Davies opening the 2005/06 Budget Debate in the House of Representatives last year.
THE EDITOR, Sir:
MANY COMMENTATORS have been suggesting zero-based budgeting to bring greater discipline to government finances. But what are the advantages and disadvantages?
In addition to saving money and improving services, zero-based budgeting could increase restraint in developing budgets, reduce the entitlement mentality with respect to cost increases and make budget discussions more meaningful during review sessions.
On the cost side of the equation, zero-based budgeting is that it could increase the time and expense of preparing a budget, be too radical a solution for the task at hand (you don't need a sledgehammer to pound in a nail) and it can make matters worse if not done in the right way. A substantial commitment must be made by all involved to ensure that this doesn't happen.
First, the success of such a change like this hinges strongly on leadership that is dedicated to the task. If those appointed to conduct budget reviews are unwilling to truly assess every item in their budget, word will get out quickly that this new budgeting technique is more symbolism than substance.
Second, don't attempt to do zero-based budgeting for every department, every year. Such a move may prove impossible to manage. Instead, several departments or agencies should be chosen and rotated through every facet of government over time.
Each review needs to be conducted by referencing all aspects of a department, agency or programme to what its goals are. This makes the very purpose of the entity being reviewed transparent, and can increase the opportunities available for making objective measurements of a department, agency or programmes' success rate.
As with most programmes or reforms of programmes, it must be done right, or it should not be done at all. For example, department, agency or programme directors who feel endangered by this kind of scrutiny will be delighted to be placed in charge, so that they can do it wrong, waste everyone's time, and give a cutting-edge management tool like zero-based budgeting a bad name.
PETER W JONES
liontraders@yahoo.com
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