national happiness and public financial management€¦ · national happiness and public financial...
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National Happiness and Public Financial Management
Manuel Pietra
ICGFM Past President Chairman of the Advisory Board, World Happiness Summit
President and CEO, FreeBalance
Why “happiness” in Public Policy?
Why Now?
Policy Complexity
Mar
ch 1
3 - 1
5 FISC: FreeBalance International Steering Committee
Mar
ch 1
6 H20: Happy 20 Government Track
Mar
ch 1
7-19
WoHaSu: World Happiness Summit M
arch
20 World
Happiness Report
Busy Happy Week in Miami
FISC
Happy 20
Tal Ben-Shahar Dr. Saamdu Chetri Vicente Fox
World Happiness Summit Statistics
40+
COUNTRIES
WOHASU # 1
2000+
ATTENDEES SPEAKERS
>90
Vote
0%
20%
40%
60%
80%
100%
NGOs Business Media Government
2016
2017
Trust
Source: Edelman Trust Barometer
Government
Tight Budgets
Low Trust
Poor Outcomes
Infrastructure Gap
Poor Citizen Services
Institutions
Communities
Reduced Digital Divide • Social media • Cross-border • Blogging • Rating systems • Mobile
Reduced Information Asymmetry
Power Shift
1. GROWTH AS PUBLIC POLICY
Positive?
GDP, Happiness & Life Satisfaction
GDP
Live
Sat
isfa
ctio
n
Consequences
Stress
Inequality
Health
Time Ticking on GDP
2. SCIENCE OF HAPPINESS
More than “Happiness”
Happiness
Well Being
Social Capital
Prosperity
Life Satisfaction
World Happiness Report
GDP Per Capita
Life Expectancy
at Birth
Generosity Freedom of Life Choices
Corruption Perception
Social Support
Government & Country Statistical
Analysis
Perception Surveys
Self-Reported Behaviour
Happiness?
Pseudo Science
Lacks Objectivity
Cultural Differences
Not for Government
Unrelated to Spending
Immoral
Happiness?
Science of Happiness
More Objective
than Growth
Cultural Differences
Is for Government
Prioritizes Spending
Moral
3. POLICY PRIORITIZATION
Public Policy Spectrum Economics
Short Term Goals
Policy
Budget
Results
Long Term Goals
Public Policy Spectrum Economics
Short Term Goals
Policy
Budget
Results
Long Term Goals
Defence
Public Security
Environmental
Social Welfare
Education
Health
Transportation
Energy
Public Policy Spectrum Economics
Short Term Goals
Policy
Budget
Results
Long Term Goals
Defence
Public Security
Environmental
Social Welfare
Education
Health
Transportation
Energy
Media
Civil Society
Donors
Businesses
Unions
Public Policy Spectrum Economics
Short Term Goals
Policy
Budget
Results
Long Term Goals
Happiness
Defence
Public Security
Environmental
Social Welfare
Education
Health
Transportation
Energy
Media
Civil Society
Donors
Businesses
Unions
Policy Guidelines
Health
Employment
Equity Anti-Corruption
Education
Participation
Policy Guidelines
Health
Employment
Equity Anti-Corruption
Education
Participation Happiness Economics
• Impact of trust in government on stability
• Impact of trust for tax compliance
• Reduced corruption (revenue & expenses) + increased tax compliance = financing better outcomes
Anti-Corruption
Anti-Corruption
• Impact of trust in government on stability
• Improvement of government policy
• Efficacy leads to improved wellbeing
Participation
Participation
• Long-term negative societal impact of unemployment
• Mental health implications of unemployment
• Importance of meaningful work
Employment
Employment
• Perceptions of procedural and discriminatory inequity
• Income inequity perceptions have cultural implications
Equity
Equity
• Negative impact of poor mental health far higher than impact of poor physical health
• Shift to preventative health • Significant linkage between
environment & health
Health
Health
• Cornerstone for happiness & wellbeing
• Shift from exam factories to future skills
• Instill life-long learning
Education
Education
Holistic Considerations
Health
Employment
Equity Anti-Corruption
Education
Participation
Effect of unemployment on mental health
Holistic Considerations
Health
Employment
Equity Anti-Corruption
Education
Participation
Effect of health on education
Holistic Considerations
Health
Employment
Equity Anti-Corruption
Education
Participation
Effect of education on employment
Holistic Considerations
Health
Employment
Equity Anti-Corruption
Education
Participation
Effect of participation on anti-corruption
Holistic Considerations
Health
Employment
Equity Anti-Corruption
Education
Participation
Effect of bias in inequality
Holistic Considerations
Health
Employment
Equity Anti-Corruption
Education
Participation
Cost of corruption to government programs
Personal Happiness & Wellbeing
Social Capital Life Long Learning
Personal Happiness & Wellbeing
Social Capital Life Long Learning
Education Health
Equity Anti-Corruption
Employment
Participation
• Pressure for growth & “doing business” • Globalization • Open Government Partnership • Sustainable Development Goals
• Wide ranging & complex!
But…
• Pressure for growth & “doing business” • Globalization • Open Government Partnership • Sustainable Development Goals
• Wide ranging & complex! • Now?
• Happiness and Wellbeing?
But…
Gross National
Happiness Pillars
Sustainable and Equitable
Socio-Economic
Development
Environmental Preservation
Promotion and
Preservation of Culture
Good Governance
Happy Planet Index
Health Justice
Ecological Footprint
Well Being
Legatum Prosperity
Index
Health
Education
Economy
Entrepreneurship & Opportunity
Social Capital
Safety & Security
Personal Freedom
Governance
World Happiness Index
Happy Planet Index
Gross National Happiness
World Happiness Summit
Governance Corruption Perception Justice Good Governance
Social Social Support
Health Sustainable & Equitable Socio-Economic Development
Social
Life Expectancy Physical
Cultural Generosity Promotion & Preservation of Culture Community
Economic GDP Per Capita Sustainable & Equitable Socio-Economic Development
Financial
Environmental Ecological Footprint
Environmental Preservation
Personal Freedom of Life Choices
Purpose
Mindfulness
Sustainable Development Goals
3 GOOD HEALTH 4 QUALITY
EDUCATION 6 CLEAN WATER & SANITATION
7 RENEWABLE ENERGY 12 RESPONSIBLE
CONSUMPTION
13 CLIMATE ACTION 15 LIFE
ON LAND 16 PEACE AND JUSTICE 14 LIFE BELOW
WATER 17 PARTNERSHIP FOR THE GOALS
11 SUSTAINABLE CITIES AND COMMUNITIES
10 REDUCED INEQUALITIES
5 GENDER EQUALITY
8 GOOD JOBS AND ECONOMIC GROWTH 9 INDUSTRY,
INNOVATION, INFRASTRUCTURE
1 NO POVERTY 2 NO
HUNGER
Governance
Social
Cultural
Economic
Environmental
4. MEASURING WHAT’S IMPORTANT
Corporate Performance Management
Bottom Line Outcome Output Input
Budget
Output
Output
Outcome
Outcome
Outcome
Outcome
Profit
Government Performance Management
Outcome Output Input Mandate
Objectives Budget
Output Outcome
Outcome
Output Outcome
Outcome
Why “Balance” Performance?
Performance
People
Process Politics
Public Finances
Balanced Scorecard Financial Stewardship
“financial performance”
Internal Business Process “efficiency”
Organizational Capacity “knowledge,
innovation”
Customer/Stakeholder “satisfaction”
Strategic Objectives Strategy Map
Performance Measures & Targets Strategic Initiatives
Vision and Strategy
FISC WORKSHOPS
Government Balanced Scorecard
Financial
Customer
Internal Process
Learning & Growth
Citizen
Internal Process
Learning & Growth
Financial
Private Sector Public Sector
Balanced Scorecard Concepts
Citizen Perspective
Internal Process Perspective
Learning & Growth
Perspective
Financial Perspective
Government Service Delivery
Automation & Efficiency
Organizational Change
Management
Budget Credibility
Government Transparency & Accountability
Program Management
Learning & Promotion
Opportunities
Debt Management
Equity
Scenario Planning
Adequate Compensation
Value for Money
Employment
Decision Support
Job Satisfaction
Taxation
Health & Education
Policy Coherence
Empowerment
Public Investments
Trust
Citizen Perspective
Internal Process Perspective
Learning & Growth
Perspective
Financial Perspective
Government Service Delivery
Automation & Efficiency
Organizational Change
Management
Budget Credibility
Government Transparency & Accountability
Program Management
Learning & Promotion
Opportunities
Debt Management
Equity
Scenario Planning
Adequate Compensation
Value for Money
Employment
Decision Support
Job Satisfaction
Taxation
Health & Education
Policy Coherence
Empowerment
Public Investments
Efficiency
Citizen Perspective
Internal Process Perspective
Learning & Growth
Perspective
Financial Perspective
Government Service Delivery
Automation & Efficiency
Organizational Change
Management
Budget Credibility
Government Transparency & Accountability
Program Management
Learning & Promotion
Opportunities
Debt Management
Equity
Scenario Planning
Adequate Compensation
Value for Money
Employment
Decision Support
Job Satisfaction
Taxation
Health & Education
Policy Coherence
Empowerment
Public Investments
Effectiveness
Citizen Perspective
Internal Process Perspective
Learning & Growth
Perspective
Financial Perspective
Government Service Delivery
Automation & Efficiency
Organizational Change
Management
Budget Credibility
Government Transparency & Accountability
Program Management
Learning & Promotion
Opportunities
Debt Management
Equity
Scenario Planning
Adequate Compensation
Value for Money
Employment
Decision Support
Job Satisfaction
Taxation
Health & Education
Policy Coherence
Empowerment
Public Investments
Sectors
Citizen Perspective
Internal Process Perspective
Learning & Growth
Perspective
Financial Perspective
Government Service Delivery
Automation & Efficiency
Organizational Change
Management
Budget Credibility
Government Transparency & Accountability
Program Management
Learning & Promotion
Opportunities
Debt Management
Equity
Scenario Planning
Adequate Compensation
Value for Money
Employment
Decision Support
Job Satisfaction
Taxation
Health & Education
Policy Coherence
Empowerment
Public Investments
Other Sectors to Support
Measurement
Citizen Perspective
Internal Process Perspective
Learning & Growth
Perspective
Financial Perspective
Government Service Delivery
Automation & Efficiency
Organizational Change
Management
Budget Credibility
Government Transparency & Accountability
Program Management
Learning & Promotion
Opportunities
Debt Management
Equity
Scenario Planning
Adequate Compensation
Value for Money
Employment
Decision Support
Job Satisfaction
Taxation
Health & Education
Policy Coherence
Empowerment
Public Investments
Goods
Services
Information
Time
Process
Quality
Cost
Relevance
5. ROLE OF PFM
5.1. Classification is Important
Government Matrix Structure
Government
Ministries
… … …
Departments
… … …
Agencies
… … …
Government Matrix Structure
Government
Ministries
… … …
Departments
… … …
Agencies
… … …
National
Objectives
Government Matrix Structure
Government
Ministries
… … …
Departments
… … …
Agencies
… … …
Sectors
National
Objectives
Government Matrix Structure
Government
Ministries
… … …
Departments
… … …
Agencies
… … …
Sectors
National
Objectives
PFM: Core of National Wellbeing
Budget Classification
Fund
Organization
Responsibility
Program
Organization
Accounting
Performance Classification
Climate
Health
Education
Infrastructure
Gender
Growth
Decision-Making Transparency
5.2. Public Investments
Public Investment Planning 2.
1 Pr
ogra
m B
udge
ting
Programs Objectives
2.2
Scen
ario
Pla
nnin
g
Financial Scenarios
2.3
Col
labo
ratio
n Multiple Versions
1.1
Per
form
ance
Str
uctu
re
Objectives Hierarchy
1.4
Cos
t Driv
ers Financial
Assumptions
2.5
Appr
oval
s Formal & Legal Budget Approval
2.4
Mul
tiple
Yea
r Previous Year Multiple Year Estimates 2
.6 P
orta
l
Budget Planning Transparency
5.3. Controls
Income Tax
Customs & Excise Sales Tax Non-Tax Debt
Income
Controls
Purchase Procurement Social
Programs Grants Debt Repay
Budgets Segregation of Duties
Transfers &
Virements Supplemental Process
Income Tax
Customs & Excise Sales Tax Non-Tax Debt
Income
Points of Control Failure
Purchase Procurement Social
Programs Grants Debt Repay
Budgets Segregation of Duties
Transfers &
Virements Supplemental Process
5.4. Fiscal Transparency
Fiscal Transparency O
• No Fiscal Information Available
1 • Printed Fiscal Information Available for a Fee
2 • Printed Fiscal Information Available for Free
3 • PDF Reports Available on Web
4 • Search, Select & Download Fiscal Information from
Web
5 • Open Data – API Integration for Civil Society Software
Role of Public Financial Management
•Performance Structure •Financial Structure •Cost Drivers •Previous Year Financials •Transparency
1. Performance Configuration
•Multiple Year •Scenario Planning •Collaboration •Program Objectives •Approval •Transparency
2. Public Investment Planning •Controls
•Procurement •Contracts •Progress •Transparency
3. Implementation
•Management Dashboards •Performance Outputs •Performance Outcomes •Return on Investment
4. Results
Vote
6. PUBLIC FINANCIAL MANAGEMENT LESSONS
A. Clarity
Wellbeing & Happiness
National Goals
Citizen-Driven Context
Relevant Sustainable Development Goals
Relevant Measurements
Wellbeing & Happiness
National Goals
Citizen-Driven Context
Relevant Sustainable Development Goals
Relevant Measurements
Socio-Cultural Context
“Best Practices”
B. Integration
Performance Integration
Different Databases
•Lack of Consistent Information
Different Classifications
•Metadata •Inconsistent controls
Fragmented Information
•No single view of government • Multiple versions of the truth •No budget visibility
Manual Intervention
•Error-prone •Lack of timeliness
Poor decisions
Decision-Making
Transparency Integration Different
Databases •Lack of Consistent Information
Different Classifications
•Metadata
Fragmented Information
•No single view of government
Manual Intervention
•Error-prone •Lack of timeliness
Poor Transparency
Life, Liberty, and the Pursuit of Happiness