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This term PBE refers to the generic organizations thatpublic managers work in or
with. This is because it captures organizations such asnationalized industries that
are managed on a commercial basis but differ from otherprivate sector, for-profit
organizations because they are owned by a government andvoluntary and
charitable organizations, as well as government ministries, hospitals,schools, police
forces, local governments, etc. that are commonly thought of as thepublic sector.
The term public manager refers to those who are involved inthe executive
management of PBEs. As well as the chief executive and line managersthe term
includes the members of the governing body, whether they are electedpoliticians,
appointees or volunteers and private sector managers, if they produceprimarily for
government. The term is not used quite as broadly as Moore (1995: 23)uses it:
supervising agents, judges, lobbyists and interest group leaders (Rhodes
andWanna, 2007: 408) are excluded here because they are not in a position to
manage a PBEs finances although they may have considerable influence on the
public managerswho can.
Public services
The classical economic view is that the public sector provides goods and services
thatare desirable but which, for one reason or another, a market economy cannot
supplyeffectively. There are two types of goods that the public sector provides:
public goodsand merit goods.
Public goods
Public goods (and services) are commodities that are non-rivalrous and nonexcludable.
Non-rivalrous means that the consumption of the commodity does not reduce
itsavailability to others and non-excludable means that no one can be effectively
excludedfrom enjoying the benefits of the commodity. If the market were to provide
such goodsand services the providers would have the potential problem of freeriders, peopleconsuming the goods without purchasing them, because of the nonexcludability (i.e.the free-riders could not be excluded). The provision of such goods
by the government is feasible because of the enforcement of taxes. Examples of
public
goods
include
streetlighting,
national
defence,
free-to-air
broadcasting(although modern technology has made encryption of broadcast
signals possible so television and radio is not a publicgood now).
they produce positive externalities meaning that there are benefits to society
thatare not taken into account by the individual who consumes them; and
individuals seek to maximise their short-term benefits, failing to take
intoaccount the longer-term benefits that often accrue from the goods.
Monopolies
Another way that governments intervene in the market is for the management
ofmonopolies, especially so-called natural monopolies such as utility services where
thereis a very high capital investment in infrastructure required. In previous
generationssuch monopolies were owned and managed directly by the government
but underNPM the preference is for such services to be provided by profit-seeking
private sectororganizations that are regulated by the government. The regulation
protects consumersfrom unwarranted price rises and also sets terms for allowing
competitors to accessthe private companys infrastructure. For these services public
money is spent on the regulation and, in some cases, in a subsidy tothe private
sector operators.
money will be spent efficiently and that officials will be accountable with every
action that they will do involving peoples money.
Three yeses are required before proceeding. There are seven doctrines that typify
NPM according to Hood (1991):
CHAPTER II
Budgets and Budgeting
Learning Objectives:
1. To understand the objectives of budgeting
2. To be able to explain the strengths and weaknesses of the common,
alternative approaches to preparing a budget
3. To be aware of the differences between public and private sector budgeting
practices
4. To understand the significance of assumptions in budget preparation
What is a budget?
The etymology of budget is from the old French word bougette meaning a small
leather bag or purse. It is a plan written in financial terms. The budget says in
numbers what the organizations plans say in words. The Oxford Dictionary of
English defined it as an estimate of income and expenditure for a set period of
time whilst Smith and Lynch (2003: 5) have a public budget as a request of funds
to run the government.
A budget is a plan for the accomplishment of programs related to
objectives and goals within a definite time period, including an
estimate of resources required, together with an estimate of resources
available, usually compared with one or more past periods and
showing future requirements.
-Smith and Lynch, 2003: 6
Process of public budgeting the acquisition and use of resources by public
organizations (Swain and Reed 2010 : 3). According to them, budgeting has four
stages: preparation, submission and approval, implementation and review and
reporting.
The level of income and borrowing, which is what determines the capacity of
the public managers organization (which by definition will be less than the
operational capacity);
The planned expenditure and investment, which will be the resources that are
to be converted into the goods and services that are valued by the public;
and
Approval by the organizations highest level of governance (which may or
may not include publicly elected officials)
To
To
To
To
To
To
plan
authorize managers to incur expenditure
measure performance
control
communicate
motivate managers
Objective analysis
Academic departments
Administration and support services
Student services
Residences
Catering and conferences
Subjective analysis
Expenditure
Employees
Premises-related expenses
Supplies and services
Transport-related expenses
Capital financing charges
Income
Grant income
Income from fees and charges
Sales
Income from investments
Internal recharges
Advantages
Simplicity, both to undertake and also to
explain to stakeholders
Disadvantages
There is no challenge to the base budget
the assumptions within it
organization will build up its budget for every activity and project from
scratch every year, effectively justifying every item in the budget by
reference to the organizations mission, objectives and policies.
Advantages
Disadvantages