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 budgeting experience 2002-2012 • Delivery approach in the Netherlands 2007-2010 • Lessons from a difficult process • Accountable budgeting reform • Policy evaluation practice • Final thoughts

3. Currentfiscal context Netherlands • Question often asked 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

5. New Public Management – performance movement From a budgetary perspective:

6. Resultorientedbudgetingreforms in the NL

7. Performance budgetingexperience 2002-2012 For each policy article (poliy program) these questions had to be answered :

8. Performance budgetingexperience 2002-2012 Performace budgeting ‘as intended’ (Safety program Ministry of Transport 2011)

9. Performance budgetingexperience 2002-2012

10. Deliveryapproach in the Netherlands 2007-2010 Inspired by UK

11. Deliveryapproach in the Netherlands 2007-2010 Examples of priorities from government coalition: 3. Bringing closer a solution to the conflicts in the Mid-East 20. Annual growth of 5% for public transport by railroad 51. Reduce nr. of stolen bikes by 100.000 compared to 2006

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

13. Lessonsfrom a difficultprocess What do government agencies use performance information for? Just a classification (de Lancer Julnes 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).

14. Lessons from a difficult process • Strong emphasis line ministries on compliance and legitimization

15. Lessonsfrom a difficultprocess • How helpful is PI in budgeting? • + Program structure useful for accountability and managerial flexibility • + Performance information is helpful for internal steering and oversight (e.g. agencies) • - Performance information seldom plays a role in allocation by politicians • - Input information and policy instruments remain vital to Parliament • - The budget cannot be the comprehensive and objective ‘mother of all policy documents’ • - A supply side oriented, uniform approach to performance information is no recipe for use Rely on multi year ex-post policy evaluation for assessing effectiveness instead of Relying on PI use in annual budgetary cycle

16. Accountablebudgeting reform • Add more detailed financial information • More selective use of policy information and indicators in budget documentation • Renewed emphasis on policy evaluation

17. Accountablebudgeting reform • More detailed financial information in budget

18. Accountablebudgeting reform More selective use of policy information and indicators in budget documentation

19. Accountablebudgeting reform • Programs in which the dominant role of government is a truly executive one, 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)

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 Renewed emphasis on policy evaluation

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

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 Spending Reviews covering a broad range of policy areas. • 75% of government spending 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 • Cultural aspects should not be overlooked • Evaluation capacity but also mentality: • 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) • Result orientation in formulating and substantiating policy proposals (a PB structure can help strengthen this awareness) • Performance planning and monitoring ought to enhance rather than erode result orientation of motivated public professionals

28. Finalthoughts • Performance management (or budgeting) is not and end in itself • Intensifying a performance dialogue is more important than the technicalities of the system chosen • Although we may prefer performance assessment to be tied to our budget calendar, systems and formats • our ultimate goal should be to stimulate more: • Dialogue about performance and results, • Preferably linked to budgetary decisions • At any level in government

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