Output Based Budgeting (Draft for March 2011 Board Consideration )

Output based budgeting is a process by which government agencies are funded on the basis of delivery of outputs.

In the Australian case it was argued that traditional budgeting gave too much emphasis to the rationing of scarce cash resources between services- the focus was on inputs rather than outputs. Then in the 1990’s various Australian States changed there budgeting to what was commonly termed an “accrual output based budgeting approach “. For instance the state of Queensland defined this as “ a process through which agencies are funded and monitored on the basis of delivery (performance) of outputs which have been costed on a full accrual basis.

The basic idea is that government agencies are funded on the basis of delivery of planned and actual outputs and outcomes. In theory the traditional budgeting process based around a rationing of inputs is reversed. The key question is now what will be produced by each agency rather than what should its expenditure be. Each output is then costed and the budget allocation for the agency is the quantity of outputs to be delivered multiplied b