Remarks by Angel Gurría
1 April 2015
(As prepared for delivery)
Dear Minister Poiares Maduro, Ladies and Gentlemen,
I am delighted to be in Lisbon once again. This morning we are presenting the first OECD Review of Policy Indicators for Portugal focusing on how policies can become more effective and reach their full potential. This Review has benefited from the excellent cooperation between the OECD and Portugal’s Cohesion and Development Agency.
In fact, this is the first time that the OECD has worked so closely with a country on the evaluation of policy indicators. It requires a leap of trust to let another institution participate so closely in a government’s internal processes. I would therefore like to thank Minister Maduro for making this happen, at a particularly important time for Portugal.
Following three years of severe recession, the recovery of the Portuguese economy is now on firmer ground. GDP growth reached 0.9% in 2014 and we expect it to rise to at least 1.3% in 2015. Many necessary adjustments are taking place: the export sector is expanding, the current account has turned positive, debt levels are falling and bond markets are rewarding successful fiscal consolidation with access to financing at record-low yields. However, many challenges persist, inequalities remain particularly high; and while unemployment has been on a declining path for the past two years, it remains unacceptably high at over 13%.
In this context, structural reform must become a permanent process – a state of mind for continuous improvement. This Report provides the necessary framework to accomplish this. While it is a review of policy indicators, the underlying issue is much bigger; it is about designing more effective policies.
Indicators are vital in understanding and measuring policy effectiveness, especially as most policies affect outcomes only indirectly.
To provide a short example: we create new bus lines, not because we want more buses, but because we want to facilitate people’s mobility and provide incentives to use public transport. How can we ensure that a new bus line is created where it is needed most and is used by enough passengers to provide value for money?
The answer is, by designing and implementing evidence-based policies that are regularly monitored and evaluated. And in this respect, indicators are essential to this process. They tell us whether policies are really working as planned, achieving the desired outcomes. They therefore provide essential information to policymakers, and allow them to better communicate the targets and achievements of public policy.
The Review we are presenting here today does just that; it offers an evaluation and provides advice on indicators which have been developed to monitor the effectiveness of policies funded by the European Union. Let me highlight three principal findings.
Firstly, the policy indicators that were developed by Portugal to monitor EU funded projects are generally in very good shape. However, some variations exist. For example, it is always easier to develop indicators for policy fields that have easily quantifiable outcomes, such as labour market policy, than for those in which outcomes are much harder to quantify, such as social policy or public administration.
Secondly, while most indicators focus on the outcomes, there is still room for improvement. For example, in areas such as that of human capital, although not always easy, it is important to define objectives that refer to outcomes, rather than outputs.
Thirdly, the evaluated indicators are an excellent first step, but they only cover specific policy fields supported by the EU. In order to obtain a full understanding of how policies work and how they interact with each other, evaluation and monitoring needs to be extended to all other fields of public policy. For example, indicators related to employment mostly refer to ESF funded programmes and are thus very programme specific. While this is appropriate for their purpose, they do not provide information regarding the broader state of the labour market.
This set of indicators can be a great tool to promote more resilient, more inclusive and more sustainable growth. However, even the best indicators will not lead to policy improvement if they are not used in the day-to-day policy-making process. For this reason, Portugal urgently needs to design a monitoring framework to ensure that all insights gained from the indicators are translated into better policies. Only when such mechanisms are in place can indicators support evidence-based policy design, budgeting and implementation and help us to achieve the desired outcomes.
Last but not least, the focus of a policy should always be on the policy objective and never on the indicator itself. Concentrating too much on improving the indicator runs the risk of policies performing badly in terms of achieving their broader objective.
Ladies and Gentlemen, you cannot improve what you cannot measure and therefore, to improve your policies you need high-quality indicators. I am very pleased to report that Portugal’s policy indicators are strong and that with the help of this Review, the Portuguese government will further strengthen them.
The OECD stands ready to continue working with Portugal on these issues to advance its quest for ‘better policy indicators for better lives’.
Rest assured that you have our full support. Thank you.