Aug 21, 2010

Need for long-term thinking

The agenda for reform and change must begin from improving the political culture

By Huzaima Bukhari and Dr. Ikramul Haq

The devastation caused by floods - irreparable loss of many precious human lives and collossal economic damage - has exposed poor management and lack of long-term planning in Pakistan. Such natural calamities are unavoidable but losses can be minimized through advance planning and by providing necessary relief measures. Unfortunately, our successive governments - civil and military alike - never bothered to prepare and implement any long-term policies for meeting challenges during emergencies. Funds of billions of rupees earmarked for projects are wasted and squandered by inefficient and corrupt government departments - there is no system of their accountability.

The Planning Commission of Pakistan, under the leadership of Dr. Nadeem Ul Haque, has now taken an initiative to start nationwide public debate on preparing policies for long-term economic development. We have wasted 63 years despite having great potential in terms of natural and human resources. We have many brilliant economists but see the economic mess in the country. Some of them were in the driving seat, yet failed to bring any structural changes and long-term reforms.

We have outstanding tax experts, but their services have never been solicited by the government. No wonder our tax system is one of the most corrupt and inefficient in the world - tax-to-GDP ratio has decreased from 13.5pc in 1992-93 to 8.9 percent in 2009-10. What a tragedy that we need so-called foreign experts who could not even drive back home on our roads - to reform our systems.

The main cause of the prevailing socio-politico-economic situation is existence of inefficient, corrupt, repressive, insensitive and outrageous governmental departments and corporations. Time and again we have argued for their right-sizing, monetising all perks and benefits and providing a fool-proof system of their accountability. But the vested interests in the establishment - civil-military complex - and parliament are not ready to implement these proposals. It will certainly disinvest them of powers through which they exploit and control the masses. Unless powers are handed over to elected local bodies Pakistan will never prosper.

The long-term planning that we need will remain an unrealized dream until we reform our political system (economic development is not possible without a dependable political and justice system). We must re-enact Local Government Acts empowering local authorities to perform functions such as educational, healthcare and social welfare services. They should also be responsible for matters relating to residents' free-time, recreation, housing, and the management and maintenance of their living environment (i.e. roads, streets, water supply and sewerage), as well as land-use planning and functional municipal structures. The power to levy and collect taxes to perform these functions will be the cornerstones of municipal self-governance - it alone can ensure executing of the duties assigned by the law.

If we want to make Pakistan an egalitarian society, we need to concentrate on empowering the masses. This requires handing over power to levy and collect taxes for essential services at the local level. Decisions would then be taken by the residents - through elected council members - and not bureaucrats sitting in Islamabad or provincial capitals in palatial offices oblivious of the ground realities and most of the time working for self-aggrandizement.

The elected members would be directly answerable to the residents. Local courts should be setup where justice is provided on the doorsteps rather than requiring people to go through expensive and long-drawn litigations under the conventional system. We need to move quickly and decisively - go for massive reforms in all spheres. The following 20-point agenda can help make Pakistan a place worth living in today's world:

1. State before seeking loyalty from citizens as their basic duty [Article 4 of Constitution] must fulfill its responsibility of "elimination of all forms of exploitation" and the gradual fulfillment of the fundamental principle, "from each according to his ability to each according to his work" [Article 3].

2. Ensuring good governance and corrupt free government structures through establishment and functioning of democratic institutions both in form and substance, supremacy of parliament coupled with an independent judiciary.

3. Empowerment of people through elected councils where a strong system of check and balance is available and funds collected locally are spent for the essential needs of residents.

4. Making the country a self-reliant economy, stop wasteful, unproductive expenses, cut the size of cabinet and government machinery, make government-owned corporations profitable, accelerate industrialisation and increase productivity, improve agriculture sector, bring inflation to single digit, reduce inequalities through a policy of redistribution of income and wealth.

5. Revamping the entire education system by introducing revolutionary measures to take society out of ignorance. Our problem is not only illiteracy but also ignorance. Even the so-called literates are ignorant of the worst order, as they do not demonstrate by their actions any norms of a civilised society. The foremost stress should be on building a knowledge-based society.

6. Elimination of bigotry, religious intolerance, and violence by taking concrete measures to ensure social development of society based on higher values of life and humanity. Reformation of madrassa system should be the top priority - these should be part of mainstream educational framework and not isolated institutions.

7. Devising long-term and short-term strategies to break the shackles of debt-trap.

8. Preparation of long-term policies of growth and productivity, ensuring employment for all.

9. Demonstration of political will along with legal framework to control wasteful, non-developmental and defence expenditure.

10. Strict laws and their effective implementation to curb money laundering, plundering of national wealth, political write off of bank loans and leakages in revenue collections.

11. Reform of technical, institutional and organizational dimensions of public finance.

12. Improvements in public sector effectiveness. Reform and strengthening of management of public finances. Transparent public sector spending. Efficient public sector performance.

13. Revitalisation of tax machinery, simplification of tax laws and procedures, reduction in excessive marginal tax rates making them compatible with other tax jurisdictions of the world, especially Asia, elimination of GST/VAT on production, machinery and equipment and substantial reduction in corporate tax rates.

14. Long-term policies removing stumbling blocks for new local and foreign investments.

15. Creating sufficient openness and accountability in the government to enable citizens to understand and participate fully in the process of national integration.

16. Introducing complete transparency in government and private financial transactions.

17. Juxtaposing economic policymaking and political reform [democratization] of society.

18. Agenda for reform should entail a comprehensive, well-integrated and unified plan that alone can assure its success. Reform in one sector ignoring the ills in the other, resorting to improving something at the cost of leaving aside the one interlinked, can never yield desired results.

19. Eliminating fiscal deficit.

20. Revamping of incompetence, inefficient and corrupt tax machinery. Improving GDP-tax ratio to respectable level.

The agenda for reform and change must begin from improving the political culture - parties should immediately be purged of corrupt and fake-degree holders. We need elected persons who demonstrate by their actions respect for rule of law and democratic behaviour in practice. It is a prerequisite for the process of reforms and change.

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