Fundamentals of Governance: Day Two – Government and Governance

1. Fundamentals of Governance:Day Two – Government and Governance Ian Rennie

2. Timetable • Governance and Administrative Institutions • OECD examples • Administrative Reform • Instruments and Agents of Governance • Examples of Administrative Reform for the Developing World • Delegates Examples.

3. Session 1 Governance and administrative institutions

4. Central Civil Service Responsibilities • to provide the Government of the day with: • advice on the formulation of the policies • to assist in carrying out the Government's decisions • to manage and deliver Government services. • civil servants therefore: • cannot express their own opinions, even in court or in front of a Parliamentary committee • must loyally carry out Ministers' decisions with precisely the same energy and good will, whether they agree with them or not.

5. UK Civil Service Principles • Civil Servants must demonstrate four core values: • Integrity • Honesty • Objectivity • Impartiality.

6. Civil Service Merit Model • Civil services in developing countries can be large, underpaid, and politicised • Delivery can be inefficient at best and corrupt at worst • The consensus in the development community is on a merit model for civil-service reform (the model used by today’s advanced countries) • This model struggles to take root because politics militates against it – but why? • The challenge is to move from patronage to merit systems.

7. Organisingprinciples for a civil service • Patronage systems overwhelmingly use public jobs to provide private payoffs • for political services rendered • to reward friends and family • to shore up political support • Merit systems employ people on the basis of merit, protect them from undue political interference, and provide equality of access • They are a pre condition for modern public administration, but not enough.

8. Why is merit system not enough? • Traditional merit bureaucracies developed in mature economies very different from today • Developed for a slower paced society • Developed in an age of hierarchy where only those at the top had enough information to make decisions • Developed at a time of mass markets when most people had similar needs and wants.

9. New Public Management • So what does modern administration need to look like to satisfy the needs of the modern citizen?

10. New Public Management • strengthening steering functions at the centre • devolving authority, providing flexibility • ensuring performance, control, accountability • improving the management of human resources • optimizing information technology • developing competition and choice • improving the quality of regulation • providing responsive service.

11. Session 2 Examples of good governance from the oecd

12. What is the OECD? • Organisation for Economic Co-operation and Development • A forum of countries committed to democracy and the market economy, providing a setting to: • compare policy experiences • seek answers to common problems • Identify good practices • co-ordinate domestic and international policies • Its mandate covers economic, environmental, and social issues • It acts by peer pressure to improve policy and implement "soft law"—non-binding instruments that can occasionally lead to binding treaties

13. Why do we find difference? • There is no ‘correct’ way of organizing the centre of government • Apparatus surrounding each country’s Council of Ministers has developed incrementally, and often haphazardly • Rarely based consciously on foreign models • Usually the centre of government is home grown, influenced mainly by domestic traditions of law, politics and administration • Often it has had to develop in unexpected directions by political circumstance, personality and chance • The degree of variation is enormous.

14. How Governance Differs • Three case studies from the OECD ...

15. Session 3 Administrative reform

16. Drivers for change • New public management • seeks to roll back the role of the state by applying private sector management principles to government organisations • principles of client focus, decentralisation, the separation of policy making from implementation, and the use of private partners for service delivery • Structural adjustment reforms • focussed on reducing overall costs of the government, mainly through privatisation of state owned enterprises and reduction of the wage bill to bring down government spending and free resources for other uses more beneficial to the overall economy • Transition from central planning • to market economy, and from single party systems to multi-party democracies • previously socialist countries transforming economies to market principles requiring reorientation of the system of public administration.

17. Four Reform Concerns • Reducing public expenditure: • maintaining the attractiveness of the investment climate and the competitiveness of national firms • Improving policy responsiveness and implementation: • overcoming resistance from vested interests to the implementation of legitimate policies or to the reduction of some programs • Improving government as employer: • making government a responsible employer – attracting sufficient numbers of appropriately skilled employees while restraining aggregate employment costs • Improving service delivery and building public and private sector confidence • enhancing the degree of respect and trust accorded to government by the private sector and by the public.

18. Value for Money • sustainable value for money, can be defined as the optimal use of resources to achieve the intended outcomes • increasingly seen as more than just modernising state institutions and reducing civil service costs • about fostering dynamic partnerships with civil society and the private sector • to improve the quality of service delivery • enhance social responsibilities and ensure the broad participation of citizens in decision-making • feedback on public service performance.

19. Lessons : Private and Third Sectors • cost savings from competitive tendering in UK have delivered between 10 per cent and 30 per cent • this includes occasions when the in-house team won the bid • and no adverse effect, and sometimes an improvement, in service quality.

20. Why? • Different firms and organisations have different strengths (and weaknesses) in delivering different types of services • Evidence points to the benefits of a ‘mixed economy’ model of provision where public, private and third sectors compete to provide the best service in a given area.

21. How? • In the UK the Labour Administration had three terms to concentrate on this • first term was concerned with setting national standards and requiring all public services to meet centrally determined targets • second term then focused on choice, diversity and the introduction of quasi-markets • the third term focused on re-engaging with citizens and public service staff.

22. Administrative Cultures • the Arena • strict adherence to the principle of democracy • the Bureaucracy • rule of law and the principle of the Rechtsstaat • the Home • basic humanitarian values in combination with a sense of duty • the Professional Seminar • a problem solving administration • the Firm • due regard to economy and resources must be used in the best of ways, both efficient and effective • the Network • working together with other societal actors.

23. Public Expenditure and the Global Financial Crisis • Government responses can be considered in three areas: • Level 1 - aggregate fiscal management • Level 2 - the prioritization of expenditures • Level 3 - the technical efficiency of government delivery.

24. World Bank Advice • Investment and core social spending may be at risk if global recession double dips and public finances weaken further • In spite of the urgency of responding to macro fiscal challenges, governments should focus on delivering good projects and improving the delivery of public services • Medium-term budgetary frameworks should be strengthened and be consistent with a credible path for deficit reductions • Spending decisions will be better if investment choices are assessed in terms of costs and benefits, and if the ministry of finance has the expertise to challenge the policies of line ministers and ministries ...

25. World Bank Advice • There may be increased scope for public-private partnerships, but beware the folly of rushing into long-term contracts without proper considerations of fiscal risk • A good response would focus on improving organizational capacity and bolstering institutions • Initiatives associated with transparency and accountability can provide benefits to private actors; fiscal rules have been tested and found wanting in many countries. • Countries have made core social spending a priority, but uncertainties remain concerning donors.

26. The Financial Crisis UK Response • UK Introduced one of the toughest programmes of public sector spending cuts on record • the government’s six-year plan will see public spending brought down from its peak of 47.4% of national income in 2009–10 to 39.3% by 2015–16 • the period from April 2011 is the tightest five-year stretch for public spending since at least the Second World War • of 29 leading industrial countries, the International Monetary Fund (IMF) forecasts that only Ireland and Iceland will deliver sharper falls in spending as a share of national income between 2010 and 2015.

27. In detail UK Response • £81 billion cut in public spending in the remaining four years of the parliament • Average departmental cuts of 19% • £7 billion of extra welfare cuts, changes to incapacity benefit, housing benefit and tax credits and a rise in the state pension age to 66 from 2020 • Public sector employees must make a £3.5 billion increase in public pension contributions • The Home Office faces cuts of 25%, local councils will face a yearly 7% cut in funding from central government each year until 2014 • Ministry of Defence will face cuts of around 8% • Many other public sector bodies will face cuts to their funding • Loss of about 490,000 public sector jobs by 2015.

28. Sharing internationally • The International Institute of Administrative Sciences (IIAS) is a NGO with scientific purpose established in 1930 • The Institute provides a platform for exchanges that promote knowledge and practices to improve the organization and operation of Public Administration and to ensure that public agencies will be in a position to better respond to the current and future expectations and needs of society • The IIAS aims to: • promote the development of the administrative sciences • provide a worldwide platform for exchanges between practitioners and academics • establish a link between theoretical research and practice • improve the organisation and operation of public administrations • develop effective administrative methods and techniques • contribute to the governance progress within the national and international administrations.

29. Session 4 Instruments and Agents of Governance

30. Exercise • What Governance Agents can you identify? • What Governance Instruments can you identify?

31. Session 5 Examples of Administrative Reform from the Developing World

32. When Governance goes wrong ... • In 1993, the European Bank for Reconstruction and Development (EBRD) was roundly criticised • The EBRD had spent US $312 million on accommodation, staff and bonuses in its first two years of operation • How much did it spend on programme in the same period? • Details included: • US $87 million had been spent on redecorating and furnishing the head office • US $1.2 million had been spent replacing the original marble with Italian Carrara marble, since this had a better feel to it • US $900,000 had been spent on renting private planes for Mr Attali, the president at that time • US $78,000 had been spent on an extravagant Christmas party.

33. Classifying reform • Reform tied to and shaped by other constitutional reform • Reform driven by economic motivations (introducing market forces or meeting financial needs of the state) • Reform based on rights of the citizen.

34. What works? • Being realistic about what is politically and institutionally feasible • Recognising that enhancing technology is not enough by itself, that the most crucial and difficult part is changing behaviour and organisational culture • Dealing with the basics first.

35. Session 6 Delegates examples

36. Session 7 Close