The Nature And Working Of Pems

2217 words - 9 pages

Outline and assess the nature and working of PEMS. What was its purpose and how well did it live up to expectations? What were its strengths and weaknesses, and what do these say about the validity of rationalism and incrementalism as guiding principles of financial management?
PEMS stands for Policy and Expenditure Management System. From 1979 through 1993, PEMS was the federal government’s macro-system of financial management. It was seen as a rational form of financial management. It was based upon the earlier PPBS system. PEMS was designed to integrate planning, programming, budget allocations and enhance the roles of the ministers in financial management. It did this by decentralizing budget decision making down to the cabinet committees. There were three elements to PEMS, with the whole system being run over a fire year horizon. Every year the government would have to revise its Multi Year Fiscal Plan. The department of Finance was responsible for the preparation of this plan and also emphasizing its central role in the process. This provided a detailed report of the existing revenue and expenditure position of the government as well as predicting it for the next four years. By doing this they established revenue targets of the government in keeping with Finance’s analysis of the health of the national economy. In conjunction with the Treasury Board, Finance would plan and divide the revenue among the sectors for program delivery. In developing the Multi Year Fiscal Plan, Finance was appointed the task of prioritizing government official’s demands. They were also responsible deficit issues and anything that was necessary to maintain the financial health of the government. Once the plan was prepared, it was presented to the Priorities and Planning committee for review, revision, and eventual acceptance. Once the Fiscal Plan was approved, it served as the foundation for allocating funding levels to the many sectoral committees of cabinet in order to support current and new programs. It was seen as the “A” and “B” budgets. These committees were made up of the ministers of the departments and it was their responsibility to distribute their sectors funds among the departments and programs. Each of the policy sectors received all of its funding in an Envelope. This Envelope, “a funding level,” was made up of a reference level for funding programs that were approved. Also, a policy reserve for funding new initiatives or enhancing current programs. In emergency circumstances, a small operating reserve would be used to fund special projects. The cabinet committee was responsible for watching over the distribution on the funds. In this manner, the responsibilities of financial management were distributed to responsible ministers. In every department there was a role to play in the planning and budgeting. These roles were performed by preparing department plans that were designed to assist themselves and other actors in making the entire system work...

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