38 – 2 – SUPREME AUDIT INSTITUTIONS’ INPUT INTO POLICY FORMULATION The formulation of a government-wide programme, of policies and of individual programmes aims to achieve success in the public sector. At the central government level, formulation refers to the process through which governments formulate a long-term vision and assign the resources, risk-based rules and clear responsibilities to undertake the work. The responsibility of policy formulation primarily lies with the institution within the centre of government (CoG) in the executive branch. The following functions are considered key to the policy formulation stage of the policy cycle.
Whole-of-government strategic steering and planning by the CoG should guide government in a common direction towards clear and carefully selected goals. Formulation involves making well-informed, evidence-based decisions and selecting the tools and mechanisms to achieve this vision in an effective, efficient and economical way. Decisions should be rooted in reliable evidence of past performance, or through thorough analysis of proposed benefits, using both sound quantitative and targeted qualitative information in a balanced and unbiased way.
Strategic and budgetary planning processes should be linked in a way that allows for coherence between government priorities and the country’s fiscal framework. The budget should provide government with the fiscal framework that establishes the limits within which trade-offs and difficult, often competing, decisions need to be made. Similarly, strategic human resource management (HRM) should work to align capacities and competencies needed to support priorities, within the projected fiscal limitations.
Setting out regulations and internal controls should use a risk-based approach to avoid excessive burden, while managing risk to achieving the government programme. This requires explicit whole-of-government regulatory and internal control policies, rather than a series of disjointed regulatory policies or internal controls.
OECD countries’ experiences have identified difficulties in integrating feedback from other stages of the policy cycle (namely, evaluation), into the formulation phase to make trade-offs on budget allocations and instruments that will facilitate the achievement of government objectives. This poses a challenge for linking strategy and budget. Current and pressing issues may reduce the ability of government to plan for longer-term issues.
Key Function 1: Strategic whole-of-government steering and planning Setting a whole-of-government vision gives strategic planning a purpose. This subsection focuses on the process through which government sets a long-term strategy and establishes the necessary plans for its operationalisation. Key elements of strategic steering are outlined in Table 2.1.
SUPREME AUDIT INSTITUTIONS AND GOOD GOVERNANCE: OVERSIGHT, INSIGHT AND FORESIGHT © OECD 2016
