Modernising Administration as a Prerequisite for Sustainable Efficiency Gains in the Public Sector

The study examines the problems of interlevel relationships that are of great relevance for any reform of Austria's public administration. Any effort at reform should start out by disentangling the web of responsibilities. Responsibilities shared by the federal and Länder governments (and to some extent local governments) should be reduced to a bare minimum in order to consolidate split responsibilities for tasks, expenditures and financing. The three-pillar model considered by the Austria Convent, a think-tank for administrative reform, needs to be viewed with scepticism from an economic perspective because it still fails to clearly assign responsibilities to government bodies so that the benefits of a federal state structure cannot be fully utilised. The remaining fields that incorporate multiple responsibility levels have a high potential for efficiency improvement to be obtained from clearly separating strategic requirements (the chief role of the federal government) and operative implementation (the chief role of the state and local governments). Competitive and performance-oriented control should be exercised through performance-driven contracts, global budgets and systematic comparisons. The school system would allow for a combination of basic control exercised by the federal government, organisational competence at the regional level and a high level of autonomy enjoyed by the individual schools. Global budgets and performance-driven contracts should replace input-focused and directive control. Performance control at the university, a concept already implemented, should be able to improve the separation between teaching and research. The various types of universities need to be treated equally as parts of the same system of tertiary education. As to funding, subsidies granted by the various government bodies should be based on a catalogue of competences defined in the constitution and should include a transcompetent sector of the private economy. The definition of targets and the evaluation of grants also need to be reformed.