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This paper presents a detailed economic modelling analysis of public finance in the transition towards carbon neutrality. It outlines results from a Net-Zero Emission Ambition scenario, which reflects the ambition to achieve net-zero carbon dioxide emissions globally by mid-century, using a broad and region-specific policy package that combines various policy instruments: carbon pricing, removal of fossil fuel support, regulations in the power sector, and other policies that stimulate investments by firms and households to reduce and decarbonise energy use. The analysis relies on the OECD global computable general equilibrium ENV-Linkages model.

Results show that transitioning towards carbon neutrality is feasible when considering economic and fiscal consequences. The scenario achieves carbon neutrality while maintaining continued economic growth, despite a limited negative impact on global GDP and on public revenues. The fiscal effects reflect a trade-off between instruments that increase public revenues (carbon pricing) or reduce public expenditures (fossil fuel subsidies removal), on the one hand, and more costly instruments (subsidies) and indirect effects (tax base erosion and changes in fiscal and economic structure) on the other hand.

Reflecting on the experiences of responding to the COVID-19 pandemic, this OECD working paper illustrates selected international trends that are driving innovation in the practice of public communication across the OECD to make it more inclusive, responsive and compelling. These include advanced uses of “big data” and analytics to power precise, targeted communication, collaboration with trusted third-party messengers in diverse communities, and the application of behavioural insights (BI) to communication. In turn, these trends can help promote the use of public communication for policy, openness and dialogue. The paper reflects on the implications of these international trends for four countries in Southeast Asia, namely Indonesia, Malaysia, Singapore and Thailand. It looks at local lessons from the pandemic response and identifies avenues for adopting global good practices more widely. The paper focuses on a set of institutional prerequisites, including fostering a culture of innovation in public communication mandates and approaches, ensuring access to specialised skillsets, and strengthening ethical guidance in the use of new technologies and BI.

This report discusses the costs and benefits of the transition from cash to accrual accounting in the public sector for SIGMA partners in the Western Balkans and the European Neighbourhood. The countries are attracted by the promises of accrual accounting and the corresponding IPSAS standards that it will improve transparency, accountability and financial decision-making. This report investigates whether the reform towards accrual accounting is indeed recommendable given that the reform towards IPSAS-based financial statements also carries a higher administrative burden and often requires government-wide adaptation or adjustment of the financial information systems. In this report, evidence from case studies of five EU Member States and four SIGMA partners is combined with a review of the academic literature to understand the balance of the benefits versus the costs of the reform.

Norway and Finland share several commonalities, being Nordic democracies with a population of 5.1 and 5.5 million and large rural areas. With decreasing population in rural areas, given aging and structural changes in society, both countries face challenges in trying to keep the costs of passenger transport services down while ensuring an adequate standard of service nationwide. Grappling with similar issues, experiences and information about different policies in Norway may provide useful information to the Finnish Government. This contribution therefore provides some insights into public transport provision in rural and depopulated areas in Norway, how the public authorities have attempted to solve efficiency issues while maintaining good quality services and related experiences sparsely populated rural areas. It includes aspects concerning the market of transport providers, user needs and political barriers of reform. In both Finland and Norway there are many different authorities that are responsible for the administration, procurement and planning of various passenger transport services. In both countries there are concerns with increasing costs and certain public authorities are interested in using coordination among different organisations in order to exploit potential savings, while retaining an adequate level of public services, also in rural areas. This working document includes references to Denmark, as certain Danish municipalities have coordinated their special transport services to a larger extent than in for example Norway.

1. The OECD has undertaken a comparison of the resources of older people in nine OECD countries – Canada, Finland, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom and the United States – and has examined how the incomes of older people are influenced, directly and indirectly, by government policies. The study finds that a new policy agenda is emerging, one that is likely to focus on how policy can support:
   • A transition from full-time work to retirement that is later, on average, than at present and that provides greater opportunities for more flexible and gradual pathways to full retirement. There would be a realistic possibility for many people to have a continued attachment to the labour force, and an active life in society, well into later life. However, highest priority would be on encouraging later retirement for those who now retire well before age 65.
   • A diversified system of income support for older people during retirement (and the transition to ...

This paper proposes a new set of public health and long-term care expenditure projections till 2060, following up on the previous set of projections published in 2006. It disentangles health from longterm care expenditure as well as the demographic from the non-demographic drivers, and refines the previous methodology, in particular by better identifying the underlying determinants of health and long-term care spending and by extending the country coverage to include BRIICS countries. A costcontainment and a cost-pressure scenario are provided together with sensitivity analysis. On average across OECD countries, total health and long-term care expenditure is projected to increase by 3.3 and 7.7 percentage points of GDP between 2010 and 2060 in the cost-containment and the cost-pressure scenarios respectively. For the BRIICS over the same period, it is projected to increase by 2.8 and 7.3 percentage points of GDP in the cost-containment and the cost-pressure scenarios respectively.

Education is one of the most important drivers of economic growth. The benefits of education go beyond the academic, contributing to economic objectives such as growth and productivity, as well as to social goals such as health and social cohesion. In a highly competitive, globalised world economy, public spending on education is more important than ever.

Public sector reforms and a refocusing of spending, partly through privatisation, have created a leaner and more effective government in Mexico. Primary expenditure, at around 18 per cent of GDP in 1999, is less than half the average for the OECD. At the same time, there are important spending requirements to create the basis for strong sustainable growth over the medium term. The backlog in basic infrastructure is considerable and areas such as education and health will require a steady expansion of budget resources. Specific measures to fight poverty are also needed. Inadequate tax resources and a heavy reliance on volatile oil-related revenue have been important factors impeding the development of essential public programmes. In this respect, given the sizeable marginal economic and social benefits of increasing spending in the above areas, it would be appropriate to raise the low tax-to-GDP ratio over the short to medium term. It is also essential that public spending be ...

This paper aims to identify structural reforms for better public spending management in Italy –in turn a critical need in view of the country's high debt and tax burdens, notwithstanding significant progress in the past decade. The analysis proceeds on two distinct levels. At the central government level, a misallocation of public resources is suggested by excessive pension spending against inadequate spending in infrastructure, labour market and human capital areas, as well as by high and inefficient government employment. These problems can be traced in large part to the incentive structures built into the public institutions charged with the planning, implementation, and control of spending policies. The main recommended policy actions are to pursue further pension reform while strengthening other income transfers, make the budget process more transparent and accountable, undertake deeper reform of the public administration, and to make greater use of market instruments in areas ...

In many OECD countries changes in demography and health conditions are putting pressure on public finance. To prevent further expansion of government spending as a percentage of GDP, public spending efficiency will need to be raised. This paper uses data envelopment analysis (DEA) to assess the efficiency of welfare spending in a sample of OECD countries around 2012, focussing on health care, secondary education and general public services. The DEA model has a two input-one output structure, with at least one of the variables representing a composite indicator controlling for country-specific factors (socio-economic environment and life-style factors, for example). We find wide dispersion in efficiency measures across OECD countries and provide possible quantified improvements for both output and input efficiency.

The Czech fiscal position is generally sound and policy making is prudent. However, the fiscal framework was not strong enough to contain spending in the upturn and it would benefit from independent budget oversight. An anchor for the fiscal policy would be helpful, in the form of an explicit debt target coupled with corresponding spending ceilings and deficit targets.

The ongoing fiscal consolidation, spending pressures and an already relatively high average tax burden necessitate public sector efficiency improvements. There is scope for improvement in the management of government spending, mainly by enhancing transparency, introducing performance-oriented budget indicators at both central and local levels, improving the management of state-owned enterprises and developing the procurement practices of the public sector.

Legislated increases in the retirement age will improve pension system sustainability. A new defined contribution tier is being introduced which should help to diversify future retirement income. At the same time, there is uncertainty about the number of participants who will decide to divert their contribution to the new tier and hence about the implications for revenues in the existing defined benefit pension tier. Also, attention should be taken regarding administrative costs of the new tier, since these can have a significant impact on future replacement rates and therefore public support for it. With more emphasis on private savings, the financial literacy of the population also needs to be stepped up.

In healthcare the authorities plan to continue improving the multi-insurer model through incremental reforms such as limiting pharmaceutical costs and improving provider-payment system. The potential for efficiency improvement in healthcare network planning and better care management should be explored, while ensuring that insurers and health providers are given the correct incentives.

This working paper relates to the 2011 Economic Survey of the Czech Republic, www.oecd.org/eco/surveys/czech.

This paper presents composite indicators of the institutional and policy characteristics of educational systems, collated from the questionnaire responses of 26 Member countries. These indicators provide an overview of the institutional framework in the primary and secondary education sector and are constructed so as to be used for the analysis of international differences in spending efficiency. The key features of the institutional setting in the non-tertiary education sector are grouped under three headings: i) the ability to prioritise and allocate resources efficiently (through decentralisation and mechanisms matching resources to specific needs); ii) the efficiency in managing spending at the local level (through outcome-focused policies and managerial autonomy), and iii) the efficiency in service provision (through benchmarking and user choice). For each country, an intermediate indicator is computed for each of these six institutional properties. Composite indicators then combine the six intermediate indicators of spending efficiency into a single, aggregate measure. Results are presented and some of their implications are discussed. Overall, the characteristics of the institutional framework in the non-tertiary public education sector seem to be very favourable, compared to OECD average, in the United Kingdom, Australia, Norway, Denmark and the Netherlands, whereas results are less favourable for the Czech Republic, Greece, Luxembourg, Japan, Turkey, Hungary, Belgium (French speaking community), Switzerland and Austria.

Faced with exceptionally rapid population ageing, Korea should address obstacles that lower fertility rates while encouraging higher labour force participation, particularly among women. While public social spending is currently very low, there is pressure for increased outlays on pensions, healthcare, long-term care and social assistance. The government should be cautious in expanding spending, taking into account the impact on economic growth. Outlays should be limited by shifting from direct provision of social services, notably childcare and long-term care, in favour of providing vouchers to consumers. Given the limited coverage of the public pension system, the new means-tested benefit for the elderly will be useful in reducing poverty. It is important to increase transparency about self-employed income to ensure fairness in the financing of social insurance systems, including the new long-term care insurance. The rise in inequality and relative poverty should be reversed by reducing labour market dualism.

The public service in central and eastern Europe has to adapt to an enormous number of changes in a very short time. The staff is faced with a constantly changing regulatory framework which needs implementation and enforcement, as well as new demands from the growing private sector and the citizenry at large. These challenges can only be met if the staff is highly qualified and constantly updating their qualifications. A sound system of in-service training is therefore crucial to keep the personnel within the public service on equal footing with the rapidly changing environment. This short paper is meant to point out the determining components of training systems, and advantages and disadvantages of possible solutions as they were developed in OECD countries, in order to assist countries in central and eastern Europe to set up a sound training system, while avoiding mistakes already experienced in OECD countries.

The Estonian fiscal position is much better than in many OECD countries, the country stands out for having a rather lean government sector and the authorities are striving for efficient use of existing resources. Both healthcare and local government were particularly hit the by the decrease of resources as a result of the unprecedented GDP fall during the downturn. As a return to high revenue buoyancy will not be immediate, there are challenges for delivering the same with less money but it is also an opportunity to reconsider provision of public services. The healthcare sector is state dominated and offers some scope for efficiency improvements. On the supply side, further streamlining of the existing hospital network, emphasising primary care, and keeping an eye on the standard of quality of care, would be helpful. A number of market signals are already in place on the demand side, such as fees and drug co-payments. Yet these raise issues of accessibility of healthcare, in particular for financially distressed households. A cap on out-of-pocket spending together with active promotion of least expensive drugs use would help to address this issue. Local government seems rather extensive and fragmented for such a small country. Exploiting economies of scale, either by merging or requiring deeper co-operation, should bring gains in terms of public service efficiency. Offering greater scope for tax raising at the local level can incentivise the municipalities to adopt more growth-oriented economic policies. This working Paper relates to the 2010 Economic Survey of Estonia (www.oecd.org/eco/surveys/estonia).