It was a sell-out event at the Chamber of Commerce in Valletta this week on the occasion of a lunch organised in honour of the Prime Minister. Almost 150 members filled the hall adorned with solemn paintings of past presidents and recently refitted with air-conditioning that wafted cooled air to delighted guests eating in the shadows of glowing crystal chandeliers.

Yes the event went smoothly after an impromptu speech by Prime Minister Joseph Muscat who jokingly said that the catering potential of the Chamber is not to be overlooked – much to the mirth of those attending. But seriously, he spoke about his pet hate – that of controlling unnecessary red tape to the extent that if a job can be done better by the private sector he was not averse to outsourcing it. Muscat said that even though “a social democrat at heart, we must agree to consider the private sector when it can do a better job than government: its involvement is not a luxury but a necessity”.

Naturally, considering that the government has inherited a respectable national debt (72.1 per cent of GDP) there is very little leeway in the 2013 budget prepared by the PN and adopted in full by the PL to allow for new expenditure on innovation or even contemplate a stimulus to create new business. Certainly, the desire to improve the sustainability of our finances is not merely a mere but a specific warning from the Commission to put our finances on an even keel.

The real challenge is how to trim the fat without making the process unnaturally painful. There is no doubt that this concept of doing more with less is a feature that has obsessed the mindset of the private sector during the recessionary period but is this concept also adopted by the CEOs and army of directors at government agencies? One hopes that the message to be more productive moves gently down through all public sector staff now enjoying the summer half-day routine. Yes, every penny counts. Seeing idle staff at certain public sector offices is not conducive to impressing public perception that productivity is at its peak.

It is all a matter of carrot and stick – just recall how the previous government quietly signed a new collective agreement days before the March election giving more family-friendly measures and improved pay scales. It is déjà vu all over – we have heard it so many times before that the three words “efficiency, effectiveness and economy” should be the buzzwords in the public sector. Consider that the payroll costs of about €620 million is a heavy price to pay to govern and administer a tiny community that compares to a small city abroad. This high cost of governance, if well administered, could lead us to achieve increased productivity, once the unions agree that doing more with less is not an option but a necessity.

Paradoxically, such a paradigm shift in thinking will not materialise overnight. Reducing costs and achieving a better throughput to the public has been discussed and promised many times by past administrations. Ideally, this motto begins being put into operation in earnest in the high-spending departments such as health and social services. Here, procurement and supply chain functions across government departments can be studied to eliminate duplication and thus benefit from a harmonised process of bulk purchasing while assuring high quality levels .It is not 13th-century alchemy in action but the application of modern management concepts, widely used in the private sector where “value for money” audits during an economic slowdown needs to be properly delivered.

The fine-tuning of manpower resources across government departments must be undertaken so that surplus or idle hands are re-deployed or at extremis reassigned to the public/private partnerships. And this fine tuning does not come a moment too soon, given that all countries that take our exports are themselves going through austerity programmes and that, in the private sector, workers are bearing the brunt of tougher working conditions to remain competitive in export markets. The finance minister who is to administer the medicine has to be supported by his peers otherwise it will be an uphill struggle with little tangible effect other than cosmetic changes.

The aim is to cut fat and not muscle. To start with: why do we have mountains of uncollected revenue over the years? Some say that revenue-collecting departments can best be outsourced to private sector so more benefit is reaped from the use of human and capital resources. This political commitment to the electorate has been repeated so many times in the past, promising that such reforms will end up with a lean, more effective public sector. The result is elusive, although some improvement has been registered. Austerity and cost cutting has been tried in other countries with some measure of success. But can we honestly agree that outsourcing or privatisation here has led to a more economic and efficient service to consumers? This is not easy to answer, although some improvements are evident. It definitely makes sense that, during the preceding legislature, the PN was in favour of outsourcing to the Big Four audit firms (sometimes by way of direct order) consultancies in WasteServ, Enemalta, Transport Malta and other assignments to re-design processes or recommend improvements in state corporations and/or government entities. Such assignments feature published reports investigating various sectors such as renewable energy, water and electricity rates, incentive legislation and the outsourcing of tasks to surveys by agencies awarded by the Malta Tourist Authority. One hopes that the millions paid in such consultancies will help us become a more efficient country which can in a short time cut deficits and aim for a balanced budget. Typically unless more taxes are gathered or the economy grows exponentially, then the only way forward for trimming the deficit is by cutting public expenditure, namely social services and/or pension allocations.

This move is definitely unsociable and in the end governments reach a compromise by issuing amnesties to speed up the collection of millions of unpaid tax and vat fines. Certainly, the PL administration will spare us the pain suffered in the UK with a two-year pay freeze in the public sector followed with a £17 billion reduction in government departmental spending over four years. Having seen the austerity measures taken by countries such as Britain, it is not surprising to read that locally this is not the best time to reduce personal taxation by 10 per cent as was so cavalierly promised by the party in power prior to the last election. Luckily, last year we achieved a 0.8 per cent real growth, which compares well with other countries – some with a negative growth – but we are still not out of the woods.

Equally disconcerting is the Central Bank warning that national debt is forecast to rise to close to 74 per cent of GDP in 2014 which is beyond the maximum limit of 60 per cent allowed under the Maastricht Treaty.

In conclusion, considering the unstable economic times, everyone wants to know how to improve results while using fewer people and spending less money but still achieving or maintaining the same level of excellence so the task ahead for 2013 is challenging. While there are some positive signs that grass shoots are appearing in our orchard, we must never lose our sense of urgency in making improvements or reforms. We must never settle for “good enough” because good is the enemy of great. While our goal is to achieve a stable economy, we also want to improve our standard of living so that we continue to set and exceed our own high standards, constantly raising the bar for competitors and for ourselves as only thus can our deficit vanish and we can start repaying accumulated debts. Let us hope that we learn the lesson of doing more with less.

The writer is a partner in PKF an audit and business advisory firm

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