Millennium Post

Governance on corporate model

The Australian experiment of New Public Management could be introduced in the Indian system.

Governance on corporate model
The focus today is on reforms in governance across many developing countries. The reasons are obvious. The colonial legacy of conservative power structures hardly permits innovations, while the expensive mammoth establishment with scores of departments, thousands of officers and the ranks, are generally attacked for inefficiency and corruption. Unutilised allocations and incomplete execution of schemes reinforce such negative sentiment further in these countries, even as human indicators continue to move at a snail's pace. Moreover, values of inclusion and equity, rightly influence policies through, 'entitlement'; however, to free and subsidise public services has become synonymous with 'empowerment'. As a result, concerns outweigh costs in as much as the agenda of development is seldom vetted by cost-benefit considerations. Hence, the quest is for alternatives towards more accountable and result oriented governance, compatible with the socioeconomic mandates of the 21st century.

Readers may be aware of 'New Public Management' (NPM) experimented in Australia, UK, and Sweden over the last two decades. Focusing more on results rather than on inputs and processes, the unconventional method of governance aims at accountable and efficient delivery with the rational allocation of resources. In short, NPM is governance on a corporate model with an entrepreneurial spirit. UK's health care management, using quasi-market structures, is a handy example to appreciate the point. Australia as trailblazer has an inspiring success story worth emulating.
Originally begun as Financial Management Improvement Program (FMIP) 1980, in Australia, the Budget Reform White Paper 1984, which combined both decision making and financial management as inseparable, was the watershed. Emphasising on efficiency and accountability, it adopted a market approach to creating change through disaggregation, competition, and incentives in the delivery of public services. Innovations were introduced in the decision making levels of the government too in order to smoothen the path to reform.
The top political executive such as the PM, President or cabinet is concerned mainly with the objectives and strategy for governance, whereas, the in-charge minister designs the policy and owns the responsibility to execute it. Many areas of governance in Australia are largely minister driven. With a formal sign off between him and his ministry, the portfolio minister establishes executive agencies within departments with clear-cut tasks. He appoints CEOs, who are exclusively answerable to him alone. 'Public Service Managers' are appointed and given greater freedom to achieve the physical and financial goals with 'Pay for performance' as an incentive. Citizens are treated as customers and all essential public services are chargeable. Service providers are independent entities known as 'Government Business Enterprises' (GBEs) staffed largely by skilled personnel engaged on task basis from outside the government. In place of permanent recruitment, it is 'hire and fire' management of skills and manpower. The secretaries of departments have only a limited role in designing policy objectives and ensuring interdepartmental Coordination.
The largest Victorian GBEs in Australia provide water, housing, transport, gas and electricity services. The government has equities in GBEs and Corporations which pay dividends to State Exchequer, at around 50 per cent of their profits. The annual audit is carried out by state agencies and the minister tables the reports in the legislative house. The department of treasury and finance exercises regular control on these GBEs and corporations through corporate planning and quarterly reporting. Each one at each level is accountable for his job and each dollar spent is subjected to cost-benefit assessment. Leaving no room for blame game or mischief, it busts the myth of the indispensability of conventional mechanisms.
As opposed to entitlement regimes, inter alia, the reform underscores cooperation and contribution from the public towards the efficacy of delivery. Most importantly, public money is not only spent judiciously but also to generate dividends towards financial stability, which can help sustain the costs of various other non-profit departments like defence, social welfare etc. The reform also helps in the long run, as envisaged, rationalise tax regime to ensure more productivity and more jobs.
A predominant feature of the Australian model is that it encourages 'political initiative' as opposed to 'political interference', which is often a roadblock in many developing nations. The minister centric governance holds the political executive directly accountable, replacing the 'invisible' interference with more visible and positive intervention. The prospects of such innovation are promising in countries like India, with more number of educated, English speaking young politicians around. It is all the more in the interest of accountability in a democracy that the 'elected executive' might as well take up the reins of governance. It will have a positive effect on the 'selected executive' too, for it develops professionalism under a new administrative culture. In the long run, it will also help politicians metamorphose into real leaders with a broader vision.
NPM is not just 'good' but strives for 'best' governance as the experiments reassure; however, it is not to be confused with the 'laissez-faire' system devoid of public values. Equally, neither disinvestment nor crony capitalism can be seen as alternatives to it; they are part of the agenda though.
The Australian model is not a tailored program to suit all developing countries. However, the philosophy behind it is progressive. Misgivings are that low growth rates, poverty and undemocratic cultures are antithetical to the reform. But these are unfounded apprehensions no more than those that resisted computerisation and liberalisation in the 90's. On the contrary, in this era of e-governance, NPM is all the more and precisely required in order to address these issues. Singapore is a success story in the neighbourhood. India has got a headstart for it has already experimented business models through PPPs and outsourcing. The logical culmination of it can be an all-encompassing NPM not long from now. The runway is already laid; it is time to take off.
(The author is a senior bureaucrat in Chhattisgarh. The views expressed are strictly personal)

K.D.P. Rao

K.D.P. Rao

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