Public Sector Reform
Public Service Reform is an important part of building for the future.
Here we examine some of the issues
Two aspects of Government accounting act as a wedge inhibiting outsourcing. First, unfunded public pension costs are ignored while private operators must include the cost of any pension benefit provided. Second, VAT increases the costs of procuring services externally, but the Exchequer will benefit by the amount of VAT paid.
The failure to introduce a modern, accruals-based system of financial management in the public service has serious implications. There needs to be a system that will take account of the costs of accrued pension liabilities and depreciation of fixed assets in order to send the right signals to public sector management.