Download RBB in SouthWest Pacific_Bob Shead

Fiji
Bob Shead
Partner, BDO, Australia
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Context
Origin
Mechanism
Benefits
Challenges
Learnings
Questions
Sustainable Organization Change
Australia
Queensland
Fiji
Population
20 million
4 million
1 million
Public service
size
155,000
(I in 129)
194,000
(1 in 21)
33,000
(1 in 27)
Public
administration
Budget
Decentralised
Policy-focus
Decentralised
Service-focus
Centralised
Both focusses
A$235billion
A$27billion
A$1billion
Public debt
Nil
3.5% of GSP
40% of GDP
Capital
expenditure
1%
12%
20%
(target 30%)
Australia
Fiji
Strengths
Strengths
•Public service leadership
•Political leadership
•On-going reform culture from
•Economic imperative
1970s to 1990s
•External influence (MDG, aid
•Reasonable skills
agencies, IMF)
•Long time frame
Weaknesses
Weaknesses
•Stop-start reforms
•Lack of political leadership
•Previous failed reform attempts
•No economic crisis
•Loss of skills after military
coups
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Prescriptive legislation
Line-item budgets
◦ Virements approved by Finance Minister
◦ Central funding of rent, telecoms, common services
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Centralised functions
◦ Purchasing through tender board
◦ Establishment control by Public Service Commission
◦ Vehicle replacement by Finance Ministry
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Internal audit role
◦ Reports to Finance Ministry
◦ Surcharges for breaches & losses
Sustainable Organization Change
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Accrual accounting attempted twice in 1990s
NZ model attempted in late 1990s
◦ Public Finance Mgmt Act 2000 (suspended)
◦ Separation of Minister’s roles as purchasers & owners
◦ Purchase agreements between Ministers & CEOs
Cash to accrual in 2 years!
New Accounting System
◦ User requirements copied from Australia
◦ Lacked local expertise to support
Financial management competencies copied
from Queensland
Sustainable Organization Change
Australia
Fiji
•Improved efficiency &
•Government frustration with:
effectiveness
•Lack of spending flexibility
•Make CEOs more accountable
•Lack of “spending traction”
for performance
•“Process over performance”
•Focus on asset management
•Infrastructure constraints
•Poor budget control
•Poor compliance
Australia & Qld
•Simplified New Zealand model
•no performance contracts with
Ministers
•Defined results as “outputs”
and “outcomes”
•Accrual budgeting
•Appropriations for outputs
•Australian Government tried
appropriating for outcomes
•Balance sheet regimes
•Capital charge
•Interest on departmental cash
balances
•“Claw back” of depreciation
funding to Treasury
•Flexible reporting requirements
in Treasury Instructions
Fiji
•Simplified Queensland model
•Defined results as “outputs”
and “outcomes
•Cash budgeting
•Devolution of central costs to
departments
•Reporting requirements
locked into FM Act
•Phased in
External
influences
Service
Objective
Inputs
Process
Output
Outcome
Home life
School Education
Improved
literacy, etc.
$ cost
Process
No. of
students,
Teaching
hours
Reading
performance
Sustainable Organization Change
Planning
Whole-of-Government
level
Strategic development
plan
Agency-level
Corporate plans
Government
annual report
Reporting
Quarterly
appropriation
statement
Strategic policy
statement
Annual
reports
Budgeting
Budget
Mid-year
fiscal
statement
Managing
Delegations
Measure outputs &
outcomes
Expenditure/commitment
control
Sustainable Organization Change
Australia
Fiji
•Can compare performance •Institutionalised
across states
•Public sector network
•Report on Government
•Communication
Services
•Skills
•Covers 72% of expenditure;
•Legislation
13% of GDP
•Systems
•Balance sheet visibility
•Local ownership
•‘opportunity cost’ of trading •Survived the 2006 coup
enterprises
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Outputs & Outcomes
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ignores other ways of achieving outcomes
many-to-many relationships not identified
the results framework simplifies real life
gradually expanding & improving
Balance sheet management - Australia
◦ capital charge & cash incentives too complex
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Transparency - Australia
◦ Budget papers less clear
◦ Financial statements too ‘bloated’
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Political environment - Fiji
Sustainable Organization Change
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Know your strengths & weaknesses
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Project design
◦ accounting skills – departments & Finance Ministry
◦ systems – accounting & budget
◦ champions
◦ tailor for political, economic, public administration
context
◦ don’t listen to consultants with a ‘textbook’ answer
◦ keep it simple
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Project implementation
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communicate widely & regularly
make allies with key people – eg Auditor-General
use a staged approach, with realistic expectations
build capacity for ‘the long haul’
Sustainable Organization Change
Sustainable Organization Change