Governments need to become more productive

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Travelling abroad can often spur bouts of “e-envy” — or jealousy over the digital ease of life elsewhere. Whether it is the ability to file a tax form in a click or to renew a passport via a smartphone, business leaders and tourists get an insight into how their government might drain less of their time back home. Immense pressures on the public sector, however, come not only from disgruntled citizens. With debts elevated and demands on public spending growing, governments across the world must work out how they can deliver more, with less.

The public sector already plays a prominent role in advanced economies. It employs around one in five workers while general government spending accounts for 40 per cent of gross domestic product on average. This gives it a significant bearing on national productivity. Ageing populations, climate change, and national security challenges are meanwhile bringing additional burdens on the state. Indeed, with tight budgets and rising debt interest payments, it is now even more essential that tax and spend decisions are not wasteful, and that governments find ways to become more productive.

Defining what public sector productivity means is part of the challenge. It is often equated with cutting jobs or shifting resources from lower priority departments. But this comes at a cost — dilapidated infrastructure, longer healthcare waiting lists, and administrative blunders. Instead, governments need to work smarter, both in identifying and eliminating waste, and also by extracting more — and higher quality — from their existing resources. For measure, research by McKinsey estimates that operational improvements could save the US government $750bn per annum, without reducing the effectiveness of services.

Leveraging technology — for instance by digitising paperwork, using data to generate policy insights, and automating tasks — offers most promise for boosting long-term efficiency and quality. Many nations have already made strides in e-governance, with Scandinavia leading the way, according to UN rankings. Estonia’s e-Tax system sends pre-filled tax forms to be checked and filed within minutes. In Singapore registering a company online can take just 15 minutes. Indeed, digital governance can streamline staffing needs, smooth compliance processes, and raise the productivity of the private sector — small businesses can lose a few working weeks per year grappling with regulation.

The reams of data collected by governments can also be cleaned and analysed to unearth inefficiencies, improve services, and even raise revenues, particularly with the aid of artificial intelligence. America’s Inland Revenue Service, for example, recently announced plans to use AI to collect unpaid taxes. In Britain’s NHS, the auto-generation of cumbersome patient forms could free up time for nurses and clinicians, while machine learning could also help hospitals to manage capacity better.

Ditching outdated technology — particularly fax machines, which are shockingly still used by some governments — for existing best practice is a no-brainer. Adopting newer gadgetry may have an upfront cost, but it can bring significant long-term efficiency gains. Broader operational improvements can also come through developing and attracting talent better, boosting partnerships with the private sector, and encouraging innovation and experimentation.

Revamping vast bureaucratic machines while they are operating is not easy. Governments have to balance the more effective use of technology and data with privacy concerns, cyber security risks, and regulation. The skillsets to manage transformation can be lacking too. These challenges need to be overcome. The cost of not doing so means an ever-growing strain on public services, and ongoing pressure to raise taxes. In the meantime, envious travellers can at least help prod governments into action.