Remarks of the Auditor-General of Finland, Dr. Tuomas Pöysti at the publication of the OECD Public Governance Review of Finland1, 31 May 2010:
OECD PUBLIC GOVERNANCE REVIEW OF FINLAND GIVES A GOOD BASIS FOR
THE PUBLIC MANAGEMENT AGENDA OF THE NEXT ELECTORAL PERIOD
OECD Public Governance Review of Finland gives a fair view of the challenges of Finnish
public management and governance system. Review's recommendations also correspond to
the insight of the National Audit Office of Finland as the Government's supreme external
auditor. Reform of the public governance and steering system and the establishment and implementation of Finland 2030 Strategy for Welfare and Success are the key tasks of the next
electoral period. In addition to the explicit recommendations of the OECD review Finland
needs to adopt a systematic approach to the public sector knowledge and information management.
This is needed to implement OECD recommendations and to enable a jump to new
level of productivity in public services. Strategic management and budgeting shall be aligned
but we need to secure strict fiscal discipline.
OECD has once again produced a very useful and topical governance review about Finland. This
Public Governance Review should be read together with two other recent OECD reports, the
OECD Economic Surveys, Finland, 4/2010) and the review of Better Regulation in Finland
(OECD: Better Regulation in Europe, Finland. OECD 2010). These 3 reviews give excellent bases
for the preparation of the next Government Programme, and for the economic policy and public
management policy preparation in the next electoral period. Hopefully the reviews will be well
read. In Finland we shall ensure that knowledge of these reviews is widely spread in public discussion
and among political actors. These reviews should not remain only as an intellectual property of
the expert community.
The National Audit Office of Finland, which a constitutional authority in connection with the Parliament, has as the supreme external auditor of the Government in our performance, governance
system and financial audits covered widely the topics discussed in the OECD Public Governance
Review. Our financial audit also has an important component in the assurance of steering and fairness
of performance information. Our audit observations enable us to validate the findings of the OECD review. Observations and recommendations in the OECD Review do correspond with findings
and views of the National Audit Office of Finland. In some concrete details the OECD Review
does not necessarily take into account all developments in Finland, particularly in the area of budgeting. Some recommendations seem to be a bit too prudent and weak. This concerns recommendations
on the Government's policy programmes, which according to my view are now at the end of
their life cycle. OECD Review contains, in addition, certain internal tensions. Review believes in
the improvement of the agility by strengthening the leadership by the centre of the Government but
concurrently in the case study of e-Government in Finland raises doubts about whether the highly
centralised and control based steering model in information society and e-Government affairs is
best to deliver in an administrative culture characterised by de-centralisation, delegation and autonomy. Strategic insight and agility should be improved partly by better information and by using
evidence based policies. Lack of information and knowledge are seldom hindering agility. Overflow
of information and narrow expert knowledge and cultures may suffocate agility. Finland's
administration generally does not lack information or potential information – Finland lacks channelling
information and knowledge in a systemic way to the decision-making and policy drafting.
Issue for discussion is how to respond in the best possible way to the challenges recognised in the
OECD Review Report.
There is a fair general acknowledgement of the devil problems of growth, competitiveness and ensuring
the sustainability of public finances. What we lack in Finland is a sufficiently concrete practical
solutions and strategy for their implementation. Public governance systems shall be reformed
to correspond to the challenges and realities of today and tomorrow. Task of the public administration
is by coherent action create conditions and surroundings for future welfare and, simultaneously,
create a sense of security among risk-taking work and entrepreneurship and in the openness
for globalisation; sense of security will be created by provision of high quality and efficient public
services. Courageous Public Governance Reform is a key task for the next electoral period and
Government Programme (Coalition Agreement).
Efficiency trough agility and flexibility
Concurring with the OECD Review the main challenges of Finnish public governance system are
(1) establishment of genuine strategic insight and strategy, (2) common will to implement the strategy,
(3) agile and flexible use of the resources to implement strategy and gain effectiveness and
efficiencies, (4) relations between central and local government, (5) move to a systematic public
sector knowledge management and group information & ICT management and the (6) strong and
changing values of public administration and government.
In the public governance reform and in the adoption of the new strategic insight we shall have
courage to abolish certain systems and practises not any longer serving their purpose. The OECD
review raises the issue of layering of practises and traditions but the Review does not itself include
direct proposals on practises to be discontinued.
Finland needs a new strategic insight and vision and Finland needs a Finland 2030 Strategy for
Success and Welfare covering both central and local government. To give foundations for that Finland needs a Reform of the Nordic Social Contract covering at least 2 - 3 electoral periods.
Bringing public finances back to sustainable path namely will require this time2. One may, however,
question, the possibility of such common strategy in the context of fragmented society and
administration. Finnish public administration has too many papers called strategies. Often these
papers are good analyses but no strategies. We lack a path a strategy form common strategic insight
to sufficiently common vision and from that to common and coherent action. Currently the only
real strategic documents in the central government are the Governmental Programme and the Government decision on Spending Limits. The Government's Strategy Document is not a genuine strategy.
The style of presenting the Government's Programme results from political rationality and political
economy. Governmental programmes have created foundations for governability and stability in
multi-party governments. It is not realistic to attain major changes to the way in which Government
Programmes are written. One may, however, wish that in certain issues the Programme would leave
more room for choosing of the most optimal methods and tools and would only establish political
targets. Next Government Programme will, however, be drafted in a different economic conditions
than the 3 previous Programmes. There is no new proceeds for distribution in the programme negotiations. Point of departure shall be in the re-allocation promoting growth and efficiency and effectiveness of societal policies and public services. To create agility information about to which extent resources are already deployed by previous decisions and which are the real possibilities for reallocation would be necessary. This information should be included to the last spending limits of
the out-going Government (these spending limits are often called civil service spending limits because
the Government lacks political mandate over the next electoral period) and provision of such
information is a task of the Ministry of Finance, Prime Minister Office policy analyses unit and of
the Government's Financial Controller, the Government Controller-General's service in cooperation
with the sectoral Ministries. It is also desirable that this technical analyses would be welcomed
in the Government Programme negotiations and that those civil servants giving such analyses
would refrain from advancing a certain lines of fiscal policy.
The new Government in its Programme should agree:
(1) on the adoption in Finland of the practise of budget reviews at the mid-term of Government
and, following the Australian example, continuous thematic budget reviews aiming at reallocations
(2) on the practise of reviewing of the Government's policy priorities during the electoral period
(3) that Ministers are representatives of the whole-of-government business and Coalition and
not the agents of their administrative sectors
It could be useful that while the Government agrees on its rules of the game the Ministers would
give a public ethical commitment to remain Members of the Cabinet and representatives of its
whole-of-government agenda and commitment to accept for re-allocations and review of priorities.
This can be done within the frame of the Government Programme.
The current Government Strategy Document and the current system of policy-programmes could be
abolished. Let the Government Programme and the Government Decision on Spending Limits and
the Basic Services Programme, which should even more than today be an agreement between central
and local government, be the strategic decisions. Policy programmes could be replaced by
Government's Political Policy Priorities of which key inner-circle members of the Cabinet would be
responsible and which would be of horizontal nature.
The long term economic scenarios and perspectives and the sustainability analyses of the public
finances, which all are prepared in the updates of Finland's Stability Programme, should also be
presented as common background scenarios in all policy-planning documents.
Strategy shall be coherently implemented – implementation and coherence are the weak point
of Finnish public sector strategies
The most significant need of governance reform in Finland concerns the creation of genuinely
common and coherent will of implementation. OECD Review and the audit and evaluation findings
of the National Audit Office of Finland enable to propose new procedures which would function in
the Finnish public administration. A good point in the OECD Review is to see Ministry of Finance
and Prime Minister's Office together to form the Centre of the Government. Observation is a right
one even though it will be irritating to several Ministries. The National Audit Office and I as Auditor-
General are ready to present, have been asked to present and we will present during next Autumn
several concrete and practical recommendations. The following changes will, at least be
needed:
-The Government Strategy Document shall be replaced by a concrete action plan of the implementation of Finland 2030 Strategy for Success and Welfare and a concrete action plan of the
Government Programme and Spending Limits.
-Ministries Economic and Operational Plans, which are still required by the revised legislation
concerning central government budgeting, and the Performance Management documents shall
be plans of implementation of the common strategy
-Prime Minister's Office and Ministry of Finance shall follow up the performance of the ministries
and the rate of success in the implementation of the Government's strategy. Here the policy
analyses unit of the Prime Minister's Office together with the Government Controller-General
and her Financial Controller's Function – the OECD Review does not necessarily sufficiently
see the potential this horizontal service entails – and the budget and public governance departments
of the Ministry of Finance are key analytical forces and should work tightly together. The
follow-up reporting shall be solely done by means of information systems based on a system
like Findikaattori and Netra. The Parliament and general public will also be taken to discussion
by utilising the renewed Government's reporting procedures in which the Government's general
Report on its activities and the Report on Final Central Government Accounts will be merged to
one single report to be handled in the Parliament by the Parliament's Audit Committee.
-The Government's Economic Policy Committee can be increasingly used as the whole-ofgovernment
group-wide steering committee. At the level of civil service leaders the current
Ministry of Finance whole-of-government steering group for consolidated corporate services
could be expanded to an authentic whole-of-government advisory board of executive management. Then also representatives of the Prime Minister's Office and on the thematic basis representatives
of other ministries should participate to the steering group proceedings.
-Local government and regional councils shall participate via regional development programmes
departing from regional interests and perspectives and trough the Basic Services Programme,
whose role and status should be further strengthened, to the definition of the common strategic
vision and action plan of the implementation of the strategy. Performance indicators and some
elements of the performance-informed steering and performance contracting shall be taken into
use in the central – local government relationships.
-Government needs to strengthen its common capacity of execution and implementation with
bold reforms akin of the recent reform of the Universities. Posts of the civil servants in the Ministries
shall be reformed to be common civil servants of the Government. The most significant
governmental product, drafting of laws and regulation, shall be led as a common Government
product and methods of the group-wide steering and leadership shall be applied. Government
should establish a single service for the quality assessment of the regulatory and policy impact
assessments and this service should have also the powers to report to Cabinet or to key ministerial
committee about the proposals which lack substantial co-ordination or in which the impact
assessment is not carried out in accordance with agreed level of quality.
Budgeting and strategy need to be aligned
OECD Review's observation of the disconnection between Government's strategy and budgeting
and the Ministry of Finance Budget Department's increased isolated focus on its own perspective
and agenda are fair. Distance between budgeting and the weak attempts of strategic management
have so far also been beneficial; this disconnection has to certain extent saved the fiscal discipline.
In the alignment of the strategy with the budget we shall absolutely ensure that the strict fiscal discipline will be maintained.
Government's Spending Limits are not formally an obstacle to reallocations. The practical way of
budgeting in which the spending limits are de facto calculated at the level of single budget items
and in which there exists a fair amount of distrust between Ministry of Finance and the spending
Ministries is the obstacle. Primary obstacle is the political culture in which each Minister is the
attorney of his domain of administration. In the preparation of the Spending Limits the co-operation
between Prime Minister's Office and Ministry of Finance should be increased. A budget review
procedure in which the Ministers have in advance committed themselves to re-allocation shall be
taken into use. In budget reviews also 0 base budgeting could also be applied. The governance departments of the Ministry of Finance shall work tightly together with the Budget, National Economics and Financial Market Departments and with the Government Financial Controller in the
Budget Reviews – as a common project organisation - and this model shall also applied in the
budget preparations.
The critical remarks concerning the Government's Productivity Programme are appropriate. The
results of the Productivity Programme is mixed as it is shown in the performance audit carried out
by the National Audit Office of Finland (see Preparation and Leadership of the Productivity Programme,
National Audit Office of Finland Performance Audit Reports, 207/2010). The National
Audit Office has recommended in the fiscal policy parts of the Special Report to Parliament in May
2010 Government to focus the productivity enhancement programmes to the local government sector.
Assignment of tasks between central and local government should be re-considered
All 3 OECD Reviews provide insights to the problems and challenges in relationships between layers
of government. Challenges are not limited to the relationship and negotiation procedures between
the central and local governments but extend also to the relationships between labour market
organisations and public administration in the social contract of a Nordic welfare society.
Key challenge of the PARAS municipal reform programme is well captured: political agreement
concerns only the need for improvement of economy and efficiency whereas there is fundamental
political disagreement on the methods. Partly for this reason and partly due to the commitments
made in the realisation of the PARAS reforms the efficiency and productivity target will hardly be
attained in the next 5 years. Drafting of the substantive legislation concerning local government and
objectives of the PARAS reform have also distanced from each other. It seems reasonable to accept
as point of departure in the continued local government reforms that no single model of local government and regional government and the assignment of the tasks between the layers of the government provides optimal solutions to the whole country. Complicated service and administrative
structures however weaken transparency and accountability. Therefore the Danish local government
reform would a model to consider in the future. However, we need to keep in mind a simple
principle: it should be possible in various parts of the country to happy living and sense of security
and to develop oneself and one's own future.
A ICT-based follow-up and benchmarking system enabling benchmarks and learning is highly
needed in Finland. Such a system could be based on the combination of ideas behind the Findikaattori
–service and the Norway's KOSTRA system and complemented by access to evaluation reports
and development projects with wide search features. After the ALKU reform of the regional state
administration we can address the genuine issue of the division of tasks and allocation of resources
between state administration and regional councils. Raising the issue of the division of tasks and
financing responsibilities between central and local government should not be limited beyond discussion: efficiency of scale would be attained by giving the special health care to central government or to one or two organisations whose domain of activity covers the whole country.
Towards an era of systematic public sector knowledge and information management
The response to the challenges well identified in the OECD Reviews and the realisation of the jump
in efficiency and effectiveness enabled by the ICT requires that methods of knowledge management
are systematically and coherently applied in the whole of public sector. Development of the
knowledge management and information management are at the centre of the public management
and productivity improvement agenda. Political will is strong in this area but our weaknesses remain still in the managerial implementation. The OECD Public Governance Review recommendations
on revision of the charges concerning information services to other government agencies and
on the significance of the operative reforms and architectures in the ICT based reforms should be
seriously taken aboard.
In today's challenges we need the Finnish values and Citizen participation
OECD Public Governance Review report highlights the significance of values in the public governance
and leadership and in particular, in the attainment of positive changes. Finland now needs the
application of the traditional Finnish values – the virtue of work, trust and confidence to the future – and further adaptation of new public sector values. We need in the public sector:
-passion for work and problem solution to the innovation of new solutions
-courage to change
-objectivity and transparency
-fidelity to laws and principles of good governance
-seeing efficiency as a value and ethical principle
-consistency in the implementation of government strategy
It is important to get the citizens broadly along as actors in the reform work. The OECD Review
shakes Finland in our self-congratulating proud on transparency. The genuine endorsement of citizens
and citizen perspectives is our weak point and in the administration in the middle of resources
scarcities such an approach is simply considered burdensome compared with the results it gives.
However, even the crude efficiency agenda calls upon more citizen involvement. This requires cultural
and paradigm shift both in the government services and among the citizens. In Finland the
citizens are happy to outsource difficult thinking to the administration and then to complain about
the solutions they came along.
1These remarks are based in addition to my own analyses to the observations prepared by Mr Vesa Jatkola, Assistant Auditor-General, Performance Audit concerning the OECD Review in the light of the audit findings of the National Audit Office and to observations given by Ms Katri Lammi, Senior Auditor at the National Audit Office of Finland Executive Management Support on strategies, strategic insight and agility and on the relationships between knowledge, information and strategies and on the citizen participation
2 The urgency and long-perspective of plan to re-establish sustainability of public finances is taken up in the National Audit Office of Finland Special Parliamentary Report in May 2010 on the audit of the Central Government Final Accounts Report, in section concerning the findings of the external effectiveness audit of Government's fiscal policy, see VTV Special Report to Parliament, Parliamentary Reports K 13/2010 vp.
Additional information: The Auditor-General of Finland, Dr. Tuomas Pöysti, phone + 358 9 432 5700, e-mail