The Public Sector in Hong Kong

1. The Public Sector: An Overview

1 The Public Sector: An Overview The public sector may be defined as those government agencies and related organisations that are funded by revenue raised from taxes, fees and charges or from the sale of state-owned assets.1 The agencies include bureaus, departments, the judiciary, funded statutory bodies, publicly-owned corporations, and fully or partlysubsidised organisations such as social welfare agencies, schools and universities. They do not include private companies or voluntary associations. In Hong Kong, the government agencies (the civil service) consist of the offices of the Chief Executive, Financial Secretary and Secretary for Justice, twelve policy bureaus and almost 60 departments.2 In September, 2008, they employed 153,477 people, approximately 4% of the labour force.3 A further 1200 people worked for the Independent Commission Against Corruption (ICAC).4 The 70 “related organisations”, which range from small tribunals, to statutory bodies such as the Hospital Authority, to very large public corporations such as the Airport Authority, employ at least as many people as the civil service.5 There were, in addition, eleven tertiary institutions which are partly funded by the taxpayer. Government and the Public Sector The Issue of Autonomy In recent decades, the relationship between the government and the public sector has become much more complex. Two factors, in particular, have contributed to this complexity. The first is that many governments have given public sector organisations outside the civil service a greater degree of autonomy. The second is that the delivery of public goods and services has become, to a greater extent, a partnership between government, the private sector and voluntary social organisations. Under the influence of New Public Management doctrines, private sector practices have been widely adopted in government which itself has been increasingly divided into “core government” — comprising important centralised functions such as finance, security and overall policy-making responsibility — and decentralised government agencies or other public sector organisations which are often concerned with the delivery of social policies such as education and healthcare. Underlying decentralisation is the  The Public Sector in Hong Kong notion that, if public sector organisations are given greater autonomy from central control, they may be able to cut through red tape, deliver services in a more efficient and cost-effective manner and better meet the needs of the public they serve. Figure 1.1 shows a possible relationship between core government and the public sector, assuming that power has been divested, in varying degrees, to decentralised public sector organisations. The degree of autonomy of those bodies from core government will depend on their functions, the extent of public funding, public perceptions of their need for independence, and on the political circumstances which led to their creation. In many cases, autonomy is limited to the performance of very specific functions. For example, regulatory agencies, fully funded by government, may be set up to control, say, the stock market or to protect consumers from inferior or dangerous products. These agencies have autonomy in that they can administer existing legislation independently but they do not make the ultimate decisions on what that legislation should be. Similarly, central banks may be given autonomy to determine interest rates but they may need to work closely with government and legislatures to co-ordinate economic policy. Whether the taxpayer funds a service is an important determinant of the organisation’s autonomy. The greater the level of funding, the more likely it is that government will seek to control it. With some agencies, however, such as the Audit Office or the Ombudsman, governments do set up fully funded, independent public bodies. In these cases, the function of the organisation, to act as a check on government, overrides the fact that it is entirely paid for by the taxpayer. Many governments also own public corporations which generate their own revenue and which are intended to make profits. Public corporations usually have greater autonomy than other public sector organisations although there are often provisions for ultimate central government control. Society Market Closely-controlled public bodies Semi-autonomous public bodies Figure 1.1 The Public Sector Core Government The Public Sector: An Overview  The Hong Kong government’s relationship with the rest of the public sector should be seen in the context of why power has been devolved to the public sector outside the civil service in the first place. In Hong Kong, unlike many developed countries, the reason for devolution of responsibilities often has little to...