MEMORANDUM FOR THE PUBLIC ACCOUNTS COMMITTEE
Programme Budgeting—General Explanation
1. As it is being developed in this country, programme budgeting is an integrated planning/budgeting system which by means of three major components namely, programme budgets, analysis and systematic review procedures,
defines Government policy objective by reference to each Department’s area of responsibility
segregates the on-going activities of Departments into specific programmes to achieve those objectives
calculates the expenditure on programmes for a number of years ahead; identifies and quantifies as far as practicable the results to be achieved; and presents this information in 5-year “programme budgets”
identifies and analyses major issues of policy as a continuing process
provides information by which progress can be reviewed regularly on a continuing basis with the help of modern management techniques.
2. Programme budgeting was introduced on an experimental basis in the Departments of Education and Lands (Forest and Wildlife Service) in the period 1969 to 1971. In the light of the results of the experiments a decision was taken by the Government in 1971 to introduce programme budgeting progressively in all Government Departments. This was reaffirmed by a further Government decision in June 1973. The present intention is that programme budgeting will be operational by 1978. Paragraphs 3 to 7 following describe the information which will be available and the uses to which that information will be put when programme budgeting is fully operational. As paragraph 9 indicates, the system is at present at various levels of development in the different Departments.
3. A programme budget comprises expenditure and output tables accompanied by explanatory memoranda. The expenditure and output tables contain information for five years ahead at sub-programme and activity levels, that is, at more detailed levels than the programmes mentioned in 1 above. The expenditure figures include:
(i)Central Government voted expenditure and non-voted capital expenditure
(ii)local authority and state-sponsored body contributions to the Public Capital Programme
(iii)Central Fund Expenditure
(iv)other extra budgetary fund expenditure
(v)local authority current expenditure.
(i) and (ii) for the year ahead taken together represent the estimates and capital allocations sought by Departments for that year. The material on local authority current expenditure and expenditure from the Central Fund and extra budgetary funds is included to enable Departments to prepare their Estimates and capital allocation submissions in the light of a full picture of public sector expenditure. The remaining four years’ expenditure figures indicate the level of expenditure proposed by the Department concerned for that period.
4. The memoranda accompanying the table include an up-to-date statement of needs intended to be served by the programmes and sub-programmes including such relevant economic social and other indicators as may be of assistance in considering the contribution of the programmes to meeting these needs. The memoranda also include references to alternative courses of action considered to achieve the objectives; the reasons for the priorities selected; and the results of any analytic studies carried out during the year which are relevant to the programmes.
5. The programme budgets have two main uses—for resource allocation and planning purposes and for management. In connection with resource allocation it is intended that an abridged version of the programme budget would be submitted to the Department of Finance showing expenditure and outputs at programme and sub-programme level together with appropriate supporting memoranda. The material for the first year would include the relevant Department’s submission on the Estimates and Public Capital Programme requirements for that year and would be used by the Government in taking decisions on the Estimates and capital allocations. Subject to the approval of the Public Accounts Committee the Estimates format would be revised for each Department to bring it into line with the categories of expenditure in the programme budgets.
6. The full five-year expenditure projections would represent a Department’s planning proposals for that period and would be used as a basis on which the Government could adopt guidelines for the examination of the expenditure proposals for the first year and also indicate where its priorities would lie in later years. In the light of the use of these expenditure projections it may be possible for the Government to give a firmer commitment of resources for some years ahead. In a more general planning context the projections of expenditure for Departments could provide material for the public sector portion of Government economic and social programmes.
7. The preparation of a programme budget will also be an aid to the internal management of a Department as it will involve a Department in planning its activities in detail for a number of years ahead and in setting out explicitly the expenditure involved on these plans and the results expected. The preparation of this material will also form part of the machinery to be set up in a programme budgeting system for review and analysis of expenditure. Department’s plans as set out in a programme budget will be reviewed annually by Review Committees and this process will in turn suggest subjects for more detailed analysis.
8. The benefits which would be expected from a fully operational system might be summarised as follows:
the provision of a longer perspective and more explicit information in deciding on Departmental and Government priorities
the availability of a wider range of choices, with costs and benefits identified and quantified where practicable, both for existing programmes and when new projects are being submitted for decision
a practical basis for multi-annual planning of government expenditure and for management accounting
up-to-date material for public sector programmes, either for inclusion in general programmes for economic and social development or otherwise, as well as for review of such programmes
clearer identification of the sections of the community to whom the benefits from Government expenditure flow
identification of overlapping or conflicting areas of activity between different Departments.
In addition an increased capability for delegation of financial controls may be possible for programmes or parts of programmes where results can be measured accurately and, therefore, the effectiveness of the expenditure monitored. The usual procedures with regard to virement would be observed in the case of voted expenditure in such instances.
Present stage of development
9. Programme budgeting systems are currently being introduced in all Government Departments. To date draft programme budgets have been prepared by most Departments. Though these budgets, where available, have been used to assist in the resource allocation process, no approval has been given to expenditure on programmes as such. The submission of estimates from Departments for 1975 was looked for in both conventional and programme form and projections for 1976/79 were sought in programme form alone. Again this material will be used only as far as practicable in deciding on allocations for Departments for 1975. Recommendations to Government on the estimates for that year will be in conventional form and will be submitted to the Dáil in that form.
10. Proposals for a presentation of the annual estimates in programme format are being prepared by an informal Working Group which includes officials from the Departments of Finance and Public Service and from the Comptroller and Auditor General’s Office. When the Group’s report is available it will be examined in the Department of Finance and will be the subject of formal consultations with the Comptroller and Auditor General and Departments. If found generally acceptable, it will then be submitted to the Public Accounts Committee for approval. Any change in the Book of Estimates to give it a programme format would be a complex undertaking and would take a number of years to implement. There is no intention to alter the principle of virement in this context but the merging of a number of related Votes is likely.
11. Other aspects of the programme budgeting system will also be developed over the years to 1978. Systematic analysis of policy issues identified in the programme budgets will be undertaken and Review Committees will be set up to supervise or execute this work as appropriate. There will be a continual refinement of the objectives and measurements of results as used in Department’s budgets. It is also proposed to develop criteria to assist in assessing programme priorities.