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

160 Anwar Shah and Chunli Shen
and report progress toward achieving those outputs. Output appropriations
encourage the government and Parliament to focus on the goods and services
to be delivered by the entity receiving the appropriations. Thus, as much
attention is directed to the value obtained from government expenditure as
to how that expenditure was made. Output appropriations also provide
departments with autonomy in determining the appropriate input mix and,
where necessary, in altering that input mix during the period (New Zealand
Treasury 2005). Resources are linked to results in three dimensions:
(a) resources are linked to and appropriated against expected outputs in
the budget; (b) resources are linked to and reported against actual output
performance; and (c) actual outputs (and, in some cases, outcomes) are
tracked and reported against targeted performance. It is widely held that
budgeting reforms have contributed considerably to New Zealand’s improved
fiscal position.
Australia: outcome budgeting
Since the early 1980s, the Australian government has developed initiatives to
make the budget and management system more results oriented (as, for
example, with the introduction of program budgeting in 1983). In 1996, the
introduction of an outcome budgeting and reporting framework in the
Australian public sector was discussed. The framework was implemented for
the first time in the budget of 1999/2000. Under the Australian outcome
budgeting framework, “appropriations are structured around outcomes,
whilst Portfolio Budget Statements specify the price, quality, and quantity of
outputs agencies will deliver and the criteria they will use for demonstrating
the contribution of agency outputs and administered items to outcomes”
(Scheers, Sterck, and Bouckaert 2005: 136). Figure 5.2 illustrates how outcomes
are linked to outputs and budget using the portfolio budget statements of the
Department of Families, Community Services, and Indigenous Affairs.
Because appropriations are made for outcomes, executive management has
more freedom in spending the resources, and Parliament has less control. The
key components in the framework are listed in box 5.3.
Despite the comprehensive performance budgeting framework, members
of the Australian Parliament have criticized the output information in the
portfolio budget statements and annual reports as too aggregated. They have
complained that it is difficult to get a clear view of the agencies’ contributions
to the outputs. Moreover, in general, there is little evidence that the output and
outcome information is actively used in political decision making, although
the Department of Finance and Administration states that when savings had