A budget is first and foremost a political document. Yes, government's fiscal policies obviously affect the economy. However, all sides of politics are roughly of the same view about the long-term aim of fiscal policy, which is to keep the budget in balance over the course of the economic cycle. It is also obvious to everyone that the budget is not going to be in surplus in the coming year and that moving quickly from a large deficit to a surplus would harm the economy.
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So what really matters it is how the government chooses between the multitude of options for spending and taxing. Different choices reflect different political philosophies.
To what extent, though, are the choices well informed? There is considerable room for improvement, according to a recent report by the Auditor-General. It was released on April 23 and goes by the racy title of The Australian Government Measurement and Reporting Framework - Pilot Project to Audit Key Performance Indicators. It concludes that ''it is time for greater attention, investment and resourcing to be given to the quality and integrity of [key performance indicators] used by public sector entities to inform decisions about the performance of government programs''.
Our system of government relies on people paying taxes to fund government activity. No one likes paying taxes. It is, however, easier to make the case for taxes if it is clear that government programs are working. Without that assurance, people are less likely to trust the government and public service, and far more likely to resent paying taxes.
The federal government's announcement that it intends to fund part of the costs of the national disability insurance scheme through a levy reflects this. Hypothecated taxes like this are, in theory, undesirable. If in later years priorities or needs change, it is harder to adjust spending accordingly. They are more complicated and costly both for taxpayers and for the Australian Taxation Office. Our tax system is complicated enough already without adding in levies. But in practice they have the great attraction that at least people can see where their tax dollar is going.
Good performance information can do the same thing for other programs. Performance information shows people how their tax dollars are being spent. Ideally, governments, parliaments and the people can use this information to make good choices about what works best, and what needs to change. The Australian National Audit Office report reveals that we are still a long way from that ideal.
Of 31 KPIs examined, five did not even meet the Finance Department's definition of ''measuring the impacts … on the target group'' and were descriptions of activity instead. Of the remaining 26, only one met all the criteria of being focused, understandable, measurable and free from bias. However, 22 met at least one of the characteristics.
This shows how far the public service still needs to go in reporting on performance. The hopeful sign, though, is that this audit was done, and the lessons were drawn out.
It has brought to the fore a harsh truth about how incentives work in public administration. Managers faced with a choice between useful performance measures that really hold them to account, and a steaming pile of meaningless banalities that they can waffle on about for hours, often opt for the latter. And who can blame them? The system allows them to make that choice. It reveals the limits to devolution. Independent oversight is needed to make some elements of the framework work effectively. Quality of performance measurement is one.
The oversight of the public sector by the Parliament - and in particular the scrutiny of agencies through the estimates processes of Senate legislation committees - is no longer a guarantee of independent external scrutiny of performance measures.
There are several reasons for this. One is the short-term media cycle. There are few rewards for politicians in scrutinising long-term performance trends. Their incentive is to seek out a quick headline. The second is the change in the accountability relationship of ministers and public servants. Increasingly, there is little gap between them, and reflections on the performance of a department or agency are seen as reflections on a minister. This means that whereas in past times even government senators felt free to quiz public servants about performance, today they are reluctant do so in case it embarrasses a minister. Even opposition senators feel constrained, for fear it might embarrass their own side following a change of government. The third is the pressure of parliamentary business and the weight of other pressing legislation. Here, though, it has to be said that the publications provided to senators don't go out of their way to make it easier for them to scrutinise performance. As the ANAO revealed, only five of the 26 KPIs it examined met the criterion of being ''understandable''.
These are not new problems. Highly respected former Democrats senator Andrew Murray produced a report for the then finance minister, Lindsay Tanner, in 2008. Operation Sunlight - Improving Budget Transparency addressed the inadequacy of performance reporting. The government has, to its credit, implemented some of the recommendations of the Operation Sunlight report, but better performance reporting remains the big unmet challenge.
The issue dates back much further. As the ANAO report notes, ''the core elements of performance measurement and reporting frameworks have been in place in similar forms in the Australian government since the introduction of the outcome and outputs framework in 1999, which built on earlier reforms''. For some observers, this long history indicates that performance measurement in the public sector is too hard. More likely, the explanation is that incentives on public servants do not incline them to realistically measure their performance. There have been steps forwards followed by steps back. Meaningful reporting on performance won't happen unless the government, central agencies and scrutiny agencies like the ANAO keep pressing. Every time that pressure is let up, the system reverts to less meaningful indicators and bureaucratic waffle re-emerges.
The ANAO notes that, in 2010, the current Finance Minister, Penny Wong, announced a Commonwealth financial accountability review to ''consider options to ensure the framework supports high-quality resource management'' and that it ''provides the opportunity to consider how to position the current performance measurement and reporting framework to respond to a range of contemporary issues in public administration''. It all has promise, but realising the potential is far too slow. Even elephants produce offspring in less time.
The danger is that the review initiatives will be overtaken by the caretaker period - and then a change of government means it starts all over again. In the meantime, the taxpayer remains in the dark about the effectiveness of government programs.
This ought to be a non-partisan issue. Every Australian and every politician who represents us has an interest in good information about the performance of government programs.
As we approach the budget next week, we should be considering whether the priorities it reveals are well informed. Some will be. One of the highest-profile new elements, the national disability insurance scheme, has the benefit of a detailed Productivity Commission study that recommended not only the scheme but also a range of options to fund it.
The new measures are, however, only a tiny proportion of any budget. The far bigger issue is the number of unexamined priorities: the existing programs that continue rolling on year after year, without adequate evidence or performance information to support them. It may be that they are working well, but without adequate performance measures we can't be sure. Some programs might not be working well or achieving the objectives originally set for them. Provided they do not generate a spectacular and high-profile catastrophe, they, too, are likely to be ignored. Either way, the Australian taxpayer deserves to be better informed.
Stephen Bartos is executive director, Canberra, of ACIL Allen Consulting and a former senior public servant.