Public Management and Administration - Owen E.hughes

money on items that are unnecessary, just to use up the allocation. Finally, the
paucity of information in the traditional budget means that politicians have
only limited ability to make major changes, and only limited data linking costs
to achievements. Politicians or the public have no satisfactory way of judging
whether taxpayers’ money is serving desired ends, or is doing so efficiently or
effectively. As a result of these various flaws, recent years have seen substantial
changes to the system of financial control.
Financial management and the public sector reforms
Financial Management 171
The traditional budget makes no express link between allocation of money and
performance. As this is its main failing, it seems an obvious reform to somehow
link the budget with outputs and performance. The deficiencies of the lineitem
budget led to demands for better forms of budgeting, mainly by
governments arguing that the traditional method of budgeting did not provide
enough information for decision-making purposes.
The early years of financial reform were not encouraging. As far back as the
Hoover Commission in the United States (1949), performance budgeting was
advocated for the military. It failed there, as did other attempts in the 1950s.
The comprehensive ‘planning, programming, budgeting’ (PPB) system was
introduced into the US Defense Department in 1961 and extended to other federal
agencies by President Johnson in 1965. The initiative did not survive the
Nixon administration and, by 1971, ‘PPB as a major budget system and even
as an acronym was allowed to die a quiet death’ with the main reasons for its
failure being (Lee and Johnson, 1989, p. 84):
The lack of the leadership’s understanding of and commitment to using programme budgeting
tended to deter success, as did an agency’s general ‘underdevelopment’ in the use
of analytic techniques. Agencies administering ‘soft’ social programmes had difficulty
devising useful programme measures. Bureaucratic infighting also reduced the chances
of successful implementation.
The demise of PPB is sometimes used as an argument against any comprehensive
financial management system.
Another attempt at more rational budgeting was that of ‘Zero-based budgeting’
(ZBB) which was introduced by the United States Department of
Agriculture in 1962. The basic idea is that no assumption should be made that
future spending is related to past spending, so that the department or agency
must justify all its budget each year. On becoming President in 1977, Jimmy
Carter mandated ZBB for all federal agencies. In fact, ZBB was never applied
as expected as a comprehensive management approach. It did not revolutionize
budgeting approaches and was abandoned by the Reagan administration in
1981. The main reasons for its failure were the waste of administrative time in
producing massive amounts of documentation to justify the total budget and
the practical political problems of cutting programmes.