Outcome budgeting calls for cultural and behavioural shift, NSW Treasury says

By Shannon Jenkins

March 12, 2020


The New South Wales government has been busy embedding its outcome budgeting reform, but it requires a “huge mindshift”, according to NSW Treasury.

Outcome budgeting bases the allocation of public resources on the outcomes achieved for the public, rather than the amount spent. The state government has been developing and refining an outcomes framework to inform investment decision-making since 2017. Over the course of the following two years, NSW Treasury introduced a set of state outcomes to highlight what the government seeks to achieve for the public.

Treasury’s executive director, sector outcomes and performance and transformation lead for outcome budgeting reform, Vinita Deodhar, told The Mandarin implementing outcome budgeting across the state public sector has required a cultural and behavioural shift at all levels of leadership.

“I think that embedding it entirely will take a few years, but there’s quite a step up that’s happening now,” she said.

“The incremental approach to budgets is so deeply in everyone’s psyche … this is our time to take a pause and think about what we are trying to deliver and what are the right resources to achieve that.”

Read more: NSW Treasury begins outcome budgeting

Last month NSW Treasury hosted a forum for public sector leaders to discuss how the process to embed reforms across the state has been progressing.

The event saw roughly 100 public servants attend from a broad range of disciplines. They covered a variety of topics including cluster insights in driving change, culture, digital innovation, and the role of finance in driving cluster strategy and delivering outcomes.

The forum was well received, Deodhar said, and allowed leaders from across departments to share their thoughts and experiences in a safe space. One cluster leader described outcome business planning as a “really unifying force in aligning business structures and cultures following machinery of government changes to deliver a joined-up vision quickly”, Deodhar noted.

The discussions highlighted that the new approach would look “beyond budgeting” and would involve cultural issues as well as performance management.

One participant said it was important for leaders to help staff and stakeholders understand that they must think about the outcomes that need to be delivered before anything else.

“What are the benefits that we’re going to bring in doing this investment, and what’s the smartest, most practical way that we can deliver those benefits?” they said.

Departments like Premier and Cabinet, and Treasury — where setting and measuring outcomes may not be as obvious as for departments like Education and Health — have been developing outcomes to reflect their stewardship role in the sector, Deodhar said.

NSW Treasury has also launched a new website to show how the reforms have been tracking, and details four components of outcome and business planning:

  1. Outcome and performance indicators and targets,
  2. Cluster change priorities which are organisational priorities or change programs to help deliver state outcomes,
  3. Budgeting for outcomes, where cluster resources, base budgets and internal investment allocation processes are aligned to outcomes,
  4. Governance and accountability arrangements to ensure outcomes delivery.

A cluster outcome and business plan proposes outcome-focused performance objectives, and sets out how to achieve them over the next four years. According to NSW Treasury, the plan creates a “shared vision within the organisation”, informs the strategic allocation of public resources and the budget decision-making process, and “helps communicate how the cluster is delivering results and outcomes”.

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