Annual activity report to the 2009 Parliament

The report presents the conclusions made on the basis of the audit findings as well as summaries of the audit findings that are of material importance to Parliament. The report also assesses whether positions adopted by Parliament on the basis of reports of the Audit Committee have resulted in any measures. Furthermore, the report presents a review of the National Audit Office’s activities and their effectiveness during the 2008 budget year.

Main content

The National Audit Office’s report on its activities has followed the implementation of positions approved by Parliament on the basis of reports issued by the Parliamentary Audit Committee. On the basis of a position taken by Parliament concerning the need to avoid excessive borrowing from the viewpoint of liquidity and the state’s cash management, as an indispensable measure the 2009 Budget included a provision according to which, if the central government’s liquidity permits, a budgeted loan in an item does not have to be withdrawn to the extent that revenues accumulated in other budget items exceed the corresponding budgeted estimates. The legal framework of the state’s cash management is being evaluated in connection with an overall reform of legislation concerning the budget. A draft report on an international comparison that was conducted to prepare a new basic study concerning tax subsidies as required by Parliament was completed in May 2009. In future attention should be paid to improving information regarding tax subsidies. As a result of the financial crisis and growing public debt as well as the lack of sustainability, it will be necessary in future to consider the expansion of the tax base, and the new study concerning tax subsidies is even more timely in order to prepare for this.

Devoting attention to productivity in the central government, and more broadly to the development of productivity in the public sector, is extremely important for the functioning of the economy in the current economic situation. The central government and general government face a developing sustainability gap that amounts to roughly 5% of GDP. For economic and fiscal policy reasons and owing to the ageing of the population and the related decline in the supply of labour as well as the need to prepare for climate and environmental change, the systematic improvement of productivity and efficiency in public administration and service production must continue. In the National Productivity Programme and efforts to improve efficiency and effectiveness in the public sector in general, greater attention must be paid to efficiency as a whole, which means managing more clearly the economy and overall productivity of activities, the return on capital and other dimensions of productivity besides labour productivity. Improving energy and environmental efficiency should be made an important area of productivity and efficiency work in the public sector as well. Improving economy and productivity requires the skilful management of change. Ministries’ steering and management particularly need to be strengthened. The productivity objectives that are approved by ministries as an essential part of performance management have gaps. Productivity objectives were set for only 40 per cent of government agencies in result agreements. Evaluating the current state of performance management on the basis of the setting of result objectives concerning economy and true and fair information in final accounts concerning these objectives, essential changes did not take place in performance management compared with past years.

In 2008 auditing the quality of legislation as part of central legislation in the field of welfare services and concerning central government transfers to local government. On the basis of audits, challenges for the quality of legislation in the field of welfare services result from the fact that legislation is both broad and vague and also incoherent and fragmented. This weakens policy effectiveness, cost-effectiveness and the evaluation of cost impacts. From a financial viewpoint using legislation to address shortcomings is not always an appropriate way to resolve problems in the audited services. Clear and sufficiently detailed legislation is necessary to ensure the implementation of equality, as guaranteed in the Constitution. In legislation, including grounds, the adequacy of economic resources, local self-government and citizens’ equal opportunities to receive services should be prioritised more clearly in relation to one another in matters where policy-makers wield discretionary power. Policy effectiveness and cost-effectiveness in arranging health-care services are clearly weakened By the present multichannel financing system. Data protection provisions in special legislation also needs to be clarified. Although the preparation of the reform of central government transfers to local government, which entered into force at the beginning of 2006, was found to be well implemented as a rule, in the audit attention was drawn to the vague nature of evaluations of effectiveness and the understandability of legislation. The content of legislation is ultimately up to the legislator’s political judgment. Legally and from the viewpoint of carrying out Parliament’s will, the reform cannot be reproached. Viewed from a long-term economic perspective, however, the approved policies cannot be considered prudent in all respects. Future reforms of central government transfers to local government should, in the opinion of the National Audit Office, strive more strongly to apply principles regarding good state aid, particularly to the clearly calculatory nature of central government transfers and other central government funding on the basis of standard costs and to seeing that the financing system encourages efficient activities.