indicators don’t address certain crimes • Example: ‘Sticky fingers” • Art thefts

  11. Perverse incentives

  12. IMF ‘fiscal ROSC’ • IMF conclusions on budgetreform • Reform with potential for transparency • Much work done, harvest still to be reaped (mostly) • Recent changes in course by MoF are appropriate • Limit and focus performance information • Use appropriate information for level of discussion (main issues) • Integrate policy analysis better in budget cycle • Raise quality and independence • www.minfin.nl

  13. Change in course: the (long) way ahead • Rigorous analysis (new policies) in policy documents • Ensuring basic questions are answered • Experiments and independent experts • Basis task budgets = authorization • Reduce text (internet, useful indicators)

  14. Intermezzo: uncertainty • FT 7 April “Fruitless search for certainty” • “As in most walks of human life: inputs and outcomes are imperfectly connected” • “I can live with doubt and uncertainty. I think it’s much more interesting to live not knowing than to have answers which might be wrong”

  15. The (long) way ahead • Efficiency must be promoted with other instruments • Interdepartmental policy reviews • Evaluation of effects of policy • “Demand-driven” reforms

  16. Example:social assistance • City councils receive “objective budget” • Big success: reduction 25%

  17. Too important to lose touch with reality!

  18. "This is not the end."

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