II. COMPARISONS OF OECD COUNTRY LEGAL FRAMEWORKS FOR BUDGET SYSTEMS

audit and control below). In New Zealand, prior to adopting a performanceoriented budgeting system, a law was adopted in 1988 to clarify accountabilities between Cabinet ministers and senior civil servants responsible for providing public services. The State Sector Act 1988 fundamentally changed the roles of the heads of government departments, who became managers of the budget allocated to them, the personnel under them and all other departmental resources. No longer did Parliament control inputs such as staffing of ministries and agencies. Inspired by new institutional economics, new contractual arrangements were introduced (Box II.2). Few countries have imitated the strict contractualism embedded in this legislation.

Box II.2. New Zealand’s State Sector Act 1988

The Act requires or provides:

●Budget authority to heads of government departments, who become “chief executives” responsible for managing inputs, including staff and their remuneration. As managers, they must determine the most efficient way of producing the government services for which they are responsible.

●Personal accountability of chief executives for producing high-quality outputs – the provision of goods and services for the government and other users.

●Contracts between individual budget managers (suppliers of services) and ministers (purchasers of services) that specify the quality, quantity, timing and price of agreed services. Each chief executive has a personal performance agreement with the appropriate minister, accompanied by a purchase agreement which specifies the outputs to be supplied by the department to the minister.

3.3.Judiciary

When the budget system is being reformed and a new law is introduced into the legislature for this purpose, the judiciary may intervene. There are two main possibilities:

●Review of laws by a special or constitutional court. In countries of this “model” (e.g. Germany, Korea, Spain), the establishment of courts for ensuring constitutionality is laid out in the constitution. In examining draft budget system laws, courts may strike down parts of the laws as adopted by legislatures. Two examples are provided. First, the Line-Item Veto Act of 1996, which would have granted the President of the United States with the ability to eliminate certain line items from the approved appropriations