Performance Budgeting Systems Information

Most governments around the world have budgeting systems that are input based. They focus on what resource inputs the government has acquired with public resources e.g. personnel payments to civil servants, purchase of equipment and services etc. They do not focus on the results or impact of government expenditure. With increasing democratisation in the developing world and the constrained ability to increase taxation in the developed world, governments globally are being put under pressure to account for the effectiveness and efficiency with which they have employed public funds. As part of reform initiatives to improve the effectiveness of the public sector, many governments have moved towards performance budgeting. Performance budgeting creates a link between the resources in the government’s budgets and the expected service delivery outputs which will be generated from that public expenditure. The service delivery outputs produced by various programmes can also be linked to departmental and whole-of-government outcomes and impact. Understanding the costs of producing public goods and services can improve the credibility and prioritisation of the annual budgeting process as well as lay good baseline foundations for the Medium Term Expenditure Framework.