The Government is implementing wide-ranging reform of the State’s budgetary architecture. A number of expenditure reforms will improve management of scarce public resources and tackle inefficiency. The principal features of the new budgetary architecture, as it affects public expenditure management in Ireland, can be summarised as follows:-
Planning for Sustainable Public Expenditure – The old ‘bottom up’ processes of expenditure growth – whereby the total expenditure allocation for a year only became apparent once all of the demands had been catered for – is being replaced with advance planning by Government based on the resources that are available. The Medium-Term Fiscal Statement represents a first decisive step in this regard. In future years, the annual Stability Programme Update (published in April of each year) will update the medium-term fiscal targets and extend them by a further year.
Multi-annual expenditure framework – The annual Estimates ‘campaign,’ conducted privately within the system of public administration, is being replaced by a modern, multi-annual framework which will allow for full transparency about the allocations available to each Department over the coming three-year period. This will open the way for structural, medium-term planning and prioritisation within each area, with full public input and parliamentary oversight. The multi-annual allocations for each Department are set out in the Comprehensive Expenditure Report 2012-2014
Evidence-based Expenditure Policy – In a time when resources are exceedingly scarce, old expenditure lines are no longer sacrosanct, and all areas of spending should be subject to rigorous scrutiny. This year’s Comprehensive Review of Expenditure (CRE) is a good start – all areas of spending have been examined, and all of the background documents from the CRE are now available for public inspection. A tough, clear new VFM Code is also being launched on a dedicated new website – a VFM Portal for the whole of the public service. Under this VFM Code, the Government will re-double the processes for ongoing scrutiny and evaluation of public expenditure; and all Departments will work to demanding new timetables in this regard each year, answerable to their Oireachtas Committees for progress and action.
Performance-based budgeting – This year, for the first time, most Departmental Estimates are being presented in a new format, organised on the basis of “strategic programmes” rather than the old accounting “subheads.” This allows for a joined-up approach, linking the Estimates process directly with the Statements of Strategy, and allowing for performance information to be scrutinised by Dáil Committees at the same time that public money is being requested.
Accountability to the Oireachtas and the Public – All of the above reforms allow greater opportunities for the Oireachtas members, as representatives of the public, to play a more substantive role throughout the entire budgetary process, from initial allocation of funds, through to holding Ministers and public service managers to account for the achievement – or non-achievement – of stated performance targets. Moreover, the Government is moving to a new ‘whole of year’ budgetary timetable that allows for greater, more meaningful engagement by Oireachtas Committees in contributing to Estimates discussions in advance of the allocations being finalised.
Full details of the new approach is available here.