| || || Tooki, Meaua Namane B.|
| || || Public sector reform in Kiribati and its impact on public enterprise : a case of the Public Utilities Board (PUB) in Kiribati |
Author:Tooki, Meaua Namane B.
Institution: University of the South Pacific.
Call No.: pac In Process
Copyright:This thesis may NOT be copied without the authors written permission.
Abstract: Public sector reform in Kiribati that began in the late 1980s has been part of a global trend towards reassessing the role of government in the economy. There has been a shift towards the rhetoric of private sector management or free market philosophies with the view to improving productivity, efficiency and effectiveness of public enterprises. From the global view, there is recognition that the poor economic performance of public enterprise has in part contributed to the underdevelopment of the private sector, thus in turn led to poor economic growth. In Kiribati as elsewhere, the introduction of free market philosophies into public enterprises (PEs) can only happen through the reform of the enterprise, and privatisation is chosen as an immediate option in achieving this goal.The experience of the United Kingdom, New Zealand and Australia proves that privatisation has been a good option in improving public sector efficiency and indeed, the best way to boost private sector development. However, the early reform in Kiribati has been disappointing since to date, no privatisation has materialized. Instead, commercialisation and corporatisation have been widely adopted as alternative strategies to transform PEs into commercial and competitive enterprises. The case of the Public Utilities Board (PUB) clearly demonstrates that commercialisation and corporatisation policies have made a little progress at the micro level, such as changing the legal status of the company, adoption of information technology and human resource development, but without necessarily much improvement in the company’s performance. As a government owned company, the PUB is still committed to its social obligations, by providing noncommercial services, such as free water services and delivery of the electricity and sewerage at nominal rates. The reform in Kiribati and other PICs since the 1980s and to date clearly demonstrates that the transfer of an outside model into the local system is not possible because of the differences in the levels of development. The UK, Australia and New Zealand are developed countries and thus changes that have been implemented successfully in their system cannot be the same in the developing countries of the Pacific. Some of the common problems and challenges facing the PICs and Kiribati are weak legal system, strong communal ties, and greater dependence on external aid funds. Although privatisation would bring about development opportunity, this has been a threat to Kiribati as other small PICs given the uniqueness of the country’s smallness and isolation. These same factors have in part contributed to the failure of the PUB management in bringing about efficiency, effectiveness and profitability. The isolation of Kiribati as other PICs has caused high fuel cost making it difficult for the PUB and related commercial activities to achieve efficiency and effectiveness. This is further added by political interference especially in setting appropriate tariff rates for its services. It is suggested that commercialisation and corporatisation should be revisited as they appear fit in the case of Kiribati ensuring that reform should be at the micro and macroeconomic levels. Partial privatisation through joint venture or contracting out as well as liquidation is seen as necessary in the case of Kiribati. Contracting out and joint venture are good options for countries with lack of resources like Kiribati because they have the advantage of reducing government subsidies and the likelihood of increasing the company’s performance. More importantly, they bring in new ideas and skills together with the required expertise into the company and the country as a whole. Fragmentation is the final option and may be the best option for big companies managing more than one complex business like the PUB in Kiribati. The separation of water service from electricity and sewerage is the preferred option to enhance PUB management focusing on one or two specific business activities. In achieving successful reform, the people of Kiribati should have ownership of the reform programme ensuring that implementing policies are devised concurrently with the existing culture, available resources and capacities. Government should play a critical role in providing funds and appropriate legal protection while external aid donors put more effort in educating the people at different sectors of the economy. These may boost sustainable economic growth upon which improved living standards of the wider citizenry may be based. It is the researcher’s hope that in respecting the people’ views and providing quality life for everyone, peace, health and prosperity will be maintained in Kiribati.