SDG+1: Turning Words and Plans into Concrete Budgets

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  • 2016•09•25

    Michael Cichon

    Turning Words and Plans into Concrete Budgets

    Photo: UN Photo/Amanda Voisard

    As we reach the first anniversary of the adoption of the Sustainable Development Goals (SDGs) — “a plan of action for people, planet and prosperity” — this series from the UNU Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT) focuses on various aspects of a new monitoring tool designed to measure SDG impact and hold governments to account.

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    The world is an unfair, unequal, insecure, and unhealthy place for about half its population. Around 30% of ‘us’ have no access to adequate healthcare when needed, and 40% face a complete or near-complete loss of income security when a personal or a national economic crisis strikes. At least a third of the global population live in abject poverty (under US$3.10 per day) — that is, the cruellest form of insecurity. Every second child is poor, and 5 million to 10 million children die every year of preventable causes; millions of elderly die too early for the same reason.

    Inequality is rising in many parts of the world, but in theory we have a governance mechanism to help tackle this sad state of affairs: the effective and efficient introduction of a comprehensive national social protection system. In the widest sense, social protection should go beyond the transfer of cash between and within different groups of a population. As defined in International Labour Organization (ILO) Recommendation R. 202 on National Floors of Social Protection, social protection should ensure access to all essential goods and services to all residents.

    Clearly, social protection systems will not work if they only focus on cash transfers. If essential goods and services cannot be accessed or bought, then cash and entitlements to health services provide very little de facto protection. So to ensure a minimum level of income security, social protection against poverty and inequality must include cash transfers and transfers-in-kind. Access must also be guaranteed for healthcare, education, and essential services like water and sanitation.

    For a long time, many developing countries considered such systems beyond their fiscal reach. Juan Somavia, ILO’s former director-general, countered with a simple truth: “The world does not lack the resources to abolish poverty; it lacks the political will”. A sufficient level of national and international solidarity could mobilise the necessary resources to abolish abject, absolute poverty. But do we have the will at least to try? There is, in short, new hope. Although political will is fickle, the global community of nations has spelled out its intention to abolish poverty in “all its forms, everywhere”. In September 2015, a UN summit adopted 17 Sustainable Development Goals (SDGs) with 169 targets to be achieved by 2030.

    The new goals can be roughly divided into social, economic, environmental, and rights-oriented goals, comprising inter alia a complete social protection agenda. Of the 17 SDGs, 11 have links to the social protection systems defined above; 28 of the targets for these 11 goals likewise link to social protection. In other words, implementing comprehensive national social protection schemes for all would achieve 28 of the 169 targets and ensure access to essential goods and services for all.

    How can these goals and targets be achieved by 2030? This question concerns governments, civil society, UN agencies, and Bretton Woods institutions — and by extension all schools of governance. Therefore, in a series of research seminars from 2014 to 2016, UNU-MERIT / Maastricht Graduate School of Governance aimed to respond to this central question.

    The first two seminars (in 2014 and 2015) sought to establish whether the previous global development goals (i.e., the MDGs) were an effective instrument for global social governance. Along with parallel research by A.F. Bongestabs (“Promises or Actions? Did the MDGs Change Government Investments in Social Policies?”), the two seminars found that while the MDGs embodied a step forward in global social governance, there was little evidence of real change in peoples’ lives or government policies (i.e., concrete increased budget allocation to social services and protection).

    Looking at global and national evidence, we concluded that relatively fast and traceable shifts in people’s well-being and standards of living required sizeable fiscal investments in social protection. But before we can design strategies to mobilise the required fiscal resources, we need to quantify the approximate resource requirements. Hence, our last seminar aimed to estimate the overall resources required to implement the SDG social protection agenda. My colleagues in this blog series have presented more detailed results of their research efforts, and the following table summarises their findings.

    Country Income Security Gap in % of GDP Health Security Gap in % of GDP Education Gap in % of GDP Total protection Gap in % of GDP
    Cambodia 0.6 2.9 1.4 5.0
    El Salvador 0.3 2.2 0.4 2.9
    Ethiopia 6.2 3.5 2.6 12.3
    Indonesia 0.2 2.6 0.1 2.9
    Senegal 5.7 3.3 1.9 10.9

    Table 1: Estimated annual resource requirement for compliance with the SDG social protection agenda by 2030, selected developing countries

    The results show that resource requirements would be 3% to 12% of GDP for the sample countries — a range confirmed by another pilot study for the Asian Development Bank (Estimating the Resource Requirements for Compliance with the Social Protection Agenda of the Sustainable Development Goals). Complying with the SDGs by 2030 will thus have inevitable budgetary consequences for all developing countries. Put simply, long-term national financial and fiscal planning will have to account for these new obligations if the goals are to be seriously pursued.

    Not all resources will need to be mobilised through additional taxes, though; existing government revenues could be reallocated. But in several countries a large share of additional resources will have to be mobilised through increased “tax efforts”. The UN Economic and Social Commission for Asia and the Pacific says, “in many countries tax collection is below potential. In some countries, the gap between actual revenues collected and the level that would be appropriate given the economy’s structure is equivalent to 5% of GDP or more.” Clearly, countries need more than decent fiscal strategies; they also need time. Right now, a year after the adoption of the SDGs, it seems that national (and international) resource mobilisation and budgetary planning will not start early enough.

    By sounding this alarm, we hope that our research will be continued by government agencies and other schools of governance, and we hope to have made a contribution to the international development policy debate on how best to implement the SDGs. Let me now end this research and series on a lighter note with an age-old quote by farmers of the Dutch and German lowlands — farmers who would tell their priests when they prayed for a good harvest: “Praying is good, but it also needs manure”.

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    This article originally appeared on the UNU-MERIT website on 22 September 2016.