To PPB or Not PPB – Budgeting in Victorian Local Government

Budgeting is an important element in a public sector organisation's accounting control system. There are a number of budgetary methods that could be used, each with an explicitly different focus. This article investigates possible reasons for Victorian local government selecting line item budgeting, planning programming budgeting (PPB) or a combination of the two. While program budgeting arguably failed in the USA, research shows it was adopted by local government. Australian researchers report similar findings, yet the introduction of program budgeting into local government has not been explored. Four reasons are postulated: (1) PPB will be adopted because of the complexity of the organisation; (2) PPB will be adopted because it is perceived as an aid to planning; (3) line item budgeting will continue to be used because users are familiar with this type of budgeting; and (4) management's support for the adoption of PPB will be a significant factor in its introduction. A questionnaire was distributed to all the local governments in Victoria and 60 percent were returned. The findings reported in this article confirm the reasons postulated.