COPE wants urgent action to prevent collapse of public sector

by Saman Indrajith-July 23, 2013

The Committee on Public Enterprises (COPE) has, in its second report released yesterday, warned that the government should take immediate steps to implement its recommendations to bring about "radical changes in the existing policies’ to prevent the collapse of 72 public enterprises.

The report presented to Parliament by its Chairman, Senior Minister D. E. W. Gunasekera points out that 16 out of these 72 institutions have been identified as loss incurring and another 14 as continuous loss/deficit incurring. The report emphasises the need to increase salaries of public sector professionals to retain their services.

"Attention of the executive should be drawn to the need for enhancing the quality of leadership of the public enterprises through the appointment of professional, experienced and skilled personnel. They should be made fully answerable and accountable for their performance. This can be ensured by the maximum degree of autonomy and minimum degree of interference from above. There is a dearth of professionals in the field of accountancy which can only be corrected through a deserving remuneration," Minister Gunasekera said in the Chairman’s note to the report.

The committee report in its observations and recommendations section emphasizes the "importance of increasing the professional capacity in the public sector…it goes without saying that the professionals cannot be either recruited or retained with the existing salary scales in the public sector. Because of this situation, certain institutes had been compelled to recruit personnel to the high ranking posts on contract basis which leads to a serious problem with regard to the responsibility and accountability of those personnel recruited on contract basis."

The Treasury had been recommended by the COPE to take immediate action to raise salaries and other remuneration of high ranking posts "to avoid any possible collapse of the public sector".

The COPE report makes 17 general observations and recommendations to correct the present situation, Senior Minister Gunasekera told a press conference held in the Parliamentary complex soon after presenting the report to the House.

One of the serious issues in public sector was severe dearth of actuaries, he said adding that the entire country had only a handful of qualified actuaries.

Inadequacy of actuaries not only in the public sector but also in the country as a whole is considered by the committee at the moment as the need to foresee. The ability calculate future risks is felt more than ever before. "For instance, the collapse of the Agrarian and Agricultural insurance Board had been mainly due to the inability to foresee the non-availability of its pension scheme," it said.

"The committee is of the opinion that the appointment of personnel has heads of institutions should be made only by considering their qualifications and experience in the relevant discipline. The matter remains the same even in relation to the appointment of board members as their decision making has huge dependency on their knowledge and experience in the relevant area of interest," the report says.

COPE Member MP Eran Wickremaratne addressing the press said that appointing family members and relations of those at the helm of power to the top posts such as Chief Executive Officers and Chairman in public sector had resulted in the loss incurring. "If a person to be appointed to the top post of an airline, for example, he or she, apart from other qualifications, should need experience of working with foreign airlines. Otherwise, it is impossible to prevent losses," he said.

"It should be noted that the debt management of most of the public institutions is extremely unsatisfactory and as a result, large amount of debtor balances had been outstanding for a significant period of time," the report says adding, for the lapses in the agreements and sometimes for not taking action within the required time period, some debtor balances are in a non recoverable state."

The report comprises findings of investigations on 244 state institutions from January 1, 2012 to March 30, 2013. With 320 pages, the report is considered the largest ever made by the committee, Minister Gunasekera told the press.

Other COPE members Ministers Mahinda Amaraweera, Lasantha Alagiyawanna, Jagath Pushpakumara, MPs Rosy Senanayake, Karu Jauasuriya, Sujeewa Senasinghe, Sarana Gunawardena also attended the press conference.