How to create a culture of fiscal discipline amongst officials

Creating a culture of fiscal discipline at every level of the public sector

Governments across the globe are seeking to build more fiscally sustainable policies while driving greater efficiency within their public institutions. Rising levels of public debt, cost-of-living challenges, and increasing pressure on core services like healthcare, education, and defence are forcing political leaders to make ever more difficult decisions. While these pressures are generally dealt with at the macro level by ministers and finance ministries, political will alone is not sufficient to deliver true and lasting fiscal discipline.

For any government genuinely aiming to improve financial sustainability, a commitment to responsible financial management must go well beyond Parliament and Cabinet. It must be firmly embedded in the day-to-day choices made by civil servants, programme leads, procurement professionals, and senior executives at every tier of government. Yet, in many departments, agencies, and working-level teams, this culture is noticeably absent.

Officials often criticise political leaders when their particular sector, industry, or programme faces funding reductions, delays, or reallocation of resources. While it's true that political decisions are partly shaped by ideology or aligned with an electoral base, this only influences a relatively small portion of total government spending. The reality is that most governments simply lack the fiscal space to fund everything they would ideally like to pursue.

It’s reasonable to assume that most elected leaders would prefer to be popular and to be seen as generous reformers—championing modernisation, addressing entrenched issues, or supporting vulnerable communities. They may also wish to adopt a global posture—providing humanitarian aid or investing in national defence to shape their country’s international reputation. The list of causes worthy of funding is endless. But the truth is, politicians are nowhere near able to deliver the level of generosity they may aspire to with public funds.

Government balance sheets do not—and never will—stretch far enough to meet all demands

placed upon them.

This article considers how governments can embed fiscal discipline across every part of the public sector. It also challenges the simplistic, populist narrative that political leaders are ill-informed or incapable, or that anyone else in their place would make more rational or effective decisions.

Pointing fingers at the political class is convenient—but it often masks the poor planning and flawed decision-making that happens within the machinery of government itself.

What’s needed is a culture that consistently rewards sound financial judgement, discourages waste, and prioritises the overall fiscal well being of the state. It requires officials to lift their perspective—looking beyond their own agency or initiative—and adopt a stewardship mindset, keeping in mind the broader interests of government and the taxpayer. It means thinking not just in terms of local objectives, but of the balance required across all portfolios.

This culture involves recognising the seriousness of government debt and the need to manage and reduce it over time. Above all, it requires officials to take measured, responsible decisions on expenditure within their areas, understanding that all public money should be directed towards the highest priorities. Every dollar wasted in one area could mean a critical service is underfunded elsewhere. Misuse of funds in the education sector, for example, could delay a medical procedure; inefficiency in a policy initiative might reduce the number of police on the streets.

Officials must begin with the assumption that there is not enough funding—and act accordingly. Because, in truth, there isn’t. They must also resist the temptation to hide budgets, play internal political games, or lobby aggressively for new funds. Instead, they should engage openly with central agencies—especially the Ministry of Finance—to ensure transparency and allow funding to be allocated where it’s genuinely needed most.

This may also seem naive, but to change culture we must first recognise that their is an issue - and then develop mitigations accordingly.

The current problem: a fragmented fiscal culture

Over time, many public administrations have developed operational environments that are not conducive to careful financial stewardship. While policy rhetoric may stress the importance of value for money, the reality within government departments can be quite different.

Many officials operate in systems where the incentives to spend wisely are weak or non-existent. Funding cycles often encourage agencies to “use it or lose it,” while procurement frameworks are misused to justify costly contracts with little regard for longer-term outcomes. Budget bids are frequently inflated to protect against future cuts, leading to inefficient allocation. As a result, departments often act as competitors rather than collaborators—each seeking to maximise its share of public resources, regardless of the broader fiscal context.

This has led to a culture marked by:

• Over-reliance on external contractors and consultants

• Weak controls around project delivery and budget oversight

• Limited accountability for value-for-money outcomes

• A focus on inputs rather than measurable results

Changing this culture is not merely a matter of financial reform—it is about changing behaviour, mindsets, and expectations across the public service.

Building a budgeting culture: why it matters

A strong budgeting culture provides the foundation for fiscal responsibility. It encourages public servants to view funding as a finite and valuable resource—not merely a line on a ledger, but a tool to deliver services in the most effective and efficient way possible.

At its core, a budgeting culture embeds the following behaviours:

• Ownership: Staff take responsibility for managing their allocated resources, understanding trade-offs, and making informed financial decisions.

• Transparency: Spending intentions and outcomes are communicated clearly, reducing ambiguity and fostering trust across departments.

• Alignment: Financial choices are linked to strategic goals, ensuring budgets reflect public priorities and deliver measurable impact.

• Adaptability: Agencies are responsive to changing circumstances, regularly revisiting spending plans and adjusting to maintain control.

• Collaboration: Departments work together, rather than in isolation, to make collective decisions that benefit the government’s overall fiscal position.

This approach also promotes morale and engagement. When officials feel that their decisions matter—and that wise financial management is recognised and rewarded—they are more likely to approach budgeting with care and discipline.

Enabling the shift: practical government actions

The transformation to a more fiscally responsible culture does not happen by accident. It requires deliberate steps, consistent messaging, and institutional changes that reinforce the right behaviours. Below are key actions governments can take to support this shift:

1. Leadership commitment and tone from the top

Senior political and public service leaders must make fiscal discipline a visible and non-negotiable priority. Ministers and chief executives should model the behaviour they expect from others—by challenging unnecessary spending, asking tough questions, and celebrating efficient service delivery.

Crucially, leadership commitment must be consistent across electoral cycles. Fiscal discipline cannot be treated as a partisan objective; it must become embedded as a core expectation of government performance, regardless of who is in power.

2. Clear accountability and delegated authority

Officials must understand their responsibilities for managing budgets and be empowered to act.

This includes:

• Delegating decision-making authority to those closest to service delivery

• Providing accessible financial tools and information

• Establishing formal expectations for budget planning, monitoring, and reporting

Managers should be accountable for both overspending and underspending, with regular performance discussions and support to address variances early.

3. Cross-agency collaboration and joint budgeting processes

Breaking down the traditional silos between departments is critical. Governments should establish cross-agency budget committees or steering groups that:

• Align investments with shared outcomes

• Jointly review spending proposals to eliminate duplication

• Encourage resource sharing, particularly in areas like IT, legal, or HR services

These groups help to build a collective sense of fiscal responsibility and encourage smarter, more integrated spending decisions.

4. Training, guidance and cultural reinforcement

Financial literacy must be actively developed across the public sector. Governments can provide targeted training for non-financial managers, regular budget briefings, and clear guidance on evaluating cost-effectiveness.

At the same time, the right culture must be continually reinforced through performance reviews, internal communications, and public messaging. Staff should hear regularly that fiscal discipline is not about austerity—it is about ensuring every dollar spent achieves the greatest impact.

5. Incentives and recognition for good financial management

Governments can recognise and reward departments and individuals that demonstrate excellence in financial stewardship. This could take the form of:

• Public service awards for efficiency and innovation

• Career progression tied to strong financial performance

• Departmental benchmarking with peer comparisons and incentives for improvement

When staff know that careful financial decision-making is noticed and valued, they are more likely to embed it in their day-to-day work.

Balancing control with agility

A fiscally disciplined culture must still allow space for responsiveness. Budgets should not become rigid tools that prevent adaptation. Instead, governments should build flexible budget systems that allow for real-time adjustments, while still maintaining overall control.

Modern financial planning tools, dashboards, and analytics can help departments track spending trends, model the impact of changes, and make informed decisions quickly. Importantly, they allow for timely interventions—helping to avoid small overruns becoming major fiscal problems.

Conclusion

Creating a culture of fiscal discipline in government is both necessary and achievable. It requires more than balanced budgets or fiscal rules—it demands that every official, at every level, understands their role in stewarding public resources and is empowered to make responsible choices.

For too long, many governments have tolerated systems that reward short-term gains, tolerate waste, and ignore long-term costs. But citizens deserve better. At a time of constrained budgets and rising expectations, the public sector must lift its game.

By embedding financial discipline into everyday decisions, fostering ownership and transparency, and backing it up with training and leadership, governments can build a culture that is smarter, more efficient, and more sustainable. Fiscal discipline should not be a political catchphrase—it should be the DNA of every department.