Result oriented reforms in the Netherlands: theory versus practice

Result oriented reforms inthe Netherlands:theory versus practice

Maarten de JongBudget Affairs DirectorateNetherlands Ministry of Finance(Also affiliated toErasmus University Rotterdam )

January 10th 2014

Contents• NPM & performance movement

• Performance budgeting experience 2002-2012

• Delivery approach in the Netherlands 2007-2010

• Lessons from a difficult process

• Accountable budgeting reform

• Policy evaluation practice

• Final thoughts

Current fiscal context Netherlands

Question often asked these days:

HOW HELPFUL ARE PERFORMANCE BUDGETING AND PERFORMANCE MANAGEMENT IN CREATING FISCAL SPACE?

3

9 December 2009The Origins of Program Budgeting in the Netherlands4

New Public Management – performance movement

‘A goal without a plan is just a wish’

Antoine de Saint-Exupéry

Budgetinfrastructure Servische delegatie5

New Public Management – performance movement

From a budgetary perspective:

Intended results of PBB reforms

Increased transparency of government spending and results

More effective allocation and management of resources

Allocative efficiency gains

Operational efficiency gains

Increased result orientation


Result oriented budgeting reforms in the NL

7 oktober 2010

•Traditional line item budget•up until 2001

•Performance based program budget•2002 - 2012

•Accountable budgeting reform•from 2012

Performance budgeting experience 2002-2012

For each policy article (poliy program) these questions had to be answered :

Fiscal Consolidation in the Netherlands7

Budget Annual report

What do we want to achieve? Did we achieve what we intended? What will we do to achieve it? Did we do what we meant to do? What will be the costs of our actions? Did it cost what we expected?



Program budget

Ministry of Transport

Program budget


Program budget


Budget art.32 Safety - General objective: Continuously improve the safety of persons on roads or railroads as well as the safety of public transport

Total expenses (x 1.000 €): 57.245

Budget art. Budget art.

Budget art.

Budget art. Budget art.

Budget art.

Subart.32.01 Operational goal:

Reducing the number of victims

on roads

Expenses: € 49.211

Subart.32.02 Operational goal:

Reducing the number of victims

on railroads

Subart.32.03 Operational goal: Improving social safety in public

transport

Policy measures sub article 32.01 Expenses (x 1.000 €)

32.01.01 General strategy and policy development 1.814

32.01.02 Safety standards for vehicles and technological innovation 4.349

32.01.03 Influencing behavior of travelers 21.216

32.01.04 Adaptations to the infrastructure 0

32.01.05 Inspection 21.832

Performace budgeting ‘as intended’

(Safety program Ministry of Transport 2011)



Indicator Policy goal Programme Ministry

Number of medals won by the Netherlands in the Summer Olympics

46.3: Sports in the Netherlands symbolises ambition, is a source of recreation, and contributes to our national image at home and abroad.

46: Sports Health

Percentage of students who can be considered “motivated”

Students receive higher education, and scientific staff conducts high-quality research.

6: Higher education Education

Study intensity: weekly number of hours students spend on study-related activities (perception of the student)

Students receive higher education, and scientific staff conducts high-quality research.

6: Higher education Education

Position in Failed State Index for eight selected countries

2.5: Regional stability by effective crisis prevention, crisis response, crisis resolution and post-crisis build-up efforts.

2: Peace and stability, effective humanitarian aid and good governance

Foreign Affairs

Delivery approach in the Netherlands 2007-2010


Box 3. Short explanation of the Prime Minister’s Delivery Unit of the United Kingdom

Established in 2001, the Prime Minister’s Delivery Unit oversaw the realisation of a number of the second and third Blair administration’s top priorities concerning education, health, crime, transport, and internal affairs. In its approach, the PMDU employed a combination of:

performance management;

tailored support for specific problems;

high-frequency reporting (or even real-time data);

prompt action.

In so-called stock takes, held every 2-3 months, the Prime Minister held the responsible minister to account about the progress toward projected targets. In this way, significant progress was made towards realising the key objectives. For example, the percentage of hospital emergency departments that met the four-hour target (the time in which a patient must be seen, treated, admitted or discharged) rose from nearly 80% in 2001/02 to over 95% in 2004/05.

Source: power point presentation of Sir Michael Barber (former head of PMDU) at the Netherlands Ministry of Finance on October 29th 2007

Inspired by UK

Delivery approach in the Netherlands 2007-2010


Examples of priorities from government coalition:3. Bringing closer a solution to the conflicts in the Mid-East20. Annual growth of 5% for public transport by railroad51. Reduce nr. of stolen bikes by 100.000 compared to 2006

Lessons from a difficult process• Aim for realistic mid-term (two years) and end results (four years) as the first year of

government, it is usually too early for reporting

• For some high-profile political goals, the central government’s role may turn out to be a rather passive one and may therefore not qualify

• It may not always be feasible to use the intentionally stable structure of the budget for political priorities that are more unstable by nature

• Since every line ministry wants to be included in the government’s top priorities, some priority goals may just reflect “going concerns”. Ambitious cross-cutting goals may help commit several ministries at once.

• When working with cross-cutting goals, agree on a clear accountability structure between line ministries to prevent stove-piping and unclear ownership

• Mobilize the knowledge of line ministries early on in the process when formulating quantitative goals. This process should not be left to political leaders and top civil servants


Lessons from a difficult processJust a classification (de Lancer Julnes 2008):

•Reassurance: Government shows it is doing what it is supposed to do with the taxpayers’ money.

•Compliance: Agencies demonstrate that they comply with performance measurement regulations.

•Program learning: Learning from results may lead to program changes or maybe just to a better informed dialogue.

•Enlightenment: Externally, enlightenment can lead to mobilization and put an issue on the political agenda. Internally, enlightenment can lead to more informed decisions and better-educated stakeholders; this can generate new insights and challenge previously held perceptions.

•Legitimization: Performance information can be used to rationalize, justify or validate current, past and future courses of actions and decisions (including funding levels).


Lessons from a difficult process


Strong emphasis line ministries on compliance and legitimization

Lessons from a difficult processHow helpful is PI in budgeting?

+ Program structure useful for accountability and managerial flexibility

+ Performance information is helpful for internal steering and oversight (e.g. agencies)

- Performance information seldom plays a role in allocation by politicians

- Input information and policy instruments remain vital to Parliament

- The budget cannot be the comprehensive and objective ‘mother of all policy documents’

- A supply side oriented, uniform approach to performance information is no recipe for use

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Rely on multi year ex-post policy evaluation for assessing effectiveness

instead of

Relying on PI use in annual budgetary cycle

Accountable budgeting reform

• Add more detailed financial information

• More selective use of policy information and indicators in budget documentation

• Renewed emphasis on policy evaluation

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Accountable budgeting reformMore detailed financial

information in budget

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More selective use of policy information and indicators in budget documentation

Accountable budgeting reformPrograms in which the dominant role of government is a truly executive one, seem most fit for performance budgeting and management (some 20-25% of our budget)

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Impact of Gvt. on desired policy

outcome?Significance

financial contribution

Gvt. ?

Is policy executed by

Gvt. agency?Gvt.

Stimulates

Gvt. Regulates

Gvt. Finances

Gvt. Execute

s

Decisive

Decisive

Limited

Limited Yes

No

Accountable budgeting reformNumber of performance indicators per ministry following Accountable

Budgeting reform (2013)

voettekst20

Foreig

n Affair

s (BZ)

Justice

(V&J)

Intern

al Affair

s (BZK)

Educat

ion OC&

W)

Financ

e (Fin

)

Defense

(Def)

Infras

tructu

re (I&

M)

Econo

mic Affair

s (EL&

I)

Social

Affairs

(SZW)

Health

(VWS)

Funds

and s

maller

budg

ets (1

2)0

50100150200250300350400

20112013


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Types of Evaluations

I Ex ante Evaluations

II Ex post Evaluations

Policy Reviews

Impact Evaluations

Cost Benefit Analyses

Other Evaluations

III Savings and reform options

Cost effectiveness

studies

Spending Reviews

Comprehensive Spending Reviews

List savings options

Renewed emphasis on policy evaluation

Policy evaluation practice –policy reviews

voettekst22

Questions ‘Policy review’, introduced in NL to improve ex-post policy evaluation (source MinFin RPE 2006)

• What is the problem behind the policy? Is this problem still current?

• What is the cause of the problem?

• Why does the government find it is responsible for solving this problem?

• Why does the responsibility lie with the central government (and not at local or EU level)? How has the

responsibility been shaped and why?

• What objective has the government formulated for the solution to the problem?

• What instruments are being or will be enlisted? What relationship is there between the instruments? Do

these instruments overlap?

• What is known about the implementation of policy?

• Do the instruments contribute to the objectives formulated (to a solution of the problem)?

• What are important positive and negative side effects?

• How is it decided what funds will be allocated? What is the argumentation behind this?

Unit of analysis is government program and its goal as stated in budgetSelf assessment with mandatory involvement of independent expert and Min. of FinanceMulti annual evaluation agenda in which each objective is evaluated every 4-7 years

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Policy evaluation practice - spending reviewsIndependent, non-political working groups (civil servants and external experts);Chaired by senior officials not responsible for the policy;Non veto: ideas may not be blocked by other members working group;Choice of policy options is decision by Cabinet;Reports are sent to parliament and are downloadable for wider public.

Special Case Comprehensive Spending Review 2009/2010 (in addition to above):One compulsory spending reduction option of 20%.

Comprehensive Spending Review 2009/2010 (i)

• Financial crisis provided a real sense of urgency for fiscal consolidation:o The 2007 budget surplus changed

into to 5.5% GDP budget deficito Assignment by council of ministers:o “Provide insight into different cutback options and their

effects”

• 20 Spending Reviews covering a broad range of policy areas. • 75% of government spending was included.

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Political use of Spending Reviews 2009/2010

% u

ptak

e m

easu

res

from

Com

preh

ensi

ve

spen

ding

rev

iew

in e

lect

ion

prog

ram

mes

Political parties

Substantial influence of Spending Review Reports on 2010 election programmes of Dutch political parties

Final thoughts

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Final thoughtsCultural aspects should not be overlooked

Evaluation capacity but also mentality:

• Selection of appropriate staff: mixture of analytic and research capacity (introvert) and staff with the ability to network, deal with resistance and able to operate in a fluid environment (extrovert)

• Result orientation in formulating and substantiating policy proposals (a PB structure can help strengthen this awareness)

• Performance planning and monitoring ought to enhance rather than erode result orientation of motivated public professionals

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Final thoughts• Performance management (or budgeting) is not and end in itself

• Intensifying a performance dialogue is more important than the technicalities of the system chosen

• Although we may prefer performance assessment to be tied to our budget calendar, systems and formats

our ultimate goal should be to stimulate more:

• Dialogue about performance and results, • Preferably linked to budgetary decisions • At any level in government

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Thank you!

Maarten de [email protected]+31 6 25021897

mailto:[email protected]



Result oriented reforms in the Netherlands: theory versus practice

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