Public budgeting ‘on verge of data-driven transformation’

23 Jun 17

Information technology is set to amplify the evidence base used for approaches like results-based budgeting to an unprecedented degree, EY’s global public financial management leader has told PF International.

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Mark MacDonald, global public financial management lead at EY. Credit: EY

Mark MacDonald, global public financial management lead at EY. Credit: EY

 

Mark MacDonald explained that the ability to capitalise on data sets and make connections between actions and outcomes from the macro right down to the micro level is set to completely transform the process of resource allocation and outcome delivery.

“I think the most exciting part about what’s going to emerge in the next relatively short period of time is just how powerful our capacity to manage data and analyse data in a much more robust way [will be],” he said.

With new technologies increasingly effective and inexpensive, the public sector will be able to manage, analyse and connect different data sets and information systems in ways it has never been able to before.

MacDonald highlighted the scale of evidence collection this will allow. These span from a user’s interaction with services on the ground to high-level public accountability mechanisms and will enable an unprecedented level of understanding and better decision making, he predicted.

“I think that we will look back and say: ‘Wow, this is an incredibly different landscape in terms of how resources are allocated and what they actually achieve’,” he said.

MacDonald described a move towards a stronger link between evidence and decision making as the most important change public sector bodies should be making to improve their delivery.

“This absolutely lies at the heart of what public finance, and in fact what government, should really be about,” he continued. “It is about as strong an evidence base that can be created to understand, inform and transform the way that public resources are allocated.

“I would always advocate for a higher level of achievement: a higher level of productivity, greater level of effectiveness, a greater level of efficiency,” he said. “It is simple but difficult to achieve. But difficult does not mean impossible.

 “Anywhere there is a budget and it’s tied to results, it can be done.”

He said the human dimension of change – driving a cultural shift in ingrained practices and attitudes – is often the most difficult to achieve, MacDonald said. This is one reason why developing countries can have stronger evidence-based budgeting initiatives than their more advanced counterparts.

Overcoming that challenge is about as much transparency and clarity about the change as possible, he said, and appealing to people’s ideals about what public service should be.

If you show elected and non-elected officials that there is a way to improve democratic accountability and the good government can do for society, that is something people “can get very, very committed to, very, very easily”, he added.

Commitment, he continued, was key and transparency needs to be maintained, even when the results are unfavourable.

“I think you need to have a mature perspective, when you uncover those sorts of circumstances, and focus not on any negative connotation associated with that. But rather on what that evidence can do to help you in fact improve the delivery of public service,” MacDonald explained.

Around the world, governments are currently showing different “degrees” of commitment, he said. While very few would deny the imperatives of having a greater level of effectiveness in public resource, some “have to have a very careful examination of how effective those mechanisms and systems really are”.

“I’m not sure there is ever an end game where you would have a government or operating entity say: ‘OK fine, we’re as good as we’re ever going to be’. I don’t think that’s it,” he said. “There is always room for improvement.”

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