Policy Note 28: Public spending: Less can be more!

There is considerable potential for efficiency in public spending in Austria. "In some federal states, public services can be provided much more cheaply than in others," says Tobias Thomas, Director of the economic research institute EcoAustria. "If public services were provided efficiently everywhere, expenditure could be significantly reduced and the level of service for citizens could be maintained or even increased," says Thomas.

The latest EcoAustria benchmarking of the federal states examines the areas of childcare, nursing care, compulsory education, hospitals, administration and housing subsidies in the area of responsibility of the federal states and municipalities. Public expenditure is compared with result and impact indicators and structural differences between the federal states are statistically adjusted.

The analysis shows, for example, that the adjusted costs per resident day in the area of inpatient care in Lower Austria amount to EUR 44. In other federal states, however, they are more than twice as high at up to 100 euros per day. There are also considerable differences in inpatient care, for example. Here, the so-called LKF points are the common output measure for treatments. Each LKF point costs 93 cents in Tyrol, whereas in other federal states it costs up to 1.45 euros, a good half more.

Across all six public task areas analyzed, there is an efficiency potential of 6 billion euros at the level of the federal states and municipalities. This corresponds to 1.6 percent of GDP. From an international perspective, the efficiency potential is even higher, as the benchmarking of the federal states only looks at the most efficient solution within Austria. "The considerable efficiency potential shows that even better public services for citizens are possible at lower costs. When it comes to public spending, it is often the case that less can be more," says Thomas, commenting on the results of an EcoAustria Policy Note published today.