Risks and Unintended Consequences of the Reform

Abstract

All reforms carry risks and they may have unintended consequences. This chapter discusses these features of the PFM/IC reform process. It provides some examples of where risks and unintended consequences have occurred. Perhaps the greatest risk and the one most likely to occur is that of a ‘fake’ reform. In the author’s experience this is the one for which there is some evidence because those responsible for implementation tend to be focussed on the bureaucracy associated with the reform, because it provides ‘evidence’ of implementation, but there is no substance. The managerial implications are completely overlooked. The end result is higher costs because of the added bureaucracy but no tangible benefits in terms of improvements in public value. An aim of this guide is to avoid these risks and unintended consequences from occurring.

As with many reforms there are risks and unintended consequences. These can affect the level of benefits that may be achieved and the utilisation of public resources causing actual losses through corruption or other forms of misuse of public resources as well as a misdirection of resources. Failure to achieve objectives and performance standards may also be an unintended consequence. Pressure may also emerge to either abandon the reform or focus on the bureaucracy of the reform rather than its managerial substance because it will impact upon individual responsibilities and the distribution of responsibilities and power within and between organisations. Those who feel they have lost may wish to regain that power and those responsibilities or they may not feel that the new managerial environment is appropriate for their organisation, or indeed country. A responsibility of the head of the government (prime minister or president) and the minister of finance is to ensure that regard is had to these potential risks and unintended consequences that might arise. This chapter suggests some areas where these phenomena could emerge.

6.1 The Background to Risk and Unintended Consequences

6.1.1 Definitions

What constitutes risks and what are unintended consequences in the context of the PFM/IC reform? Risks arise from not addressing adequately the nature of the PFM/IC reform and in not addressing the management as well as technical considerations. These risks may also arise from the approach of donors where they are driving the reform as well as from internal actors involved in the reform. The most important of those risks is that a country ends up with a ‘fake’ or ‘non-reform’, leading to higher costs with little or no benefits plus the costs and disruption caused by seeking to impose a reform that may be inappropriate for a country at this particular time given its current circumstances. As has been shown in earlier chapters if this reform is to be undertaken properly, it is a major reform with a very large ‘to do’ list of activity to be undertaken over a long period of time. This all adds to risk.

Unintended consequences are those consequences that result from the reform being applied correctly, but still having unforeseen effects. An example would be that as budgetary and financial controls are relaxed to allow managers greater scope to make decisions to improve efficiency and effectiveness the traditional ‘checks and balances’ are not replaced by ‘checks and balances’ attuned to the changed operational environment and decisions are made which result in consequences that undermine the benefits of the reform.

Donors and others advising on the reform should bear in mind that this reform is a major reform and that many developing and transition economy countries may not have the administrative and technical capacity to undertake all aspects of the reform and therefore the risk of unintended consequences is that much greater.

6.1.2 Causes of Unintended Consequences

In 1936, Robert K. Merton, the American sociologist listed five possible causes of unintended or using his terminology, unanticipated consequences.¹ The five are as follows:

• First—ignorance. It is impossible to anticipate everything, thereby leading to an incomplete analysis.

• Second—incorrect analysis of the problem or following habits that worked in the past but may not apply to the current situation.

• Third—immediate interest, which may override long-term interests.

• Fourth—basic values may require or prohibit certain actions even if the long-term result might be unfavourable. These long-term consequences may eventually cause changes in basic values.

• Fifth—a self-defeating prophecy. Fear of some consequence drives people to find solutions before the problem occurs, thus the non-occurrence of the problem is not anticipated.

Introducing PFM/IC, as has been said, is a major reform and as with all major reforms the possibility of risks emerging and of unintended consequences is greater and potentially more damaging than with lesser reforms. Not the least of these risks is that as the PFM reform will result in changes to existing power structures within and between organisations inherent pressure will exist, at least for a considerable period of time, for those who perceive a loss of power to seek to recover that loss by one means or another (see De Geyndt, Chap. 1).² Consequently, a risk for a minister of finance is that the reform may not be properly or fully applied in individual organisations or may have consequences that were not anticipated. The factors that ought to be taken into account in deciding whether or not PFM/IC is an appropriate reform have been explained in previous chapters but they may be summarised as: culture; relevance to the country’s own administrative and organisational structures; appropriateness given the current circumstances in the country, including levels of fraudulent and corrupt activity; and the quality of management. If these are not fully taken appreciated in the processes of reform there could well be unintended consequences.

The World Bank has described a set of five principles³ to reflect good practice in public financial management (PFM) reform, whatever the precise nature of the reform. The approach set out in these principles is in the form of advice to World Bank staff but is relevant to a minister of finance engaged in PFM/IC reform to ameliorate the possibility of unintended consequences emerging (but not remove the possibility entirely). The application of these principles will militate against potential risks as well as unintended consequences. The principles are:

• PFM work should facilitate and encourage country leadership in setting/managing the PFM reform strategy and action plan.

• PFM diagnostic work should be conducted in an integrated and coordinated manner, drawing upon the distinct competencies of the [World Bank—which may not be relevant for some countries] PFM country team and other donors, with the timing and scope determined largely by country needs.

• PFM work should be weighted towards supporting PFM implementation reforms and capacity building rather than detailed diagnostic analysis, should add value to Government budget and reform processes, and should be aligned with government decision-making cycles.

• PFM reform work should be framed within a multi-year horizon, sequenced around agreed priorities, and built upon a coordinated donor approach.

• PFM work should be linked to a robust monitoring and evaluation framework that clearly articulates the gains in PFM system performance that are sought or achieved.

These principles emphasise the importance of the reform having regard to local circumstances and that adopting a reform merely because it represents international best practice, as has been pointed out, is a mistake. However, these principles are not always followed and, for example, donors, despite good intentions, may focus simply upon their own interests and approach. In practice, donor support for capacity building can be limited in scope or simply focus on the legal and procedural aspects of a reform and ignore the wider managerial constraints that go with, in this example, the PFM/IC reform.

An international programme designed to measure improvements in public financial management is the PEFA⁴ framework. However, whilst this is a very useful tool countries should recognise that it is a one dimensional metric and does not have regard to the quality of public expenditure, yet a focus of PFM/IC is upon quality. PEFA does not attempt to assess the quality of the managerial structures affecting public financial management.

An article by Polzer et al. in their analysis of the application of the international standards of public sector accounting drew out issues which have similar characteristics to those which would apply with the application of PFM/IC, that is,

the hesitation amongst politicians to give up their budgetary control and their attempt at maintaining dominance in public sector decision-making has in many developed countries resulted in extending uncertainty in the diffusion trajectory of ACC.A [accrual accounting] at the implementation phase.

And again:

[T]he forceful adoption of IPSASs in many African countries, as part of complying with the WB’s [World Bank’s] lending conditionality, has resulted in disastrous results, promoting the rise of corruption, patronage politics and neo-patrimonialism (Hopper et al., 2017). For instance, in their study of IPSASs in Nigeria, Bakre et al. (2017) have demonstrated how the adoption of these IPSASs enabled the politicians to conceal widespread patronage and corruption in the sale of government properties. A similar situation has been experienced in Benin where IPSASs and other public sector accounting reforms have provided a space for clientelism, corruption and patronage to flourish rather than leading to any improvements in governance and accountability (Lassou, 2017). It is concluded that ‘decoupling appeared to be facilitated or prompted by the prevailing neo-patrimonial governance system wherein implementation decisions are taken in informal settings underpinned by a culture of secrecy.’ (Lassou, 2017, p. 502)⁵

6.1.3 Reducing the Potential for Risks and Unintended Consequences

To achieve effective change the minister of finance with the ministry state secretary, will need to prepare carefully for the introduction of the reform. As has been pointed out in Chap. 5, to do that the minister of finance and the state secretary ought to consult widely about the PFM/IC reform and endeavour to ensure that it is not perceived as being imposed. In other words, ‘local ownership’, which has been pointed out as necessary in earlier chapters, is equally important to reduce risks and unintended consequences. ‘Local ownership’ means involvement in the design, staffing, and funding of the reform and it can also mean instead of launching an entirely new system, building upon what currently exists, identifying the weaknesses and correcting these because otherwise these may merely repeat themselves in any reformed system (see Chap. 9 on the need for a strategic analysis of and plan for the reform before implementation). The ‘tone at the top’ in each organisation should be one of commitment to the reform. The point also has been made previously that, because of the wide ranging nature of this reform, in turn this means that both politicians and appointed officials (civil service and local government officials) should be involved in the discussions about its application and the commitment of top and senior officials is essential to success. However, in general the wider the consultation process the better and limiting consultation to just a single group, such as finance officers or even to the top political and civil service and local government officials, in an organisation would be a mistake as would a ministry of finance deciding to apply the reform without consulting other ministries and public organisations. Also, because this is a reform impacting upon both technical and managerial arrangements, consultation may be extended to others, such as academics, where they may have specific experiences in both these areas. In some circumstances consultation may also be extended to civil society. These different consultees will have different views and they will bring different perspectives to the reform. These views should affect how the reform is to be applied. What this consultation process will also do is to provide the minister of finance with an indication of from where the risks to the reform and the nature of those risks, is likely to emerge as well as the possibility of unintended consequences. This will provide an essential underpinning of the reform. This emphasis upon wide consultation is quite contrary to the approach of many transition and developing economy countries which is to regard this reform as wholly a ministry of finance reform with only those who should be consulted being the finance officers within public organisations. This reflects that the reform, in practice, is perceived of as just a technical financial reform.

6.1.4 Protecting Against Risks and Unintended Consequences, Including a Role for Internal and External Audit

The minister of finance and the ministry state secretary should be aware that introducing PFM/IC, as with many other reforms, may result in added or different risks from those that have existed prior to the reform as well as unintended consequences. Risks to some extent can be foreseen and planned for but obviously, by definition, unintended consequences will be difficult to foresee. However, these officials should be aware of the possibility of such risks and unintended consequences occurring and therefore should ensure that within the ministry of finance a resource capability exists to monitor the possibility of risks emerging and be able to respond should unintended consequences emerge. Also, by envisaging how and why risks and unintended consequences might develop precautionary steps could be taken to protect against their emergence. That resource capability would largely (but not wholly) be expected to be a responsibility of the specialist department of the ministry of finance established to support the state secretary with the implementation of the reform.

There does exist though a potential additional resource capability to assess the quality of application and that is the state auditor. The state auditor has an important role in not only auditing the financial statements but also assessing the quality of the financial systems which underpin those financial statements and for reviewing the efficiency and effectiveness of public expenditure and the use of public resources as a contribution to improving public value. This should include the PFM/IC reform and particularly the regulatory framework governing the reform. The head of the department responsible for the application of PFM/IC should cooperate with the state auditor, taking into account the advice that the auditor is able to offer. That advice offered in an independent manner could well help to reduce the level of potential risk and unintended consequences.

As this is a major reform covering a wide range of factors one unintended consequence is that of ‘reform fatigue’. Those responsible for the application of the reform should take this into account in the planning for the reform. That will mean that the reform programme probably should be broken down into identifiable stages so that clear assessments of progress can be defined and judgements made about the successes and problems which have emerged or may be emerging.

With PFM/IC the control exercised through the managerial accountability arrangements is internal to the organisation and allows for the exercise of increased discretion by internal management. As has been pointed out earlier, this changes the framework of external control exercised particularly by the ministry of finance, but also some other central organisations. The role of the ministry of finance and other central organisations with PFM/IC is to set the guidelines and to create the conditions in which the management of those organisations responsible for the delivery of public services can do so efficiently and effectively and meet their objectives and performance standards. Assuming that the PFM/IC reform has been properly applied there remains a possibility that the changed role of these central organisations may result in the unintended consequence that the managements of line ministries and other public organisations may take actions which can be disadvantageous to the government and/or add to risk through, for example, inappropriate contracting and procurement arrangements, the accumulation of debts, weak income collection arrangements or make poor investment decisions and adopt policies that have unforeseen consequences. To reduce the possibility of this occurrence, although it cannot be removed entirely, the ministry of finance and other central organisations should balance the freedoms that PFM/IC requires with a strong regulatory type framework which would prescribe how certain activities were to be undertaken, the roles and responsibilities of different officials and the managerial and accountability context in which decisions were to be made, reviewed, and accounted for.

Therefore, accompanying the decision to adopt PFM/IC should be a review of existing regulations covering the following areas, or if no such regulations presently exist, such regulations should be developed, that is,

• Codes of practice governing the actions and behaviour of politicians and senior civil servants (and local government officials)

• Managerial accountability arrangements, including rules about the delegation of authority for decision making and reporting arrangements

• Contracting and procurement

• Investment decision making

• Financial transactions and all aspects of financial activity (see also Chap. 5 and the annex to this chapter on the content of the financial regulations)

• Risk management, including both systems risks and managerial risks

• Corporate governance arrangements

Review of such regulations, where they currently exist, should be one of the first actions to be undertaken by those responsible for the development of the PFM/IC policy. The head of operational management in each public organisation should be responsible for ensuring that such regulations are properly followed within the organisation.

There would also be consequential effects upon the role and responsibilities of internal audit which should help to limit unintended consequences. These effects would not change the international internal audit standards but they would affect their application. For example, those standards refer to the ‘chief audit executive’ having ‘direct and unrestricted access to senior management and the board’. (These terms need to be interpreted in the context of the governance arrangements within each public sector organisation in a country.) In some countries this requirement is interpreted as the internal auditor should report directly to the political head of the organisation rather than to the chief operational management official such as a state secretary. The point has been made elsewhere in this guide that with PFM/IC there should be a clear distinction between the political level of management and its responsibilities for policy setting and strategy along with the overall supervision of operational management from responsibilities for operational management, including policy execution. This latter should be the responsibility of the civil or local government service officials under the authority of the head of operational management (i.e. the state secretary or equivalent). The internal auditor should therefore, in the normal course of internal audit reporting, report to the head of operational management with the application of PFM/IC rather than directly to the political head of the organisation. The only exception to this should be where the internal auditor felt that such were the circumstances that to report to the head of operational management would be inappropriate. The reporting arrangements would be different again where an audit committee existed or where some form of board arrangement existed responsible for operational management. In such circumstances the auditor should also report to the audit committee or to the board (where one existed). This means that the internal auditor should have a clear understanding of the roles of the different officials with the application of PFM/IC, that is, the roles of the political head of the organisation, the head of operational management, the head of finance and where one exists, that of the audit committee, a board and other key officials or relevant decision-making groups as well as how they relate to each other.

This regulatory framework developed to accommodate PFM/IC should be designed to ensure that these organisational structures and arrangements which are fundamental to accountability and governance are strong enough to withstand the pressures upon them that will undoubtedly emerge and which could lead to unintended consequences. These could include, for example, pressure from politicians or from senior operational management to present results in a manner that may be regarded as politically or managerially attractive but which do not actually demonstrate the reality of the situation, or to take short-term decisions where a longer-term approach would be more appropriate. Another potential area of weakness (i.e. risk and unintended consequence) is likely to be in the relationships between first and second level bodies and as is shown in Chap. 12 in the need for robust agreements between such bodies to determine the areas of competence of the second level bodies, the arrangements for their management and governance and the financial parameters within which they are to work.

Unforeseen consequences could also arise from pursuing policies that may apparently achieve the result intended but which have other effects that were not envisaged. In this circumstance the procedures may have been correct but the initial analysis leading to the policy decision was inadequate. The regulatory framework could not be expected to cover such unintended consequences which may always be a possibility, particularly given the complexity and wide ranging effects of many public service decisions. Consequently, the accountability and governance processes should provide for systematic arrangements for policy review. Again, this would impact upon the role of internal audit given the definition of internal audit as: ‘Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.’⁶ The consulting services of internal audit which should be designed to add value and improve an organisation’s governance, risk management and control processes with the application of PFM/IC should provide a facility to advise operational management on the types of risk that the PFM/IC reform could generate, including those that might lead on to unintended consequences.

Again, those responsible for the regulatory framework should ensure that it is properly monitored. This should be by the department responsible for the application of PFM/IC and could be a feature of an annual review being treated as an aspect of the proposed statement of internal control (see Chap. 13). That regulatory framework should also be subject to review by the state external auditor.

In Chap. 5 the point was made that the ministry of finance state secretary should be confident that a robust financial management structure exists within individual line ministries and other public organisations and that those responsible for that structure (the head of the civil service within the organisation and possibly also the head of finance) have a specific personal responsibility to object where decisions are proposed to be taken which are contrary to regulatory requirements or which potentially add to financial risk. (That objection may be simply made internally within the organisation or in some countries to an external authority. Whatever the arrangements that objection should be ‘on the record’.) Internal, and external audit, may have specific added responsibilities to report on the circumstances leading to the objection.

Another important potential source of information which could reveal unintended consequences is the assessment of effectiveness. For example, where a service impacts directly upon civil society, systematic assessments involving civil society cooperation can provide an important source of information about the impact of public service delivery. In the private sector the customer determines effectiveness through purchasing decisions. In the public sector, this is usually not possible so a more direct approach to the service user, or the service user representatives, may be necessary.

Following such arrangements will help to reduce the possibilities of risks and unintended consequences emerging. However, this author has not come across any country which has sought to establish such a framework which is a significant weakness in reform arrangements.

6.2 Examples of Unintended Consequences

A main purpose of the PFM/IC reform is to ensure that the potential benefits become substantive benefits and that unforeseen adverse effects do not occur. Those benefits will emerge from the managerial element of the reform and unforeseen adverse effects will require management action to overcome them.

Examples from countries of the failure of reforms to impact upon decision making processes and more generally to deliver the envisaged benefits are given below.

Accrual Accounting in the United Kingdom National Health Service

This study about the application of accrual accounting to the UK National study into the Health Service showed that a number of technical reasons caused a failure to achieve the benefits of the reform but in addition, and these reasons have more general relevance, a number of behavioural issues were uncovered, that is: ‘The first (reason) related to the level of diffusion, that is, the spreading of new ideas and the second to the level of organisational coupling, which reflects the level of communication between those whose activities are subject to the new measurement system and those imposing the system.’

The study found that ‘the revised accounting policy … was not well received and had not been diffused throughout the organisation. Implementation at the operational level did not occur, as top level management was focussed on the satisfying of regulatory requirements.’ This example also showed that in slightly different organisational circumstances (i.e. in Northern Ireland), ‘[i]nformation was retained within the ambit of high-level managements rather than being devolved to the day to day users who should have been the ultimate drivers of the reform’.

Introduction of Programme Budgeting in Korea

The Korea example, showed how a failure to properly address the managerial arrangements and managerial requirements associated with the reform meant that problems emerged which affected its success.

What both these examples from the UK and Korea show is that a focus on technicalities and not paying enough attention to the managerial environment associated with the reform risks losing some, or all, of the benefits.

The Use of Targets in the United Kingdom

A feature of PFM/IC is the emphasis upon the development of measurable objectives and performance standards where this is possible and the linking of those measurable objectives and performance standards to budgetary availability. However, there are potential unintended consequences arising from an emphasis upon the use of performance data as targets. An example was well illustrated in a review of the use of targets in policing in the United Kingdom:⁷

Numeric targets have seen extensive use in policing for many years, as part of both local and national police performance frameworks. The Public Service Agreements (PSAs) of the 1990s in particular created a slew of national targets in policing and across the public sector more widely. Since then, problems associated with targets such as ‘gaming’ and ‘perverse incentives’ have been well documented and targets have gradually been dropped by many [police] forces.

What has come through most clearly in the review is the difference between performance cultures that are narrowly focused on ‘chasing numbers’ to the detriment of other aspects—and those that have developed a broader definition of performance, which supports evidence-based problem-solving and genuine improvement of services. The review has found that while the former was often associated with targets, the simple removal of targets by itself does not turn the one into the other. Over time, the priorities, processes and behaviours that develop under a target-driven regime can become entrenched—and the removal of targets alone is not sufficient to effect change. The challenge [police] forces face is to develop a performance framework that not only provides a good understanding of the business in order to help effective decision making, but also enables individuals to be appropriately held to account, whilst ensuring that they remain focused on doing the right thing for the public and for victims and in an environment where they are empowered to do so.

What this report illustrates is the importance of wide ranging consultation and the need for high-quality management.

Relying simply on measurable targets can also generate other forms of unanticipated behaviour. For example, research has shown that

linking high-powered incentives to targets will result in improvements in reported performance and also in attempts to game the system, such as ‘hitting the target and missing the point’. This highlighted two strategic lessons for policymakers on when such an approach will and will not result in improved performance outcomes for public services. First, targets with sanctions can work when the targets accurately measure key dimensions of performance that cannot easily be manipulated by gaming. Examples include hospital waiting times, ambulance response times and school league tables. Second, where targets can only be framed as proxies for important dimensions of performance, the manipulative effects of gaming may undermine their use. An example is policing, where the nature of the targets means that pressure to meet them can result in such dysfunctional behaviour that performance deteriorates.⁸

In those countries where public administrative arrangements are based upon a legal tradition, the greatest risk is that the focus of reform will be on the bureaucratic arrangements, including any specific legal requirements. As has been pointed out, such a focus will not achieve the benefits that the PFM/IC reform is intended to achieve and those responsible for this reform need to pay particular attention to this risk, not least to the risk of slipping back into a legalistic approach unless that approach can be made compatible with the managerial environment implicit in the PFM/IC reform.

Similarly, people may adjust how they behave (gaming) to the reward and penalty system that exists. Such reward and penalty systems which in the public sector are often designed for reasons which have nothing to do with improving managerial performance, will affect how managers behave. (see also Chap. 5).

What is essential where a culture of meeting targets exists is that an essential feature of management is the application of ‘common sense’.

Accounting Reform in Ghana and Benin and in Egypt, Nepal, and Sri Lanka

An example of unintended consequences of a public financial management reform was documented in a recent study which showed that formal government accrual accounting reforms, including the implementation of IPSASs,⁹ have been used in two developing economy countries as a façade to hide ‘patronage and clientelism [which] abound within an informal setting, which make adopted accounting rules and procedures redundant; hence the observed limited role of accounting in improved accountability, governance, and ultimately development (e.g. poverty reduction)’.¹⁰

This example illustrating the reaction to advanced financial management reforms where either strong coordination/support with local management did not occur or was inadequate or the purpose of the reforms was not fully understood has been described in a study investigating the implementation of public sector accounting reforms in Egypt, Nepal, and Sri Lanka. This study described the factors that affected implementation resulting in ‘resistance, internal conflicts and unintended consequences, including the fabrication of results, in all three countries without any evidence of yielding better results for public sector accountability’.¹¹

PFM/IC in some respects has similar characteristics to accounting reform in that if properly implemented, as with accrual accounting reform, it does devolve power thus reducing detailed central control. Yet few commentators or advisers appear to address the managerial consequences of this feature of the reform. Again, like accrual accounting, it is also appears relatively easy to introduce the bureaucracy associated with the reform, but not achieve the substance of the reform. Therefore, the reform can appear to have been applied when in practice it has not. (i.e. the ‘fake reform’ syndrome). A minister of finance should be very alive to this application risk.

6.3 Performance Information and Using ‘Bureaucracy’ as an Indicator of Performance

In Sect. 6.2 above a reference was made to the possible problems which can emerge from a managerial emphasis upon the use of performance information. This showed that the development of performance measures and indicators is not easy and unless carefully thought through can have entirely unintended consequences. A discussion about the issues that should be considered is included in a World Bank paper ‘Defining and Using Performance Indicators and Targets in Government M&E [monitoring and evaluation] Systems’.¹² The paper makes the point that ‘[l]ow or inadequate use of performance information in management and particularly budgeting is often a problem for many indicator systems. Quite frequently this situation signals not only problems with performance data availability and quality, but also the existence of challenges with political consultation or a lack of buy-in of the performance indicators and the types of information produced. Lack of consultation and validation are often signs of a weak institutional environment, which tends to result in indicator “inflation”—too many indicators but a very low rate of utilization—which in turn deteriorates their quality. Officials in such environments tend to perceive that information is not a problem; for them, information may in fact be abundant, while for others (the producers), underutilization of the information they produce provides a very weak incentive to take data and indicators seriously.’ The final section of this World Bank paper ‘emphasises the importance of quality data and processes and the necessity of tailoring performance indicator systems to match available resources and capacities’. Other World Bank information is also available as is information from countries about their use of performance information.

An evaluation of World Bank projects by the Independent Evaluation Group commented: ‘Many of the stories of success were actually limited to improvements in better forms i.e., what laws, systems, and processes “look like” which were unlikely to have a noticeable positive effect on the overall performance of the public sector’.¹³

This ‘bureaucracy’ is very often the indicator of performance that many aid agencies look for when judging the success of PFM/IC reforms, but that is a mistake. It is not even a proxy. Another factor regarded by aid agencies and other international organisations is improvements in the effectiveness of financial and budgetary control. Important though this is, what also matters is improvement in the quality of public expenditure and international comparative assessments, such as PEFA¹⁴ do not address this. To do this they should be looking for the achievement of the benefits or a proxy for that, but the problem is that the benefits usually take some time to emerge, that is, beyond the end of any aid period. A consequence is that it does mean that the external pressure upon those concerned with the application of the reform is on the form, rather than the substance, of the reform. The comment about ‘fake’ reforms (see footnote 1 of Chap. 1) is relevant. Countries engaged in a reform process need to recognise that risks and unintended consequences do exist. Where they rely upon aid agencies for advice and financial support risk and unintended consequences should be taken into account, and that would mean for example, being cautious about advice and recommendations that focus on the form, rather than the substance of the reform (see Sect. 6.4 below).

A question that those responsible for the development of the PFM/IC policy and for the development of the budget should consider is, in the interests of accountability and transparency to what extent should performance indicators along with objectives be incorporated into the budgetary documents for approval by parliament. Too much information would not actually be helpful but parliamentary scrutiny would be facilitated by including key objectives and the associated performance indicators. The inclusion of objectives and performance indicators would also facilitate the development of an informed civil society. Such parliamentary and civil society scrutiny would have the benefit of providing challenge to management (political and operational management) and through challenge improve the quality of the information being made available. It can also reduce risk and unintended consequences through the strengthening of the scrutiny process. As has been indicated previously, challenge may be uncomfortable but it can be a very valuable learning tool.

6.4 Managing Relations with Aid Agencies with the Aim of Avoiding Risks and Unintended Consequences Arising from Aid Support

Aid agencies are a very important source of finance and technical support. Their contributions are usually highly welcome by benefitting countries. But benefitting countries should recognise that whilst the benefits can be considerable potential problems can emerge which may affect the success of the reform. These problems can include or arise from (some of these have been referred to already):

• the relatively short timescales for aid interventions compared with the length of time that reforms take to mature, particularly managerial reforms such as PFM/IC;

• that aid availability can depend upon the domestic circumstances of the donor irrespective of the needs of the recipient;

• that aid organisations can focus on the technicalities of the reform not recognising the managerial impacts;

• that measures of success can be judged by superficial consideration such as the introduction of the bureaucracy, including laws (see the Independent Evaluation Group comments referred to above);

• that training tends to be limited to technical training in how to apply a particular technique (in the example of PFM/IC, how to develop risk management) rather than to have regard to the training needed to reflect the managerial and cultural changes that will need to accompany the reform;

• a focus on the adoption of international best practice and not taking into account local organisational and cultural circumstances;

• seeking to introduce the most advanced solution even though local circumstances suggest that a lesser solution may be more appropriate, at least at the time; and

• cash flow policies designed to meet the needs of the aid agency, rather than be linked to the specific requirements of the project (an example of this is that an aid agency can require that, say, 90% of a budget has to be spent in the first three-fourths of the year and that only 10% can be spent in the last quarter and this is irrespective of the programme requirements of the project).

Therefore, in deciding whether to accept aid agency financial support and advice, benefitting countries should consider what drives aid agencies to give that financial aid and advice. The following are factors that a ministry of finance should bear in mind:

• Firstly, be clear about the problem to be solved to avoid the situation arising of a solution (i.e. a standard aid package) looking for a problem.

• Secondly, have a clear appreciation of what the problem actually is and what any solution should involve, which in the example of PFM/IC means recognising that what is likely to be required involves a management reform as well as technical changes, not least because this affects the extent of any technical changes and the structural order of the reform process.

• Thirdly, consider to what extent improvements to the existing arrangements can be made rather than engaging in a major reform process.

• Fourthly, from the outset have a clear view about how long the reform is likely to take to implement.

• Fifthly, determine the agenda for reform rather than allowing a third party, the aid agency, to do so.

The benefitting country should have a clear idea of what the problem is and what needs to be done, how long the reform is likely to take and then having control of the aid supported reform process. It should aim to achieve local ownership of the reform. Unfortunately, this is hardly ever the situation and countries may not have the capacity to undertake the initial analysis of what is required. They may need a third party to assist them. A useful model is provided for countries wishing to join the European Union or neighbourhood countries benefitting from its funding and who know that they will be expected to apply PFM/IC, because the European Commission through SIGMA¹⁵ is able to provide policy advice which would form the agenda for aid support. Of course, it is up to a country to decide whether to accept such advice and if several aid agencies become involved, some of whom may have strong views about a particular reform, compromises may be made over which a beneficiary country may have little influence. This raises the question of sovereignty.

Public money and its administration/management is at the heart of a nation’s sovereignty and therefore allowing a third party to dominate the reform agenda adds to risk, not least to the long run sustainability of a reform and particularly to a complex and major management reform like PFM/IC. The reform process should be dominated by the interests of the country and owned by the government. If aid agencies dominate the agenda, they are in effect demeaning that sovereignty.

Of course, aid agencies will be concerned about the misuse of aid funds and that will affect their attitude to the utilisation of such funds. As the PFM/IC reform will take many years to achieve this timescale is usually wholly incompatible with the timescales available to aid agencies. The risk for a country is that the agenda of the reform process acceptable to an aid agency may be incompatible with what is appropriate to achieve a long run reform. Using examples given earlier in this chapter, changes to the law and the institution of a bureaucracy provide ‘easy’ performance indicators for an aid agency but do not necessarily provide substantive evidence of the reform. Thus, a country may introduce the bureaucracy associated with risk management but this is of little value if no policy objectives linked to budgets exist or management to make judgements about the significance of the risks. Therefore, the risk, in this example, for those responsible for the application of PFM/IC is that they may think they have introduced risk management, when, in reality, they have not.

Another area of potential risk is that as introducing PFM/IC is a management not just a technical reform there is a possibility that an aid agency may not appreciate the full extent of the reform required or the length of time is will take to develop and apply. This reform is risky not least to the aid agency because it has very long time scales, 10–15 years according to SIDA (see footnote 25 of Chap. 1). The risk for a benefitting country is that as a result an aid agency may try to convert the reform into a shorter run technical reform. Alternatively, another risk is that an aid agency may try to convert the reform into a larger scale reform such as a reform affecting the whole budgeting and financial control process. There can be strong incentives for an aid agency to support such a wider reform especially where an aid agency wishes, for its reasons, to establish an enduring ‘business relationship’.

A country should be prepared to resist this even though it may mean forgoing aid funding in the short term. The main message for a country seeking to benefit from aid support is that there are risks associated with aid funding which should not be overlooked. To minimise such risks, the recipient country should follow the five points set out above, which can be summarised as ‘retain control of the reform agenda’.

Where an aid agency is not prepared to allow a recipient country to retain that control or to accept that PFM/IC is a managerial reform or wants to simply focus upon limited bureaucratic indicators, or the government does not have the managerial capability to engage in a wide ranging reform, the recipient government may find it more appropriate to seek support for a more limited reform. That would mean seeking aid support for the strengthening of the current PFA/IC process.

6.5 The Factors Which May Be a Cause of Risks and Unintended Consequences

Examples of the factors which may generate adverse effects leading to unintended consequences are set out below. These are not simply factors caused by the introduction of PFM/IC, although some are. They can apply equally to other financial based reforms. The examples include:

• Underestimation by the political level of government and the senior civil service of the major managerial significance of this reform (this applies equally to some budgetary reforms such as programme budgeting and in another financial area, to accrual accounting).

• The introduction of PFM/IC when the basic structures do not exist. The example given earlier in this guide is that of trying to introduce PFM/IC when a robust PFA/IC is not in place. (This applies equally to other financial reforms.) The ‘siren call’ of best international standards can be very appealing to ministers of finance and their advisers but it should not be heeded unless the circumstances are appropriate.

• Whether or not there is a perceived need within public organisations of the desirability of the reform. This in turn may also depend upon whether the need for the reform has been generated within the country or whether the reform is being introduced because of the requirements of external organisations. A lack of local ownership can be damaging. (This too applies equally to other financial reforms.)

• A failure to recognise, and therefore plan for, that PFM/IC will result in a redistribution of power within and between organisations. The potential consequences of such a failure are that

  • over time the original power structures will reassert themselves and therefore the benefits of the reform will be lost;

  • second level bodies will be used to avoid controls placed upon first level bodies unless specific steps are taken to prevent this; and

  • the existence of a new range of powers for some organisations will be exploited sometimes for corrupt or fraudulent purposes unless the overall regulatory framework is strengthened.

• Not recognising that for the PFM/IC reform to achieve results a managerial cadre must exist with that managerial cadre must be supported by an effective financial management expertise: if this is not perceived as an essential feature of the reform it will fail to deliver the benefits. (Other financially based reforms require managerial changes but these are often overlooked.)

• Even though an aim of PFM/IC should be to make finance a central feature in policy decision making, this does not in practice happen and as a result the benefits of better utilisation of resources does not occur.

• The inappropriate use of targets in attempts to measure performance can result in

  • a narrow interpretation of policy objectives;

  • an overemphasis upon performance measures which can result from a political emphasis upon a simplistic message, with consequently managers not having regard to the wider operational environment; and

  • the development of ‘gaming’ to demonstrate policy achievement: where targets are a key factor in assessing performance an important feature of the performance management process is that it should be entirely independent of the manager because otherwise the manager will be under pressure to manipulate the performance information to demonstrate success.¹⁶ Without this independence the manager can manipulate performance information to suit his/her particular needs. The result can be unforeseen misjudgements about progress, efficiency and effectiveness and the utilisation of budgets.

• A failure to recognise that most issues governments need to address cannot be dealt with by a single public sector organisation but require the utilisation of resources by several public organisations (and sometimes also private organisations): coordination can therefore be central to effective management but coordination also creates the opportunity to shift blame for policy failures leading to loss of accountability.

• Poor-quality definition of objectives and performance standards coupled with a failure to link either objectives or performance standards to budgetary provision: this could result in

  • reduced efficiency and effectiveness and

  • poorer standards of accountability resulting in corruption in reporting.

• A government cannot make effective decisions about levels of spending or the allocation of resources unless it knows, or has a genuine perception of, what the impact on performance in achieving objectives might be: PFM/IC should require this focus which involves service user participation (i.e. civil society involvement) even though it increases official exposure through accountability and transparency which consequently may generate pressure to restrict these features of PFM/IC.

• A failure to properly track performance against objectives resulting in inefficient utilisation of resources and pressure upon the quality of accountability processes caused by a concern not to expose such weaknesses.

• Not having regard to the long run financial resilience of public organisations: this can be caused by

  • committing to policies or investment decisions that have long run financial consequences without a financial plan about how such costs would be financed;

  • not recognising the ongoing costs of current activities resulting in, for example, cutting those costs in order to finance new policies or investment activity; and

  • not being prepared to address (i.e. manage) what may be defined as fixed costs (although not necessarily in accounting terms) such as employee and property costs as well as overheads because existing policies or methods of delivering services are not being reconsidered given other new commitments or changes in circumstances.

The consequences will include inefficiency in public expenditure and damage to accountability. To overcome this problem, managers should be aware therefore of the need to develop strategic financial and business planning so that when decisions are made regard is had not only to the more immediate financial and operational impact of those decisions but also to their longer-run impacts, and particularly financial impacts. (Note: the development of medium-term budgeting is not an adequate response to this problem.)

• Failing to recognise and consider the impact of other reforms and especially the consequences where other reforms have not been successful or have been delayed. An example would be the introduction of complex and extensive technical reforms, such as the introduction of an integrated financial management information system (IFMIS), which are not always successful and can take considerably more time to implement than originally envisaged and may also be incompatible with managerial needs, even though meeting the needs of the ministry of finance (a reference was made to this in Chap. 5).

• Failing to recognise that changes in budgetary funding, impact upon corresponding policy and or performance changes: similarly, not ensuring that funding will keep pace with the factors affecting the demand for public services, such as a growing older or younger population or climate change.

• Failing to recognise that a change in some problems, such as an increase in certain types of crime, can have impacts not just on one public service but on a range of public services, including in this example, the police, the judicial system, the prison and probation services, and the education and social services: this results in inefficiency and damages accountability because it allows blame for inefficiency or for a failure to meet policy objectives to be shifted.

• Other possible unintended consequences include damage to the financial and budgetary control processes, efforts to avoid accountability and the consequences of transparency.

What these examples indicate is that the benefits of the reform depend very heavily upon the recognition of the cultural and management changes that will be required. The specific features of these cultural and management changes have been referred to in earlier chapters but if this recognition does not occur then the prospect is that they could result in added risks and unintended consequences which may include the deterioration in the quality of public services; attempts to conceal that deterioration (for example through ‘gaming’); and weakened accountability.

Corruption, as an unintended consequence, is always a risk. A feature of PFM/IC should be a strengthening of governance:

The presence of corruption generally indicates shortcomings in ‘good governance’, which have, at the end, consequences for the effectiveness of PFM [public financial management] processes and controls. One important lesson is that PFM diagnostics require a rigorous understanding of the political context of the country, how political power is exercised, and how corruption fits into the country’s political and administrative culture.¹⁷

An appreciation of the cultural and managerial changes that will be required to avoid or minimise risks and unintended consequences can help reformers determine the extent to which political leaders and decision makers are committed to PFM reform and, if not, how best to influence their thinking.

The extent of these risks and unintended consequences will depend upon the circumstances and not least upon the regulatory framework governing those areas of potential risk which has been referred to above. The minister of finance and the ministry of finance state secretary should therefore take all these different factors into account in how it assesses and makes judgements about the success of the application of this reform. The solution though does not lie in a reversion to a traditional approach to public administration, for example, to a detailed external line-item control by a ministry of finance (i.e. a reversion to PFA/IC). Rather it lies in a strengthening of corporate governance, in the leadership provided by ministers and particularly by the most senior civil and local government service officials and by the recognition of the importance of the quality of the internal and external accountability arrangements. Internal accountability is a two-way process meaning that it is not simply a matter of junior officials reporting to more senior officials but of senior officials taking action on accountability reports and doing so in a non-threatening manner. PFM/IC will result in a more demanding external accountability process because of the focus upon both the control of inputs and the management of outputs. Accountability is also an important factor in helping the ministry of finance develop effective budgetary arrangements through providing information about the utilisation of resources and with PFM/IC, including the achievement of objectives and performance standards. As has been pointed out previously, external accountability together with transparency are both key features of the PFM/IC reform and facilitate challenge which ultimately is beneficial to the whole process. Therefore, attempts to reduce transparency and accountability should be firmly resisted.

These and other areas of the possibilities of unintended consequences occurring arise from the improper or inadequate application of the reform and poor-quality management, including financial management. Both political and operational management need to work together to increase success in meeting objectives and performance standards and in enhancing efficiency and effectiveness.

6.6 The Warning Signs Leading to Potential Unintended Consequences

The main warning signs of unintended consequences emerging arise from:

• Lack of local recognition of the need for the reform at the very top of government (i.e. by the prime minister or president) as well as by the minister of finance and its wide acceptability, not least by the cabinet of ministers and the most senior civil servants: this means that ‘preparing the ground’ (an activity of the minister of finance and the state secretary, or equivalent) should be an essential first element of the reform in order to achieve local ownership.

• A failure to recognise the major material change that will occur to the responsibilities of elected officials from being the operational decision makers to being that of the supervisors of the operational decision makers as well as being the policy makers and strategists: this requires that there is a clarification of the roles of politicians and their expectations and this clarification may well require specific induction arrangements for those appointed to political positions.

• Not recognising that the role of parliament also requires change, partly to extend transparency and accountability through the inclusion of objectives and performance information in the budget, partly to facilitate enhanced parliamentary scrutiny (including civil society scrutiny) and partly to recognise parliament’s role as a driver of the reform.

• A failure to accept that there will also be a major change to the responsibilities of civil and local government officials and that such a change needs to be accompanied by complementary reforms to the way in which human relations (HR) management operates: if this does not happen (and this appears usually to be the situation) there is likely to be a drift back towards the traditional arrangements for public administration.

• A failure to create a financially aware management exemplified by not recognising the enhanced role of the finance officer, the wide range of responsibilities that accompany the role of head of finance and to regard finance simply as a bookkeeping/controlling responsibility.

• A failure to have regard to local culture which it likely to reassert itself by adapting the imposed system to suit that culture: this requires that those responsible for applying the PFM/IC reform consider how the requirements of the reform conflict with traditional values and the modifications that may be required to the application and training arrangements to ensure that those traditional values do not adversely affect the objectives of the reform. To avoid this problem emerging may also affect the timing of the reform.

• Associated with the question of local culture is the relationship between elected and appointed officials: if, say, the politically appointed official seeks to dominate the decision making process irrespective of the concerns of the relevant civil service or local government official unless there is a process of effective support for such officials, this is a warning sign that unintended consequences may emerge.

• Inadequate attention being paid to civil and local government service capacity development with inadequate regard for existing staff attitudes and capabilities: this means that the reform application timetable should be to a considerable degree determined by the extent to which the civil or local government officials accept the significance of a changed managerial approach with its increased responsibilities and risks.

• Lack of coherence between the different public financial management (PFM) reforms which may be being introduced such as programme budgeting, medium-term budgeting, output budgeting and accrual accounting and associated with this, a lack of coherence between civil service and public administration reform and the public financial management reforms all of which have managerial impacts if they are to be effective. This emphasises that ‘PFM reform work should be framed within a multi-year horizon, sequenced around agreed priorities, and built upon a coordinated donor approach’.¹⁸ (Although this ought to be an objective, as has been pointed out above in Sect. 6.4 there can be considerable risks from relying heavily upon the advice of aid agencies.)

• A focus upon building the bureaucracy associated with the reform, rather than the substance of the reform, perhaps under pressure from aid agencies: this is entirely the wrong priority but unfortunately the existence or not of the bureaucracy is the easiest to monitor.

• Monitoring is not directed towards whether the purposes of the reform are being achieved? These purposes include, are objectives being delivered to time, are performance standards being met, are improvements in efficiency being delivered? The annual reporting process should be directed to this purpose and not simply to assessing whether or not the appropriate bureaucracy is in place.

• A complementary management reform is not being undertaken? If there is no evidence of this reform coordination the focus and timing of the PFM/IC reform activity is almost certainly wrong.

• The ministry of finance focus and that of top and senior political and civil service (or local government) official concern has not changed from simply the control of ‘inputs’ to having regard to the ‘outputs’ that should be expected from those ‘inputs’.

• The existence of attempts to avoid financial controls through inadequate management and supervision of second level organisations or with an increasing tendency to exempt them from controls.

• The extensive use of second level organisations to deliver public services without the application of strong first level management controls and monitoring.

• The extensive use of ‘off-budget’ funds and devices such as leases by both first- and second-level bodies.

• The recognition of a need to refocus internal audit to support the introduction of PFM/IC in order to specifically address the risks and the possible development of unintended consequences.

The effectiveness of the reform may well depend heavily upon a better understanding of behaviour and what is necessary to change behaviour. This is not a usual area of concern for those responsible for PFM/IC (and other PFM reforms for that matter) but especially because this is a management reform affecting how officials behave full regard should be had to this in the development of the reform. This aspect of a reform process is described in a Guide prepared by the UK National Audit Office.¹⁹ A summary of this Guide’s findings which relate to the development of ministry programmes of activity, covers:

Behaviour Change and Value for Money [VFM]

Behaviour change is important for value for money (VFM) because it can often contribute to, or be a prerequisite for achieving a policy outcome cost-effectively. Risks to delivery will be exacerbated if departments [ministries] have a poor understanding of either the behaviours they are seeking to change or the impact of different behaviour change mechanisms. Broadly, risks to VFM can arise at these stages:

• Design—inadequate theoretical and/or evidence base

• Application—absence of process evaluation

• Evaluation—lack of objective measurement

• Absence of convergent evidence (triangulation)

• Failure to establish cause and effect.

The Guide acknowledges that reporting on the VFM of behavioural change can, however, be difficult:

[P]rogrammes may involve a variety of interventions, be of long duration, and produce benefits that can be hard to assign a monetary value to.

This is typical of a PFM/IC reform. Although this Guide is designed for auditors specifically concerned with VFM assessments of ministry programmes, those responsible for the PFM/IC reform ought to equally have regard to its findings in both formulating how the reform should be applied and the assessment of application progress particularly to lessen the risk of unintended consequences and risks arising from the reform.

According to the Guide there are five key areas to consider when assessing a behaviour change and these are:

• Understanding the audience

• Understanding behaviour

• Understanding the levers

• Designing the intervention

• Evaluating the intervention

Take as an example, understanding the levers! What are the levers that are available to achieve effective PFM/IC reform? Are they just legislative levers, as occurs in many countries (i.e. this is what the law says and as it is the law it will be obeyed: this has been said to this author in several countries) or could such levers include financial levers, such as budgetary allocations being dependent upon the development of PFM/IC, or will personal promotion depend upon success in establishing PFM/IC, or how material is training or the incentive of more freedom in decision making?

This is an area of activity where the head of the department responsible for the PFM/IC reform should seek specialist advice, probably from a university or other organisation specialising in human resource management. Introducing PFM/IC will require significant behavioural change within organisations but this is not normally addressed in policy papers concerned with the introduction of the reform.

6.7 Arrangements for the Monitoring and Evaluation of the Reform

The ministry of finance responsibility is to monitor, report on, and evaluate the application of PFM/IC. This is a vital activity which should be undertaken by the department responsible for the application of PFM/IC. A specific purpose of monitoring and reporting is to identify problems. Examples of the problems include: is an organisation achieving its objectives and performance standards and performance objectives and if not, why not (see Chap. 13); are the managerial structures appropriate, is delegation of operational responsibility actually occurring, do examples exist to prove this and similarly for the managerial accountability arrangements, what difficulties are developing, what unexpected consequences are emerging or have emerged? Recommendations then need to be made for solving emerging problems as the strategy is applied. That may mean adapting the strategy. The monitoring, reporting, and evaluation system should be developed and established as part of the development of the PFM/IC strategy. Which issues are then likely to be addressed as a result of the monitoring process should be made clear to those responsible within public organisations for the application of PFM/IC. The form of the monitoring should be expected to change over time. Initially the monitoring should be designed to establish how far the principles of PFM/IC have been accepted by public organisations. Once the principles have been applied monitoring should be able to focus on the results identified in the preparation by public organisations of the statement of internal control (see Chaps. 5 and 13).

A SIGMA toolkit on public administration reform clarified the role of monitoring, reporting, and evaluation as a

help to identify and present information about emerging challenges and implementation bottlenecks. Such knowledge can be used to design and propose solutions for improving the strategy design and operational plan, overcoming specific implementation difficulties, and making better use of the existing management and co-ordination structures. In other words, proper use of the system of monitoring, reporting and evaluation is fundamental for timely, effective and efficient achievement of the planned reform results. In addition, monitoring, reporting and evaluation are also about accountability. The information and data generated through monitoring and reporting help to hold public institutions accountable for commitments made and reflected in the strategies. It is fundamental that results of the monitoring process, as well as any evaluation, be shared with stakeholders and the wider public, both to ensure that all affected parties are informed about what has or has not progressed, how and what results have been achieved, as well as to validate the key findings themselves.²⁰

Internal and external audit also have a role to play in assessing the content of the statement of internal control.

This annual process of review will impose an additional burden upon the department responsible for the application of PFM/IC and it should therefore be staffed to enable it to properly review these statements and to report to the minister of finance on their findings. As indicated in Chap. 13, that report ought ultimately to be presented to the cabinet of ministers and, depending upon individual country arrangements, to the parliament.

The ministry of finance, through the department responsible for the application of PFM/IC, may also consider commissioning specialist research to establish whether unintended consequences are occurring along with the causes.

6.8 Summary

As with most reforms there are risks and not all consequences can be fully foreseen. Ministers of finance and the ministry state secretary (or equivalent) should be aware of the risks arising from the application of the reform along with the possibilities of unintended consequences. Most of these risks and unintended consequences are likely to emerge from imposing an advanced reform upon an administrative culture that is unprepared for the changes that will result and where there is unfortunately an acceptance of corrupt practice. At one extreme these risks will add to that risk of corruption. Equally likely though is that the risks that will arise will not just be in the abuse of public funds, but to the quality of public services, in decision making, and to accountability and to transparency.

The cause of unintended consequences will usually lie in a failure to appreciate the managerial context in which PFM/IC should be developed and therefore the strengthening of management should not be overlooked as an essential feature of the reform.

Because this is a radical reform involving significant changes in the distribution of power and responsibility, including the move from external to internal control, an important complementary feature of the reform should be a strengthening of overall regulatory controls which affect key areas of risk and the potential for the emergence of unintended consequences.

The ministry of finance through an annual assessment process of the quality of the reform (i.e. by developing a statement of internal control) should address the potential for weaknesses to emerge. This statement should not simply focus upon procedural arrangements. In some circumstances the ministry of finance should consider commissioning a specific study into whether unintended consequences are emerging, or have, emerged.