Commercialisation ‘first step’ to better Govt management

Press, 2 July 1986, Page 45

Commercialisation ‘first step’ to better Govt management

PA Auckland Commercialisation is not a panacea but a “useful first step” for improved financial management in Government departments, says a top Treasury official. Mr David Shand, head of the Treasury financial management support service, told the Auckland Regional Chamber of Commerce that effective management with clearly defined objectives was essential to financial success. In many Government departments, financial performance and resource management had been poor. This was often caused

by ill-defined managerial aims which he said were “a product of the conflict between commercial and service objectives.” These prime objectives had to be sorted out clearly. Success, he said, was likely to be achieved by creating a flexible structure within which managers could manage best and a climate which encouraged, supported and rewarded them. Excessive controls on operations were hindering effectiveness, he said. The problems in Government departments included “Inadequate asset management, poor cash flow management, non-

payment of services, and no incentive for managerial efficiency,” he said. These problems would be highlighted by monopolies .entering the private sector. “Commercialisation is clearly likely to more easily lead to better financial management and general performance in a competitive rather than a monopolistic environment,” he said. “ In the absence of competitive pressures, an organisation may achieve its financial objectives merely by exploiting its monopoly power and indulging in cost-plus.

“ This is an issue the Government will have to address.”.