How to really reform the Civil Service

Professor John Burns, Chair Professor of the Department of Politics and Public Administration at the University of Hong Kong, was the Foundation's guest speaker on 25 May 1999. This is a summary of his remarks.

The reform proposals underscored the need for reform of other parts of the system; the system of Government as a whole is not working.

Apologising to those Civil Servants present, Professor Burns began with a joke. How many Civil Servants did it take to change a light bulb? Twenty, was his answer: one to prepare the tender, two to review it, two to revise it, one to approve it, two to audit the process, five to supervise the contractor,... and so on.

Why was reform of the Civil Service important? The Civil Service was very large: 180,000 people formally employed within it and goodness knows how many contract staff. Paying these people and others like himself in the broader public sector, said Professor Burns, cost two-thirds of public expenditure. So it was financially important. However, we also relied upon the Civil Service to provide society with essential services and to maintain stability. Lastly, the Civil Service had great power over us all; power to detain and arrest us, and to intervene in our lives in many ways. It was important to consider reform of a body with such great significance in our lives.

Generally, Professor Burns supported the reforms laid out in the Government's document. However, the Government's proposals were incomplete and did not deal with the fundamental issues; they addressed only part of the needs.

Need for reform

The reform proposals actually put forward by the Government were of a human resource management nature. They underscored the need for reform of other areas of the system; the system of Government as a whole was not working.

The root of the matter was that the political leadership was timid and lacking strategic direction. Hong Kong's odd system of government vested the political leadership in the Civil Service and the Chief Executive. By nature, such leadership was reactive rather than proactive. Not being popularly elected it lacked the mandate to take bold steps.

The policy-making capacity of the Government needed to be improved. There was a failure to anticipate. Take the right of abode issue as an example. Professor Burns recalled that ten years ago the implications of the Basic Law were being discussed outside Government but little or nothing was done within Government, with the result that the issue expanded into a crisis.

Policy implementation was another area of failure. Departments were not coordinated with one another. This had been seen clearly over the Avian flu crisis: different Government spokesmen were coming out with statements that contradicted one another. And over the Urban and Regional Councils the staff had not been informed of the Government's intentions.

There was a lack of reform culture within the Civil Service. Although the culture of front line staff in some Government departments had changed, the "back room" culture had not changed. There was also fatigue with all the initiatives which had come out over the years: performance pledges, public sector reform and so on.

The Trading Funds, Professor Burns felt, were an exception to this. They had achieved real change and set a good example.

What the objective should be

The objectives of reform of the Civil Service should be to improve its efficiency and effectiveness. To pursue this objective would require a number of key elements. These were generally not to be found in the Government's own reform document.

Firstly, there needed to be a more clearly articulated vision of where Hong Kong was going. How did Hong Kong fit into the region, into China, into the world? Tung had tried to do this a bit, but it really needed a political leadership with the will and legitimacy to unite the community to pursue the vision. This in turn required reform of our political institutions, especially a directly elected Chief Executive.

Secondly, one needed to ask, "What should Government be doing?". The Hong Kong Government was small, but it nonetheless employed tennis coaches. Why? It employed museum curators. Why? Government should only be doing what the private sector didn't do well or was unwilling to do, such as providing security and regulation. Professor Burns supported what the Government was trying to do in the Housing Department. Government should be shrunk to bring more activities into market competition.

Thirdly, to be effective the Civil Service needed to be more accountable. Accountability could be increased by added more popularly elected seats in Legco. It could be increased by introducing a ministerial system. And there should be more frequent auditing.

Fourthly, there should be reform of the Administrative Officer grade. The generalist grade of the Civil Service could be subject to streaming to distinguish between higher performers and the rest. The time spent in the post should be longer to allow development and retention of knowledge. People should be brought into the Civil Service from outside in greater numbers. This was currently being done on occasion, but needed to be done much more. Finally, the top AO (Administrative Officer) positions, Secretaries, Deputy Secretaries, Department Heads, should be put on fixed term contracts. Civil Servants should compete with people in the private sector for these top jobs.

Fifthly, Professor Burns struck a cautionary note on overreliance on private sector models. The private sector should be taken as a reference point. However, it should be remembered that the private sector was also the home of some bad practices, such as nepotism, particularly in smaller companies. The public sector performs necessary services and had the power to deny us our freedom. Therefore it had to be open, transparent and politically accountable. Finally, the Civil Service should be staffed by dedicated and public spirited people.

"Consider the costs and benefits of abolishing the Hong Kong Civil Service."

Overseas reform

Among overseas countries that had reformed their civil service, New Zealand was the leader, Professor Burns felt, and the UK second, with Australia close behind. Reform was not going so well in Canada and the US, while Germany and France were certainly behind.

Civil Service reform in overseas countries had been driven by economic crisis and with reference to business practices. In OECD countries, marketisation, in the form of privatisation and contracting out, had been a dominant theme. This removed activities from the civil service altogether. Within the civil service, forms of financial decentralisation such as trading funds had been adopted. Downsizing of the civil service had been very dramatic in some countries. Very large numbers had left government.

Reform within the civil service proper had included decentralisation of authority to departments, performance- based pay, simplification of internal procedures, and flexibility in utilisation of resources, including staff. Performance-based pay was unfortunately not the success that it was touted to be. Every academic study on the subject had found that adopting performance-based pay did not improve performance or morale and could negatively affect both. This was usually because appraisal of performance continued to be subjective. Also, too much emphasis was placed upon the performance of individuals rather than of groups, teams and departments, or programmes. And in an economic crisis, the first item that legislatures would tend to cut would be civil service performance bonuses.

Professor Burns had recently set as an exam question, "Consider the costs and benefits of abolishing the Hong Kong Civil Service". This had horrified his colleagues and the examiner had refused to accept it. But Australia was in fact discussing the abolition of the unified civil service, for example, the master pay scale. Individual departments were allowed to set their own pay scales.

Turning to Mainland China, Professor Burns found the scale of reform quite amazing, although it was still proceeding too slowly. The themes were marketisation and regulation - rather than deregulation. There was financial decentralisation, especially to local government. Downsizing was not working so well, however. The current attempt was the seventh, and the sixth had finished only in 1996. But Government employment had marched steadily upward. This time the rallying cry was that Zhu Rong Ji would make it work.

A more positive aspect was the creation of a civil service separate from the cadre class. This process had been going on since 1993, and included the introduction of life tenure, education, recruitment, compensation and education.

Tremendous change was going on all around us, Professor Burns felt. Overseas countries were adopting radical initiatives to reform their civil service, although the initiatives were not always implemented successfully. This was really a wake up call for Hong Kong.

Reform in Hong Kong

Looking at the details of the Hong Kong Government's consultation paper, Professor Burns found much to support.

On contracts, there should be fixed term contracts for all entry level grades and a smaller permanent establishment. The "Easy in/easy out"" policy was highly desirable. To facilitate it there should be portable pensions and gratuities. Direct entry at senior levels should be adopted; overseas experience in this regard was very good. Intake of outside talent should be considered particularly in areas like economics and finance, and anywhere that AOs did not possess the requisite expertise. Land and infrastructure, Professor Burns felt, were already performing reasonably well. And non-performers should be dismissed. The present procedures for dismissal were too complex and did not work in practice.

On compensation, the basic principles retained were appropriate. Pay should be sufficient to attract and retain suitable staff.

Professor Burns felt that discipline was an important area. The culture of responsible stewardship was not being carried out, and culture change was needed. More frequent auditing would help here.

Pitfalls

Professor Burns drew attention to the potential pitfalls of Civil Service reform. The Government was embarking on a very limited reform programme when Hong Kong was in its worst recession in more than 30 years. What would happen when the economy recovered? Would Government be competitive during economic good times? It should be remembered that public service as a career was important. One did not want to lose experienced people. To incentivise new recruits one could offer them permanent terms after a period of time, say two three year contracts, subject to good performance. It was also necessary to build the commitment of Civil Servants to the reform process. There needed to be genuine consultation. There also had to be an effective mechanism for addressing grievances.

Finally, Professor Burns urged attention to the broader needs for reform. A broader process of constitutional and political reform was needed to fix the other parts of the system.

The above does not necessarily represent the views of the Foundation.