Building blocks for adopting Performance Budgeting in Canada Bruce Stacey – Executive Director Results Based Management Treasury Board Secretariat, Canada

In 2003, the first roll out of performance budgeting requirements to departments in the form of – Program Structures, financial and non-financial information In 2005, the MRRS Policy was formalized by Cabinet and an implementation plan was developed In 2007, the Expenditure Management System Renewal was formally articulated to build on the work done so far. The goals: Aggregate fiscal discipline (i.e. control of overall growth in spending) Effective allocation of all government resources to areas of highest relevance, performance and priority Efficient and effective program implementation A new program evaluation policy will shortly be approved and will focus on evaluation from a value for money perspective Canadas Expenditure Management System (EMS) Renewal was geared towards ensuring management excellence and fiscal credibility 2

EMS renewal is supported by three key pillars All spending must be managed to results/outcomes that are transparent to Canadians –Have clear measures of success –Be formally assessed and evaluated systematically and regularly –Demonstrate value for money For new spending proposal : Up-Front Discipline to manage overall spending growth. New proposals must: –Include clear measures of success –Provide solid information about how the proposal fits with existing spending and results – i.e how do they fit into the program structure –Provide reallocation options for funding For existing spending: Strategic Reviews assess all existing programs and spending over a four-year cycle to ensure alignment with overall priorities, as well as relevance, effectiveness, efficiency and economy –Spending/programs must demonstrate measurable results in support of priorities –Decision-making must rely on objective evidence-based information

Represents a common approach to the collection, management, and reporting of performance information –Provides detailed information on all government programs –Establishes the same structure for both internal decision-making and external accountability – Links resources to results for each program - planned and actual –Has made program implementation excellence a much greater focus of Senior Management Management, Resources and Results Structure (MRRS) Policy: The foundation of the renewed EMS

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 expenditures 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 sign-offl The Program Activity Architecture

MRRS enhances decision-making not only for central agencies, but also for departments and parliamentarians 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 6

Implementation of MRRS consists of five steps: 1.Departments develop fully articulated structures for their Program Activity Architectures (PAA) (2006 ) 2.Departments identify/define Performance Measurement Frameworks & Governance Structures for their entire PAAs (2007) 2.Departments create, capture and use MRRS information systematically (2008 and onwards) 4.TBS develops and rolls out a system to capture the standardized departmental performance information ( 2009 and onwards) 5.Embed MRRS information in all expenditure management processes ( 2009 and onwards) MRRS Implementation: An incremental approach based on lessons learned since first attempt in 2003

Some progress has been made on the information systems issue In 2003, an attempt was made to build a system but under the tight timelines available, the system was not built in a sustainable manner We have since developed a new integrated financial component of the Expenditure Management Information System (EMIS) We are in the process of adding a results component to this Lessons learned are: –Systems to deal with the entire end to end performance budgeting process are not available –Systems to deal with hierarchical program structures are not available or simple to design –It is important to spend a considerable amount of time upfront articulating roles and responsibilities, business processes and requirements

Annual Strategic Periodic Reviews Results-focused MCs and TB Submissions (integrated information on new and existing spending) Strategic Advice to Cabinet to Support Decision-Making for Results Integrated Cabinet Budget Decision-Making Operational Efficiency and Effectiveness Effective government- wide allocations Aggregate Fiscal Discipline Responsible and Effective Spending EMS Renewal Outputs & Inputs EMS Renewal Outcomes Strengthened Information Base to Support Departmental Management, Decision- Making and Reporting for Results MRRS/PAA (Program Activity Architectures and related performance measurement information) Renewed Evaluation Function Renewed Audit Function Expenditure performance management, oversight and accountability Financial management, control and oversight End State: Integrating performance information into the decision-making process