State of Central Government Accounts 2016

Insight into public finances

All distances in the Netherlands are measured in metres and all weights in grams. The same currency is used in every province. And the clocks in every municipality show the same standard time. This was not the case 150 years ago. Standardisation was a necessary but lengthy process that took many years. As a result, we now speak the same language, can make convenient appointments and provide more and more new services. The potential is still not exhausted: new technologies will one day provide an insight into public finances at any time and in any place. This is important because the central government accounts for 2016 have been published at a time when “fact-free politics” and “alternative facts” are framing the public debate inside and outside the Netherlands and are undermining the principles of sound accountability, where truth, regularity and reliability are the key words.

The Rutte/Asscher government has submitted its final accounts. We have audited the accounts and expressed an unqualified opinion on them. The recently elected House of Representatives is already working on the formation of the next government, a government with new ambitions in a time of new opportunities. Ideally, the ambitions will build on the lessons learned in the past, on facts and realistic assumptions, and they will draw on the Court of Audit’s examination of the central government accounts. We want to provide an insight. Insight is the basis for confidence, and insight is more than just facts alone. Real insight goes beyond the facts to create understanding and meaning; it reveals and explains relationships. Our approach is neutral, independent and impartial; it is grafted on the recent past but has an eye to the future.

The House of Representatives and the government can use our audits to debate the need for new or revised ambitions. Can the tax regime be thoroughly revised in the years ahead? Will more money improve the armed forces or is something else needed? How can we meet the international climate goals? Does “appropriate education” give children a better place at school? The ministries’ annual reports do not answer these pressing questions. Such public ambitions cannot be achieved without solid foundations. There is enough evidence to suggest that the foundations are robust: from an international point of view the Dutch government is in a very strong position. Public finances are in better shape than in the recent past. Money is being spent to achieve the agreed goals and the regularity of expenditure has been very high for many years. Ministries are doing their best to put their houses in order and are receptive to new technology.

But there is still a lot of work to be done. We are concerned about the sustainability of staffing levels in central government, and have questions about the limited budgets available to update ICT systems and about the lack of attention being paid to information security. The Tax and Customs Administration, for example, wants to be an effective, modern organisation but it still has a long way to go. The Ministry of Security and Justice is on the right path but it is still underestimating the very real challenge of being fully in control. The Ministry of Defence has been struggling for many years with problems that money alone cannot solve and there are still shortcomings in central government’s procurement procedures.

But the most shocking feature of 2017 is the lack of information on policy effectiveness at virtually all ministries and in virtually all policy fields. What are the true social impacts for people and businesses? Is the public getting value for money? The difficulties we have in answering these questions open the door to both unfounded criticism and unsubstantiated defences of the decisions taken, in sum they lead to fact-free politics.

The need and utility of better information on the use of public money and its impact have been a recurrent theme in our reports for many years. A government that cannot adequately demonstrate the social benefits of public expenditure cannot adequately render account to the public. Four years ago we wrote in response to the central government accounts for 2012 that a good understanding of reality was a precondition for good public administration. The right to information is the cornerstone of parliamentary democracy. Good information is vital, and technological advances can help generate it, provided we are properly organised: we must be responsive, smart and lean.

Fortunately the Ministry of Finance and the Ministry of the Interior and Kingdom Relations are embracing the concept that the government must standardise, adopt uniform definitions, speak just one language and let other tiers of government talk in the same language. Youth policy can be successful if every municipality defines “the homeless” differently, but if the results of the 388 municipalities in the Netherlands cannot be compared their successes cannot be demonstrated. The same is true of education policy, where the relationship between funding and the quality of teachers cannot be demonstrated.

The development of a single language and the smart use of new digital technology must make the impact of government measures more transparent to everyone. The various parts of government cannot create a true digital unitary state unless they work together and are transparent. The clocks literally and figuratively have to be set to the same time. Information must be organised, shared and exchanged in order to accumulate common knowledge and insights.

A digital unitary state is created by revealing relationships in the performance of comparable organisations, schools, hospitals or municipalities. By making results comparable, all public organisations can talk about their social goals in the same way. Managers will then be better able to explain what they intended to do and what they actually did. In a digital unitary state the public will be confident that their taxes are being spent on the right things. People want value for money. Organisations therefore have to learn from each other in order to improve their performance.

We have to be open with each other. New rules and structures must not be introduced for their own sake. As noted above, we have to be responsive, smart and lean. The digital unitary state will not impede local, regional or national democracy, nor will it reduce the autonomy of hospital managers or school administrators. Neither did the gram, the metre or standard time.

The digital unitary state is possible. The House of Representatives and the government are currently setting new ambitions for the Netherlands. One of them could be to lay the foundations of the digital unitary state, beginning with the development of a common language. Information must then be opened up and modern technology must make it accessible. These are the preconditions for a better insight into the results achieved with taxpayers’ money. At any time, in any place and for everyone.