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(Stock image for illustration purposes) The growing and ageing population will most certainly put additional pressure on public spending. NSTP/ Aizuddin Saad

THE public service has heard worse; that it is fat and inefficient. So it is a relief of sorts for the public service when the good doctor, when tabling at Parliament the government’s mid-term review of the 11th Malaysia Plan, said that, as part the government’s reform agenda, the public service will be right-sized.

The previous debate about the public service’s size was rather specious. This is because there is no authoritative benchmark for an ideal size. The issue is not so much about whether the public service is bloated. Rather, it is whether leviathan can be made to work better without costing more.

Restructuring will ensure that agencies will have the appropriate resources to provide efficient and effective services. For example, the Education Ministry has merged schools with uneconomic enrolment with larger ones so that their resources can be pooled.

To effect the right-sizing, the chief secretary to the government will helm a task-force. If the task force can find as little as eight per cent savings from the annual budget through its service-wide restructuring, it could cover the RM23 billion revenue shortfall from the elimination of the Goods and Services Tax.

But it will be a long shot to find an additional RM20 billion to have a balanced budget. The population is growing and ageing. It is also becoming increasingly urbanised, educated and consumerist. These developments will most certainly put additional pressure on public spending.

The task is Herculean no doubt. But finding another RM20 billion annually is doable. More so if we factor in the RM40 billion cut in development expenditure from now till 2020.

The task force’s work is based on eking out savings from productivity improvements. E-government has delivered dividends in this regard. We are in the cusp of Industry 4.0. Adopting its technologies, in particular big-data analytics, to predict citizen needs and meet them in a cost-effective way should contribute to enhancing public-service productivity. Another uncontrollable monster gobbling up a sizable chunk of public expenditure is pension payments. These will only grow more unsustainable if they are not reined in by a contributory-pension scheme for new entrants.

With such a pension scheme, life-time employment can be replaced with renewable contracts for new employees. This will make it easier to jettison deadwood. There will be no need for the cumbrous sacking process. And contractual employment will put pressure on those who remain to serve better.

Another public management reform that has been implemented is collaborative governance. This whole-of-government approach should continue. Breaking down silos and blunting the tendency to protect departmental turf will enable resources to be shared. This is what the police and the army are doing — sharing beat-duty responsibility and training facilities to combat crime.

The Health Ministry’s cluster concept pulls nearby hospitals into a constellation, where facilities are shared. Similarly, working with private-sector partners and at no cost to it, the ministry dispatches medicines through post. It eases congestion in hospitals by providing medical services in nearby buildings that have been renovated by the private sector.

The police, army and Prisons Department, too, have collaborated to provide incarceration and rehabilitation facilities for petty criminals in army camps. And, of course, no one will grudge the Urban Transformation Centres, or UTCs. Housing some 40 public and private agencies, they bring the bulk of public services under one roof and closer to citizens.

Such transformations saved the government a lot of money. The 20 UTCs have saved RM2 billion nett in construction costs. The army-police cooperation has saved the government a similar amount. The arrangement in rehabilitating petty criminals has also saved costs. A rehabilitation centre is cheaper by 85 per cent to construct compared to the cost of building a conventional prison. It costs RM6 million a centre in contrast to the RM250 million required to build a 1700-inmate prison. The centres are also 58 per cent cheaper to run. They save the government RM20 a day per inmate.

The task force should consider moving resources from hot spots to cold spots, that is, moving resources to where they have a greater impact on service delivery from areas with lesser value creation. For example, when the call was made to make crime control a priority, the public service department transferred 4,000 clerical staff to the police department. That enabled some 7,400 police officers to be shifted back from desk-work to beat-duty.

The government is also mulling selling off its assets to plug the revenue gap. The larger argument is whether these assets can be managed properly. Dag Detter and Stefan Folster, in their 2015 book The Public Wealth of Nations: How Management of Public Assets Can Boost or Bust Economic Growth, suggest that a tiny two per cent increase in returns from public assets (read government-linked companies, or GLCs) would allow a government to double its basic infrastructure spending.

Additionally, the International Monetary Fund calculates that improving GLCs’ profitability would raise public revenues by one per cent of gross domestic product. GLCs should be made to sweat harder to offer the much-needed boost in tax-free public revenue.

Datuk Dr John Antony Xavier, a former public servant, is a principal fellow at the Graduate School of Business, Universiti Kebangsaan Malaysia. He can be reached via [email protected]

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