The Return of the Deficit: Public Finance in Belgium over 2000-2010

5. Approaches to Primary Expenditures

Approaches to Primary Expenditures 121 Approaches to Primary Expenditures In this chapter different authors shed light on a particular aspect of government expenditure or public governance in general. In one way or another, they all address the theme of government efficiency. The contribution by Valérie Schmitz, Bastien Scorneau and Robert Deschamps focuses on the spending differences between regions. Why does a higher share of the budget not always imply a better output? Stefan Van Parys and Luc Van Meensel describe the evolution of employment in the public sector in both a narrow and a broad sense. The Belgian story is also compared with those of other European countries. A reduction in government employment is one of the possible ways of achieving budget cuts and increasing government efficiency. The two remaining contributions do not make use of an economically analytical approach to the same extent, but are certainly no less interesting for that. Koen Verhoest, after a brief theoretical introduction, discusses the evolution of performance contracting as an instrument of control used by the different Belgian governments during recent decades. To what extent and under what conditions can performance contracting be used to achieve a more efficient government? Finally, Jean Hindriks‘s contribution makes one think about the concept of government efficiency, how to measure it and what tools exist to improve it. 5. 122 The Return of the Deficit 5.1. the structure oF exPenditure oF the regions and communities: a comParison 2002-2011 Valérie Schmitz, Bastien Scorneau, and Robert Deschamps 1 1.1 introduction In the process of the federalization of Belgium, Regions and Communities have seen a major expansion of their competences and responsibilities. Within this broader autonomy, Regions and Communities may allocate their budgets as they think best, which can possibly lead to large discrepancies between them. Because budgets are the visible expression of political choices, differences in their allocation also pinpoint diverging political priorities. The aim of this paper is to compare the budgetary expenditures of the Regions and Communities for the territories of Wallonia, Brussels and Flanders in the period from 2002 to2011 and to highlight the implicit priorities of those governments. Those priorities are to be analysed in terms of their impact on the economy, employment and sustainable development . The purpose of our contribution, however, is not to study the expenditures’ efficiency, but to quantify them in terms of budget shares. Budgetary expenditures are classified into five categories: regional, social and cultural, education, debt and administration expenditures. Budgetary expenditures for each territory have to be carefully defined; regarding the Walloon territory, they come from the budgets of the Walloon Region and of the French and German Communities. For the territory of Brussels, they come from the budgets of the Brussels-Capital Region, of the French, Flemish and Common Community Commissions, and also from the French and Flemish Communities’ budgets. Budgetary expenditures for the Flemish territory come from the Flemish Community’s 1. Valérie Schmitz and Bastien Scorneau are researchers at CERPE, Faculty of Economics, University of Namur. Robert Deschamps is professor at CERPE, Faculty of Economics, University of Namur. Approaches to Primary Expenditures 123 budget. Corrections have to be made for each territory’s expenditures in order to neutralize transfers between entities. 1.2 methodology2 1.2.1 period We studied the evolution of the structure of expenditures for the 20022011 period, 2002 being the first year after the Lambermont reform (2001). This reform of the Belgian federal system was the last one before the reform the current government will have to implement. For each of these 10 years we have published comparisons from a territorial and from a linguistic point of view. For the Brussels-Capital Region, however, our analysis starts only in 2005. 1.2.2 regional TerriTories & adjusTmenTs Budgetary expenditures for the Walloon territory or “Wallonia” (“Walloon expenditures”) consist of the expenditures out of the Walloon Region’s budget (except for transfers to the German Community), of the German Community’s budget and of a share (defined below) of the French Community’s budget (except the transfers to the Walloon Region and the French Community Commission of Brussels). Budgetary expenditures for the territory of Brussels cover the expenditures from the Brussels-Capital Region’s budget (except for transfers to the French, Flemish and Common Community Commissions, as well as transfers to the debt management Fund) of the French, Flemish and Common Community Commissions, and of shares...