In this context, knowing if the welfare levels of our society could have been achieved with less use of public resources, or if their use could have improved current benefits, can be considered one of the economic policy priorities.
From the IEE has developed a synthetic indicator itself, called IEE public expenditure efficiency index, designed from international indicators of different international organizations and some researchers. It has been prepared for the 36 countries that make up the OECD and for the OECD and EU aggregates. It is constructed in such a way that the OECD takes the value 100, to facilitate comparisons. In this indicator, the higher the level of the index, the greater the efficiency of the public sector of the country to which it refers. Spain has obtained a score of 87.4 points and is ranked 26th in the countries analyzed, in the lower-middle zone of the ranking, which is led by Nordic and Central European countries.
Thus, Spain has a significant margin of potential improvement in terms of the efficiency of public spending. Specifically, it should grow by 4% with respect to the EU average, 14% to reach the OECD average levels and up to 66% if the purpose were to reach the country that presents the best practices (Switzerland) . With the removal of a small part of the efficiency gap, the balance of our public finances could be placed in surplus from the current deficit without raising taxes.
To increase the effectiveness and efficiency of public spending in Spain, we must improve the allocation of expenditure in the different policies and generate greater efficiency in each of them. Thus, the main thing would be to carry out a rigorous and external evaluation of public policies. In this regard, the work of the AIRef stands out, which has initiated a process of reviewing the expenditure for all Public Administrations, in order to detect possible inefficiencies and overlaps between Administrations.
The document shows that there are important areas for improvement, such as education. Spain has school dropout rates and results that are not consistent with its level of expenditure, and greater efficiency has been observed in the private sphere than in the public sphere. In relation to active employment policies, AIReF notes that some of its programs do not offer the expected results in terms of employability, while, regarding the provision of services by Local Administrations, it indicates that the small size of some municipalities does not allow An improvement in costs.
Among the good practices to contain public spending, Spain is undertaking a remarkable process of digitalization of its public sector, which should be extended to all Administrations. In the health sector, in the Valencian and Madrid Communities it has been found that, through the private management of hospitals, cost savings close to 30% are achieved compared to those of totally public management. And efficiency could also be improved through the reduction of parallel Administration, that is, rationalizing public bodies that operate under poor control. At the international level, it is indicated that, in some countries, a better evaluation of public sector employees and the implementation of remuneration by objectives have allowed them to improve their performance.
On the other hand, public-private collaboration turns out to be a mandatory catalyst for efficiency in Public Administration. It is unquestionable that outsourcing to the private sector, by these Administrations, is a source of savings for taxpayers and improvement of allocative efficiency, either through the provision of services directly by the private sector, or through the acquisition of intermediate consumption or outsourcing or subcontracting of some tasks. The outsourcing allows to take advantage of the greater specialization and efficiency of the companies, which should move to a higher quality in the services provided, together with a cost saving for the Administration.
The outsourcing of certain services introduces greater flexibility, allowing more agile responses to a specific, changing or specific demand. Spain has outsourcing ratios, both against GDP and total public spending, significantly below the EU and OECD average. In addition, it has been possible to confirm the existence of a positive correlation between the degree of outsourcing of the public sector and the IEE public expenditure efficiency index, so a greater outsourcing by the Spanish public sector is another way that would contribute to improve its efficiency.
A permanent evaluation of the public expenditure, of the resources used and of the results obtained must be carried out, not only at the beginning of them but also throughout its implementation stage, undertaking the evaluation of those items with a greater weight in public expenditure. It is essential that the public sector is well managed and, in an environment of limited resources, those criteria that enhance the improvement of efficiency in public spending must prevail.
From the IEE some recommendations are proposed to improve the efficiency of the public sector:
- A deep reflection on the competency model between Public Administrations should be carried out to improve its functioning through the study of duplicities between all levels of Public Administrations.
- It would be desirable to carry out an exercise of benchmarking within the Local and Autonomous Administrations.
- The reduction of the number of public agencies, agencies and companies of the Public Administrations should be considered.
- It is essential to carry out a permanent evaluation of public spending and that this is done through the cost-benefit criterion.
All these factors would help to improve the productivity of the public sector, and, therefore, the competitiveness of the Spanish economy. Likewise, Spain has the need to undertake a process of fiscal consolidation, which should not be done by way of increasing taxes, since it would harm the growth of activity and employment, but by improving efficiency in spending , which has ample room for improvement, following the recommendations of the IEE.
