Time to shut down redundant Government agencies

Last week, the Cabinet granted approval to the proposal presented by President Anura Kumara Dissanayake for the review of State entities with non-commercial interests. As per the Government, due to obsolete structures, insufficient or incompatible powers, and inefficiencies, a review of these institutions is warranted. Accordingly, a high-profile committee under the chairmanship of Secretary to the Prime Minister has been appointed to undertake the evaluation. 

Unfortunately, although committees after committees have come up with various recommendations to get rid of unwanted State institutions, presented via elegantly designed reports and publications, none of them are implemented, mainly because of fear of losing votes among other factors and instead the documents are thrown into shelves, representing a waste of taxpayers’ money.

The bloated Government apparatus is composed of 86 departments, 25 District Secretariats, 339 Divisional Secretariats, 340 State-owned Enterprises (SOE), and 115 non-commercial statutory boards. During this year, the Treasury allocated Rs. 140 billion to undertake the operations of statutory boards and 51 SOEs. Ever since the steps were taken to raise both direct and indirect taxes, the amount of expenditure which is incurred by the Government has come under heightened scrutiny. Hardworking employees in the private sector as well as entrepreneurs in particular are furious about having to part their earnings as taxes to pay the salaries of the extremely lethargic and inefficient bureaucrats in the public sector.

No one would have thought a Left-leaning political alliance, which has a history of advocating a large State bureaucracy, will consider steps to downsize the public sector, a policy which is traditionally associated with Centre-Right political parties that espouse market-friendly economic policies. An overwhelming majority of public sector employees voted for the NPP at the last two elections, and it would be interesting to observe their reaction to this move.

During the premiership of Ranil Wickremesinghe (from 2002 to 2004), as envisaged by its much publicised blueprint for economic development – Regaining Sri Lanka – plans were drawn to trim down the public sector. However, the JVP – the predecessor of the NPP – despised the then stated attempts to scale down the public sector and lambasted the Wickremesinghe-led UNP administration.

Incidentally, in the US too, the incoming Donald Trump administration has placed a considerable emphasis on cutting public spending and reducing the size of the federal government. Trump has proposed a presidential advisory commission called the Department of Government Efficiency and the Commission, which would be led by the serial entrepreneur Elon Musk, is tasked with restructuring the federal government of the US and removing regulations in order to reduce expenditures and increase government efficiency. 

Sri Lanka’s existing State machinery contains a number of Government agencies that have outlived their usefulness and thus necessitating termination. Why does the island need an archaic institution in the calibre of Food Commissioner’s Department any longer? What role does it have to play within an open market economic system? According to the 2020 Performance Report of the institution, its approved cadre was 102 employees. Moreover, the Auditor General had highlighted a number of shortcomings within the Department too. Playing games of cards by employees at its head office in Union Place is a common occurrence and epitomise the institution’s irrelevance in this modern day and age. 

Another State establishment, the existence of which needs to be questioned, is the National Enterprise Development Authority. It was established in 2006 by the Mahinda Rajapaksa Government with a vague mandate of promoting and facilitating enterprise development with a special emphasis on SMEs. There are so many chambers and business support organisations that promote SMEs and entrepreneurship. Hence, a taxpayer-funded agency for the same task is not necessary. 

Nevertheless, closing down unnecessary Government agencies carries political costs. Employees who would lose their jobs with the closure of redundant establishments would invariably become livid at the incumbent administration. Given the populist inclinations of the ruling dispensation, progress beyond the stage of recommendation is highly doubtful.