The ACA audited reform projects on financial equalization

The 2017 agreement on financial equalization encompassed 28 reform projects. The Austrian Court of Audit (ACA) carried out an audit on the implementation of the agreed reform projects and published its corresponding audit report today. Therein, the auditors note the following: activities were undertaken in almost all reform projects, but they were of varying intensity. The scope reached from several working group meetings per year to a one-time dissemination of information. Furthermore “not every activity advanced the project”.

The audited period spanned the years from 2017 through 2019. 

The project responsibility should be clearly allocated

The financial equalization partners, i.e. the Federal Government, the provinces and municipalities, agreed on the 28 reform projects in the 2017 agreement on financial equalization for the period of 2017 to 2021. The ACA broke the reform projects down into four thematic areas: “task assessment and task orientation”, “tax autonomy”, “health and care” as well as “further reform projects and measures”.

Of the 28 reform projects, 14 were completed and six were ongoing at the time of the audit. Two projects were not carried out and in six cases the project was cancelled during its implementation.

According to the ACA’s view, agreements on reform projects provide a good opportunity to prepare reforms aiming at ensuring a higher effectiveness and efficiency of public task performance. The auditors, however, note that reform projects that were started without a political agreement on significant issues failed in most of the cases. Another obstacle for the implementation of reform projects is the lack of a clearly allocated project responsibility.

As regards agreements on joint projects, the ACA recommends to the financial equalization partners to focus mainly on the project design and to clearly allocate the responsibility for the project. The purpose and the objectives of the project should be clearly communicated. In the absence of a consensus on key issues, the working groups should focus on developing alternative options for decision-making. 

Call for consequences in the case of a non-fulfilment of projects

In the agreement, the partners concluded that the implementation of reform projects should be a prerequisite for certain federal benefits. One benefit concerned the one-off payment of EUR 125 million (of which 70 per cent were allocated to the provinces and 30 per cent for the municipalities) to cope with the special expenditure arising from migration and integration. The payment of the federal funds was effected already from 2017 on, although many reform projects had not been concluded or had not started yet.

The ACA critically notes that no consequences have been defined for the non-implementation of a reform project. For the agreement of joint projects, the ACA therefore recommends to the financial equalization partners to define a clear project objective, to formulate criteria for assessing the implementation and to determine a course of action in case of a non-implementation of a reform project.

Overview of the reform projects (in German)