The Organisation for Economic Co-operation and Development has recently released the report OECD Good Practices for Performance Budgeting. Performance budgeting is defined by the OECD as the systematic use of performance information to inform budget decisions, either as a direct input to budget allocation decisions or as contextual information to inform budget planning, and to instil greater transparency and accountability throughout the budget process, by providing information to legislators and the public on the purposes of spending and the results achieved.

Foreword

Performance budgeting is an innovative budget practice that has been widely adopted by OECD countries. The OECD Network of Senior Budget Officials has maintained a strong interest in the relationship between budgetary governance and performance management initiatives. This resulted, in 2004, in the creation of a network dedicated to exploring and learning from countries experience in the closely related areas of performance budgeting, spending reviews and programme evaluation.

The report presents the OECD Secretariat’s advice on good practice principles and practices in the area of performance budgeting. This is based on the results of several OECD surveys of member countries – including Australia – OECD country budget reviews, and exchanges of information between OECD government officials in the Senior Budget Officials Network on Performance and Results. It also takes account of recent papers published by the OECD, the World Bank and the International Monetary Fund.

OECD Good Practices

  • Good Practice 1: The rationale and objectives of performance budgeting are clearly documented and reflect the interests of key stakeholders.
  • Good Practice 2: Performance budgeting aligns expenditure with the strategic goals and priorities of the government.
  • Good Practice 3: The performance budgeting system incorporates flexibility to handle the varied nature of government activities and the complex relationships between spending and outcomes.
  • Good Practice 4: Government invests in human resources, data and other infrastructure needed to support performance budgeting.
  • Good Practice 5: Performance Budgeting facilitates systematic oversight by the legislature and civil society, reinforcing government performance orientation and accountability.
  • Good Practice 6: Performance budgeting complements other tools designed to improve a performance orientation, including programme evaluation and spending reviews.
  • Good Practice 7: Incentives around the performance budgeting system encourage performance-oriented behaviour and learning.

(Source: OECD iLibrary)

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