Federal Government Wants to Better Demonstrate the Effectiveness of Their Expenditure
ResearchZEW and Deloitte Report Offers a Toolkit for Strengthening Target- and Impact-Orientated Budget Management
On 10 April 2024, the Federal Cabinet acknowledged the final report on the 11th Spending Review, titled “Improving performance budgeting in the federal budget, with a particular focus on sustainability”. Since the 2010s, the federal government has consistently refined its budget management’s target and impact orientation through a series of important changes and innovations. The basis for this enhanced impact orientation is a report prepared by ZEW Mannheim and Deloitte GmbH Wirtschaftsprüfungsgesellschaft for the Federal Ministry of Finance.
On 10 April 2024, the Federal Cabinet acknowledged the final report on the 11th Spending Review, titled “Verbesserung der Wirkungsorientierung im Bundeshaushalt mit einem Schwerpunkt Nachhaltigkeit” (“Strengthening the impact orientation in the federal budget with a focus on sustainability”). Since the 2010s, the federal government has consistently refined its budget management’s target and impact orientation through a series of important changes and innovations. The basis for this enhanced impact orientation is a report prepared by ZEW Mannheim and GmbH Wirtschaftsprüfungsgesellschaft for the Federal Ministry of Finance.
Effective indicators: measurability and open evaluation practices are key
The up-front development of robust indicators for government spending programmes is crucial for the efficiency of public spending, as they serve as yardsticks to gauge the real impact of policy measures. For instance, a good indicator for a programme on energy-efficient building renovation would be the amount of carbon dioxide saved through the renovation. To facilitate the widespread use of indicators, ZEW and Deloitte have developed a specific guideline.
Moreover, the report underscores the importance of establishing independent empirical evaluation methods and fostering open evaluation practices. Comprehensive programme evaluations go beyond mere indicator calculations and allow for a nuanced evaluation of a policy measure. It is important that evaluations refrain from categorising a programme as either successful or unsuccessful, and instead offer granular insights into which aspects of a policy are particularly helpful and which are not. “This way, officials can make continuous improvements and ultimately increase the impact achieved with the budgetary resources allocated. With our comprehensive report, policymakers are equipped with a versatile toolkit, containing many starting points for strengthening public finances,” concludes Friedrich Heinemann.
