Updated Analysis of Performance Budgeting During Recent Fiscal Consolidation

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Updated Analysis of Performance Budgeting During Recent Fiscal Consolidation

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The Parliamentary Budget Officer’s (PBO) legislative mandate includes the responsibility to provide independent analysis to Parliament concerning the government’s estimates.

Over the past five years, parliamentarians and the PBO have sought greater insight concerning spending restraint and the consequences of these spending decisions on service levels.

The government’s expenditure management system intends to reallocate funds from lowpriority and low-performing programs to higher-priority and better-performing programs.

As part of ongoing efforts to monitor the fiscal sustainability of recent spending restraint, the PBO has developed a multi-year framework to analyse spending, performance and relative operational efficacy using public performance and spending data. The purpose of the framework is to determine whether performance is a good predictor of budgetary changes.

The main conclusions of this report are:

  • For fiscal years 2010-11 through 2013-14, no consistent statistically significant relationship exists between a department’s performance and its budget growth in the subsequent year(s).

  • The performance data for 108 organizations does not suggest that financial resources have been reallocated from low-performing to high-performing programs. Rather, low-performing programs were somewhat more likely, on average, to receive budget increases in the subsequent year than programs that met targets or did not present measurable performance data.

These findings are generally consistent with an earlier survey by the Organisation for Economic Co-operation and Development (OECD). It concluded that performance budgeting data among member countries were “less influential” on decision making during the fiscal consolidation that followed the Great Recession. 

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Analysis of Performance Budgeting During Recent Fiscal Consolidation