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Newly elected President Gloria Arroyo has made a promise to reform the bureaucracy. The promise has a familiar ring to it as many other presidents have tried but failed to make much progress in the pursuit of public administration reform. In her 'State of the Nation' address President Arroyo announced a program of public sector downsizing, the transformation of bureaucrats into entrepreneurs, privatization, cost cutting and anti-corruption measures. The driving force behind these moves is the budget deficit, which is too big and unsustainable. It has been hovering between 4 and 5 per cent of GDP, forcing the government to borrow each year to make ends meet. The persistent deficit reduces needed government expenditure in infrastructure and keeps interest rates high, both of which deter private investors.
The proposed public sector reform policy of President Arroyo involves reducing the size of the bureaucracy to cut government expenditure. This 'rationalization' program actually began in 2002 and has seen the removal of 102 mostly obscure agencies such as the Mindanao Rail System Taskforce and the Interagency Committee on Philippine Schools Overseas. Another 34 agencies have been earmarked for abolition or merger in 2004. The result should be savings of P15 billion over the next three years.
Cutting costs also extends to curbs on foreign travel, car purchases and limits on the 'social activities' of public servants. For example, there will be no more government-funded seminars in holiday resorts such as Borocay and no more newspaper advertisements wishing 'happy birthday' to high-ranking officials. 'Fiscal discipline' is to be the guiding principle.
Making inroads into the wages bill signals the intention to reduce the number of public servants. The public payroll of P286.5 billion currently eats up 33 per cent of the national budget. According to Budget Secretary, Emilia Boncodin, the government wishes to cut the public service workforce by 10 per cent. The 30,000 personnel involved would be voluntary retirees who would be given 'silver parachutes' (gold in one presidential speech) to soften the landing. Fifteen billion pesos have been set aside to pay for the program. But the supposed voluntary nature of such arrangements has been challenged by the Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE).
Anti-corruption measures are also identified as part of the reform package and as a priority of the President. The three-pronged approach involves 'enforcing laws, adopting systems and inculcating values in schools and institutions'. To promote the latter a Presidential Commission on Values Formation has been established and is hoping to recruit the active support of religious leaders. Meanwhile, in the first week of August, the Bureau of Internal Revenue (BIR) filed 24 tax evasion cases worth P300 million as a demonstration that it means to clamp down on tax cheats. President Arroyo also wants to strengthen the office of the Ombudsman by transforming it into an institution resembling Hong Kong's Independent Commission Against Corruption. The most recent anti-corruption suggestion is to install 'fast lanes' in government offices to by-pass the fixers. This move would be complemented by the publication of manuals with details of the transaction procedures, costs and officials concerned.
To accomplish this program of public administration reform requires the cooperation of Congress to pass the appropriate legislation and senior public servants to lead by example in their agencies. There is public support but the public is waiting to see if President Arroyo can pull off what other presidents have failed to do-that is, create an efficient and effective public service.
WATCHPOINT: Will President Arroyo's reform measures lead to the desired 'leaner and meaner' public service?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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