Summary of Commission of Audit in relation to Impact on Competition Policy

INTRODUCTION

1.1 Terms of reference: to review state finance, and recommend strategies for service delivery. This is interpreted to include ways to meet growing needs for services and infrastructure. The challenge is to meet service needs of a population growing at twice the national average, and to achieve a sound fiscal position. This challenge is compounded by indications of reducing Commonwealth funding without transfer of new financial sources. Population growth creates need for services and infrstructure, but appropriate services and infrastructure can also set tone for states's development (eg inadequate infrastructure leads to low growth / high cost environment). To meet this challenge a new method for managing government is required. [[probably true]]

1.2 Guiding Philosophy and Approach: Commissions of Audit have been conducted elsewhere. Queensland differs in that the need to deal with existing pressure on state debts was not an issue, and could focus more on the future. However there was an incipient problem in the state's finances. Framework for reform is based on principles field tested over two decades, initially articulated by Efficiency Unit in UK. Idea is to draw a sharp distinction between the provision of services, and their management. This opens scope for efficient management practices, and better accountability. The resulting principles are: government should separate its role as purchaser from providor; budgeting should shift from input to output focus to promote efficiency; accural accounting should be used; government services be provided in a competitive framework - and covered by contracts or service agreements. These principles do not necessarily imply smaller government, merely that best services are provided for the resources used. This also applies to CSOs by government enterprises.

2. BROAD PRINCIPLES: THE ROLE OF GOVERNMENT IN SERVICE DELIVERY

2.1 Introduction: Governments have an important role in maintaining a healthy economic and social environment within which enterprises and their customers can operate with confidence in meeting a wide range of needs through the market. While government involvement (through service provision or regulation) is needed, the most efficient allocation of resources and the strongest foundation for growth and development is through a free and competitive market.

2.2 Options for Service Delivery

Given acceptance of free and competittive markets as producing efficient outcomes, the rationale for government involvement relies on market failures. The most elementary market failure is absence of natural market pressure to act honestly and fairly. The appropriate response is government regulation (to establish legal and ethical framework for commerce). This can be minimal (eg linked to ownership and measures of quantities). The case for further intervention rests on market failure such as: public goods (which many enjoy without depriving others of right to enjoy them); economies of scale (leading to natural monopolies; and significant spillover benefits or costs. Where spillovers occur, markets fail to provide correct pricing (requiring correction through a tax or subsidy; or in extreme cases, prohibition). Natural monopolies are seen as a case for government provision, because private provider might exploit monopoly profits - however there can be alternatives (eg further regulation, franchising) which provide services efficiently without costs and inefficiencies of capital provision. Public goods are major traditional area for public provision, but often there is no need for government ownership (eg of infrasturcture) any more than private sector needs to own its premises. Public provision may arise from public goods or from general perception that social end is only achievable by this means. There are few pure public goods.

2.3 Traditional Approaches to service delivery: Traditional approach involves direct provision of services by government itself. Under Westminster system this involved public service departments which developed public service 'ethos' but were not subject to pressure for efficient resource usage. It often creates strong incentives for department to expand for its own sake. Rising expectations and favourable economic circumstances (until oil shocks of mid 1970s) allowed significant expansion of government activity. There was little focus on whether governments could be effective and efficient, or of the impact of high taxation. There had been major expansion of government post war in all OECD countries. Increasing government size has been associated with less impressive economic pertformance since mid 1970s Queensland's outlays did not increase, but will be under pressure to do so in future. Part of the difficulty in constraining size of public sector was lack of rules about what it should do. Principles outlined above limit government to: public goods; natural monopolies; and those impinging on fundamental community values (which is wide scope). In the 1970s government spending ran well ahead of electorates willingness to pay, but this was concealed by cash accounting which allowed full costs (depreciation, acruing liabilities) to be concealed. Deficit financing also added to the problem.

2.4 Service delivery in Queensland: Constitution establishes limits of service delivery of Commonwealth and states. This involves very high level of fiscal imbalance compared with other federations. States rely heaviliy on Commonwealth for funding, which allowed the latter to pursue its own objectives through specific purpose payments. Federal sources account for 46% of Queensland revenues. This is quite dysfunctional for states, in reducing budgetary flexibility, and distorting accountability to electorates. This makes it difficult for states to manage service provision. There are significant gains from reducing overlap, and clearer delineation of roles. Though heavily reliant on Commonwealth funding, states have some discretion, and in some areas Queensland has achieved equivalent service delivery at lower than national average costs. Whilst adequate by interstate benchmarks, there is a need to respond to community expectations, and to more international competition for location of economic activity.

2.5 The Drive for Public Sector Reform: Reform, which has grown worldwide since the 1980s, was the result of constraints on efficiency and effectiveness that are inherent in traditional public sector provision. UK Efficiency Unit set up in mid 1980s was one of most prominant. It produced a report 'Improving Management in Government: the next Steps'. It proposed the following principles:

· destinction between policy and service delivery role;

· distinction between government roles as purchaser and provider of services;

· need to shift focus of budget funding from inputs to outputs;

· need to use accrual accounting;

· importance of competition.

It argued that service efficiency most likely when provided at arm's length (leading to the 'agency' model in UK, and in most Australian juresdictions by late 1980s). It is possible for government to provide (or facilitate services) without being the producer. For pure public goods, public ownership is appropriate (eg defense). Natural monoploies are another case (but some countries have used franchising - put out to tender). A less compelling case arises when there is community perception that services must be provided to meet social objectives. Often merely need government to facilitate consumers purchasing services. Contracting out is also of value. The advantages of separation depend critically on establihing appropriate structures to ensure benefits. If public provision is retained need to refocus thinking from inputs to outputs. This improves prospects for better outcome oriented measures for services. UK model argues that agencies be established with clear cut managerial mission and system of accountability. Also need to adequately measure benefits and costs. UK model does not impose privatisation, but does allow private sector to compete. The implication is that management of service delivery functions should be compelled to act commercially and that market based processes (like competitive tendering) should be used to promote quality. Public sector agencies who are producers should be subject to contestability to an appropriate extent (ie remove monopoly rights, consideration of contracting out and linking funding to outputs not inputs).

2.6 Financing Service delivery: Decisions about service provision are independent of question of financing. Thus seen as more a constraint, than as a matter for separate consideration. Conventional public financing choices seen between taxes and debt, but also include user charges and assets sales. This has major effect on where costs are met.

· Taxes are a way to pay for public goods, public service and regulatory structures and are useful when want to separate service from its apparent cost to community. Taxes also useful for spillovers. Taxes are 62% of government's own source revenue in Queensland. Reliance on taxes has not yet provded a constraint, but may soon do so - given narrow tax base and increasing demands.

· Debt is like tax except deferred. This can shift costs to future generations - sometimes with unintended consequences. Intergenerational equity should apply. Over reliance on debt is seen by markets as sign of indiscipline - thus leading to simple rules of thumb like previous governments trilogy (but the latter was more conservative than required for intergenerational equity, and not necessarily consistent with maximising nett worth, and could lead to under-investment in social infrastructure). There is no intrinsic difference between social and economic infrastructure - need just look for sufficient benefit over time to justify it. None the less need to guard government's credit rating. Government guarantees are part of liabilities and full cost should be recognised. User charges are not widely used by government, though more widely used by local governments. Partial cost recovery is usual.

· User charges are relevant where property rights can be identified, and where economic rather than social objectives are more important. They should be structured to meet the full net cost. They are an important mechanism to promote efficient use of resources.

· Under cash based accounting, asset sales sometimes merely dress up budget deficiencies. Under accrual accounting, sales are a legitimate source of finance - but needs care. Only suitable where asset is not essential, and where it is underperforming. Question is: do assets produce more in private than public hands (including discounted present value of possible stream of earnings). There is always an option to sell assets to reduce debt.

Queensland faces difficult task. Must provide high services with constrained resources. Government must adapt. Now fewer restrictions on transactions in goods and services. Governments can not act unilaterally. Thus Queensland must examine what it is doing, and how well performing.

3. BEST PRACTICE: MANAGING GOVERNMENT WELL

3.1 Introrduction: Need to design framework with practices and processes to allow the above aims to be achieved. This involves: planning process; accountability; and avoiding pitfalls in public sector reform. Principles will be: fiscal responsibility (ie maintaining nett worth); must be complemented by fiscal transparency (accrual accounting); need same rigors as business in strategic, corporate and business planning; capital assets must be charged to the departments using them; and all government liabilities should be recognised.

3.2 Fiscal Responsibility: Principles were outlined in Section 2.1. In some countries Fiscal Responsibility Legislation has been used (eg New Zealand - which requires: reducing debts; balancing revenues and income; maintaining net worth; managing risks; predictable taxes; and also in NSW). Queensland adopted `the trilogy' in the past. Queensland should now:

· maintain nett worth (for intergenerational equity). This is key principle of fiscal responsibility. It provides more scope in financing where benefits are high but financial returns are limited. Employee entitlements are a key issue. Measurement is a significant hurdle.

· preserve competitive tax structure (which is more flexible than narrow rules like precluding new taxes)

· efficient and flexible regulatory system (form of regulation is as important as public services; must not replace market failure with government induced failures; regulation can reduce productivity - thus requires constant balancing of benefits against costs. Guidlines are: to assume minimum regulation to deal with market failure; subject regulatory bodies to accountability; regulatory agencies should identify stakeholders; and periodic reviews)

· structures and processes should ensure responsibility (especially by planning, accountability, application of competition, adopting purchaser-provider model, operation of GOEs)

Fiscal responsibility legislation which prescribes balanced budget is easily avoided, in the absense of accrual accounting. Key issue is that erosion of nett worth does not arise unknowingly.

3.3 Strategic Leadership and Planning: Translating economic and social goals into a set of operating principles and disciplines is not easy. Processes like those used in private sector can be adopted. This includes:

· strategic planning - where government needs to provide clear statement of its objectives and priorities, for whole economy and for regions. Strategic plan should identify: economic / social objectives; functions / services / infrastructure needed to achieve this; role of government in providing benefits; and needed public resources. Stating objectives allows agencies to be consistent with overall objectives. The party platform of the government of the day is a starting point, but is unlikely to be detailed, requiring iterative approach. A collective approach will generate coherence, ownership (and help gaining community acceptance). SSP is being prepared in Queensland. Options must be submitted to government in a form which encourages consistency with overall strategy, and considers views of all agencies.

· corporate planning - takes explicit cabinet decisions and shows how objectives can be achieved within financial and human resource constraints. Public Finance Standards require three year plans, updated annually. The main role of corporate planning is to: clarify broad strategic aims and objectives of organisations; and outline actions to achieve them. Plans are also part of the accountabilioty process. Components should be: vision and mission statement; environmental analysis; outcomes intended; and strategies to achieve major objectives.

· business planning, which set out detailed implementation steps. Basic requirements are: identification of goods and services to be produced; specify output / performance indicators; estimate resources; evaluation and performance; review schedules; and review past performance. Cycle must be integrated with budget cycle.

· coordination: corporate and business plans must be reviewed and coordinated centrally to ensure that objectives and implementation are consistent. The state strategy provides an umbrella for sectoral / regional service delivery and infrastructure investment. They provide direction for agencies, and means for review by central agencies. Department of Premier and Cabinet has principle responsibility for policy planning and requires to articulate strategic directions of government, without being directive. Government's role is to create environment for efficient and effective services where its own role is as purchaser. Those who make decisions on inputs (including capital) must be responsible for planning, investment and carrying risks. Coordination is a task of organising efficient information exchange on planning tasks, as well as articulating government's strategic vision. Need for coordination applies to regional strategies (eg SEQ 2001) which involves bringing together many participants (providers / users of services; various authorities). Ministerial commmittees should supervise sectoral strategies requiring state wide cooperation.

3.4 Accountability: is an important issue covering reporting; performance measurement; and incentive structures.

· The starting point is the accounting framework. Traditionally Westminster governments report on a cash basis (though quantity of data has expanded recently). Business however reports on accrual basis. Debate about application of the latter to government has taken place. Public sector's accounting standards are similar to those under corporations law, but recognise bottom line as net services cost, not profits. Public Sector Accounting Standards Board recommened in 1995 that governments shift to accrual accounting. These proposals are being implemented / considered. Key issue is identification of nett worth, and cash accounting provides no link between net worth and operating budget. Without net worth data, can not assess if government achieves it core objectives; nor assess state of social / economic infrastructure or costs / benefits of public provision of services. Also cash accounting allows deficits to be concealed by asset sales. Lack of transparency can mask unsustainable positions.

· capital planning and charges: accrual accounting requires that capital be charged to actual users, thus allowing agencies to assess its value to services. Managers need to have access to total resources, and ability to use them as appropriate. Government has strong net worth position, and is under pressure to use assets to good effect. All capital assets should be assessed against government's opportunity cost of capital. Allocation of capital cost is essential to avoid underutilised cassets (eg land, which might realise $750m). Capital changes should be applied to department (accompanied initially by increase in accrual price paid for services). All general government bodies use capital whose cost (equivalent to that of alternative uses) must be met by service provided. If cost is not recognised, capital is seen to be free.

· capital (investment) budgeting: assessment of capital expenditure should include: identify service need; identify objectives; identify options; identify financial / economic effects; identify socio-economic effects; combine assessments and rank; and select preferred alternative. Above level of internal assessment proposals must meet standard assessment techniques (which Treasury has role in developing). Standard should deal with benefit / cost, rate of return at project and economic level. For large projects, general equilibrium model assessment is also useful. Projects must be coordinated within government's overall strategic plan, and limited by government's limited ability to service costs (if not fully self financing). A system for prioity setting needs to be developed (probably by Treasury), as basis for Cabinet Budget Committee decision. It should consider: consistency with SSP; consistenciy with corporate strategies; whether options other than government ownership been considered; effect on service delivery; options for external funding; scope for user charges; financial and economic returns; contribution to departmental productivity; and interdepartmental aspects.

· authority and autonomy: accountability needs authority and autonomy. Traditional cash based accounting restricts managers to cost control. There is a need to shift focus from inputs to outputs. Providing managers with information, incentives and flexibility is central to making them accountable. In most OECD countries devolition is only of operational decisions, rather than policy, strategic or political. Removal of transaction controls from higher level managers allows them to concentrate on policy / strategy issues. Shift from input to output focus can be achieved by: consolidation of detailed appropriation items; giving flexibility to carry over unspent funds; and medim term corporate planning. Control over capital can also be devolved given accrual accounting and appropriate treatment of capital. This provides managers with flexibility and certainty over several years. In OECD countries increased devolution of authority has been accompanied by stricter accountability for performance in achieving defined / measurable performance objectives

· service agreements and contract budgets: under model in Section 2, government would select broad objectives and outputs, while department would identify delivery mode. Service agreements would formalise this division of responsibility. Service agreements (contracts) will detail outputs, quality, quantity, costs, risk factors and performance measures. Where main output is advice, main issue is whether advice is acceptable to minister. This can be achieved by establishing requirements, or by obtaining indepednet assessment. Most of government outputs are not intangible or subjective. By setting out results for which departments are accountable, agreements link performance to that of staff. They provide basis for resource allocation through contract budgeting (which has been used in other juresdictions for years). This requires: realistic expectation; clear mutual understanding of services and measures; provision for review; dialogue; independent verification of performance. This appraoch has been trialled in three departments.

· customer service standards: satisfaction of customer requirements is key measure of agency output. Standards incicate to customers what they can expect, and allow assessment (including assessment of needs for CSOs). Some countires publish standards. Client services standards was key component of Financial Management Strategy of 1994, and included: customer focus; standards established in consultation; openness; continuous improvement; service culture (customer oriented ethic).

· implications for budget authorisations: present arrangements are defined in terms of cash appropriations, which will change with introduction of accrural accounting and contract budgeting. Service delivery requires authorisation of service delivery in exchange for required resources. Such business plans will aggregate to constitute state budget. Parliament would be asked to authorise obligations and expenses (not just cash outlays).

· assessing performance: accrual accounting provides the basis for assessing performance. Measures should be important aspects, but not complex. Some aspects can be quantified. Qualitative aspects require customer feedback. Quantitative measures should not be over-emphasised at the expense of factors more important to community needs (eg not just measure student contact hours but also proxy for skills acquired such as course completion rates). The following needs consideration: performance measure is limited in public sector due to difficulty of identifying / measuring some aspects; performance measure need to apply to decision making (not just in assigning blame). and benchmarking is important to assessment. As contestability increases, benchmarking will be more important in improving in-house performance. Benchmarking should not be limited to exactly identical organisations. Types of benchmarks include: internal processes; service performance; functional; and generic. Treasury has supported benechmarking for three corporate service activities - human resources, information technology and financial management. Benchmarking should address service outputs not inputs.

· efficiency dividend: much of pressure on state's budget must be resolved by improved productivity. A 1% efficiency dividend should be required of departments annually in exchange for devolution of more control. This pool can be re-allocated annually to priority services (ie to also allow policy renewal).

· the role of information: an argument against contract budgeting / accrual accounting is costs of data gathering. More information is gathered, but is essential for best practice service delivery. Reorganisation into principal-agent style places much greater demands on information. Problems arise where each have different information sets - this must be agreed at time of contracting. Techniques are available to reduce paperwork costs. Cost is small relative to gains from using state's operational assets effectively. Integration of data bases across agencies is an important step.

· implications for structure of central agencies: need more streamlined / output oriented central agencies. There is no place for duplication There is much greater need for management skills and accountability. (see Section 15).

3.5 Implementing Competition and Contestability: The importance of competition has been recogniised (eg Hilmer report proposed creation of single national market and applying same disciplines to public as to private sector. It recommended competition, or at least contestability. Six main elements were: limiting anti-competittive behaviour by firms; reforming regulation which restricts competition; restructure public monopolies; third party access to key facilities; restraining monopoly pricing; and fostering competitive neutrality. These were in 1995 Commonwealth legislation and Competition Principles Agreement amonst COAG governments. Queensland needs to comply by: ensuring government agencies comply with Trade Parctices Act; reviewing legislation consistency with Competitiin Principles agreement. The Industry Commission estimated that Commonwealth would gain about 66% of revenue benefits from competition, though state reforms would create 83% of it. Thus compensation was offered to states. Staging was agreed. Agencies have been assessing compliance with trade practices act.

· competition regulation: acceptance of competition principles is often accompanied by institutions which regulate this. In Australia this is ACCC, with NCC as forum to review ACCC and poilcy development. Previous government endorsed creating Queensland competition Authority to oversight prices; develop state based regime for access; and apply competitive neutrality to significant businesses. State is not obliged to do so, and potential for duplication suggests not hastening with this. Main objective was uniform regu;ltory framework. also considering costs on business. There is no reason for government to establish body with skills not widely available. However: unbundling of retail franchises in electricity / gas will need large technical effort (which ACCC may not support). Regulatroy review over next 5 years requires organisation independent of ministerial department - which ACCC may be unable to do. Prefer ACCC to fulfil role, providing it can provide assurance of resourcing. An industry specific regulator is unsatisfactory, given the dangers of regulatory capture. Government is developing timetable for legislation review, which will be by: administering departments: stakeholders: and an independent chair. Competition policy is consistent with aims of proposals in Section 2, and of the use of purchaser / provider model.

3.6 Private sector Participation in Service delivery: Distinguishing roles of provider / producer opens the way for private providers. This can lead to significant efficiency gains / and also reduces pressure on government resources. There are risks - sometimes used to dress up budget deficiencies - using weaknesses of cash accounting. Firstly ideal is clear purchaser / provider split, but issue is unlikely to be so clear cut - eg infratsructure may be combination of public good, natural monopoly and social objective. Optimal may be combined public / private participation. While contracting out usually allows costs to fall, it does not do so always - thus need operating principles for this. Likewise private participation in infrastructure can lead to higher costs. Efficiency gains are possible but not guaranteed. Problems can arise from: inappropriate private sector motivation; poor risk sharing arrangements; poor structures in contracting out; and insufficient involvement of ultimate consumer. Choice should be based on desire for increased efficiency, not by desire to circumvent good management practices. Most important steps are: full accrual accounting; and full recognition of liabilities.

· Risk sharing arrangements: Service delivery will involve risks (especially where private providers are involved with infrastructure). Private provider has strengths managing risks of: construction / scheduling and delivery; and ongoing project operation. Public sector can manage risks of: projects without competitive alternatives; and those with large spillovers. The difference is like that between goods / services with public / natural monopoly objective one one hand, and those with social objectoves. An particular project may lie along public / private spectrum. Risks are illustrated by problems of blowout of Sydney Harbour tunnel costs to gobvernment. Party best equipped to manage risk should carry it, and receive resulting rewards / losses.

· Tendering processes: From criticism and experiences, guidelines for tendering are: define service levels and quality; treat all tenderers equally; be satisfied as to delivery capacity; process must be competitive; and need to protect intellectual property rights of tenderers.

· Consumer Involvement: Risk with government purchasing on behalf of community is that may procure services not matching needs of consumer. One option is to introduce subsidy for consumers (via vouchers). An alternative is to place intermediary between provider and consumer (who will be more cost conscious than provider)

3.7 Government Owned Enterprises: Some GOEs fall outside government's core business area and should be candidates for privatisation. However some will remain, and previous government recognised desirability that they operate at arms length from government as GOEs. This is consistent with agency principle. GOE outputs are significant inputs for others, and affect economy. Purchaser / provider model emphasises value of competition, and has particular relevance to GOEs. As GOEs move from immediate government control, competition will be paramount.

· Operating Framework: Queensland GOEs have been either corporatised or commercialised (the latter being a weaker form). Corporatised bodies have Boards similar to Board of Directors under Corporations Law. Policy on GOEs is contained in Policy Guidelines, and GOC Act, and is based on four objectives: clear objectives; management autonomy and authority; performance accountability; and competitive neutrality. The principles were derived from NZ where: non-commercial functions were separated from state trading organisations; managers were required to run as businesses; no competitive advantages were allowed; and set up GOC on individual basis. Queensland principles do not yet include reward and scanctions requirement.

· Competitive Neutrality: is essential to economic success of GOEs. Many traditionally faced little competition. Often corporatisation involves removing restrictions on competition (eg by removing obstacles to private entry; removal of regulatory functions performed by agency to others; quarantining of CSOs; and restructuring separable business units. GOE operations should not be clouded by cross subsidisation. thus need separate business units. Where competition is not possible, might use surrogate approaches, like benchmark competition.

· Community Service Obligations: GOEs often used for CSOs. These must be identified. Pricing should not be distorted by subsidies. CSOs include: uniform pricing of services; free or below cost services; concessions to particular group; needs to procure inputs not needed for private firms. Costs have been estimated, but appear to be not properly identified and costed. Other issues are: CSO can create disincentives to efficient performance by confusing commercial and social objectives; budget funding of CSOs is preferred, but does not always apply; alternative mechanisms have seldom been explored.

· Relationship between Government and GOC Boards: GOC relationship to government is (worth looking at - complex). Success depends on creating appropriate relationship between board and government. Prime objective is improve commercial performance of GOE, which requires clear performance targets. These have usually taken form of rate of return. Appropriate benchnmark is capital. In private enterprise, authorty and autonomy rest with board. Key feature of corporatisation is that government retains ownership. Ministers are responsible for setting objectives and assessing performance. Each year agreements reached about: objectives/ main activities; performance targets; non-commercial activities and CSOs; reporting; accounting policies; etc. As Statement of Corporate Intent is contract, it needs to specify sanction to apply if fail to achieve targets. Corporatisation structure selected can give rise to difficulties ie: board lacks power to hire / fire executives; directors are jeopardised through having to comply with minister's directive without indemnity; and insuffient attention given to position of shareholding ministers

· Effective Monitoring: Corporatised entities do not face same competitive pressures as private firms, and not subjected to same disciplines (eg borrow at lower rates) thus performance needs to be monitored rigorously and comprehansively. Difficulty of deriving comparable asset valuations makes it difficult to rely on rates of return in addition to prices / quality. Need assessment of economic returns, efficiency in use of resources and good prices / quality information. This allows benchmarking. Recent IC view was that: financial indicators necessary but not sufficient; need more comprehencive measure of performance as well as prices and quality; need consistent and comparable data. Measures to be publically available to allow comparisions. Suite of indicators should include: total factor productivity, prices and quality, economic rates of return, are needed for complete picture - without too great reliance on labour productivity or financial indictors used for firms in competitive markets. Comprehensive reporting and monitoring will be important as competition policy is implemented (as ACCC / NCC will require consistent and reliable data to carry out their tasks. Treasury proposes improved benchmarking as follows: defining financial indicators which should be referenced by GOEs; standardised quarterly reporting; more detailed commentary guidleines in quarterly reports (whether or not targets are to be met); definition of perfromance indicators in statement of corporate intent; means to overcome lack of indicators / targets; fourth quarter reports; documenting issues and assumptions when setting agreed targets; and periodic review of indicators.

· Not for Profit statutory Corporations: Such entities should be subject to same level of scrutiny (and contestability) as other arms of government. Now assess corporate plans, but should also assess service delivery plans. Revenue should not be earmarked for particular purposes to provide government with scope to re-allocate funds.