PE powerpoint Part BW 6

PE powerpoint Part BW 6 - Public Economics Principles and...

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Public Economics Principles and Practice Part 6: Public Supply of Goods and Services Peter Abelson Applied Economics and University of Sydney
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Public Supply of Goods and Services Delivering Efficient Public Services Pricing Public Services Public or Private Ownership Economic Infrastructure: Transport
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Chapter 16 Delivering Efficient Public Services Issues in the Supply of Public Services Principles of Public Sector Management Public Expenditure Management and Budgeting Estimating the Costs of Services Organising Service Delivery
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Issues in Supply of Public Services Aim of value for money Benefits exceed costs or Least cost supply Many public services may be described as “outputs” as distinct from outcomes. Many outputs and outcomes are not marketed and have no explicit value.
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Framework for analysing supply of public services
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Figure 16.2: The process of supply
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Some key issues Complete process: valuing outcomes and estimating costs – cost-benefit analysis. Partial process: outputs are set – find cost- effective process. To estimate cost functions (cost as function of output), need to estimate production function (output as function of inputs). Marginal relationships also important.
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Further issues Definitions of outputs in quantity and quality terms. Heterogeneity of output. Contingent capacity. Cost containment incentives.
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Principles of (New) Public Sector Management 1. Objectives of government departments should be stated precisely. 2. Government should serve consumers rather than producer interests. 3. Government activities should be separated according to functions. 4. Activities should be separated according to responsibilities. 5. Government should adopt best practice management.
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Principles of (New) Public Sector Management (cont.) 6. Where feasible (and equitable), government should employ market prices instead of taxes. 7. Supply should be provided competitively where feasible. 8. Provision of services should be decentralised. 9. Improve transparency: if subsidising, do directly and transparently. 10. Suppliers of public services should be accountable.
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Public Expenditure Management and Budgeting: Three key issues Aggregate fiscal discipline – total expenditure should be set before decisions are made on individual components (not on demands of spending departments) Allocative efficiency – allocating funds to highest priorities Operational efficiency – delivering services at least cost.
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Nature of the budget Central issue of public expenditure management. Traditionally used to fund and control departments for use of inputs rather than supply of outputs. Detailed line by line allocations assisted auditing.
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This note was uploaded on 12/02/2009 for the course ECOS a taught by Professor A during the Three '09 term at University of Sydney.

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PE powerpoint Part BW 6 - Public Economics Principles and...

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