Five factors for Budget bid success
Jason Webber, Finance and Economics Lead at MartinJenkins, has some tips for getting a Budget bid over the line.
Budget Day is here — that day every year when the Government’s books are unfurled, spending is allocated, and Ministers announce new proposals. A Budget can also have long-term consequences, setting the direction of fiscal and social policy for years to come.
Memorable New Zealand government Budgets also appear to come with a nickname, for some reason. I suppose a nickname makes a good headline.
We probably aren’t going to see a Budget anything like the “Mother of All Budgets” of 1991, or “The Black Budget” of 1958, but this year’s Budget will be announced in an environment that is markedly different from the past several years.
We’ve already been told it will be a “No-Frills” Budget (maybe that’s the nickname that will stick, although personally, I liked the “Bread and Butter Budget” because I’m a sucker for alliteration), but with the added complexity of responding to a natural disaster — sadly, something successive New Zealand governments are starting to have far too much experience with.
Reflecting in the lead-up to Budget 2023 has often led me to think back to: What makes a good Budget proposal, and what’s the best way to successfully get an initiative funded as part of the Budget? In our work at MartinJenkins, we consider five main angles — and no, being lucky or a policy priority isn’t necessarily one of them (although that certainly doesn’t hurt).
First: Know the context, and understand the bigger picture
Before you even start drafting up that business case or approaching government with a funding proposal, there is a wealth of published information on the macro-economic and fiscal picture that is super helpful to wrap your head around.
The first thing I always encourage people to do is read the Budget Policy Statement (BPS). The BPS is a government policy document, usually published just before the Christmas break (some light holiday reading) that sets out the Budget priorities and wellbeing objectives that will guide the Government’s Budget decisions in the coming year.
The Budget Policy Statement usually has a few key pieces of information:
- key investment priorities for the Government in the upcoming Budget
- the amount of the capital expenditure and operating expenditure “envelopes” that will be set aside for funding — basically, this is the amount of total additional funding that will be available to, say, build schools (for capital expenditure), or to fund an increase in benefit levels (operating expenditure)
- alternative sources of funding beyond the normal “Crown” funding envelopes (I talk a bit more about this later — but think things like the Provincial Growth Fund or the Climate Emergency Response Fund).
Finally, in the work we do we always like to remind organisations that are bidding for Crown funding that, although they live, breathe, and understand the importance of their initiative and proposal every day, there is almost always something else competing for the (very limited) pool of incremental Crown funding available. It’s important to understand how scarce additional Crown funding may be, and what Cabinet and Ministers have indicated are their priorities.
Second: Think strategically about funding
Just like us, Ministers tend to like free things.
To be honest though, I’m an economist and so I know that even if you give me something for free, I’m paying for it. I’m a bit of a killjoy like that.
But there is a way to improve the attractiveness and quality of a proposal: think about different ways that you may be able to fund components of the initiative or request or demonstrate what funding you might be able to bring to the table.
The Crown and Ministers are often interested in providing funding that can catalyse GDP growth or investment. They are also often interested in initiatives involving other private or third-party investment — what’s known as “contributory funding”.
And if you’re fee- or levy-funded, it’s always a good opportunity to review fee and levy arrangements to ensure they are capturing the full suite of costs, and that the balance between Crown-funded and levy- or third-party funded is still appropriate.
If you’re a Crown entity that has borrowing power, it’s also worth considering whether or not you can borrow or use the power of your own balance sheet before coming to the Crown for additional funding.
The key thing here is that even if you ultimately decide it’s not possible to seek funding sources other than those from the Crown, you’ve at least thought about these opportunities. There are a range of useful documents and information that can help frame up options and your thinking, and perhaps make you think about ways to fund and finance investments that you hadn’t thought of previously. These include:
- The Treasury’s “Guidelines for Setting Charges in the Public Sector”
- A paper by Te Waihanga, “Financing and Funding Infrastructure in New Zealand”.
Third: Know your data, and your history
There’s a whakataukī here that I always think is germane: Kia whakatōmuri te haere whakamua — “I walk backwards into the future with my eyes fixed on the past.”
It keeps me grounded and reminds me that, although any new proposal or idea may be firmly focussed on the future, you need to understand your organisation’s past to make any proposal compelling.
The whakataukī reminds me to ask simple questions like:
- has this proposal been submitted previously? Why wasn’t it successful?
- have other entities or agencies submitted similar proposals in this Budget round? Should I be talking to them?
- was this approach or proposal tried before? Was it the recent past, or not recent? What has changed to make this proposal viable now?
- does our annual report have any performance metrics that support (or contradict) the assertions made in the Budget bid?
- does anything from select committee presentations support the need for investment or the proposal?
It’s also worth understanding your comparative advantage. If you’re a Crown entity or Schedule 4A entity, you may specifically have been established to be more nimble and innovative than government departments and agencies — this may make proposals that are perhaps riskier or more innovative, more attractive, given where they are coming from.
Fourth: Tell a compelling story
Business cases can often be long … like, really long. They can also be super-repetitive. Yes, it’s important to fill in the information properly and cover all the components of a business case — but in our work we remind individuals that, at its core, a business case and request for additional Crown funding is two things:
- an evidence base for Treasury, which provides the data, information, evidence, and intervention logic that underpins the investment, and
- a story for both officials and Ministers that helps them remember the proposal and the request, and often has a citizen-centred viewpoint.
The data and information are important — but you don’t want to bore people to death. Even an investment in a technology system replacement can be made to sound exciting, necessary, and a valuable change for the department or entity.
And finally: Start early — the early bird can indeed get the worm
The earliest I ever had a client ask me for advice about seeking funding in a Budget was one month after initial Budget bids for the previous year had been submitted.
That would be akin to starting in January of 2022 for Budget 2023 (the one that is being announced tomorrow). That is 16 months of planning.
I chuckled at this — but, in thinking about it more, it occurred to me that a successful investment proposal is indeed often years in the planning and making. It can take that long to gain support from stakeholders, collect the evidence, and build a compelling case.
It also can take a couple of tries — if the first fails, this isn’t the end of the world, and it doesn’t mean the bid doesn’t have positive qualities. Sometimes, there are just other priorities that the Government wants to invest in.
But starting early provides you with the opportunity to build an understanding of the need for investment, both in your own organisation, but also with your Vote teams at the Treasury.
I like to remind people that Vote teams are in fact your biggest ally in the Budget process in the Treasury. Your Vote analyst and Vote team will be conducting the first assessment on Budget bids, before these go to the “central” Budget team for sifting through, among all the other sector and agency bids. If you can bring those individuals up to speed with the proposal, and build their understanding early, you’ve got a much better chance of getting your bid across the line.