2016 · Q8a · Incremental budgeting (10 marks)

Source: PUBLIC ADMINISTRATION 2016.pdf, PDF page 1 · Answer allocation: 10 marks

Original examination question

Write a substantive note on any TWO of the following: (10 each) (a) Incremental budgeting (b) Planning Programming Budgeting system (c) Dissensus Budgeting

This page answers option/part (a). All options are supplied for revision; follow the paper’s choice instructions in the examination.

Bullet outline

• Start from the existing expenditure base.
• Explain bargaining over marginal changes.
• State continuity and low information-cost advantages.
• Identify inherited waste and weak reprioritisation.
• Recommend periodic baseline review.

Full exam-ready answer

Meaning and operation

Incremental budgeting prepares the next budget by adjusting an existing base, usually the previous allocation or expenditure. Departments negotiate additions or reductions for inflation, staffing, new commitments and policy changes rather than justify every activity from the beginning.

Its attraction is practical. Most public services continue from year to year, and their costs cannot be reinvented annually. Concentrating attention on marginal changes reduces information demands and allows bargaining within a familiar framework. It can protect continuity in services such as schools, courts and routine administration.

Strengths and weaknesses

The method is relatively simple and predictable. Managers understand likely resources, while finance officials can focus on important changes. Incremental negotiation can also reduce conflict by treating much of the existing budget as an accepted starting point.

However, past allocation is not proof of present value. Ineffective programmes may retain resources because their base is rarely challenged. Departments may exaggerate needs or spend remaining funds to defend future allocations. Uniform percentage cuts can damage effective services while preserving low-value activities.

For example, increasing every office's travel budget by the same percentage ignores differences in actual responsibilities and alternatives such as remote meetings. Equally, reducing all offices equally may harm a field-inspection service more than a headquarters unit.

Additional qualifications

Incremental budgeting can accommodate inflation; its weakness is mechanical adjustment without checking actual cost pressures, workload or programme value. For example, a 5% nominal increase when relevant input prices rise by 10% reduces purchasing power rather than expanding services.

An accepted baseline can also discourage innovation: managers may have little incentive to redesign services if historical allocations remain protected. Periodic baseline reviews and performance evidence help address this.

Input focus and limited public participation are not defining requirements of incrementalism. Incremental decisions can coexist with programme classifications, performance indicators and public consultation.

Assessment

Incremental budgeting is useful for stable operations but insufficient for major reprioritisation. It should be supplemented by expenditure reviews, performance evidence and selective reconsideration of programme baselines. The objective is to retain administrative practicality without allowing historical expenditure to become an unquestioned entitlement.

Study note: This is an original model answer, not an official FPSC marking scheme. The outline is for revision; the prose below it provides the complete answer. Marks guide relative depth rather than a prescribed word count.