Public Sector Governance and Accountability Series: Budgeting and ...

Budget Methods and Practices 125
TABLE 4.1 Drivers of Change: Factors in Developing and Industrial
Countries Underpinning Public Management Reforms
Industrial market economies
Economic and fiscal crises in the 1970s
and 1980s
Quest for efficiency and effectiveness in
public services
Ascendancy of neoliberal ideas in policy
making in the 1970s and 1980s, including
a belief in markets and competition
and the minimal role of the state
Coming into power of conservative
governments
Development of information technology
to facilitate and support change
Growth and role of a network of
international management consultants
who believe in New Public Management
Developing economies
Economic and fiscal crises and increasing
debt burden in the 1970s and 1980s
Structural adjustment lending conditions,
including efforts to reduce public deficits
Efforts to reduce the size and role of
government under economic
liberalization policies
Political and policy instability
Failure of public administration
institutions and the need to reform them
and build their capacity
Good governance requirements and their
link to public administration,
management and budget reform
Demonstration effects of reforms in the
industrial world
Technical assistance and the influence of
international management consultants
as advisers on reforms
Source: Based on Larbi 1999: 11.
The shift from old public administration to New Public Management has had
fundamental implications for budgeting (Rose 2003: 21). Traditional budgeting
practices focus on economy of inputs, financial regularity, and adherence
to procedure. NPM systems permit greater flexibility of inputs and
processes in return for greater emphasis on outputs and performance.
The budgeting practices of only a few countries, such as New Zealand
and Singapore, however, follow a strong managerialist or NPM approach,
where the public sector is divided into purchasers and providers with explicit
contractual arrangements and the purchasing of outputs. More often, countries
focus on a range of common issues that push their budget methodologies
closer to decentralized management and a performance orientation and
away from an exclusive focus on inputs, centralized decision making, and
controls. Such issues include efforts to do the following:
Make clearer links between inputs, outputs, and outcomes.
Develop statements of goals that become the focus of attention to establish
ex ante accountability when departmental requests are reviewed in
relation to those goals.