Practice Advice on Budgeting and Financial Management
Performance Budgeting (OECD)
Summary Advice: The OECD advises that governments should better integrate performance information into management and budget decision making.
Main Points: The five lessons from a review of Canadian experience are:
Lesson one: There is no substitute for central leadership if you want to move the whole government in a new direction. In its role as the government’s management board, the Treasury Board sets
policies and priorities in areas as diverse as human resource management, procurement, executive training, and all aspects of expenditure and results-based management. In support of these policies, the Treasury Board Secretariat provides guidance on their application; for example, on the preparation of departmental planning and performance reports and on the generation and use of performance information. Working within this suite of central policies and consistent with their own mandates, departments are responsible for setting targets and outcomes, as well as for developing performance measurement systems and strategies. This Treasury Board ability to set the rules, monitor compliance and alter the rules when necessary has proved essential to leading change in the Canadian setting.
Lesson two: A detailed understanding of the links between resources and results at a programme level is essential and needs to be constantly maintained. Being able to integrate performance information into expenditure management decision making requires a detailed, almost granular understanding of the ongoing programme base across many organisations. Programmes need to be defined consistently, and resources and results (both planned and actual) need to be linked to each programme in a common manner. This programme-based information needs to be easily accessible, available for planning, decision-making and reporting purposes, and updated continuously. Performance information focused mainly on high-level results can have a negative impact, contributing to a loss of programme-by-programme knowledge. For that reason, the government of Canada is investing much time and effort to
understand what is going on at the programme level.
Lesson three: There is no substitute for evaluation but you need to give it regular attention. While the government has a substantial evaluation capacity in departments and agencies, the function needs to be reoriented and strengthened: evaluation capacity has not been optimally directed and evaluations are not always available on a timely basis. For example, evaluation coverage would need to be more than doubled if the government were to evaluate all or the bulk of its direct programme spending within a four or five-year period.
Lesson four: A common framework is essential if you want to apply results-based management principles government wide. Understanding the granularity of resources and results at the “small p”
programme level is only part of the answer. An effective expenditure management system needs to link those programmes to higher-level intended outcomes on a departmental and a government-wide basis. A first whole-ofgovernment framework, intended to do this, was introduced in the Canada’s Performance report and has been refined over the past few years.
Lesson five: Managing for results depends on clear expectations, sound underlying management practices, regular assessment and public accountability. The government now has several years of experience in implementing the Management Accountability Framework (MAF), which establishes common expectations for management performance and is the basis for accountability between departments/agencies and the Treasury Board. The MAF can be viewed through three lenses: as a vision for good management, establishing a framework for accountability; as a process (assessment, engagement, dialogue and reporting); and as an analytical tool to identify strengths and weaknesses within departments and across government. Through the MAF, departments are evaluated against a set of indicators and measures that assess, among other things, the quality of management, resources and results structures; the capacity to undertake and use programme evaluations; and the overall quality of reports to Parliament. Discussions between senior officials identify management priorities, a process that draws attention to issues in a structured way that can lead to improvement.
Source: OECD (2007). "Performance Budgeting in Canada," Lee McCormack, OECD Journal on Budgeting, Volume 7, Number 4 at http://www.oecd.org/canada/43411424.pdf (accessed 26 January 2013).
Page Created By: Ian Clark on 26 January 2013. The content presented on this page is drawn directly from the source(s) cited above, and consists of direct quotations or close paraphrases. This material does not necessarily reflect the official view of the publishing organization.