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Performance Budgeting in the Government of Canada Presented to: The Asian Regional Seminar: Promoting Fiscal Sustainability Date: February 28 th – March 2 nd, 2011, Kuala Lumpur, Malaysia Presented By: Bruce Stacey, Associate Chief of Defence Transformation - PowerPoint PPT Presentation
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Performance Budgeting in the Government of Canada
Presented to: The Asian Regional Seminar: Promoting Fiscal Sustainability Date: February 28th – March 2nd, 2011, Kuala Lumpur, MalaysiaPresented By: Bruce Stacey, Associate Chief of Defence Transformation
Department of National Defence
2
Canadian Context Foundation New Expenditure Management System Strategic Review Process National Defence an Example Lessons Learned
Outline
3
Federal Expenditures Overview 2009-2010
Major and Other
Transfer Payments,
44%
Public Debt Charges,
14%
Direct Program
Expenditures, 42%
Elderly Benefits,
31%
Employment I nsurance,
15%Child Care
Benefits, 2%
Other Transfers,
3%
Equalization & Transfers
to Territories, 17%
Health & Social
Transfers, 32%
Grants & Contribution
s, 35%
Operating Expenses,
60%
Crown Corporation Expenses,
5%
Total Expenditures $235.8 B (Fiscal Year 2009-2010)
Major and Other Transfer Payments
$104.3 B
Direct Program Spending $99.6B
Source: Main Estimates – Part I 2009-2010
4
A common approach to the collection, management, and reporting of performance information is key …
Management, Resources and Results Structure Policy (2005)
Provides detailed information on all government programs
Establishes the same structure for both internal decision-making and external accountability
Helps to link resources and results -- planned and actual
Is being implemented across government
5
Policy requirements for Strategic Outcomes incl: Performance Measures
Policy requirements for each program activity element include:
Program title & description
Expected results
Performance measures
Planned & actual spending
Target & actual results
Governance
Strategic Outcome*
Program Activities*
Sub-Activity Level**
Sub-Sub Activity Level**
Lowest Level programs
Accountability levels to Parliament (Estimates & Public Accounts)*require TB approval, incl. major & minor changes
Departmental PAA: reflect the inventory of all the programs of a department depicted in their logical relationship to each other and to the SO(s) to which they contribute **require TBS approval
The Program Activity Architecture
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The New Expenditure Management System
• All spending must be managed to transparent results/outcomes - Clear measures- Assessed and evaluated systematically and regularly- Demonstrating value for money
• Up-front discipline is applied to new spending proposals to manage spending growth
- Include clear measures of success- Demonstrate how the proposal fits with existing spending and results- Provide reallocation options for funding
• Strategic Reviews assess existing spending over a four-year cycle to ensure alignment with priorities, and effectiveness, efficiency and economy
- Programs expected to demonstrate results in support of priorities- Decision-making to use objective, evidence-based information
7
Strategic Reviews – Key Elements
• Objective of Strategic Reviews: - Assess all direct program spending and performance over a 4 year period to
ensure value for money for existing spending• Comprehensive Review of Programs
− Strategic Reviews assess whether programs are aligned with government priorities, are effective and efficient and provide value for money
• Reallocation and Reinvestment Proposals− Through the comprehensive review of programs, organizations identify the lowest
priority and lowest-performing 5 per cent of programs (reallocations) and propose higher-priority, higher performing programs for reinvestment:
Potential for Improvements/ reinvestments
Primary Candidate for Reallocation
Potential for Reinvestment
High-Priority
Low-Priority
Low-Performing High-
Performing
Secondary Candidate for Reallocation
100% Organizational Review Base
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The Bottom Line
needs to be isolated and removed from our baseline and “parked” to be either…
Re-invested in other higher Dept / CF priority activities or initiatives (internal)
Re-allocated to other Govt priorities activities or initiatives (external)
?
Grants
Govt decision will be based almost entirely on the scope / scale of the review we conduct and the storyline we tell
Baseline 2010
5 %
Pers
onne
lO
& M
Cap
ital
Inve
st $
9
Strategic Reviews – Scope and Key Elements
Departmental Strategic Reviews to answer specific questions in key areas: Government Priority, Federal Role, Relevance (i.e. continued prog. need) Performance (effectiveness, efficiency, value for money) Management Performance
Departmental Strategic Reviews to be conducted using the following key elements
Analytical Framework: The department’s Program Activity Architecture Information Sources: Evaluations, Audits, Management Accountability Framework
assessments, Auditor General Reports, and other reports Reporting Requirements: Outlined in the Terms of Reference Steering Committee: A departmental steering committee to be established with ex
officio membership from TBS External Advice: Expert outside advice to be involved on each Review to ensure
neutrality and credibility
10
National Defence’s Component Definition
ActivityComponent
INPUT
Enabling Inputs (Role filling Resources)
Role or Requirement
Specifications
INPUT
INPU
T
INPU
T
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTPUTTARGETS
OUTCOMETARGETS
OUTCOME
OUTCOME
ITEMS TO BE DEFINED & JUSTIFIED
1. Outcome Targets2. Output Targets3. Outcomes Achieved4. Outputs Achieved5. Enabling Inputs6. Throughputs7. Role/Requirements
THROUGHPUTS
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PRESENT GOC OBJECTIVES
GOC MANDATE
ENDURING REQUIREMENT
FOR DEFENCE & SECURITY OF
CANADA
Program Integration Efficiency
Relevance to present GOC
Political & Strategic
RelevanceEnduring
Relevance to Canadians
Within Purview of GOC
RELEVANCE
Pan CF/DNDPerformance Management
Q1
Q2
Q3
Defence & Security Delivery
Program Integration
Effectiveness
ProgramEffectiveness
ProgramEfficiency
PERFORMANCE
Individual Program Performance Management
Q5
Q6
Q4
IndividualProgram Delivery
The Assessment
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Initial AnalysisC
ompr
ehen
sive
E
valu
atio
n
Primary International Secondary International Domestic & Standing
Land TrainingLand Inf & Base SptLand Eqt Maintenance
Land C2
Land Readiness
Sustain Land Forces
Component 1
Component 2
Component 3
Component 4
Component 5
ActivityComponent
INPUT Req
INPUT
INPU
T
INPU
T
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INPU
T
INPU
T
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INPU
T
INPU
T
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INPU
T
INPU
T
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INP
UT
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INP
UT
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INP
UT
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INP
UT
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INP
UT
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INP
UT
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INP
UT
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INPU
T
INPU
T
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INPU
T
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INPU
T
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INPU
T
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
ActivityComponent
INPUT Req
INPUT
INPU
T
INP
UT
OUTPUT
OUTPUT
OUTCOME
OUTCOME
ENABLING INPUTS
OUTCOME
OUTCOME
Role/ReqSpecs
PF
PF
PF
PF
Req
Req
Req
Req
Req
Req
Req
Q& A Text Template Component X
$ to Component Attributions
Recommended Prioritization & Recommendation of bottom 10%
Take assignedPAA activities
Identify Components
Define Components
Analyse Components Prioritize Components
21 3
45
Analysis A : Sub-Sub-Activity Partitioning & Assessment
13
$32M
$14M
$18M
$16M
$2M$5M
$12M
$2M
$10M
$1M
$15M
$11M
$12M
$20M
$1M
$2M
$5M
$5M
$2M$2M
Rel
evan
ce
Performance
Program Activity Component X (compared to all DND/CF)
14
What lessons have we learned (#1)?
Need persistent effort to build capacity - will take time Political leadershipHave a plan but experiment and adapt:
• Central agency leadership • Know program base• Identify measures and collect the data• Evaluation capacity means investment • Use the information for decision-making in the
department• Use the same information to improve reporting
Linking performance information to reporting was helpful – but linking it to decision-making in the budget process has been criticalDon’t wait for perfection
What are the lessons learned (#2)?
This is cultural change: expect resistance - go for small wins - communicate - acknowledge risks - adapt - build trust
Rewards and sanctions are important - gaming
Put elected and non-elected officials on the same information base:
• Make it relevant for decision-making• Better management and fiscal results • Sound understanding of the business • Ministerial engagement important
Have realistic expectations - under promise, over deliver
21
Questions
