Performance elements in budget and reporting process - Norway

1. Performance elements in budget and reporting process - Norway 5TH ANNUAL MEETING OF OECD SENIOR BUDGET OFFICIALS NETWORK ON PERFORMANCE&RESULTS – 28 OCTOBER 2008

2. Performance Information in the Budget Process • The 1986 budget reform in Norway called for a greater focus on results and efficiency. • Ministries and agencies increased managerial flexibility in order to improve efficiency and performance and to hold them accountable for results measured in the form of outputs and outcomes. • Changes in the Appropriation Regulations (by Stortinget) • Government system of performance budgeting and management has developed slowly.

3. Government requirements of performance information • Require that the budget proposal contain information on planned objectives and achieved results for the previous financial year together with financial information • Government Decree on Financial Management regulates management of all administrative central government bodies, all activities in the administration and all grant, contribution and guarantee schemes • The Ministry of Finance has also issued Provisions on Financial Management in accordance with the government decree.

4. The ministries must ensure that agencies report relevant and accurate performance information and that they commission evaluations. • The ministries shall in consultation with the agencies define needs and agree on the scope and content of the reporting of performance information. • The scope of the reporting shall be in accordance with the letter of allocation and shall focus on achievement of objectives and results. • Ministries decide on the reporting requirements • Reporting on results may include inputs, activities, products and services as well as outcomes

5. The agencies shall prepare a separate annual report to the ministries, in accordance with requirements in the letter of allocation, and it shall contain relevant performance information • Individual line ministries have the flexibility to establish their own approach for overseeing and managing agencies • Ministries shall ensure that evaluations are performed to obtain information on efficiency, achievement of results within the ministries area of responsibility • The frequency and scope of evaluations shall be decided on the basis of the agency`s distinctive characteristics, its risk profile and its significance. The need for evaluations must be considered in light of the quality and scope of other reporting.

6. Practice • Many ministries and agencies have made only limited progress in developing meaningful performance measures and using them in the budget process • The MoF has so far not put pressure on ministries or agencies to actively implement performance information in the budget process • There are exceptions and progress does vary with individual ministries and agencies • Norway struggles with problems of goal definition and developing good quality performance measures and data • The development of output and outcome measurements has been slow and generally the quality of the data is problematic

7. These problems are compounded by a decentralized system in which there are few incentives and little pressure in ministries to use performance information in the budget process. • There is little systematic evaluation or monitoring by the MoF of ministries or agencies progress and activities in this area • In 2004 MoF established The Government Agency for Financial Management. Important role in initiating, promoting and coordinating reforms within performance management and financial management within government • Give advice, prepare advisory material, methods and tools for finance management, training and conduct consultative functions.

8. Initiatives • MoF has taken an initiative in 2008 to consider different models of centralized reporting of conducted evaluations. No final decision has been taken. • MoF has together with The Government Agency for Financial Management initiated a project which examine the status of performance budgeting in a systematic matter. • Survey of five budget propositions and six letter of instructions are carried out recently. The project will be finalized in 2008.

9. Major findings are: • The overall framework of performance management, according to the regulations, seems to established both at ministerial and agency level. However, there are differences when it comes to quality • The goal definition both in budget propositions and letters of instruction are generally formulated, and with some exceptions, and not measurable • There is not a overall framework of goals in the budget propositions (exception; Ministry of Justice) • Performance information in budget propositions are mainly on activities (seldom output or outcome) • The ministries use few performance indicators to measure cost efficiency • There are huge differences between ministries and agencies in structure and quality of performance information • Different practice between ministries in use and references to conducted evaluations in the five budget propositions • Additional measures are planned in 2009. Case-collection of good practice.

10. Conclusions • Extensive improvements have been made by managerial flexibility. • However, the government-wide system of performance budgeting and management has developed slowly.