Australian and Tanzanian case studies
What is public sector like in your country?
Karen Sanderson, executive director, Policy and Budget Group, New South Wales Treasury, Australia:
New South Wales treasury is a fascinating place to work. It’s dynamic, it’s energetic and we’re constantly challenging the status quo to try and do more for the citizens of New South Wales.
Williard Kalulu, chief accountant, Ministry of Finance and Planning, Tanzania:
We know that Tanzania is one of the developing countries. And being a developing country it needs a strong public finance management reform.
What is the public finance initiative?
The initiative that we’ve done is implementing an asset and liability committee - we call it ALCO for short. This committee’s real focus is looking at the balance sheet and looking at how we can leverage it, using the assets and properly managing the liabilities.
Phil Gardner, deputy secretary, Commercial Unit, New South Wales Treasury, Australia:
The idea has been around for a while. If you’re look in the private sector there are a lot of big financial organisations who have a total balance sheet perspective, a lot of banks in particular have an asset liability committee. Within government historically, governments have more looked at the operating side – the cash in and the expenses out. And this was an opportunity for the state to take a look at the entire balance sheet to understand how they can reshape and utilise it more efficiently to meet the physical challenges of the future.
The public finance initiative that has occurred in our country, as I said earlier, that we are implementing international public sector accounting standards. That it being one of the major initiatives in terms of financial reporting, that it portrays the true and fair view of the government affairs, especially in financial matters.
How did this initiative provide immediate value for citizens?
One of the things that New South Wales is most well-known for is the asset recycling programme and that’s one of the key platforms that work alongside the function of the ALCO. So New South Wales has a very strong liquidity position it has a negative net debt position and it has a triple a credit rating. But at the same time it has been able to deliver a very large infrastructure programme across social and economic infrastructure. And the key reason the state has been able to do that has been the asset recycling activities, so unlocking the capital through selling core assets of the balance sheet to the private sector, utilising those funds to deliver infrastructure projects. So all the funds that result from the asset recycling programme go into an entity called “the restart fund”. Today 32.9 bn AU$ has gone into that fund, of which 22.4 bn AU$ has already been committed to infrastructure projects across the state.
The reforms initiative provides immediate value to the citizens because when public service is improved, automatically the citizens are to ones who get to enjoy it. In terms of health sectors, you find there are medicines in the hospitals; you find there are supplies and equipment in the hospitals. In terms of education, pupils are now going freely to school because the government has taken initiative to pay for the pupils from primary school to secondary school. So these are the results of having strong public finance management.
What would you like to say to other financial professionals implementing PFM reform around the world?
You need to understand your balance sheet, understand the assets and the liabilities that you’ve got. I think you need to understand your risk appetite and what you’re prepared to do with the people’s money. I think you need to network with people both within and outside of the public sector, find people who can help you on the journey. And I think finally you need to work across your organisation, you can’t do this on your own. In the New South Wales Treasury, it involves all parts of Treasury.
If the professionals work together, automatically the sustainability of economic development will be enhanced. And while we’re saying that, if one wants it to move fast they have to move alone but if we want to succeed it means we have to join forces for the whole of the professionalism to ensure that we help our countries to sustain the economic development and enhance and improve service delivery to the public.