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Austrian Federal Budget Reform
Austrian Federal Ministry of Finance & Austrian Federal Chancellery
Austria

The Problem

Up to the recent past, budget formulation in Austria was very traditional, cash-based, highly legalistic, non-gender-sensitive and input-oriented. This entailed growing dissatisfaction within the federal administration, as the flaws of that very system became increasingly obvious: Primary emphasis was placed on inputs, neglecting performance results in the process and exhibiting insensitivity to gender-related impacts. Especially in the latter field there was scant data and transparency, reflecting a low level of awareness of gender-issues. There was no structural implementation of gender budgeting, no minimum standards, and no legal requirements for gender mainstreaming or gender budgeting. Even though some kind of regulatory impact assessment took place, including a general obligation to define goals and assess certain impacts, no systematic approach, no guidelines, and no support existed. Thus, the results of impact assessment were neither meaningful nor led to improvements.

Solution and Key Benefits

 What is the initiative about? (the solution)
The central aspect of performance budgeting in Austria concerns gender equality, which is set forth and spelled out in the constitutional amendment of 2007. Gender budgeting was explicitly named as the only mandatory dimension of performance budgeting. The constitution states that the budgets of all levels of government have to strive for the equality of women and men. Therefore, the gender dimension is now represented at all levels of the performance budgeting system: at least one outcome and one output per each budget chapter must deal with gender matters. As a consequence, each Austrian ministry now works toward promoting gender equality, and reports on the achieved results. Gender mainstreaming is now embedded in the budget of all federal institutions.
Furthermore, a new systematic regulatory impact assessment approach (RIA) has been implemented: The Austrian Federal Administration now defines outcomes and outputs, assesses impacts in impact dimensions such as gender equality, and conducts social impact analysis as well as internal evaluation programs. The newly implemented impact dimension “gender equality” highlights the most important impacts on gender equality that otherwise could be overlooked (blind spots), such as potential impacts of financial aid to natural persons or corporate entities, impacts on the gender pay gap, education or employment, impact on unpaid labour, on tax distribution or health, as well as the impact on representation of women and men in high-level decision-making bodies.
Gender budgeting now has to be applied to all new laws and regulations as well as bigger projects. After a maximum of five years, the outcomes, outputs and impacts of each government activity in regard of each impact dimension will be internally evaluated. As such, the Austrian gender budgeting model is also a comprehensive tool for both interest groups and the Federal administration, allowing for informed discussions about costs and benefits of each policy adopted. In its strategic role, the Federal Austrian Chancellery is providing guidance, training, quality assurance, as well as support of ministries implementing new structures, and producing two major annual reports.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
To integrate all relevant players into the gender budgeting reform process right from the start, a reform committee was formed as a sounding board and platform for discussion. The committee was joined by experts, all political parties represented in Parliament, by the Court of Audit (CoA), the Chancellery and the Ministry of Finance (MoF). This way, the political parties made sure that issues of particular relevance for them – such as the role and the rights of Parliament in the budget process – were designed according to their needs. The result of this committee’s work was a unanimous Act of Parliament in favour of the Reform.
Another important contributor to the Budget Reform is the public. The main contributing groups were scientists, journalists and international multipliers. Notably, professors in public management and economics were contacted to discuss the reform ideas and receive feedback that could be integrated into the general framework.
International multipliers were another important reference group. The aim was to draw upon their experience for the Austrian Budget Reform. As the MoF actively participated in the OECD Working Party of Senior Budget Officials, this created an excellent opportunity to gain access to relevant international multipliers. In addition, international congresses and bilateral contacts were used to broaden the basis for respective communication.
Last but not least, it was important to integrate feedback from the civil servants into the reform body.
The implementation of the reform has been predicated on two pillars: On the one hand, the MoF deals with budget planning and execution processes, whereas on the other hand the Federal Chancellery takes care of the performance management aspects involved, all of those the line ministries and agencies are obliged to apply, first and foremost dealing with quality assurance and reporting on gender relevant policies.
Regarding the task of assessing the impact of those policies implemented, the Chancellery and the MoF together provided the general legal and institutional framework, whereas the Chancellery and the Minister of Women’s affairs share the responsibility of administrating the gender impact dimensions.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The aim of the Austrian Budget Reform was a complete re-launch of the budget system. Such far-reaching changes could not be managed in one step. Consequently, two major stages were envisaged: the first would be implemented in 2009 and the second is going to come into force in 2013.
The constitution was changed in a way that would make fundamental change inevitable by defining the core elements of the whole reform in the constitution. Backed strongly by the Minister of Finance and after intense discussions with the stakeholders mentioned above, two draft reform bills passed the Council of Ministers in early 2006: the amendment of the constitution, and a detailed reform bill for the first reform stage. However, parliamentary decision was not taken inasmuch as the legislative period ended and the parliament was paralyzed in the wake of national elections.
In 2007, it was successfully tried again. Backed by the informal parliamentary reform committee and after several concessions to the opposition which changed details but not the design of the reform, Parliament passed both reform bills unanimously. This provided a strong signal to the public and the administration that this change was here to stay under any political constellation after future elections.
The obligation to work towards gender equality was anchored in different parts of the Austrian constitution: All levels of government – the federal state, the regions (Länder) and the municipalities are thereby obliged to pursue gender equality.
From 2009, pilot projects concerning this matter have been installed, whereas the overall framework will take effect in 2012, providing the comprehensive underpinnings for all budgeting beyond 2013.
Integrating gender mainstreaming into performance budgeting and the public management framework has given widespread legitimacy to this issue, drawing in not just gender mainstreaming officials, but stakeholders from any field within the political process of the nation.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The Austrian Federal Budget Reform is based on an amendment to the constitution which was unanimously adopted in Parliament in December 2007. The key elements have been implemented in two stages: The first stage went into effect in 2009. The cornerstone of the first stage was the constitutional amendment of 2007, explicitly naming gender budgeting as a mandatory dimension of performance budgeting. The constitution states that the budgets of all levels of government have to strive for the equality of women and men.
Furthermore, with the first stage of the reform, a 4-year medium-term expenditure framework (MTEF) with binding ceilings enacted into law was introduced. In addition, incentives for line ministries for a more efficient use of resources have been created through more flexibility in building reserves and carrying forward appropriations from one year to another. The Annual Budget Law as the legal basis for the first stage has been adopted as well.
The new budgetary principles adopted in the constitution lay the foundations for the 2nd stage of the reform (starting as of 2013). These principles are: efficiency, transparency, a true and fair view of the state’s financial situation and outcome orientation closely linked to the principle of improving gender equality.
In the course of implementing the second stage of the reform after 2009 and preparing the federal ministries for the upcoming tasks, all ministries have undergone extensive training programmes conducted by the Chancellery and the MoF, comprising Gender Equality as integrated part of all guidance and training.
In 2010, the Chancellery and the Ministry for Women developed the Gender Impact Dimension of budgeting together, coordinating with the MoF on questions concerning tax distribution.
As a result, in 2012 the Federal Administration is going to hand over the first draft of a gender-sensitive budget to Parliament in Austrian history, going into effect in 2013. In the same year, gender-sensitive RIA will be implemented, followed by the first gender equality report handed over to Parliament and published in 2014.
As of 2013, also gender equality auditing is going to be integrated into all auditing activities of the Austrian Court of Audit.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
Regarding the Austrian Parliament, a general political consensus and support by all political parties could be reached by a reform process that created a win-win-situation for the MoF and the political parties: on the one hand, the MoF could accomplish its reform; on the other hand, the political parties made sure that issues of particular relevance for them – such as the role and the rights of Parliament in the budget process – were designed according to their needs. Additionally, it proved attractive for Parliament that the reform design of the MoF included detailed and regular performance information in the future annual budget bill, with special regard to gender budgeting. Therefore, Parliament’s portfolio was substantially enriched.
Another obstacle to overcome were ideological reservations expressed by certain stakeholders. They resisted a budget system focusing on gender equality. Solutions to this problem were the implementation of gender equality as a non-optional part of performance budgeting, awareness-raising and training, that finally led to a better understanding and thus less resistance.
One more hurdle that had to be taken seriously was the fear of creating additional red tape as well as a lack of high-quality data. The solution to this was to encourage the ministries and support them in developing steering and performance-management systems within the ministries.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The main resources for implementing the new Austrian approach to gender equality have been provided by the Federal Chancellery and its Department for Women’s Affairs as well as by the MoF, especially making use of the knowledge and experience of gender mainstreaming officials. Concerning this matter, it is worth noting that no additional staff has been hired to plan and implement the reform, although the reform process has increased the workload of the IT sections involved in the short term, since tools have had to be created for performance management and impact assessment.
Along these lines, another important aspect with special regard to civil servants was to keep the involvement of consultants to a minimum. During the previous decade, consultants had been hired often in the federal administration, although the administrative staff was very sceptical. Civil servants had the impression that consultants would take the experience and ideas of the administrative staff, selling them to the government, earning lots of money in the process.
Additionally, the hiring of consultants would have been understood as a clear signal to the administrative staff that they were not able to cope with the challenges ahead and needed advice from consultants who would teach them what they allegedly did not know themselves. This would have created a strong defensive attitude among civil servants. Hence, extensive use of consultants would have reduced the acceptance of the reform considerably.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
The Austrian Federal Budget Reform introducing gender mainstreaming is not a one-time project, but introduces a whole new approach, establishing a new culture that will affect public administration for decades. As shown in the paragraphs above, the Reform is the result of a broad national consensus, carried by all political parties and key stakeholders. The Reform has been built to last, and this common understanding is mainly reflected in the fact that the Reform and its commitment to strengthen gender equality has been written into constitutional law, backed by a series of unanimous decisions of the Austrian Parliament. Even if the political constellations change in the future, there is no way back: The Austrian Budget Reform has been one of the biggest political reforms in decades and is a fundamentally sustainable model not only financially but also socially and politically, reached by thoughtfully involving the key players and stakeholders.
The political cultures in the fellow member states of the United Nations might be different from Austria’s, and these cultural specifics should not be ignored. A “copy & paste”-approach, imposing the Austrian Budget Reform on other political and cultural systems as is would probably be doomed to fail. However, the key elements of the Austrian Budget Reform can be transferred: Performance budgeting can lead to more efficient governance and more effective outcomes in any country.
As far as gender equality is concerned, the Austrian Budget Reform is a good example of how to embed Gender Budgeting and Gender Mainstreaming in the constitution as well as budget laws to make sure that each and every ministry has to contribute to gender equality and blind spots on this issue are minimized. Regular reports are sent to the performance management office at the Chancellery. There, the reports are collected, commented on and sent to the Austrian National Council for consideration. This process makes sure that the progress is monitored and discussed.
Especially the new approach to RIA as a standardised process and the gender impact dimension are fitting examples of integrating gender equality into legislation that could be transferred to other countries.
Furthermore, any ground-breaking reform in any political and social culture will have to gain widespread support among its stakeholders. The Austrian Budget Reform may serve as a best practice template of how to anchor gender-sensitive budgeting and of how to involve and convince the stakeholders and how to reach this national consensus necessary for a successful reform that does not lose its momentum while being carried out.
Regarding the dissemination of the initiative throughout the public service at the Austrian national level, it has already been mentioned that the Budget Reform has been fully adopted by the federal level of the Austrian government, but not yet by all federal regions (Länder) or the municipalities. In the constitution, Länder and the municipalities have an obligation to consider gender-sensitive budgeting, but there is no unified practice or regulation. Hence, some local and regional authorities introduce the new system according to the federal framework, while others go their own way and implement gender mainstreaming using a range of different methods catering their specific needs.
On the international level, the Reform has attracted a lot of attention: Several IGOs, INGOs and countries from virtually all over the world have taken a keen interest in the content and the implementation strategies of the Austrian Budget Reform regarding its gender budgeting model, on the one hand by sending delegations to the MoF or the Chancellery, on the other hand via requests and invitations to present the Reform in their respective homelands, quoting the Austrian model as a best-practice example of how gender budgeting should be realized.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
In December 2007 and December 2009, Austria’s Federal Parliament decided on a far-reaching, comprehensive budget reform package. The introduction of a medium-term expenditure framework with legally binding expenditure ceilings and of performance budgeting with a special emphasis on gender equality marks a decisive change, not only in steering the budget, but even more so in the Austrian administrative and political culture. The 1st stage of the Austrian Budget Reform, which was put in place on January 1st 2009 has visibly strengthened the budget discipline of the federal government right from the start of its implementation.
One lesson to be learned is the need for a thoughtful change management that incorporates the stakeholders of the reform towards gender budgeting, overcoming their second thoughts and resistance and benefiting from their feedback. A broad consensus constitutes the very basis for an irreversible gender budgeting reform process and thus the key to successfully improving gender equity in society.
Moreover, as striving for gender equality and outcome orientation has become the centre of attention within the Austrian Federal Administration, each ministry has to a) find possibilities within its reach to promote gender equality, b) define outcomes and outputs and c) report every year on the progress made. The pressure to set objectives was needed to obtain obligatory gender goals and activities, avoid confining the case for gender equality to gender mainstreaming officials, and make sure this mind-set is being shared across all civil servants.
Furthermore, it ought to be kept in mind that compelling key metrics and data are very important aspects of performance management, although they are not always readily available. That is especially the case concerning data on gender equality. Hence, it is crucial to sensitize the ministries to develop a meaningful set of figures.

Contact Information

Institution Name:   Austrian Federal Ministry of Finance & Austrian Federal Chancellery
Institution Type:   Government Department  
Contact Person:   Hannes S. Auer
Title:   Budget Reform Coordinator  
Telephone/ Fax:   +43 1 51433 502005
Institution's / Project's Website:   http://english.bmf.gv.at/Budget/
E-mail:   hannes.auer@bmf.gv.at  
Address:   Hintere Zollamtsstraße 2b
Postal Code:   1030
City:   Wien
State/Province:   Wien
Country:   Austria

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