A First Approach to a Public Financial Information System for Social Benefits

By Pena-Miguel, Noemi | European Research Studies, April 2017 | Go to article overview

A First Approach to a Public Financial Information System for Social Benefits


Pena-Miguel, Noemi, European Research Studies


Introduction

Thorough, ongoing assessment of public management tasks has long since ceased to be a mere ideal, or indeed a mere legal requirement, and has become an inescapable economic necessity (Fernandez, 2009). Ordinary people are demanding to know where public funds are sourced from, how spending by public administrations is arranged, how funding is used in pursuit of objectives and how the whole process is monitored from the outset. The high level of devolution in Spain makes these tasks extremely complex, but this should not be seen as an impediment but rather as an additional stimulus for optimising the use of public resources.

In the last third of the 20th century criticisms began to be levelled at the "myth of benevolence" of the public sector (Brennan & Buchanan, 1980) and even the alleged superiority of the majority rule in collective decision-making was called into question (Arrow, 1951). Baumol (1967) attributed intrinsically low productivity to the public sector, while Niskanen (1971) asserted that bureaucracy behaved highly inefficiently, and assumed that its objective was merely to maximise its own funding allocations. Along similar lines, Wolf (1979) drew up a theory of "public sector failures" caused by the special supply and demand characteristics of public goods and services.

In the 1990s the doctrine of New Public Management gained popularity, particularly following the publication of its basic postulates in a paper by Osborne & Gaebler (1992). This doctrine sought to change the traditional bureaucratic approach and redirect public sector management towards attainment and quality of results, encouraging the participation of the public, fostering decentralised decision-making, striving for continuous improvement and seeking to support ongoing innovation (Fernandez, 2009). Two of the basic postulates of New Public Management in particular deserve to be highlighted:

a) public management oriented towards results and quality of results, over and above concern for procedures (legality) and mere resource consumption; and

b) public management oriented towards customers/citizens (Osborne / Gaebler, 1992; Gore, 1994).

One of the criticisms levelled at the way in which public administrations manage their affairs is that how the services and goods that they manage are funded is of secondary concern to them: pressure, vested political interests and demands for coverage of particular risk or expenditure items arise first, and only afterwards is any thought given to how their provision is to be funded or implemented. This heavily distorts the choice of resources and results in major inefficiencies in the management of the corresponding basic "pillar" of social protection (Ruesga et al, 2012; Theriou 2015; Athanasenas et al., 2015; Thalassinos and Liapis 2013; Duguleanu and Duguleanu, 2016). Moreover, when financing is merely a secondary consideration detailed financial information on such provisions, broken down item by item, is hardly contemplated at all. This has led us to look for a model of financial information capable of providing information on the origin and application of funds that could enable a basic social assistance benefit (BSAB) to be financed (Fetai 2015).

Importance of Public Financial Information

In the 1990s much more attention began to be paid to matters of openness in the public sector, as reflected in papers such as that of Kopits and Craig (1998), with the support of international organisations such as the OECD (2001). However, in practice a largely entrepreneurial public sector (Utrilla de la Hoz, 2006) and certain public/private partnership arrangements (e.g. shadow tolling and the so-called "German method" of deferred payment) have resulted in a lack of transparency.

This lack of transparency has led stakeholders (including customers, shareholders and suppliers) to demand more financial information from the public sector, including details of its performance on economic, social and environmental issues. …

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