Secretary-General

The role of the Centres of Governments in meeting today’s economic challenges

 

Opening Remarks by Angel Gurría, OECD Secretary-General, delivered at the 31st Meeting of the Network of Senior Officials from Centres of Government (CoG)

London, Tuesday 23 October 2012

(As prepared for delivery)


Sir Bob Kerslake, Ladies and Gentlemen,

Good morning! I am delighted to be here today to open this 31st annual meeting of OECD Senior Officials from Centres of Government (CoG). I am extremely grateful to the United Kingdom Cabinet Office and particularly to our hosts – Cabinet Secretary Sir Jeremy Heywood and Head of the Home Civil Service Sir Bob Kerslake – for welcoming this year’s meeting in such a beautiful and historic setting.

Unfortunately, the economic backdrop for this year’s meeting is not quite so pleasant. The last four CoG meetings took place in the shadow of economic and social tension. Well, we are by no means out of the woods yet. Our recent interim “Economic Outlook” assessment suggests that growth in OECD countries will weaken from 0.4% in the first half of 2012 to 0.2% in the second half of the year, with the euro area remaining in recession throughout the period. The impact has been more far-reaching than we anticipated. Unemployment continues to rise. Over 10 million jobs would need to be created just to bring the employment ratio back to pre-crisis levels.

Of course, we need to put the fire out! For this to occur, bold action is needed in particular in the euro area and in the United States to avoid the impending fiscal cliff. In particular, the OECD’s recently published second edition of “Restoring Public Finances” shows that consolidation in OECD countries needs are still considerable – an average effort of 2.8% of GDP is still required between 2013 and 2015. Clearly, macroeconomic policy support including detailed and credible consolidation plans will continue to be a priority. But, at the same time countries also need to boost growth and employment through structural reforms.

Today, I want to take you away from the “fire-fighting”. Pressing challenges to short-term prosperity have diverted attention from longer-term social, demographic and environmental pressures that will have enormous economic consequences in coming decades.

The crisis has been a wake-up call to policymakers around the world. We have been left with a number of unwanted legacies: low growth, rising unemployment and inequality, high budget deficits and debt. At the same time, the economic meltdown of 2008/2009 exposed serious flaws in the underpinnings of mainstream economics, and in our governance.

Thus, returning to business-as-usual after the crisis is not an option. We need to look beyond these short-term fixes to the future and start rebuilding our economies. This is essential to avoid long-lasting scars to our economic and social fabric.

That’s why the OECD has launched the “New Approaches to Economic Challenges (NAEC)”, to take a look at the overall structure of our thinking, our analytical frameworks and their effectiveness. We aim to revisit our conventional economic models to better deal with imbalances, address the under-pricing of risk and the unintended effects of pro-growth policies on issues such as inequality and the environment.

At the centre of my message to you today is that there is one place in particular where such new thinking can be brought together with policy making: the Centres of Government. You are the people who make things happen – you see the big picture, you have the benefit of working with all departments, you roll out policies across the whole of government. Above all, you are ideally placed to exert your leadership and play an important role in translating this new strategic agenda into joined-up policies in your countries.

In fact, some of this thinking is already being done. The analytical frameworks that we used in the past are now being questioned.

For example, through our Better life Initiative (we just had our 4th OECD World Forum “Measuring Well-Being for Development and Policy Making” in New Delhi), we have been working to identify better ways of measuring the progress of societies – making the case for the need to move beyond GDP and putting people’s lives – their needs, their aspirations and their feelings – at the centre of policy-makers’ attention. And some governments are already taking the “well being” agenda very seriously.

Another excellent example is the Behavioural Insights Unit here in the UK Prime Minister’s Office, which aims to find innovative ways of encouraging, enabling and supporting people to make better choices for themselves. The so-called “nudge” approach. Such behavioural insights could help people to make better decisions for themselves and save millions of pounds for government. This is the kind of thinking we need to see!

But these are just a couple of examples. We need more of this thinking. We need a different institutional setting to avoid being caught in a “silo approach”, which simply does not consider the trade-offs and unintended consequences of certain policy actions.

Alongside these “new approaches” to policy making, there needs to be a focus on “new approaches” to institutions, public governance and the political economy of reform.  If we have learned anything from the crisis, it is that institutions matter. Strengthening and re-valuing the performance of governments, and addressing implementation gaps are crucial to improving the working of market economies.  Let me highlight two particular aspects for the Centres of Government:

First
, you need to look inwards and reflect on how to make the machinery of government work better.

For instance, it is crucial to improve links with the budget process. As a result of the crisis and the need to control public expenditures, many of you have brought in systems that ensure better co-ordination between budgeting and policy formulation.

Monitoring of progress on policy implementation by the Centres also needs to be enhanced. Acting strategically can only lead to better results if it is based on robust evidence. How are rules applied in practice? Is it easy for ordinary citizens to access information? At the OECD, we have been developing the art of measuring government performance for several years through “Government at a Glance” and now “Restoring Public Finances”.

Coordination across levels of government also has to be strengthened. Our data shows that, on average, sub-national government deficits in OECD countries moved from a near balance in 2007 to 9.5% of their revenues in 2010. The strategic response of governments to the crisis must address the fiscal pressure faced by local governments. It also needs to take stock of the many innovations that emanate from cities or regional governments and eventually scale-up or apply this across government.

Second, rebuilding confidence means looking outside of government, strengthening the
dialogue between government and citizens and making government more open.

This will help to rebuild the relations of trust and confidence on which democracies depend and which legitimise decisive and effective government action. Initiatives such as the Open Government Partnership, presently chaired by the United Kingdom, demonstrate an international commitment to improve how governments work.

Open government is also about regaining public trust. For its part, the OECD has developed a range of instruments to ensure concrete improvements in key activities of government. For instance, the OECD Principles for Integrity in Public Procurement provide guidance across the whole procurement cycle. Our Principles for Transparency in Lobbying have been important in steering countries towards taking a more serious look at how lobbying is organised in their country and steps to improve transparency, such as registers of lobbyists.

We are also looking at some of the more sensitive issues that strain relations between governments and citizens – in particular, political financing. The cost of elections has skyrocketed. Countries all have rules – but the sanctions do not seem to work too well. And scandals related to the financing of campaigns have become more and more frequent.

Ladies and Gentlemen,

The context of government decision-making has changed. The crisis has forced us to engage in a true soul-searching exercise – to see where we stand, where our models have failed, and where we need to go. This is a great opportunity and a great responsibility. I challenge you today to take up that opportunity and make the most of your positions right at the very centre of government. We will be remembered in the future for what we are doing now. Tomorrow’s generations depend on us to leave them a world where they enjoy better policies and better governance for better lives. Let’s not disappoint them!

Thank you!

 

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Visit of the OECD Secretary-General to the United Kingdom (London, 22nd - 23rd October 2012)

 

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