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Government launches thorough review of state budget

2. September 2019 - 13:10

The Government decided to launch a thorough review of the state budget in order to use taxpayer money as efficiently as possible. The objective of the review is to assess whether the current expenditure is justified and free up funds for dealing with the government’s priorities.

According to Finance Minister Martin Helme, a broad-based review of the state budget helps cast light on the adequacy of the state’s services and activities. “On the basis of the review, we’ll be able to make more justified decisions about which services the state should provide and about the extent to which they should be provided,” Finance Minister Helme said. “We will also be able to decide which services to stop providing if they don’t meet their purpose. This way, we can free up funds to finance new objectives of the government. The needs for funding always exceed our means: the government has to make choices.”

The objective of the state budget review to make available funds or fiscal space in the state’s budget strategy. This would allow money to be used for the government’s priorities.

“The budget is a part of the state reform,” Finance Minister Helme said. “We strive for an efficient state that provides services reasonably and directs its attention and funds to areas where they are needed the most. The purpose of the review is to achieve better results with the same amount of money, or the same results with less money. In order to retain our previous success, it must be possible for the Government to flexibly adapt to changing circumstances. We must therefore assess whether the expenditure that has become ordinary is still justified.”

The review will help the government get a detailed overview of the sources of revenue and expenditure, and to assess whether incurred expenditure helps meet the set performance objectives.

The state budget review will be carried out in cooperation with various ministries and it will be coordinated by the Ministry of Finance. The review will be overseen by a steering committee, which will be formed and managed by the Finance Minister. The steering committee will be supported by working groups with analyses and suggestions.

The state budget review will become a part of the process of drafting the state budget strategy and state budget in the coming years. In the autumn, after the approval of the draft state budget for 2020, the government will select the areas in which it will be seeking proposals for increasing efficiency in the next year.

The state will have a budget with a new structure as of the next year. The state budget for 2020 consists of sectoral programmes in addition to financial data. The government will set performance goals for programmes, and state agencies will provide services with an agreed quality, volume and price in order to meet the performance objectives. Each euro in the budget is linked to a service and thus each euro has a set purpose.

As a result of the extensive preliminary work completed prior to the adoption of performance budgeting, the government now has a better overview of the cost of services provided by the state. It will be easier for the government to make decisions on the basis of these data. The state budget review is the next step in making public finances more efficient.

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