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Performance Budgeting Performance Budgeting in the Government of Canada Working Party of Senior Budget Officials OECD-MENA Senior Budget Officials Network.

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Presentation on theme: "Performance Budgeting Performance Budgeting in the Government of Canada Working Party of Senior Budget Officials OECD-MENA Senior Budget Officials Network."— Presentation transcript:

1 Performance Budgeting Performance Budgeting in the Government of Canada Working Party of Senior Budget Officials OECD-MENA Senior Budget Officials Network Bruce Stacey, Executive Director, Treasury Board Secretariat Cairo, Egypt, November 24 – 25, 2008

2 Canadian Context New Expenditure Management System Foundation – MRRS & Evaluation Strategic Review Process Whole of Government Reporting Lessons Learned Outline 2

3 The Canadian Context

4 This poses unique monitoring and reporting challenges: – 35 million people in a vast geographic area – Highly decentralized federation: 10 provinces, 3 territories – Provinces are equal to the federal government and have real power – Hundreds of federal-provincial agreements and transfer payment programs Over 90 departments & agencies and 46 Crown corporations – Over 300,000 core public servants – Over 1,600 points of service – Diplomatic presence in about 180 countries - Canadian Forces in 17 missions – Over 2500 programs and 350 million transactions per year Canada is a big country, with a small population, and a decentralized government that delivers services across the world … 4

5 Federal Spending Overview Total Expenses $222.2B (Fiscal Year ) Major Transfer Payments $98.1B Direct Program Spending $90.2B Source: Public Accounts of Canada TB/TBS Focus

6 Expenditure Review & Results Agenda in Canada: A History Federal Accountability Act cyclical evaluation of all transfer payment programs Management, Resources and Results Structures – regaining detailed program level knowledge Improved Reporting to Parliament – moving to whole of government planning and reporting Renewed Evaluation Policy – quality, capacity, credibility, and expansion of coverage Management Accountability Framework – assessing management performance across government Canadas Performance – linking programs to societal performance Results for Canadians – results-based management as a stated priority of government Transfer Payment Policy – performance frameworks and evaluations reviewed by TBS Modern Comptrollership – investment in management practices and controls Program Review – dealing with a large deficit through major expenditure cuts Departmental Reporting to Parliament – moving to results-based plans and reports on performance Planning Reporting and Accountability Structures – unsuccessful try at linking resources to results First Program Evaluation Policy – government-wide implementation Late 70s Mid 90s 2000 Todays Agenda

7 Expenditure Management System in Transition Designed 15 years ago to fight deficit and control new spending 1995: Program Review of the entire spending base Late 1990s: budget surpluses lead to new spending without an anchor to discipline that spending Cabinet time focused almost exclusively on new spending Ad hoc restraint exercises to control spending with no real focus on performance Governments around the world emphasize outcomes – Australia, U.K., U.S., New Zealand. Budget 2006 and 2007 committed the government to a new ongoing approach to managing overall spending EMS Renewal approved in June 2007

8 The New Expenditure Management System

9 The government wants to deliver high quality services and high value programs at reasonable cost Expenditure Management System Renewal is changing the way the government operates and aims to ensure: Aggregate fiscal discipline (i.e. control of overall growth in spending) Effective allocation of government resources to areas of highest relevance, performance and priority Efficient and effective program implementation The underlying objectives are management excellence and value for money … 9

10 Privy Council Office Support elected government in establishing priorities and meeting these through the effective allocation of spending to government priorities by Supporting Prime Minister & Cabinet Committees Managing flow of Cabinet business Facilitating broad Govt policy development Treasury Board Secretariat Supports Treasury Board (TB) in effectively allocating spending in manner that ensures operational efficiency and effectiveness by: Establishing and monitoring adherence to TB management policies (financial & non financial) Supporting TB approval of detailed operational plans & recommendation of resource appropriations for new programs Supporting TB determination of resource needs / investment opportunities for existing programs Finance Department Ensures aggregate fiscal discipline is maintained by: Establishing fiscal framework & determining total spending levels Budget The Expenditure Management System in Canada is decentralized between central agencies, each with specific roles

11 The new System is supported by three pillars All spending must be managed to transparent results/outcomes –Clear measures –Assessed and evaluated systematically and regularly –Demonstrating value for money Up-front discipline is applied to new spending proposals to manage spending growth –Include clear measures of success –Demonstrate how the proposal fits with existing spending and results –Provide reallocation options for funding Strategic Reviews assess existing spending over a four-year cycle to ensure alignment with priorities, and effectiveness, efficiency and economy –Programs expected to demonstrate results in support of priorities –Decision-making to use objective, evidence-based information 11

12 The Foundation MRRS & Evaluation

13 A common approach to the collection, management, and reporting of performance information is key … Management, Resources and Results Structure Policy (2005) Provides detailed information on all government programs Establishes the same structure for both internal decision-making and external accountability Helps to link resources and results -- planned and actual Is being implemented across government 13

14 Policy requirements for Strategic Outcomes incl: Performance Measures Policy requirements for each program activity element include: Program title & description Expected results Performance measures Planned & actual spending Target & actual results Governance Strategic Outcome* Program Activities* Sub-Activity Level** Sub-Sub Activity Level** Lowest Level programs Accountability levels to Parliament (Estimates & Public Accounts) *require TB approval, incl. major & minor changes Departmental PAA: reflect the inventory of all the programs of a department depicted in their logical relationship to each other and to the SO(s) to which they contribute **require TBS approval The Program Activity Architecture

15 Department of Heritage Program Activity Architecture SO1 Canadian cultural content and artistic expressions are created and accessible at home and abroad PA PSA SO2 Canadians have a sense of their Canadian Identity SO3 Canadians participate and excel in sport SO 1. Arts 1.4 National Arts Training Contribution Program 1.1 Arts Presentation Canada 1.5 Canadian Arts and Heritage Sustainability Program 2. Cultural Industries 2.3 Canadian Feature Film Policy 2.1 Broadcasting Policy 2.7 Book Publishing Industry Development Program 2.6 Canada Music Fund 2.10 Canadian Culture Online 2.12 Copyright Policy 2.13 Cultural Sector Investment Review 2.14 Trade Routes Program 2.15 TV5 3. Heritage 3.1 Museums Assistance Program 3.4 Canadian Conservation Institute 3.2 Canada Traveling Exhibition Indemnification Program 3.5 Movable Cultural Property Program 3.3 Canadian Heritage Information Network 4. Promotion of and Attachment to Canada 4.1 Celebration and Commemoration Program 4.4 Canadian Studies Program 5.6 Historical Recognition Program 5. Engagement and Inclusion 5.1 Multiculturalism Program 5.5 Aboriginal Peoples Program 5.4 Building Communities through Arts & Heritage 6.1 Development of Official-Languages Communities Program 6.3 Official Languages Coordination program 6. Official Languages 7. Sport 7.2 Sport Support Program 7.1 (Sport) Hosting Program 7.3 Athlete Assistance Program Federal Secretariat 8. Internal Services (details being developed by central agencies) 2.16 UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions 1.3 Fathers of Confederation Buildings Trust 1.2 Cultural Spaces Canada 2.11 Canada New Media Fund 2.9 Publication Assistance Program 2.8 Canada Magazine Fund 2.5 Film or Video Production Tax Credits 2.4 National Training Program in Film & Video Sector 2.2 Canadian Television Fund 6.2 Enhancement of Official Languages Program 5.2 Action Plan Against Racism 5.3 Human Rights Program 4.2 State Ceremonial and Protocol 4.3 International Expositions 4.5 Exchanges Canada Program 4.6 Katimavik Program

16 Well structured information helps decision-making … DEPARTMENTS Management Tool Reflects full mapping of programs Better alignment of resources & priorities More evidence based reporting Improve program performance FinancePCO Budget Plan TBS Informed decisions on investment choices based on priorities and value for money PARLIAMENT Reporting Tool Stronger accountability for spending and results Common basis for planning and reporting inside and outside More logical and consistent basis for interaction MRRS Policy Objective: Development of a common, government-wide approach to the collection, management, and reporting of financial and non-financial performance information - to provide an integrated and modern expenditures management framework 16

17 Evaluation information is important but there are challenges to getting it … Quality, timeliness and strategic focus issues hinder systematic use of evaluation to support decision-making: –often small programs - not strategic –about 10% of spending each year - too low –take too long and difficult to understand –can be self serving when funded by program managers Capacity issues have made it difficult to deliver –Need more trained evaluators –Need consistent competencies for managers and staff –Definition of the evaluation product same as 20 years ago - may need a new sort of product 17

18 Rebuilding evaluation requires focused attention … Strategic reviews require credible information on the relevance and performance of government programs … and evaluation is a key source Objectives of evaluation policy renewal: –Improve the information base for strategic reviews - increased focus on value for money (relevance and program performance) –Comprehensive coverage of programs through a regular and systematic cycle –Improved credibility through agreed upon standards, flexible tools for evaluation and neutrality of the evaluation function –Improved quality by having the right capacities, people and systems –Continuous learning and improvement - stronger Treasury Board capacity to lead the function, monitor capacity and use evaluation information New Evaluation Policy will require comprehensive evaluation coverage (100% of large departments) of all direct program spending over a 5 year cycle Federal Accountability Act requires 100% coverage of all Grant and Contributions 18

19 Strategic Reviews

20 All direct program spending reviewed - 25% each year Treasury Board and its Secretariat set terms of reference: Comprehensiveness – assessment of mandate, departmental objectives, program effectiveness, efficiency and alignment to government priorities Reallocation proposals – options for program reductions or eliminations to reallocate to government priorities and support overall spending control Reinvestment proposals – options to better support government priorities Departments review the relevance and performance of their spending, identify lowest performing/priority 5% of programs, seek outside expert advice and report to the Treasury Board Privy Council Office identifies review departments every year and assesses, with Treasury Board and the Department of Finance, the departmental proposals Strategic reviews are program-based and results-informed 20

21 Strategic Reviews – Scope and Key Elements Departmental Strategic Reviews to answer specific questions in key areas: Government Priority, Federal Role, Relevance (i.e. continued prog. need) Performance (effectiveness, efficiency, value for money) Management Performance Departmental Strategic Reviews to be conducted using the following key elements Analytical Framework: The departments Program Activity Architecture Information Sources: Evaluations, Audits, Management Accountability Framework assessments, Auditor General Reports, and other reports Reporting Requirements: Outlined in the Terms of Reference Steering Committee: A departmental steering committee to be established with ex officio membership from TBS External Advice: Expert outside advice to be involved on each Review to ensure neutrality and credibility

22 Strategic Reviews –Conditions for Success Sufficient time for deliberative process Ministerial engagement throughout the Review process Clear and strategic alignment of programs and results (value of a strong Program Activity Architecture) Comprehensive assessment of all programs (100%)-not focussing only on 5% Early involvement of senior management team – policy, communications, and corporate services Multiple lines of evidence – evaluations, audits, benchmarking, international comparisons Overview portion of the Strategic Review should tell a compelling departmental story Arms length expert advice as effective challenge to proposals and alternatives

23 Seventeen organizations reviewed their programs in 2007 Ministers examined $13.6B, about 15 per cent of direct program spending $386 million per year was identified as presenting opportunity to: Increase efficiency and effectiveness: Change the way the Government delivers programs and services Focus on core roles: Ensure that services are delivered by those best positioned to do so Meet the priorities of Canadians: Align federal activities with the needs and priorities of Canadians and eliminate programs that are no longer necessary Savings were redirected to fund new initiatives, both within departments and to broader spending priorities in Budget 2008 The first reviews (2007) generated significant savings but also demonstrated a need to improve the quality of results information … 23

24 Public Reporting

25 Key Parliamentary Reports Main Estimates –Part I: Government Expense Plan –Part II: Main Estimates (in support of the Appropriation Act) Part IIIs –Reports on Plans and Priorities (RPPs), support committees in reviewing supply –Departmental Performance Reports (DPRs), actual achievements against the expected results in the RPP Supplementary Estimates –Usually two per year 25

26 RPP Overview for Parliamentarians –helps parliamentarians and their staff to navigate through the 91 RPPs ( ) –provides a whole-of-government view of planned spending Canadas Performance –Provides an overview of and helps parliamentarians and their staff navigate through the 90 DPRs ( ) Public Accounts –In three volumes, covering financial performance for most recently completed fiscal year Parliamentary Reports cont. 26

27 Whole-of-Government Reporting

28 Whole of Government Framework 28

29 RPP Overview for Parliamentarians Searches may be customized by spending area and by organization 29

30 Slide on Layered approach Layered Reporting allows a continuous drill down from the most aggregate to the most detailed … Safe and Secure Communities Expected and actual results Expected and actual resources Indicators and targets Whole-of- Government – Layer Aggregate information on Spending and on Plans and Performance in: Whole-of-Government Overview for RPPs Canadas Performance Comprehensive, Layered, Continuous: User is able to continuously drill down from the Whole of Government level to detailed financial and non-financial information at the lowest level of the PAA Economic Affairs Departmental – Layer High-level departmental information on: Spending, Planning and Performance Indicators in concise RPPs and DPRs (30 pages or less) Electronic – Layer Detailed information on specific programs and policies Links to databases and useful policy documents Social AffairsInternational AffairsGovernment Affairs Spending Areas (4) Government of Canada Outcome areas (13) Canadian Culture/Heritage Healthy Canadians Diverse Society Citizenship and Immigration RPP Maximum Contribution to the Economy… Successful Integration of Newcomers… Reflection of Canadian Values… Integration Program Citizenship Program SOs PAs SA SSA Supplementary information (i.e. sustainable development strategies, audits and evaluations)

31 What lessons have we learned (#1)? Need persistent effort to build capacity - will take time Political leadership Have a plan but experiment and adapt: Central agency leadership Know program base Identify measures and collect the data Evaluation capacity means investment Use the information for decision-making in the department Use the same information to improve reporting Linking performance information to reporting was helpful – but linking it to decision-making in the budget process has been critical Dont wait for perfection 31

32 What are the lessons learned (#2)? This is cultural change: expect resistance - go for small wins - communicate - acknowledge risks - adapt - build trust Rewards and sanctions are important - gaming Put elected and non-elected officials on the same information base: Make it relevant for decision-making Better management and fiscal results Sound understanding of the business Ministerial engagement important Have realistic expectations - under promise, over deliver 32

33 Annexes and Background Material

34 Annex A - Links to Further Information TBS website: Management Accountability Framework (MAF): crg/index_e.asp crg/index_e.asp Tools and Resources for Parliamentarians: auditoire/parliamentarian-parlementaire-eng.asp auditoire/parliamentarian-parlementaire-eng.asp Whole-of-Government Planning and Performance: prpg/ prpg/ Management, Resources and Results Structure (MRRS) Policy: Results-based Management: Audit and Evaluation Database: Canadas Performance : rc/ /cp-rctb-eng.asp rc/ /cp-rctb-eng.asp Guidelines for preparing RPPs and DPRs: Performance Reporting: Good Practices Handbook: 34


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