Civil servants can’t save, cut their budget.

Government servants are not known to be thrifty. On the contrary they are spendthrifts.

COMMENT

By TK Chua

I refer to the Prime Minister’s call for a new approach in spending – asking government departments and agencies to exercise thrift and be rewarded when there are savings from unfinished allocations by the end of the year.

The current practice is for all ministries and agencies to finish their annual allocations. By doing that, they are deemed “efficient”.

I do not know since when spending money has become an indicator of efficiency.

I am surprised that it takes the Prime Minister and Finance Minister so long to realise that spending money can’t really be a KPI of efficiency. Perhaps the toll of 1MDB has finally made the government wake up from its slumber.

So the Prime Minister and Finance Minister has proposed that government departments and agencies must now exercise thrift to keep some of the allocations as unspent money. The savings can then be used for other programmes or for the benefit of the officers concerned.

To me this is another half-baked proposal that will give rise to unintended consequences again.

First, government servants are not known to be thrifty. On the contrary, they are spendthrifts. The annual audit report has given us sufficient indication of this.

Second, if indeed there is leftover from the allocation, it is not because of prudence or thrift among government servants. On the contrary, it is an indication of over budgeting, i.e. the Treasury has been too generous or too incompetent to provide the right allocations to ministries and agencies.

A more effective approach is to adhere to budgeting process more stringently, rather than to provide generous allocations and then ask the departments and agencies to save part of the allocations.

I could have reduced the budget allocations of all ministries and agencies by at least 20% without sacrificing the quantity and quality of services provided. And in one stroke, we could have solved the fiscal deficit problem.

Of the cuff, I know most government departments and agencies are “over-provided” by at least 10% of what they are getting. My intuition also tells me that most government purchases are at least 10% “over-priced”. In fact these are conservative estimates; just read the audit report if you disagree with me.

Hence cutting the budget by 20% will not adversely affect the outputs of most departments and agencies. If heads of department and government servants can’t deliver the same output with 20% less, replace them with those who can. I believe this approach will be more effective than what the Prime Minister and Finance Minister has suggested.

TK Chua is an FMT reader