This study examines the decision-making process of policy priorities and resource allocation in government budgets, and discusses tools associated with outcome-oriented budget systems. It evaluates the limitations of performance-based budgeting in terms of policy priority determination and coordination, and explores the concept of a outcome-oriented priority budget system along with potential avenues for its advancement. This framework aims to achieve harmony with policy objectives such as addressing climate change, reducing social inequality, and promoting sustainable development. It follows a trend of approaching various key policy challenges from multidimensional perspectives and resolving them through stakeholder engagement. The shortcomings of performance-based budgeting include an output-oriented approach, interdepartmental barriers, and challenges in maintaining policy consistency and prioritization. Consequently, the priority budget system is considered effective in addressing these issues.
Complex societal issues exhibit a higher level of complexity than simple or merely complicated problems, rooted in the interactions of multiple causes and entities. These issues are commonly found across nations and encompass economic imbalances, education, environment, well-being, and aging. South Korea also grapples with challenges related to an aging population, low birth rates, youth unemployment, real estate, equality, well-being, and education. To effectively address these issues, cross-departmental collaboration and strategic priority budgeting are essential.
The OECD recognizes the importance of effective budget allocation for economic well-being and inclusive growth. It acknowledges issues stemming from public debt escalation and aging populations. OECD member states are pursuing fiscal soundness through medium-term expenditure frameworks and various strategies, aiming to enhance transparency and efficiency in budget processes. Through priority budget systems, they efficiently utilize public resources, emphasize political significance, and achieve outcomes. Leadership from the Central Budget Authority (CBA) strengthens budget governance, while the significance of IT systems and data is highlighted. Challenges including resource scarcity and difficulty in policy targeting require continuous efforts to be addressed.
Examining case studies of priority budget systems in various countries, France's green budget integrates environmental considerations into budget processes to promote sustainable development. Collaboration with the OECD has enhanced green budgeting, employing methods such as green tagging for budget analysis and submitting a supplementary document called the "Yellow Book" to parliament. Green bonds are issued to invest in environmentally beneficial projects, supporting the green budget. This concept adjusts the budget process to achieve environmental goals, emphasizing integrated evaluation, consistent policies, and transparency.
Furthermore, the well-being budget, initiated by New Zealand and adopted by Canada, Australia, Ireland, and others, transcends economically centered budgeting to improve quality of life through considering social and environmental aspects. Overcoming limitations of economy-focused budgeting, it underscores efficient budgeting and evaluation through interdepartmental collaboration. New Zealand's well-being budget is based on a standard of living measurement framework, determining policy priorities through interdepartmental cooperation and structuring projects while considering well-being improvements. This approach focuses on deriving medium- to long-term results by utilizing various indicators to address present and future generations' policy demands. The well-being budget manages budgets through interdepartmental cooperation and well-being indicators, adjusting priorities and allocations through post-budget policy impact and project performance analysis. This encourages policy improvement, citizen participation, and sustained efforts for well-being enhancement.
Lastly, Ireland's equality budget system aims to address various disparities and integrate equality into government decision-making. Considering income, gender, and regional disparities, this system conducts budget allocation and policy decision-making, analyzing budget impacts across diverse equality dimensions and supporting government policy priorities. Ireland's equality budget pilot project started in 2017, setting various equality objectives and incorporating them into budget programs to pursue diverse goals including reducing socioeconomic inequality and poverty. The operation of Ireland's equality budget system involves collaboration with various institutions. Expert advisory groups cooperate for the development and support of the equality budget system, while each department connects their policies and equal ity objectives to the equality budget and collaborates. However, challenges in setting equality objectives and collecting data can limit this process. To overcome this, the OECD proposes developing government-level equality goals, enhancing communication between citizens and policy makers, developing and protecting data, and reinforcing legal foundations. Ireland's equality budget system plays a significant role in supporting effective government policy decision-making and budget allocation considering various equality dimensions.
The governance structure for the introduction of the priority budget system focuses on policy priority determination through inter-departmental collaboration. This system is based on a standard of living measurement system, allowing each department to plan projects and have the budget allocated transparently and responsibly. The core of the system is policy evaluation using various indicators and improving the standard of living in society. For the successful introduction and establishment of the budget system, strengthening decision-making at higher levels, establishing a results-oriented performance management system, enhancing the role of the central budget agency, and expanding investment in IT systems are essential.