Introduction

All public sector employees are stewards of public resources on behalf of the people of New South Wales. Managing these resources effectively, efficiently, and economically is crucial to achieving value, improving outcomes and building trust with the public.
Senior decision-makers are expected to consider the benefits, risks, and the financial impact on both current and future generations. The practical application of this principle includes:

• developing and maintaining policies and procedures regarding budget, financial, asset and liability management, and maintaining effective risk management procedures
• ensuring the integrity and alignment of financial and non-financial performance information
• complying with all government-wide budget and financial management policies and processes to ensure the efficient management of government resources, including compliance with the GSF Act.
   

A state's fiscal strategy acts as a compass for the budget. It is a critical component of responsible budgeting by ensuring sustainable spending, taxation and investment. The strategy also guides government decisions to ensure resources are effectively allocated and risks are appropriately managed. 
To support this, the public sector must accommodate and consider the government’s fiscal objectives through:

• the day-to-day management of budgets, ensuring the cost of delivering services and programs are within approved budgets and sustainable over the short, medium and long-term
• the annual budget process, ensuring that prioritisation of existing budgets has occurred prior to seeking new funding, and that new funding proposals are evidence based and ensure the highest value of public money
• expenditure reviews and the delivery of any other request by the Expenditure Review Committee (ERC) to reduce or manage costs.
   

Accuracy and transparency of financial and non-financial information is a core enabler of strong budget and financial management. Transparency supports an effective accountability framework and ensures that decisions are supported by a comprehensive and shared set of information.

Accuracy and transparency of financial and non-financial information applies to:

• the breakdown and allocation of approved budgets and forecasts across an agency’s activities
• the performance of existing budgets, services and programs, and the key factors driving the performance
• requests for new funding, which must include appropriate information and evidence to support an investment decision, regardless of whether the investment is for a new or existing activity.

The government’s core budgeting and financial management system, Prime, is the source of truth for advising the government on financial allocations and performance. Information presented in Prime must be accurate, reflect information held within agencies, and align with reporting provided by agencies to their Ministers. 

The Treasurer (as authorised under the GSF Act) or ERC, may request detailed financial and non financial information at any time to support performance management and resource allocation decisions. Agencies must have systems and processes in place to readily provide more detailed information than what is available in Prime.
 

Pressures and risks associated with existing services and programs must be proactively managed at the agency level and within approved budget allocations. The management of these pressures is enabled through the high degree of autonomy and flexibility that agencies have to manage their budgets. These two elements allow agency budgets to be viewed holistically and resources to be prioritised to deliver on outcomes and priorities.

The proactive management of pressures and risks may encompass:

• the balancing of underspends and overspends across the agency
• reprioritising funds from activities where outcomes can be achieved at a lower cost
• identifying and discontinuing services or programs that offer low value or duplicate other services or programs provided elsewhere
• considering where an activity can be delayed and funding reallocated, if the pressure is a one-off cost
• applying policy levers to reduce the cost of delivery of a service or program.

Government consideration may be required for any policy changes that are required to manage a pressure or risk. This applies when proposals are inconsistent with government’s decisions, pose reputational risks to government, or significantly impact service delivery. Limitations to an agency’s ability to flexibly manage their budget include where funding is protected under the Protected Items policy, or when expenditure is required to be reduced as part of a government commitment.  
 

Collaboration and cooperation enable public sector organisations to achieve common objectives. Effective collaboration supports the government to meet its priorities and fiscal objectives by ensuring that resources are fully utilised where possible, spending is targeted effectively, and opportunities to reduce costs are proactively identified. 

As such, the government expects that ministers and the sector collaborate to achieve shared government outcomes, including participating in and driving reform through the NSW Outcome Networks. Outcome Networks have been established to better support cross-sector collaboration on outcomes where input from multiple agencies is needed for successful delivery. They provide central coordination and ensure effort, resources, and investment are aligned. There are currently 28 NSW Outcomes covering government activities and services. 

This expectation extends to the operation of departments and affiliated entities. That is, they must maintain practices and identify opportunities that create efficiencies and streamline information, including shared services and coordination in relation to whole-of-government processes and reporting. 
 

Financial and non-financial performance and accountability must be embedded at all levels of government. Alongside transparency, accountability is a critical component of a budget model that embeds flexibility and a high degree of autonomy. 

While there are differing levels of accountability, each public sector employee is responsible for delivering on the government’s priorities. This includes, but is not limited to:

• operating within approved budgets and any other financial control set by government, including savings targets
• delivering services and programs in line with budget, milestones and timeframes as set by government
• meeting stated policy objectives and performance metrics.

Performance metrics for delivery against these priorities, including budget management, must be appropriately cascaded through the sector.