Working Group 2
INSTITUTIONAL AND PUBLIC SECTOR REFORMS
[Terms of Reference]

Background

This paper covers the institutional framework for the Public Sector and the related reform initiatives to rationalize its organization and to improve its performance.

The Public Sector comprises the Public Service of Fiji and other organizations such as public utilities where the staff complement are remunerated by Government.

The Public Sector supports the achievement of Government’s strategic objectives through the provision of policy advice; the delivery of services to the community; and the performance of a number of regulatory roles related to the economy and the social sector.

The Public Sector in Fiji is large, using a high proportion of the nation’s assets and skilled labor. Over the years, it has extended to undertake economic activities in which private sector management are better suited.

Institutional Framework of the Public Sector

The interim Government has already rationalized the structure of the Public Service by reducing the number of Government Ministries from 23 to 16 and is proposing further restructuring of individual Departments.

In addition, questions relating to the overall configuration of the Public Sector are likely to be raised in the work of all three National Task Teams. For example, one question to be considered is Ministries of Works, Energy, Information, Public Enterprises, Civil Aviation, Housing, Tourism and Communication perform functions that could be better operated privately with improvements in services to the public.

Fijian Administration

A number of institutions have been established in the Public Sector to support the advancement of the interests of indigenous Fijians. These institutions include:

The Fijian Administration system is charged under the Fijian Affairs Act to be responsible for the good governance and well being of the Fijian people. Its structure and systems have been designed for this purpose and questions have been raised about whether they are adequate to meet the concerns, needs and aspirations of all Fijians, including those residing in urban areas and who have adopted an urban lifestyle.

The Review of Fijian Administration by PricewaterhouseCoopers, commissioned by Government in 2000 to address these concerns, made recommendations in its Report which were not accepted by the Great Council of Chiefs and as such not implemented by Government. The Government instead adopted the province as the unit for development and realigned administrative boundaries along provincial lines. This realignment saw the strengthening of the Ministry of Provincial Development who were provided additional resources, particularly staffing, aimed at improving turn-around time and facilitating the monitoring of development projects in rural areas.

A study commissioned by the Fijian Affairs Board (FAB) in 2005 made substantial recommendations on the institutional strengthening of the Board and the provincial councils. Those recommendations were endorsed by Government in 2005 but implementation was to be staggered because of the prohibitive cost of the exercise. The FAB has therefore remained relatively unchanged with no new improvements to address the concerns of the Fijian people.

Questions have also been raised about whether the role of the Bose Levu Vakaturaga (BLV) within the Fijian system of governance has been weakened. A key cause has been the lack of broad minded and clear sighted leadership and divisions within it. The dismissal of the BLV following the events of December 2006 raises questions about its continuing relevance in providing leadership for Fijians in the performance of its constitutional role as adviser to the Government on matters of interest for their good governance. On the one hand the system of Fijian governance is seen as a symbol of protection of the interests, identity and status of Fijians. On the other hand the BLV is regarded by its critics as ineffective, interfering and sometimes misguided in its actions at local level. Some also regard it as wasteful, unaccountable, corrupt, and dominated by vested interests.

Freedom of Information

Part 5 of Chapter 11 of the Constitution on Accountability sets out under section 174 that Parliament must as soon as practicable after the commencement of the Constitution “enact a law to give members of the public rights of access to official documents of the Government and its agencies.”

Public Sector Reform

Reform in the Public Sector has covered civil service reform; financial management reform; and public enterprise reform.
     
Civil Service Reform
 
Civil Service reform has included a new Public Service Act and Regulations; the establishment of the Senior Executive Service; the introduction of three year industrial relations agreements; the development and implementation of corporate plans and performance management systems; contracting of senior employees; and implementation of the Service Excellence Award Framework.  Most recently, short term changes have been made to Civil Service salaries. Changes to the retirement age are also being phased in so as to reduce the age from 60 to 55, with full effect from 2009.

 Financial Management Reform

The finance management reforms have been geared towards putting in place a better performing budget and financial management framework that, firstly, adopts a performance focus, and secondly, strengthens accountability. As well as the macro economic issues and budgetary reform, key issues that have been worked on include improving linkages between government policy decisions and their implementation; focusing more on performance than just on inputs; improving performance information; and weaknesses in line agencies in financial management and budget accountability.

Public Enterprise Reform

From the late 1980s, there has been pressure to limit the role of Government to areas that could be best handled by the public sector and reduce ownership to commercial activities that could be better handled by the private sector. In 1993, a public enterprise reform policy was developed and adopted by Government. The Public Enterprise Act 1996 provides the legal framework that guides the implementation of the policy.

The public enterprise reform policy is guided by the following principles:

The government has capital equivalent to 30% of GDP tied up in largely unprofitable public enterprises. Few public enterprises are able to finance their investments from internally generated funds and the modest target of a 10% return on assets is rarely achieved, overall returns are some 3% and well below the opportunity cost of capital.

Government has been undertaking a three-step reform process: (i) introducing measures to reorganize, commercialize and corporatize public enterprises; (ii) enhancing competition in the markets in which particular public enterprises operate; and (iii) privatizing the restructured public enterprises. The Government has made some progress in reorganizing, restructuring and commercializing some of the commercial operations. The reform framework related to public enterprises has led to corporatization of the Fiji Ports Authority and the Public Trustee Corporation.

 Less progress has been made in corporatisation, constrained by the “no redundancy” policy and almost no significant privatizations have been made recently, which is especially unfortunate because even partial privatization can add significant value to an enterprise.

Public Private Partnerships (PPP)

In the Public Private Partnerships Act 2006 the Government establishes a range of legal options for ownership and operation of entities which fall between full public or private ownership. PPPs are arrangements which, irrespective of the corporate or legal form, bring together state assets or expertise and private sector assets or expertise to provide infrastructure or services at competitive prices. PPPs and the variations on them provide an effective means of increasing the overall efficiency of public infrastructure and service provision

The size of the Civil service has increased from 10,000 in 1971 to 25,888 in 2005. One estimate for 2007 had the Service at approximately 30,000 employees.  This increase has not translated into any visible improvements in productivity, hence undermining Government’s fiscal policy and service provision.

ISSUES

Institutional Reform   

There are four main institutional issues that are likely to need to be considered:

• Task Team 2 is examining what should be overall role of Government and in particular whether particular functions might be better performed by the private sector and/or civil society. Any recommendations that Task Team 2 makes could have implications for the institutional framework of the Public Sector. Similar issues may arise from the work of Task Team 3.

• In particular, accepting that indigenous interests must be treated as paramount, there is a need to review how effectively the particular bodies concerned with furthering the interests of indigenous Fijians such as the Fijian Affairs Board and the Native Lands Trust Board are operating, particularly as regards accountability and transparency.

Chiefs need to be accessible to their people and to listen to them. "It will be impossible to achieve this if the elders and chiefs have their own way and are too proud of their chiefly status to not bring themselves down to the people," (Madraiwiwi, May 2005).

The chiefly system in Fiji and other Pacific Island nations would have to adapt to modern realities. Traditional leadership remained significant, but its role was diminishing. British colonisation had reinforced the chiefly system and in fact fossilized it. Historically, there had been some flexibility, as chiefs had to earn their positions through military prowess, but British protection had given the chiefs an unprecedented "reach and depth”v. Christianity, too, had buttressed the system. The church and the chiefly system had become intertwined and mutually reinforced each other, not always to society's benefit. The changing realities of the modern world, however, meant that traditional leaders would have to share the leadership of the country with others. Chiefs and church leaders would have to recognise that tradition did not always sit easily with human rights, and that sensitivity was needed to diffuse the inevitable tension between the church and tradition on one hand and human rights on the other.

The recommended institutional changes and reforms emanating from foregoing reviews must enhance contributions of these institutions for indigenous Fijian development for:

• Chiefs to be accessible to their people and to listen to them.
• Develop leadership among indigenous Fijians that is visionary, progressive, and mindful of the interests of other communities and also the national interest.
• Strengthen dialogue and cooperation between indigenous governance institutions and other communities and stakeholders in the development of        land, such as organisations and enterprises needing access to land for development.
• For the various business initiatives such as Yasana Holdings Ltd, Vanua Development Corporation, and others identify strategies and measures to enhance growth of Fijian entrepreneurship and enterprise.

The review will focus on the roles, structure, functions, leadership of the Fijian institution. It should identify a new approach to administration that accounts for the changing patterns of behaviour amongst Fijian people and their changing aspirations and desires. In this regard the review will focus on the existing key political and legislative governing institutions: The Great Council of Chiefs, Native Land Trust Board, Fijian Affairs Board, Ministry of Fijian Affairs and Provincial Development, Provincial Councils, Business development initiatives such as Yasana Holdings, Vanua, and Development Corporation, etc, will be the major focus.

A major focus of the review should be on developing a new set of organisational structure and processes for the revamped Fijian Administration. In addition, and just as important, is that functions and accountabilities of the organizations under the Fijian Administration are clearly established and demarcated. This will provide for a clear guideline for the new legislation. The review must also identify clearly the outputs (goods and services) that are to be produced by the elements of the new Fijian Administration. This will provide a useful guide for improved productivity.

Freedom of Information

The interim Government is looking at the possible introduction of a freedom of information law. The NTT may wish to express a view about the content of such a law. It is important that any new law expedites low cost access to government information, while recognising that there may need to be limited exceptions to any general access to information.

Public Sector Reform

A Roadmap for Reform.  In recent years, there have been concerns about the need for improved coordination and management of the Public Sector Reform agenda. Consideration has been given to the development of an overall roadmap for pursuing and implementing the future reform agenda.  Sequencing and harmonization of the reform effort has been a particular concern. The Government has also taken steps to improve coordination of reform through creation of a Cabinet Sub Committee, with the Prime Minister’s involvement.

Transparency in the Public Sector. Reforms have been made to improve Budget transparency. A related issue concerns the level of transparency in respect of the decisions made, and conduct by public officials. At times, it is not possible for citizens to establish the basis for official action affecting them.  Development of a Freedom of Information Law is one possible way of improving on this situation.

Policy Development. Government is dependent on receiving high quality, well researched, practical and well-reasoned policy advice from the Public Sector in order to be best placed to make decisions that are in the best interests of Fiji.  This depends in part on the availability of relevant information; the professionalism, capacity and judgment of those in the Public Sector who provide policy advice to Ministers; the capacity for coordination of issues involving different areas of the government; and the effectiveness of the policy making processes.

Civil Service Reform Issues. These issues include recent developments in the employment framework and in human resource management and development in the Civil Service such as:

Public Enterprise Reform. The issues related to public enterprise reform include accelerating the process of restructuring having regard to:

• Underperformance and nonperformance of many Government Commercial Companies and Commercial Statutory Authorities;
• ‘No redundancy’ Policy which is affecting privatization of particular entities;
• Separation of commercial and regulatory functions;
• Poor management contributing to poor performances in entities.

Financial Management Reform.  Reform is taken place across the long term. The issues related to financial management reform include further improving use of improved performance information linked to achieving strategic policy objectives; the scope for improved resource allocation and usage; the next steps in financial management reform; better management of capital assets.

Public Private Partnerships.  This arrangement has encountered teething problems, with disagreements in contractual obligations over the developments in Momi. Efforts need to be made to explore how best Government can refine Public Private Partnerships through the BOT and BOOT concept.

Size of the Public Sector 

One issue that has generated continuing public comment is the increasing cost of running Government, with operating expenditure approximately 18% of GDP. Salaries and wages alone are approximately 11% of GDP.

The Strategic Development Plan sets a target of reducing the size of Government from 14% to 7% of GDP. 

Civil service employment is to be reduced from 36% to 28% of annual Government expenditure, with the number of civil servants reduced from 36% to 28% of annual Government expenditure.

Further work is needed on the best approach to restructuring, in consultation with affected parties.

Service Delivery

While there have been civil service reforms that have been directed to improving the quality of service delivery, there have been continuing concerns raised about the deteriorating level of delivery of services to the general public.  The issues related to quality concern citizen’s access to services, particularly in rural and remote areas, timeliness

The recent years has seen a high number of complaints expressed by members of the public, particularly through the media, on the lack of responsiveness in various service oriented arms of Government.  These concerns need further investigation to determine what are the critical gaps in service delivery and what policy, management and/or operational response can be made.

 TASKS 

Having regard to the work that is being undertaken by other Task Teams on the overall role of government, examining what is the institutional structure that is needed to best perform those roles and to provide appropriate levels of coordination across shared areas of responsibility.

Making recommendations to improve performance, and to strengthen accountability and transparency, of the institutions responsible for indigenous Fijian governance, including;

•  the Great Council of Chiefs;
•  Fijian Affairs Board;
•  Native Lands Trust Board;
•  The Ministry of Indigenous Affairs and Provincial Government;
•  Provincial Councils;
•  Business development initiatives such as Yasana holdings, Vanua Development Corporation.

Examining what action might be taken to increase transparency in respect of decisions and conduct of public officials, such as through the enactment of a freedom of information law.

• Assessing the efficiency and the effectiveness of the Public Service in terms of its provision of high quality policy advice to the Government and making appropriate recommendations on processes for improving policy coordination.
• Examining the scope for improving delivery by the Public Service of accessible, timely and high quality services to the public, especially in rural areas and in outlying islands, and making appropriate recommendations.
• Based on the experience to date in public service and financial management reform, assessing, and making recommendations on the need for further reform of the Public Service- composition, grading and remuneration structures, planning, e government, performance management, financial management, human resource management, and other management systems- with a view to further improving capacity and performance so as to obtain a better balance between the benefits and the current cost of the Public Service.  Based on this assessment, recommending a harmonized and sequenced framework, with timelines, for reform in the Public Service.
• Reviewing the desirable management framework for the Public Service for the future, including the role of the Public Service Commission and other central agencies.
• Reviewing the reforms made in relation to GCCs and CSAs, with a view to assessing the impact of the reform program and what next steps are needed.

Making any other recommendations it considers appropriate in order to improve the institutional structure, processes, efficiency or effectiveness of the public sector.

COMPOSITION

The working group is to comprise up to 20 members: of whom at least four (4) are NCBBF members plus up to 16 others from government and non-government sectors. At least 10 of the 16 additional members are from the non government sector.  The Working Group would have the power to co-opt additional members as it sees fit.

TIMEFRAME

It is anticipated that the Working Group will be established and operational within a fortnight. 
In consultation with the Head of TASS, the Working Group may request the preparation of literature reviews and commission Issues and Discussion Papers (IDPs) to assist it in its deliberations.

The Working Group shall report back to NTT 1 at the latest by mid March 2008, with its report and recommendations to assist it in the preparation of the State of the Nation and Economy Report

REFERENCES

PricewaterhouseCoopers, Review of Fijian Administration Report, Vol. 1 and 2, Parliamentary Paper no. 70/2002, Government Printer 2002

Fiji Times 6th May 2006.

Pacific Human Development Report 2006

Overton, J. (2000) Fijian Land: Pressing Problems, possible tenure solutionsSingapore Journal of Tropical Geography 8 (2), 139–151.

Press Statements by Government Ministers and the Public Service Commission

Public Sector reform in other jurisdictions (See http://www.apsc.gov.au/about/exppsreform)

“Towards a Better Fiji”, the Public Enterprise Reform Program

The World Bank; 1991: The Reform of Public Sector Management.

Schacter, Mark, 2000; Public Sector Reform in Developing Countries: Issues, Lessons and Future Directions; Institute On Governance, Ottawa, Canada. www.iog.ca