Evaluating public expenditure management systems: An experimental methodology with an application to the Australia and New Zealand reforms

Abstract

This article examines how institutional arrangements affect the size, allocation, and use of public expenditures. It identifies a set of arrangements that can address underlying problems and affect three levels of expenditure outcomes ‐ aggregate fiscal discipline, strategic prioritization, and technical efficiency in the use of resources. A diagnostic questionnaire is constructed which produces index values for each arrangement. This methodology is used to analyze the radical reforms introduced by New Zealand and Australia. The results show that New Zealand sought to achieve aggregate fiscal discipline and enhance technical efficiency through formal mechanisms for transparency and accountability. The Australian reforms sought to improve strategic prioritization through transparency of the medium‐term costs of competing policies, and the devolution of detailed program decisions to line ministries within hard budgets.

Budgetary and Financial Management Reforms in Korea: Financial Crisis, New Public Management, and Fiscal Administration

“…As is now well known, New Zealand has placed an almost one-sided emphasis on technical efficiency in the delivery of outputs (Campos and Pradhan, 1997). But the New Zealand public management reform neglected the strategic capacity of government, producing a short-term policy focus and an inattention to the collective interest of the government.…”

Reforming Budget Systems in Countries of the Former Soviet Union

“…Such expenditure envelopes, determined with the backing of the government and issued by the cabinet, are critical to developing budget priorities (Campos and Pradhan 1997). On the whole, however, the FSU countries still have much to do to make ministry budget proposals an effective and meaningful part of public expenditure planning and management.…”

“…In Central Asia, the Kyrgyz Republic 1998 budget procedures law also requires the linkage of the budget to a medium-term financial planning horizon. Realistic short-and medium-term forecasts are critical to establishing fiscal discipline (Campos and Pradhan 1997).…”

“…Adequate spending unit flexibility and accountability for performance are critical in establishing budget formulation and execution which effectively carry out government priorities and meet programmatic needs of populations (Campos and Pradhan 1997). Budget construction throughout most of the FSU is driven from bottom-up processes, often based on out-of-date personnel and facility norms (regulations) which were once centrally sanctioned as a budget calculation basis, but have no relationship to finances available during the transition.…”

“…However, flexibility should be based on reasonable policy choices, not driven by chance. At the same time, to effectively deliver services, line agencies need predictability and some level of certainty regarding the flow of budgetary resources (Campos and Pradhan 1997).…”