Sat, Aug 11, 2012 - Page 8 News List

Economic woes merit innovative thinking

By Lu Hsin-chang 盧信昌

Greater Tainan Mayor William Lai (賴清德) is reported to have called for a tighter control of expenditure at a recent city government meeting. Lai said that given the city government’s poor financial outlook, all departments and offices should cut back on wasteful activities and that private companies should be encouraged to take part in public construction projects.

Tainan City was merged with Tainan County and upgraded to a special municipality in December 2010, but the new Greater Tainan’s budget is not on the same scale as those of the other four special municipalities. It has also not grown as much as expected following the merger. Consequently, only by finding new sources of revenue, cutting back on spending and using its budget creatively can the city hope to get out of its present difficulties.

Lai’s remarks about the city government’s finances were spot on. Improving the quality of public services through partnership arrangements with private firms can cut down on administrative spending and help boost revenue.

Given the poor state of local government finances, city mayors and county commissioners across the nation should think of how to build alliances to make the best use of available resources. If there are items that are budgeted for year after year, but do not perform well, or enterprises that are inefficient, then their business model could be transferred to local groups, which have good prospects for self-liquidation.

Although there is no guarantee that calls for private companies to take part in public construction will be taken up, the possibility of failure should not dissuade the authorities from trying.

Even more worthy of consideration is the possibility of using productive public enterprises to provide commercial opportunities. Civil servants could be encouraged to start their own businesses while remaining in their posts, but not receiving a salary. This would reduce local governments’ pension and benefit burdens, as well as manpower expenses. When it comes to improving local policy implementation, the foremost task is to improve the local investment environment so as to provide incentives to invest.

Authorities also need to think about how to get more investors to stay for the long term and develop investment relations in the locality.

Additionally, they should think about how to facilitate personnel exchange between town and country, so as to generate synergy in governance between neighboring cities and counties. An example would be the way the annual Yilan International Folklore and Folkgame Festival has attracted people from Taipei and New Taipei City (新北市).

Finally, getting local governance involved in public-private partnerships requires complete readiness for unexpected events and close adherence to the allocation of rights and obligations for public and private departments. It is not acceptable to leave these matters until after a project has commenced to stop and change things. The the risk of delays, interference and capital getting tied down will make private and overseas entrepreneurs reluctant to invest.

Following the string of local corruption cases that have come to light recently, the world of politics must be exposed to public scrutiny. In future, subsidies from the central government to local governments will have to be handled more transparently and openly, and jobs must be assigned strictly according to merit.

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