Indicators and measurement of government policies
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1 1.2.3 Public Value & Policy Analysis and Evaluation Day 12 Indicators and measurement of government policies Measuring productivity and beyond
2 Agenda National Accounts (foundation) Productivity of the public sector what information needs to be collected how to collect information how to calculate public productivity relationship between indicators Cooperation between Statistics of Finland and other sectors of public administration Discussion and Q&A Summary of main learning points
3 System of National Accounts... describes all the economic activities in the economy is based on the theory of economics includes a lot of definitions and agreements gives a possibility to comparisons between years, countries and institutional sectors... forms THE basic set of economic indicators does not describe the well-being 3
4 National accounting system as policy Nationally (input in preparing state budget): traces economical impacts of policymakers provides information about production, productivity, income, deficit, assets, social transfers and so on Internationally: EU own resources (EU Budget), EU stability and growth pact, EDP debt monitoring EU structural funds indicator membership fees UN, OECD etc 4
5 The basic idea: supply and demand are equal GDP + M = C + G + I + X <=> GDP = C + G + I + (X - M) Definitional equations: Economic circuit transaction identity (for transactions between units): total use = total resources budget identity (for sectors and units): total use = total resources Income = Expenditure = Production (=Economical welfare) production = inputs + productivity 5
6 Production boundary Definition of production: An activity carried out under the control and responsibility of an institutional unit that uses inputs of labour, capital and goods and services to produce outputs of goods and services. Production does not cover purely natural processes without any human involvement or direction, (ESA ) Includes all individual or collective goods and services that are supplied to the market as well as the own-account production of all goods for own final consumption or gross fixed capital formation 6
7 Output = value of produced goods and services during the accounting period Three types of output: a. market output b. output produced for own final use c. other non-market output Three types of producers: a. market producers b. producers for own final use Output c. other non-market producers 7
8 Productivity Bases on Growth Theory Output value CURRENT OUTPUT = CURRENT PRICE * VOLUME CY= CP * V Output volume FIXED OUTPUT= VOLUME FY= V and National Accounts idea Output, input and productivity OUTPUT= f(productivity, inputs) Y= productivity, inputs 8
9 Productivity OUTPUTVOLUME = PRODUCTIVITY INPUTVOLUME Annual change, compare two consecutive years, is used because tells about annual development same information with goal (improving productivity related to timeline) 9
10 Uses and restrictions of productivity information, non-market production measures changes in production performance / efficiency can be divided by labour and total (factor) productivity changes solid statistical system provides annual performance information for management annual changes can be compared between other units ranking different units needs more detailed study DEA -analysis, case study tells nothing about the reasons behind productivity changes 10
11 Quality identification, non-market Aim to detect quality by product grouping Weighting on information of prod. costs => need of accurate account and service volume data Aim to transform internal quality to structural quality new products as new groups production means changes in classification in time to time tries to avoid the problems of outcome indicators Quality changes approached typically through classification by type, length, service group, type of decision, capacity...
12 Quality, Output and Outcome in nonmarket production There are no unified outcome based quality corrections on output volume measures effects of other factors not tracked is not evaluated in similar market production either complicates the compilation of national accounts Output changes of different services are summed up usually by cost weights not by desired utility derived outcome weights In output volume there should not be any features of changes in public performance outcome is not a concept in national accounts used coefficient of outcome corrections is a normative element and not observed state of balance sheets produced public output is always consumed and don t tell about the significance of production as economy level
13 Relationship of indicators Basic set of measures Measures should be different between: Input Process Output Outcome 13
14 The quality of the output indicators Only the final production should be measured the production of goods/services to external users output is not e.g. customer satisfaction or other effects/impacts All final production should be included The output can be divided into homogeneous product/service groups different types of products/services are measured with different indicators The output indicators can and should be modified or changed if the activities change the quality of output changes 14
15 Description of productivity statistics The statistics describe: Volume changes in output labour input total input and changes in labour productivity total productivity of state accounting offices and institutions. The statistics does not describe the level of productivity 15
16 What we need for productivity Accrual accounting - unit cost book keeping of working time unit cost Definitions of different services quality Monitoring of services quality All this comes possible by: Activity based (financial) management and/or measurement General statistic over unit costs
17 Central government productivity The statistics is published once a year. The data are published on the total level and on the level of administrative sectors. Data by administrative sector are published on those administrative sectors on which a sufficient amount of information is available. 17
18 Central government productivity The statistics contain data from 1995 onwards. The coverage of the statistics has risen yearly, for which reason the statistics do not comprise of the same units in the time series. The change data for 2005 were produced with a new weighting method, so data prior to 2005 are not fully comparable with newer data. 18
19 Central government productivity, Data collection The data on outputs and inputs are collected by Statistics Finland from government agencies and institutions with an electronic form completed on the Internet. The inquiry units belong to category S.1311 Central government*. -> The statistics do not include unincorporated state enterprises, state-owned companies, funds and statesubsidized associations. 19
20 Central government productivity, Dataflows State Treasury Central government Book keeping Performance measures Book keeping Labour input Labour input Annual Reports Labour input Book keeping Output information Productivity measures Ministry of Finance Labour input Unit costs Statistics Finland Productivity Statistics Public
21 Central government productivity, Methods Several sources are used to check and complete the data Netra - the Finnish State Internet Reporting (State Tresury) financial statements, annual and personnell accounts, annual reports, etc. Central Government Finances 21
22 Central government productivity, Methods The government agencies and institutions classify their own output categories (in co-operation with Statistics Finland). Over 3000 output indicators Used expense and administrative sector categories are the account scheme and classifications of the State Treasury. (Developed in co-operation with Statistics Finland especially with national accounts.) 22
23 Central government productivity, Methods Price index of public expenditure is used as a deflator for the inputs The index for output, labour input and total input are calculated for each unit, administrative sector and central government (weighting by cost share) 23
24 Central government productivity, Methods The data for each year are compiled on the data on those units from which usable and comparable data are available on successive years. The data for each unit is made comparable for the two consecutive years 24
25 Central government productivity, Improving the statistics Development / improvement projects: the Ministries initiate and support the agencies/institutions create the indicators and other data needed Statistics Finland expert consultant The work never ends: new units, new products/services, termination of units and/or products/services, quality changes, etc. 25
26 Central government productivity, Improving the statistics Coverage (more units, more activities) There are still institutions/agencies that are not included in the statistics Not all activities (final production) are measured Improving the quality the chosen indicators should be revised The improvement of data and e.g. reporting systems in the institutions/agencies enable the development of better indicators Detecting the quality changes is not always easy In the future: the data is found in the Finnish State Internet Reporting System (Netra)? 26
27 Central government productivity, results The productivity of central government agencies and institutions deteriorated from the previous year in Total productivity fell clearly (2.0 per cent). The fall in labour productivity was minor (0.2 per cent). 27
28 Central government productivity, results 2009 Development in the output, production inputs and productivity of central government agencies and institutions Change (%) from previous year 2) Year Output Labour input Total input Labour productivity Total productivity ,9-0,1 4,4 3,0-0, ,9-1,7 4,1 6,8 0, ,2 4,2 2,3 0,0 1, ,1 0,8.. 3, ,6 0,9-1,4-1,5 0, ,9 0,2-0,2-1,1-0, ,5 1,2-1,3 0,3 2, ,8 1,0 2,3-0,2-1, ,5 0,3 2,7 0,2-2, ,1 1,2 1,2-0,1 0, ) 1,0-0,2 0,0 1,1 1, ,1-0,5-1,0 0,4 0, ,3-0,6 1,6 0,3-1, ,1-1,8-1,2 1,9 1, ,3-0,1 1,7-0,2-2,0 1) Data are not fully comparable with those on earlier years 2)..Data not available due to revision in state book-keeping 28
29 Central government productivity, results 2009 Change (%) from previous year in output, inputs and productivity by administrative sector 2009 Administrative sector Output Labour input Total input Labour productivity Total productivity Ministry of Justice 1,3-1,1-0,6 2,4 1,9 Ministry of the Interior 0,8 0,7-1,6 0,1 2,4 Ministry of Defence -0,3-3,0-1,4 2,9 1,2 Ministry of Finance -3,2-0,8-0,2-2,4-3,0 Ministry of Education -1,4 2,3 4,8-3,5-5,9 Ministry of Agriculture and Forestry -0,2-1,0-0,5 0,7 0,3 Ministry of Transport and Communications 0,8 0,2 6,5 0,6-5,4 Ministry of Employment and the Economy 1,0-1,8 2,8 2,9-1,7 Ministry of Social Affairs and Health Ministry of the Environment Other administrative sectors State addministration total -0,3-0,1 1,7-0,2-2,0 29
30 Role of Statistics Finland, central government Pressure for productivity information Public Central Government Ministry Agency Statistics Finland 30
31 Local government productivity Bases on general statistics Development within national accounts frame
32 Local government productivity What is measured change in total productivity = volume change in total input / volume change in total output Three industries (e.g. 80% of wages of local government) health services social work education Other non market output volume indicators weighting through share of costs cost data sources: Statistics Finland, Board of Education
33 National accounts source data on Inquiry on local government finances and activities Covers all municipalities and joint municipalities. Published in November t+1. Consists of: local government expenditure and operating income by activities (national classification) acquisitions and sales of fixed assets by type of assets lots of additional detailed information on finances and activities --> Primary data source for final ESA95 accounts of local government.
34 Dataflows between actors, Local government National Institute for Health and Welfare Partial output information Unit cost information Processed partial output information Unit cost information Statistics Finland Local government Municipalities, Offices Book keeping Labour input Partial output information Partial output information Unit cost information Processed partial output information Unit cost information Productivity Statistics National board of education Output information Public
35 Social work, volume indicators and 21 performance indicators in total National Institute of Health and Welfare (THL) RUG (Resource Utilised Groups) -adjustment for institutional care of the disabled data on intense sheltered housing of elderly Statistics Finland: The statistics on activities of municipalities and joint municipal authorities social services all other data sources
36 Social work activities Indicator Social work activities with accommodation Institutional care of children and young people Institutional care of the elderly Institutional care of the disabled -occupant days -occupant days, RUG-adjusted -occupant days Social work activities without accommodation Children's daycare Children's daycare in families Pre-school education -care days -care days -number of pupils Sheltered employment and welfare services for the mentally handicapped -number of customers Home help services Other services for the elderly and the disabled -number of visits -number of customers -care days
37 Health care, volume indicators and sources Ca performance indicators in total every DRG-group is counted as an indicator National Institute of Health and Welfare (THL) DRG (Diagnosis Related Groups) -treatment episodes RUG (Resource Utilised Groups) -adjustment on inpatient services in primary helth care outpatient services of primary health care Statistics Finland: The statistics on activities of municipalities and joint municipal authorities social services inpatient services of primary health care
38 Human health care activities Indicator Hospital activities (special health care) -number of treatment weighted episodes, by DRG classes (DRG Full) Medical practice activities (primary health care): Inpatient -care days, RUG-adjusted outpatient -number of visits by type of visit (17 types) Dental practice activities (primary health care) -number of visits by type of visit (3 types)
39 Education, volume indicators and sources 29 performance indicators in total National Board of Education number of pupils Statistics Finland s education statistics credits, number of pupils
40 Education Indicator Primary education Pre-school education -number of pupils, (disabled measured separately) Comprehensive education (preliminary and lower secondary general) -number of pupils, by age levels (disabled measured separately) Secondary education Technical and vocational secondary education -number of students by field of education Upper general secondary education -number of students Tertiary education Polytechnic education -ECTS credits, by field of education -number of students Adult and other education -number of students
41 Current challenges A lot of changes going on in municipalities Especially co-operation projects in social and health Municipalities are obligated to found co-operation areas in arranging services. The actual ways to arrange services co-operation areas can decide themselves Multiple and complex different ways E.g. so-called host municipality arranges services to other municipalities on the area. It can produce itself or/and buy from market or/and establish a municipal enterprise Municipalities have problems when filling in the statistics The quality of the data?
42 Health care productization of primary healthcare s outpatient services now there s data only on visits THL has attemps towards productization in following years compare to: DRG in hospital services non-somatic health care (psychiatry) Education THL is developing measuring hours of education (number of education hours the pupils have received) Development focuses, volume no data available indicators
43 Role of Statistics Finland, central government Pressure for productivity information Public Central Government Local Government Statistics Finland 43
44 Main points Production theory national accounts Invest resources to basic data multiple gains No super indicator different purpose/goal means different measures, use control measures Help from statistical institution is good for start-up measurement sound methodology, transparency Data collection can be done trough different channels survey, general statistics 44
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