Public governance

A question of trust

 

How can you be sure the toy you buy your child as a birthday present or the bicycle you buy to ride to work is safe? That your money is safe in the bank? That the tax you pay is not going to waste? The answer is essentially trust – but what happens when that trust breaks down, and how can you rebuild it?

Much of what we do in our daily lives depends on trust, without us really thinking about it. We do not expect to be injured or made unwell by the food, perfume, toys and consumer goods we buy. We bank, shop and file our tax returns online because we trust that our privacy is protected.

But what happens when that trust breaks down? The economic and financial crisis shook public confidence not just in banks and governments but in the system as a whole. How to rebuild that trust, and ensure that it is maintained?

The financial crisis focussed attention on our relationship with banks, and how to ensure that consumers understand the conditions of the loans they take out or the accounts where they invest their savings. Financial literacy, to ensure for example that consumers can understand the financial contracts they are signing, is one part of the answer.  But the contracts themselves also have to be understandable – in the 1980s, the typical credit card contract fit on a single page. Today it covers 30 pages, a daunting prospect for the most financially-savvy consumer.

To help policy makers address information overload and ensure consumers get the information they need to make informed decisions about financial issues, the OECD has developed a Consumer Policy Toolkit. But this is just one way the OECD helps consumers. Its work on privacy protection pre-dates the Internet revolution by many years, but those guidelines have been tailored and updated to help make it safe to do business on line. OECD standards on fruit and vegetables make sure you know what you are getting when you pay for a Class 1 apple, tomato or kiwi fruit. Its tractor safety standards have been saving lives for half a century.

 

But what about our everyday relationship with government? How can we be sure our tax systems are fair and functional, and that governments are spending that money effectively? Paying tax is never popular, but when it is spent effectively people appreciate the roads, schools and health systems it provides. Unfair, poorly-managed or corrupt tax systems that do not deliver anything in return, however, make people more inclined to avoid payment if they can. And if some people deliberately evade taxes in a well-managed system, it means that the honest taxpayers are penalised by higher bills. The OECD’s work on tax transparency and efficiency is helping developed and developing countries to make the most of their public revenue, something that is even more important at a time of tight public finances in the wake of the financial and economic crisis.

And in an increasingly interdependent globalised world, what about trust beyond national borders?  Corruption undermines good governance and effective government, but also has an added cost to the consumer in the form of higher prices when businesses pay bribes to win contracts. The OECD Anti-Bribery Convention makes it a criminal offence for companies based in OECD countries to bribe public officials anywhere in the world in order to win a contract. Its Guidelines on Multinational Enterprises hold companies to the same standards wherever they operate across the globe.

Restoring trust is vital if we are to achieve a lasting, sustainable recovery from the financial and economic crisis. The OECD’s work on governance and consumer protection is a key element in the G20’s toolkit for the future as G20 leaders prepare to meet in Cannes next month.

 

“Openness and transparency are key ingredients to build accountability and trust, which are necessary for the functioning of democracies and market economies. Openness is one of the key values that guide the OECD vision for a stronger, cleaner, fairer world….We believe that an organisation like ours has a democratic duty to provide citizens with the information that allows them to understand the day’s main issues.”

OECD Secretary-General Angel Gurría
Launch of the Open Government Partnership (Read full speech)

 

Further reading on this issue:


Good job?

Back to school

Cool, clean water

Greening growth

Food prices

Development

 

 

 

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