Acronyms AAS Aid Advisory Service ADB Asian Development Bank AEC Australian Electoral Commission APPR Annual Program Performance Report AusAID Australian Agency for International Development CMS Customs (Cargo) Management System EPSG Economic and Public Sector Governance EPSR Economic and Public Sector Reform FMIS Financial Management Information System GoA Government of Australia GoT Government of Tonga MoCTL Ministry of Commerce, Tourism and Labour Ministry of Finance and National Planning MoPE Ministry of Public Enterprises MoR Ministry of Revenue MTBF Medium Term Budgetary Framework NRBT National Reserve Bank of Tonga NZ-IDG New Zealand International Development Group PACC Project and Aid Coordination Committee PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PICPA Pacific Islands Centre for Public Administration PRM Policy Reform Matrix PSC Public Services Commission PSDI Private Sector Development Initiative QAI Quality at Implementation Report RCA Root Analysis RMS Revenue Management System SIDS Small-island developing states TSDF Tonga Strategic Development Framework 2011 - 2014 UN United Nations UNDP United Nations Development Program WB World Bank
Annexes 1: Tonga Economic and Public Sector Governance Performance Assessment Framework Objectives and outcomes EPSG development objective to 2017 Tonga Australia Partnership for Development Outcome One: “A more efficient and effective public sector” This is aligned with the ‘Impact’ and ‘National Outcome’ identified in the GoT’s Strategic Development Framework: Impact: A just, equitable and progressive society in which the people of Tonga enjoy good health, peace, harmony and prosperity National outcome: A sustainable, efficient and effective public sector that develops and implements policies and programs to enable private sector growth and deliver quality public services in Tonga End-of-strategy outcome to 2016/17 End-of-strategy outcome indicators Intermediate outcomes (or outputs) Intermediate outcome/output indicators Key assumptions End-of-strategy outcome one Public sector governance GoT agencies demonstrate measureable improvement in the efficiency of public service delivery Percentage of planned reform activities implemented according to timetable; Percentage of reform plans adequately resourced (budgets and actual) Progress towards developing sustainable human capacity building systems Number of public servants trained; performance ratings for advisers on annual adviser performance assessments Achievement in this area will be largely dependent on the ongoing commitment of GoT to undertaking public sector reforms. Key evaluative questions for outcome What evidence is there that individual activities (including advisory support and other capacity development programs) are leading to public servants more effectively performing their roles? What are public servants doing differently as a result of training? How are improvements in public sector staff, plans, systems and processes leading to system-wide capacity development and reform? Interview key stakeholders from GoT & AusAID Consider context End-of-strategy outcome two Economic and financial governance
Intermediate outcome: Progress towards developing sustainable human capacity building systems. Number of public servants trained; performance ratings for advisers on annual adviser performance assessments AusAID & agencies End-of-strategy outcome two – Economic and financial governance End-of-strategy outcome: GoT agencies demonstrate measureable improvement in the allocation and use of public expenditure for TSDF priorities as well as sustainable revenue collection. % actual recurrent expenditure allocated to TSDF public service delivery priorities Corporate Plans and annual reports of implementing agencies; MoFNP annual Budget Papers and SD data Number of criteria in periodic PEFA assessments for Tonga that obtain improved ratings Biennial PEFA assessments Intermediate outcome: Progress towards developing sustainable human capacity building systems Key structural reforms identified in the PFM Roadmap are progressed by MoR Biannual World Bank Policy Reform Matrix monitoring missions Intermediate outcome: Improved public sector procurement practices. Procurement Reform Action Plan (PRAP) is endorsed by Cabinet by August 2013 and adhered to; all procurements are undertaken in line with AusAID and GoT supervision PRAP endorsed by Cabinet
GoT regulations and AusAID risk mitigation measures. Intermediate outcome: Strengthened audit capacity and improved auditing of AusAID funds. Timeliness of annual audits of evidence of follow up on recommendations AusAID annual sample of procurement transactions; MoFNP supervision of GoT PFM Roadmap; biennial PEFA assessments Ratings for the relevant PEFA criteria (2010): P1-21(i) D, C, P1(iii) D GoT ratings goal for the relevant PEFA criteria (2014): P1-21(i) B, B, P1(iii) B End-of-strategy outcome three – Business enabling environment End-of-strategy outcome: The majority of public enterprises reform and GoT agencies enable measureable development of the private sector rankings in annual World Bank Doing Business Survey Annual World Bank Doing Business Survey Intermediate outcome: Reform of public enterprises by MoPE, including of inefficient SOEs Key structural reforms identified in the PFM Roadmap are progressed by MoPE Biannual World Bank Policy Reform Matrix monitoring missions End-of-strategy outcome four – Effective aid through alignment, harmonisation and mutual accountability
End-of-strategy outcome: GoT agencies and development partners ensure a more coordinated of government approach to partnership for PFM reforms. Success of Policy Reform Matrix in coordinating donor support and in providing momentum to the GoT’s reform program Biannual Bank Policy Reform Matrix monitoring missions Intermediate outcome: GoT and donors hold each other mutually accountable for agreed development results. % of acquittals (for the use of AusAID funds) that are completed and provided on time by the GoT to AusAID GoT, AusAID and implementing partners (TA) Political governance End-of-strategy outcome: Strengthened governance institutions and democratic processes that are transparent, accountable and responsive to citizens’ needs and interests. Intermediate outcome: Legislative Assembly strengthened to effectively carry out its oversight, representative and legislative functions. Parliamentarians’ perception on the effectiveness of the Parliament Secretariat in providing administrative, technical and procedural support to Members UNDP-led perception surveys conducted in partnership with the Tonga Statistics Department Absence of perception study
Perception of the constituents on the effectiveness of Parliament to perform its legislative and financial oversight functions disaggregated by gender, population, & geography UNDP-led progress reviews in the 4th quarter of each year Level of constituents understanding of the roles and functions of Parliament including their rights and civic responsibilities disaggregated by gender, population, & geography UNDP-led field monitoring visits Intermediate outcome: Capacity of CSOs, education providers and communities strengthened for increased participation in law making, policy and oversight processes. % of constituents’ participating in the law making, oversight and national planning and budgeting processes through an agreed formal engagement mechanism disaggregated by gender, population, & geography UNDP-led perception surveys % of CSOs with increased capacity to design, mobilize, UNDP-managed annual progress reports
coordinate and deliver civic education and advocacy activities in the communities Level of understanding amongst students attending formal and informal schools system of democracy, human rights, civic responsibility and reforms to date disaggregated by gender, population, & geography monitoring visits Absence of curriculum framework for addressing Civic, Democracy & Human Rights Education in formal and informal school systems; Intermediate outcome: Capacity of Tonga Electoral Commission enhanced to ensure the effective conduct of free and fair national and local elections. Public perception on capacity of national electoral authority to administer free, transparent and democratic manner National and local elections disaggregated by gender, population, & geography UNDP-led perception surveys There is a need to strengthen the technical, logistical and support capacity of the TEC Intermediate outcome: Program efficiently and effectively managed. Recipients perception on the effectiveness and usefulness of the flexible fund as a means to respond to UNDP-led perception surveys Need for flexibility and responsive funding for strengthening
as sustainable revenue collection allowing the accumulation of cash reserves to manage shocks over the medium-term World Bank’s dialogue with Government on appropriate ways to approach and manage expenditure or revenue shocks 2.2 GoT does not progress key public financial management or economic reforms resulting in further debt or poor quality expenditure, and therefore not meeting targets to trigger next payment. The joint reform policy matrix that underpins Tonga's own economic reform program that is linked to budget support and technical assistance from development partners, including Australia, incentivises and enables Tonga to progress these reforms. Moderate Unlikely Moderate 2.3 Backlog of delayed acquittals and return of funds from GoT due to poor financial system practices and capacity results in AusAID being unable to account for funds and ensure funds are used as agreed Short-term technical assistance With-holding of disbursement of funds until reporting obligations have been met Moderate Possible High 2.4 Poor procurement practices due to lack of understanding of and capacity to implement processes results in AusAID being unable to ensure best value for money and could lead to corrupt practices Annual sample of AusAID-funded GoT procurements Moderate Possible High 2.5 Expenditure to priority areas is diverted due to poor planning (such as the impending loan repayments to China) resulting in delays and failure to achieve improvements Linking of budget support to core services sector expenditure The World Bank monitors the GoT’s budget closely and, through ongoing dialogue with the GoT, helps ensure that all donor budget support/sector Moderate Possible High
level; and quarterly AusAID and GoT meetings to ensure program coherence and oversight) Improved political and institutional environment Political governance A more accountable, responsive and effective government Tonga Governance Strengthening Program Legislative Assembly TEC CSFT UNDP AEC Minimal: some government and implementing partner meetings; participation in in-country monitoring visits First Secretary, Nuku’alofa Second Secretary, Nuku’alofa
Annex 4: Draft implementation schedule for pipeline programming Objective Activity/ task Start End 2013/14 2014/15 2015/16 2016/17 Resources required Public sector governance Improved human resource planning and capacity building Collaboration with PICPA July 2013 TBC X X X TBC Economic and financial governance Strengthened public financial management and strengthened fiscal policy (Policy Reform Matrix) Performance-linked aid X X X X $5 million per year in PLA Economic and Public Expenditure Adviser (MoFNP) February 2011 May 2014 X 1 adviser Interim assistance to Deputy Commissioner of Revenue (Head of Customs) X 1 adviser to support transition arrangement FMIS upgrade July 2013 June 2014 X $950,000/ 2yrs Improved public sector procurement practices (TSDF) Procurement Manager (MoFNP) February 2013 December 2013 X 1 adviser Improved public sector procurement practices (TSDF) International Procurement Specialists January 2014 January 2016 X X X 2 advisers Business enabling environment Structural reform (PRM) Performance-linked aid X X X X $5 million per year in PLA Effective aid through alignment, harmonisation and mutual accountability Other Strengthened governance institutions and democratic processes Tonga Governance Strengthening Program April 2013 June 2016 X X X $3.8 million/ 4yrs
5: Policy Reform Matrix Joint Policy Reform Matrix FY2014-15 Agreed Reform Actions – for completion August 31st 2013 (stakeholders in brackets) Responsibility/ implementing partners Indicative Reform Actions – for completion August 31st 2014 Responsibility/ implementing partner Strengthening Public Financial Management The Ministry of Finance will reflect new program structures for major ministries in the FY2013/14 budget to improve alignment between expenditure and policy priorities. (ADB, WB & AusAID) Cabinet will approve a Procurement Strategy outlining steps for strengthening of procurement processes based on the recent procurement review. (AusAID) AusAID and ADB TA supporting corporate planning and medium-term budgeting programs. Ongoing TA provided to assist in preparing budget documents as necessary. Ongoing WB assistance provided to Government restructure. Two AusAID-funded International Procurement Specialists envisaged. Ministry of Finance will progress key reforms identified in the Public Finance Management Reform Plan to be agreed by Cabinet in and in the Procurement Strategy GoT with donor support (ADB, WB & AusAID) Strengthening fiscal policy Cabinet will approve submission to Parliament of legislation to create a presumptive tax regime for SMEs, to reduce administrative burden on Ministry of Revenue and encourage formalization. (ADB, WB & AusAID) Cabinet will approve submission to parliament of legislation establishing a natural resource tax regime to ensure equitable sharing of benefits from prospective extractive industry activities. (ADB, WB & AusAID) PFTAC TA provided to prepare Cabinet papers, consultation papers, and legislation for both reforms. Ongoing PFTAC TA provided to Ministry of Revenue on general strategy and priorities. Ongoing TA to be considered by ADB, AusAID, World Bank. Cabinet will agree to an exemptions policy clearly stating criteria to be applied when considering requests for tax exemptions, and approve immediate changes to the existing exemptions regime to ensure consistency of tax exemptions with Government policy priorities, with a view to reducing the overall fiscal costs of exemptions. GoT/ Cabinet with donor support (ADB, WB & AusAID)
Cabinet will approve a plan enabling TCC to operate as a successful business as defined in the Public Enterprise Act, through restructuring and/or full or partial privatization. (ADB) Progress towards full compliance with the Public Enterprises (PE) Act, including: Cabinet approves a SOE director skills-based selection and appointment process consistent with requirements of the PE Act; 100% of PEs and Cabinet comply with the GoT Policy Obligation provisions in the PE Act; 60% of SOEs have audited annual accounts for financial year to June 2012 (or December 2012 as appropriate) complete and have published summary results in newspapers as required by PE Act. (ADB) Authority Limited achieve their target ROE. Full compliance with the Public Enterprises (PE) Act, including: Full compliance with the Cabinet approved skills based director selection and appointment process 100% of SOEs have completed the director performance process and questionnaire. 100% of SOEs have audited financial accounts for the financial year to June 2013 (or December 2013 as appropriate) complete and have published summary results in local newspapers as required by the PE Act. GoT with donor support (ADB) Business Environment Reform Cabinet approves submission to Parliament of Receivership Bill revisions of the Business Act. (ADB, WB & AusAID) ADB PSDI assistance provided to Ministry of Commerce to inform policy decisions, prepare legislative revisions, and draft new legislation. Cabinet approves Competition Policy. Cabinet approves submission of Bankruptcy Bill to the Legislative Assembly. (ADB) Government will submit to Parliament revisions to enable foreign investment in the fisheries and agriculture sectors. GoT/Cabinet with donor support (ADB) GoT/Cabinet with donor support (ADB) GoT with support (ADB, WB & AusAID) Extended Government of Tonga Reform Matrix (Including non-binding actions and indicative actions for 2015)
Progress towards full compliance with the Public Enterprises (PE) Act, including: Cabinet approves a SOE director skills based selection and appointment process consistent with the requirements of the PE Act; 100% of PEs and Cabinet comply with the Government Policy Obligation provisions in the PE Act; 60% of SOEs have audited annual accounts for the financial year to June 2012 (or December 2012 as appropriate) complete and have published summary results in newspapers as required by the PE Act. (ADB) 100% of SOEs have completed the director performance process and questionnaire. 100% of SOEs have audited financial accounts for the financial year to June 2013 (or December 2013 as appropriate) complete and have published summary results in local newspapers as required by the PE Act. (ADB) Business Environment Reform Cabinet approves submission to Parliament of Receivership Bill revisions of the Business Names Act. (ADB, WB & AusAID) Cabinet approves Competition Policy.(ADB) Cabinet approves submission of Bankruptcy Bill to the Legislative Assembly. (ADB) Government will submit to Parliament revisions to enable foreign investment in the fisheries and agriculture sectors. (ADB, WB & AusAID) Process improvements resulting in reduced time for the granting of business visas. Process improvements in resulting in reduced time and cost for the granting of ancillary licenses for business and investment.
Quick re-cap – what we did yesterday Quick re-cap – what we’ll do today 09:15 – 10:15 Step 4 – Results mapping (Program Logic) Present draft results map and links to road map, policy reform matrix and corporate plans Small groups work through draft results map to revise goal, purpose and end-of-strategy statements and check intermediate outcome statements Small groups review output statements and add more to fill gaps groups identify gaps, make corrections, test assumptions and relationships Small groups groups report their findings to whole group 10:15 – 10:30 Tea 10:30 – 11:30 Step 5 – Delivery options and risk management table discussion of options for delivering donor support Groups identify risks associated with weaknesses and threats Groups reach consensus on preferred delivery options for priority outputs Groups suggest approaches to managing risks associated with engagement in the sector John Fargher Small groups report their findings to whole group 11:30 – 12:00 Step 6 – Key Performance Indicators (measuring what has changed) Brief introduction – what we mean by key performance indicators brain storm of information that would be useful to support implementation of Corporate Plans and mutual accountability John Fargher 12:00 – 12:30 Step 7 – Evaluation questions (measuring why change happened) Brief introduction – what we mean by evaluation questions Group brain storm of key questions to ask to understand why economic and public sector governance change has happened Identify questions for mutual accountability John Fargher 12:30 – 12:45 Thanks and next AusAID Attendees Position Section, Ministry/organisation Ms. Balwyn Fa’otusia Deputy Secretary Aid & Project Management Division, MoFNP Ms. Tufui Faletau Deputy Secretary Policy & Planning Division, MoFNP Ms. Kilisitina Tuaimei’api Principal Economist Procurement Division, MoFNP Mrs. Daphney Stone CEO Ministry of Revenue Ms. ‘Akanesi Taufa Deputy Commissioner Corporate Services, Ministry of Revenue Ms. Teisa Pohiva Legal Officer Ministry of Revenue Ms. Falemei Fale Head of Training and Policy Division Public Service Commission Mr. Moleni Ika Officer Public Service Commission
strengthening budget execution, increasing the transparency of key budget processes and increasing the credibility of the budget; Strengthening fiscal policy – specifically strengthening revenue effort, improving the quality of expenditure, and improving the management of the civil service wage bill; and Promoting structural reforms relating to the business regulatory environment – specifically restructuring and privatising public enterprises and Cabinet approval of legislation to improve the ease of starting a business. INK375 Economic and Public Sector Reform II Jan 2012 – Jun 2014 $2,100,000 The program builds on work undertaken through the EPSM (INI190) Initiative. Activities under this program support implementation of the GoT’s economic and public sector reform program and include: A donor harmonisation adviser; Implementation support for the policy matrix through the AusAID-World Bank PF3 facility; Support for improved revenue management; An assessment of national systems; and Support for the GoT service restructure. Active INK890 Tonga Governance Strengthening Program Jan 2013 – Jan 2017 $3,500,000 The program has the following components: support to Parliament; Active