The Government Reform Com-mittee, set up to implement the resolutions of the Economic Development Advisory Confer-ence (EDAC), was officially established on Oct. 25 when it held its first meeting. This meeting inaugurated the most significant governmental reform project since the drafting of the ROC Constitution. As a committee member, I would like to submit my suggestions here as a reference for the general public.
Central government payroll and debt expenditures this year will total approximately NT$600 billion (roughly 38 percent of the budget). This is already an astronomical figure in the eyes of the average taxpayer, and while payroll costs and government-issued debt will probably continue to rise, the public frequently criticizes the services provided by the government as inadequate.
The question of how to create a streamlined system that satisfies the demands of the public is therefore an important issue which must be addressed when carrying out government reform. My opinion is that we must pay special attention to the following when carrying out these reforms.
One, the goal of such reform is a reduction in expenditures and staff. There are presently over 30 ministries and commissions in the executive branch. Reducing and combining them will be a great undertaking, but that in itself will not bring obvious results in the overall reduction of expenditures.
Whether a government is good or bad is not decided by its size, but rather by how much satisfaction it provides. The fundamental goal of reform is therefore to confirm the functions and tasks of an ideal future government, because the only way to get results is to reform the system and its personnel in accordance with this goal.
The method is a bit like tidying a desk drawer. If one only picks out what one doesn't want, then normally only about 20 percent will be discarded. If one turns the drawer upside down, however, and then puts back only the most necessary items, only about 20 percent will be put back. Following the same reasoning, we must first clearly define governmental functions, and then, under the premise of maintaining social welfare standards, re-think how those functions are defined and the services delivered. This is the only way to cut expenses to the minimum required amounts.
I want to emphasize, however, that social welfare and justice and administrative efficiency are two different things, and we must avoid mixing them up when considering a solution. Our goal must be first and foremost to reduce personnel and expenditures.
The reforms implemented by former British prime minister Margaret Thatcher streamlined the British government to the point where only staff concerned with policy considerations and deci-sion-making remained. About 70 percent of the government's workforce was transferred to functional units, such as licensing or representative systems.
Two, we must guarantee the rights and interests of officials and strive to obtain the support of the people. When one talks about organizational reform, the outcome will necessarily be a reduction and merging of existing units, and therefore staffing must be reduced. The government must remember, however, that the interests of civil servants must be properly protected and officials should be allowed to leave with their full salary until retirement. Even with many employees furloughed at full salary, the government will still be able to cut expenditures.
The reason for this is that salaries are only one part of total expenditures. If the actual number of staff is cut, administrative expenses will be reduced. It will also speed up the administrative process and increase efficiency. For businesses and the general public, this means saving money and faster service.
For this reason, ameliorating the resistance of officials by properly protecting their interests will affect the success or failure of the whole reform exercise. We could inform the public about the funds saved and the advantages brought by the reforms in order to secure a high degree of popular support.
Third, management by objective is more important than management by method. The first way to increase the work efficiency of officials is to decrease their workload. This can be done by redefining and reorganizing the work they do.
In particular, the central government should replace management by method with management by objective in their dealings with local government. This will help reduce the crime of "profiting others." Also, objective-oriented management needs to have full control of the human resources assigned to their work units to give them flexibility in assisting local government in handling local matters. As long as the requirements of the public are met, the central government should not interfere.
Fourth, the government system and its human resources must be streamlined. This should begin with a review of the current five Yuan system with the goal of greatly reducing the number of national, county and city government legislators.
Also, the long-delayed goal of a transparent two-tier system of government in which the central government manages affairs with county and city governments, which in turn manages affairs with rural and urban township chiefs.
For state-run enterprises -- apart from a few special cases -- personnel should be reduced by a preferential retirement system and privatization should be stepped up. Enterprises that are not critical to the national interest and that cannot stand on their own should be either closed or taken over and operated by their employees.
In principle, what can be done by the private sector should be, and the government should only perform the tasks that the private sector can't perform. Further, even these tasks should be harmonized with the workings of the market, including education and health care.
When it comes to education, the government must guarantee an equal right to education for all by providing subsidies to poorer families in accordance with their level of income.
Fifth, change the financial, taxation and budgetary systems. To ensure that the relationship between the central and local governments is that of a partnership, the central government should only concern itself with national defense, foreign affairs and matters that require unified national standards and allow local government to develop its own special characteristics.
Apart from redefining administrative regions according to natural and demographic boundaries, the most important task is to redefine the methods by which tax revenues are distributed. The subsidies and revenue distributed to centrally-administered cities and those administered by the counties must be equalized. A reasonable tax collection and redistribution system should be defined according to factors such as population, land area, industrial circumstances and natural disasters.
The central government should no longer subsidize local governments. This will help to prevent corruption. Along the same lines, the government should stimulate more public concern for, and understanding of, its budgets. This is necessary to insure that people understand the relationship between government revenues (taxation) and the benefits or burdens. This is especially important vis-a-vis local governments' use of the government's increasingly limited fiscal resources as these organizations are closest to the people and often are the biggest sources of corruption.
Budget categories should be defined in ways that allow work unit managers flexibility in spending. Further, units should be allowed to keep most of the funds not spent in the course of normal business for use the following fiscal year. This will help prevent the units from doing their best to spend surplus funds -- ie, wasting -- at the end of the year.
Governmental reform will have an important bearing on the nation's future competitiveness, and it needs the attention and support of all the people.
Shi Wen-lung is chairman of the board of the Chimei Corporation.
Translated by Perry Svensson
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