Announced—yet not fully debated—during the 2007 presidential campaign, the RGPP results from the conjunction of many factors. Public opinion was prepared to the very notion of a general review of public policies by two reports by the former IMF’s Managing Director Michel Camdessus and prominent banker Michel Pebereau. A series of innovations were introduced in the PFM area after the adoption of the Loi organique relative aux lois de finances (LOLF) in 2001, including more transparent budgetary debates and “rotating” 3-month performance audits developed by former minister of the budget Jean-François Copé. Although less noticed, a number of initiatives were also launched in recent years to modernize the state administration, for instance to rationalize local administration networks.
The RGPP was launched on July 10, 2007 and is intrinsically linked to France’s commitment to return to a balanced budget by no later than 2012 (taken before the Eurogroup on July 9, 2007), and to the government’s policy of reducing public employment through attrition (replacing only 50 percent of retiring public employees). The list of measures adopted will provide the basis for France’s first multi-annual budget, which will be presented to Parliament in September of this year.
A comprehensive effort
Areas for review. The RGPP, while leveraging the program budget structure introduced by the LOLF in 2006, goes well beyond the scope of the sole central government’s budget. Two rounds of modernization measures were adopted in December 2007 and in April 2008 that cover:
- central government ministries (e.g. the merger of departments in charge of employment and enterprises),
- the central government’s administration in local territories (e.g. the rationalization of the network of military bases),
- some major social and economic policies (such as social security funds, professional training or housing subsidies), mostly managed in collaboration with unions,
- the improvement of fiscal governance, including the establishment of a multi-annual budget,
- some “support” services that cut across all ministries (HR policy, procurement, etc.), and
- power and finance-sharing agreements between the central and local governments. By contrast with the issues above, for which the Prime Minister’s strategy is to reinforce the accountability of all involved ministers, this last aspect of the reform is being led by a prominent member of Parliament, Alain Lambert, who was one of the LOLF’s fathers and who was also minister of the budget from 2002 to 2004.
Depth of review. The RGPP promotes a very candid and comprehensive approach to reform. Government policies are systematically analyzed through a list of seven questions (Figure 1) designed to focus on outcomes and outputs and to challenge existing structures. In addition, many reform items tackle public employment and transfers. This is critical to the long-term success of the RGPP, as a vast body of literature suggests that long-lasting adjustment relies mostly (or exclusively) on spending cuts, particularly in government wages and in social security and welfare. Furthermore, fiscal corrections of this type tend to be expansionary, whereas those relying mainly on tax increases are usually contractionary.
Parallel exercises. The RGPP is led in conjunction with the Revue Générale des Prélèvements Obligatoires (RGPO) (General Review of Government Revenue) which was launched with the authority of the minister of finance in November 2007. However, as large tax cuts were adopted in August 2007 and by previous governments throughout 2002-2006, the RGPO will focus less on diminishing taxes than on making them less distortionary and more conductive to investment. In parallel with the RGPP, public and private pensions are being reformed, and a debate on the status of civil servants has been launched (a white paper was recently released).
A structured effort
Strong leadership and centralized governance. One of the most striking features of the RGPP is that it centralizes and legitimizes reform decisions by institutionalizing a new governance mechanism involving the direct authority of the President. Specifically, reforms are prepared by a total of approximately 200 public and private auditors under the close supervision of a comité de suivi co-chaired by the Secretary General of the Elysée and the Director of the Cabinet of the Prime minister. This committee associates in particular all ministers and the heads of the finance commissions of both assemblies. All final decisions are taken by the Conseil de modernisation des politiques publiques, chaired by the President.
Systematic, “consulting” approach. This consulting-style influence is clearly perceptible in the presentation of ministries’ modernization plans, and in the methodology designed for the reform. The Direction Générale de la Modernisation de l’Etat, whose recently appointed director has a long experience with McKinsey, is specifically in charge of providing methodological support to audit teams and line ministries.
The establishment of a transparent, medium-term budget. The RGPP will serve as the basis for France’s first multi-year budget (2009-2011). Constitutional constraints may limit the government’s ability to formally present a three-year, constraining budget to Parliament; however, the government has repeatedly confirmed its intention to give ministers and program managers the maximum visibility on their future budget appropriations to conduct reforms over the medium-term.
Important outreach efforts
International examples. References to successful fiscal consolidations were already present in many publications, but few have used international benchmarks more actively than the proponents of the RGPP (see for instance, François Fillon’s speech at the National Assembly on April 17, 2008). A note on Canada’s 1994-1998 reform was even included in the press package of the first Conseil de modernisation des politiques publiques in December 2007. The example of the U.K.s’ spending reviews is often cited. More recently, President Sarkozy’s speeches have insisted on the example of Germany.
Modern communication. The RGPP has been extensively presented in the media, and benefits from a dedicated website.
President Sarkozy’s Révision Générale des Politiques Publiques (RGPP) (General Review of Public Policies) undoubtedly marks France’s most comprehensive, structured and spelled out effort to modernize its public management and deliver the structural reforms needed for a long-lasting fiscal adjustment. The objective of the year-old initiative is not so much to yield short-term budgetary savings than it is to review underlying government policies, coverage of activities by the public sector, and delivery modes of public services.
