Global Financial Crisis leads to government finance renaissance
Deloitte European Public Sector Finance Report
Ljubljana, 26. June, 2014 - Deloitte’s Public Sector Finance report reveals that public financial management across Europe has entered a new era. While the 2008 crisis caused a range of damaging effects for businesses, families and governments across Europe, it also triggered a period of intense improvement in the way governments manage taxpayers’ money.
This spring, Deloitte firms in 19 European countries interviewed 33 senior government finance professionals, about the impact of the global financial crisis on their team, their financial management reform programmes and their aspirations for the future. The outcomes of those conversations have been distilled into a report that aims to bring a new dimension to the reform discussions underway within governments and supranational organisations.
Mitja Kumar, Director: “The global financial crisis in 2008 hit Europe hard, but it also triggered a period of intense reflection, development and innovation in public financial management. This report highlights the similarities and differences between finance functions across Europe and explores how the commitment, hard work and talent of government finance professionals helped contribute to a government finance renaissance.”
Key findings from the report are:
The global financial crisis triggered a renaissance in public financial management – Many of the finance leaders interviewed for the report confirm that their teams are now doing more with less, and almost all revealed that there have been significant improvements in their function since the advent of austerity measures.
Governments did not change their revenue mix – Tax types were not radically altered over the course of the crisis. The majority of those interviewed told us that their governments had focused – and continue to focus- on improving tax administration and compliance.
Exploiting their own information is a challenge for governments – Those interviewed see opportunities for improvement in the way governments collect, manage and use information. Differing IT systems and data collection between departments are hampering efforts to create comparable, cross-government information. Our conversations also suggest that more could be done to improve access to technology or make sure that existing technology is used effectively.
Employment restrictions are limiting the available talent pool – Many of the finance leaders interviewed for the report told us that public sector employment restrictions acted as a barrier to new talent. They said that the sector’s lower salaries, inflexible pay rises and the lack of performance-related pay made it difficult to attract and retain talented professionals.
Passive communication about public spending does not engage the public – As the crisis put government spending under greater scrutiny, many governments began to publish greater amounts of financial data. Our interviews nevertheless suggest that governments need to be more proactive in their communications and publish material in more engaging ways if they are to reach the public.