Sub-Regional Workshop for the North Pacific: Integrating MDGs into National Development Strategies and Budgets

1. Sub-Regional Workshop for the North Pacific:Integrating MDGs into National Development Strategiesand Budgets PRO-POOR POLICIES What Are They? How Do They Contribute to the Achievement of the MDGs? David Abbott Regional Macroeconomic and Poverty Reduction Advisor UNDP Pacific Centre david.abbott@undp.org regionalcentrepacific.undp.org.fj

2. What is Pro-Poor Policy • Pro-poor policy aims to target those who are most disadvantaged, in income, opportunity or hardship • Pro-poor policies will lead to: • An increase in the income levels of the poor faster than the average rate of growth in income as a whole • A reduction in recorded poverty levels: MDG 1 and national poverty lines • An improvement in other MDG indicators, and • An improvement in the HDI and HPI indicators • MDG Reports suggest that growth has NOT been pro-poor - or at least not sufficiently pro-poor to be making a real impact on poverty and MDGs

3. “Good” Pro-poor Policy • Policy may be pro-poor when: • It is labour rather than capital intensive • Targets sectors in which the poor are employed or engaged • Rural: agriculture and fisheries (rural) • Urban: labour intensive sectors including construction, services • It creates income and employment for the poor and disadvantaged: • Youth and other unemployed (low-skilled) • Women • Other disadvantaged groups (elderly, disabled, displaced people, rural/urban migrants) • Targeted at individual disadvantaged and poor groups • Serves to reduce inequality • Growth is a necessary but not sufficient condition for poverty reduction

4. Growth and MDGs: A Two-way Causality • Growth Human development and poverty reduction • Human development and poverty reduction Growth  MDGs are an end in themselves but also a means to achieving high quality, sustainable growth

5. MDG-based National Development Strategy: Principles • Adopt pro-MDGaction programs: do not rely on “trickle down” (economic growth). • Adopt pro-poor, MDG-focused policies that will be pro-growth in the long run. • Ensure consistency between macro and growth policies, and pro-poor, MDG-focused policies. • Set localised targets and standards for key groups or regions: don’t rely on national averages. • Earmark funds for pro-por, MDG-focused policies in annual federal, state and local authority budgets and protect them from budget cuts.

6. Economic and Social Policy Issues 1 • Low rates of economic growth • High rates of population growth • Declining per capita incomes • Weak fiscal situations and poorly defined budget parameters and priorities • Budget allocations are not priority or policy driven • Not always (often) linked to national strategies • Inequity in access to, and quality of, basic services between rural and urban areas

7. Economic and Social Policy Issues 2 • Governance standards are often weak • Standards of basic service delivery are often poor • Weakening of social environment • Changing attitudes to traditional roles, customs and responsibilities: • Exposure to outside influences including: money, “western values” in social relations, alcohol/drugs, DVD/videos, access to information and knowledge etc • Weakening of traditional family discipline and ties • Increasing social and domestic tension • Lack of clearly defined pro-poor and sustainable development strategies to address these key issues

8. Economic and Social Policy Issues 3 • Impact of economic reforms • Increases in user charges for government services • Changes in taxes and tariffs may lead to increases in basic food prices and other “essentials” • Increasing monetisation of subsistence economies • Lack of economic opportunity in the outer island/rural areas leads to urban drift/migration • Increasing dependency ratios in rural areas • Decreasing rural agricultural production • Urbanisation, deterioration in environmental health and rising social tensions • Increasing youth unemployment

9. Linking National Strategies, Pro-poor Policy and the Budget • National Sustainable Development Strategies • Vision: 10 – 15 years • Pro-poor / sector priorities, policies and strategies • Strategic outcomes: 3 - 5 year time frame, may be longer • Sector interventions and investment • Need to prioritise and set timetable • Annual budgets should reflect national priorities • MTEF: needs to integrate national priorities and strategies and annual budgets through clearly costed pro-poor policies

10. Costing Pro-poor and Other Policy 1 • Policy interventions must be properly costed • Policy costing methodology should be identified • Should give clear realistic costs and benefits • Casual forecasts/estimates are not sufficient • MTEF must be a deliberate planned and costed future programme • Links planning, policy, budgeting into an overall framework

11. Costing Pro-poor and Other Policy 2 • Design and Implement Targeted Policies and Other Interventions • Targeted Interventions • How should they be targeted • direct transfers • subsidies • other policy influence/interventions • Assess the Impact of Policies on the Poor • Economic growth • Pro-poor budgeting; taxes and tariffs, user charges • Equitable social expenditure • Other targeted interventions including MDGs

12. Costing Pro-poor and Other Policy 3 • Pro-Poor Budgeting and Social Spending • Who uses public services (health and education) • Do the poor and disadvantaged have equal access • How does the quality of service provided vary by location and social group (poor/non-poor, urban/rural) • Cost and allocation of resources by user group • Do the poor get a proportionate allocation of resources • Is there a gender balance in resource allocation • Unit cost of delivery/subsidy • Are the poor (or other groups) disadvantaged by user charges • Or the cost of accessing services • Impact of proposed policy interventions • Are policy interventions costed/assessed for pro-poor impact

13. Budget and Economic Implications MDG 2 to 6 • Poor educational attainment and gender inequality: • Cost of additional teachers/classrooms/books and teaching materials • Loss of productive potential from poor educational attainment • Additional budget burden from consequences of poverty • Poor health: • Additional costs for clinics, hospitals, medications and treatment • Current burden on the budget • Better priority would be prevention rather than cure • Loss of production from sick workers • Loss of tax revenues • Poor health in childhood leads to poor health as adult • Future burden on the budget

14. Budget and Economic Implications: MDG 7 & 8 • Social tensions: • Additional cost of law and order • Additional cost of other social welfare services • Pressure on infrastructure and public services: • New investment needed in roads, water, sanitation, power, health and education services to meet increased urban population • Additional maintenance costs • Urban/Rural migration: • Rural transport services and public utilities become (even) less financially viable • additional subsidies required • or higher charges place additional burdens on the rural poor – or their working relations in the urban centres • Unit cost of rural social service delivery (education, health) increases as rural populations decline

15. Pro-Poor Policies: Summary and Conclusions • Growth alone is not enough • Patterns of growth are important • Growth in sectors in which poor are more likely to be involved, agriculture, fisheries, informal activities • Rural sector must be made more attractive • Enabling environment for economic opportunities to be created for the poor in their sectors • Access to resources and assets • Access to basic services • Access to rural financial services, credit facilities and financial literacy programmes • Decentralization, local empowerment and participation • Good governance • Land reform • Access to transport and markets • Access and other support to extension services

16. Pro-poor Policies: A Virtuous Circle • The Growth Strategy • Creating sound macroeconomic and fiscal policy framework • Developing pro-poor, performance oriented budgets • Delivering cost-effective, efficient and quality services to all • Creating enabling environment for private sector • leads to • Creation of Employment • Generation of new economic opportunities • Increasing incomes • Resulting in • Economic growth and reduction of poverty • Raising welfare and progress towards MDG achievement

17. Thank You David Abbott Regional Macroeconomic and Poverty Reduction Advisor UNDP Pacific Centre david.abbott@undp.org regionalcentrepacific.undp.org.fj