Finance Minister On Concept Of Mutualisation
Mutualisation sees Government services spun off into a separate entity with the staff moving to the new entity as employees and shareholders, Finance Minister Bob Richards said today [Dec 12].
Minister Richards said, “As the Premier has stated this debate on the SAGE report will launch the government’s public consultation process. Admittedly public discussion is already under way.
“With even the mere possibility of certain government functions being privatized being met with consternation and horror in certain quarters, I would like to introduce a concept that has been put into practice in the UK with considerable success.
“What if we could find a way to unleash that wealth creating power, that efficiency creating power, that power delivered by intelligent balancing of risk versus reward.
“What if we could apply that attitude, that only comes from self interest, to some functions currently provided by the government and thereby make those services more user friendly, innovative, efficient and economical? What if we could?
“Indeed we can! It is called mutualisation. What is mutualisation? Mutualisation is a process by which a service, that is currently provided by the public sector, is spun off into a separate entity, but the staff employed by government providing the service move over to the new entity, not only as employees, but as shareholders of the new entity with representation on the board.
“Typically these employees will be provided their shares without charge by the government and there will also be other private sector investors invested in the entity. Often, but not always, the government will retain some shareholding going forward.”
Minister Richards’ full statement follows below:
1. As the Premier has stated this debate on the SAGE report will launch the government’s public consultation process. Admittedly public discussion is already under way. With even the mere possibility of certain government functions being privatized being met with consternation and horror in certain quarters, I would like to introduce a concept that has been put into practice in the UK with considerable success.
2. Now globally the Cold War is over and capitalism has won, not because of nuclear weapons and political intrigue, but instead because capitalism enabled ordinary people to act in their own economic self interest and in doing so they created wealth for themselves, their communities and their nations.
3. What if we could find a way to unleash that wealth creating power, that efficiency creating power, that power delivered by intelligent balancing of risk versus reward. What if we could apply that attitude, that only comes from self interest, to some functions currently provided by the government and thereby make those services more user friendly, innovative, efficient and economical? What if we could?
4. Indeed we can! It is called mutualisation. What is mutualisation? Mutualisation is a process by which a service, that is currently provided by the public sector, is spun off into a separate entity, but the staff employed by government providing the service move over to the new entity, not only as employees, but as shareholders of the new entity with representation on the board.
5. Typically these employees will be provided their shares without charge by the government and there will also be other private sector investors invested in the entity. Often, but not always, the government will retain some shareholding going forward.
6. Mutualisation transforms employees into owners, with outstanding success in the UK.
7. If the staff is unionized, they choose whether to keep their membership in the union after mutualisation, and many have done so.
8. Mutuals have a 5-6 year track record in the UK and there has evolved a proven play-book on how to mutualise: what to do, and what not to do, to take this concept from an idea to success on the ground.
9. One example of a successful mutualisation is MyCSP [My Civil Service Pension]
10. There has been much talk about economic empowerment over the years, but little concrete achievement. Mutualisation of certain government services has proven itself to be an outstanding success in economic empowerment in the UK.
11. And we think that, at this time in our history, there could be a confluence of two opportunity streams: first, the opportunity to slim down government and second the opportunity for economic empowerment by way of mutualisation.
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Brilliant minds create brilliant solutions!!! Now that is the government (OBA) that we elected!!! Well done Min Richards, the plp would not have thought of that in a million years!! The proves the OBA is the government for all people in Bermuda!! While the plp are still denying they were the cause of our demise, the OBA has been strategizing, I guess staying focused on the job they were elected to do instead of spending their time from 4.30pm each day at certain establishments gives them the time to come up with this great idea!!!!
Paula would have NEVER talked openly like this. She had her head in the sand while she drove us all towards bankruptcy. She deserved to be kicked out for doing a terrible job.
That makes no sense. Who wants shares in something that looses millions of dollars a year?
Nice Try Bob, but doesn’t make any sense.
That’s just it. People are demanding Government keep them employed, but they wouldn’t want to own it because they realize it’s a total financial loss. So why should the tax payer keep losing money by “owning” this?
OK – so lets mutualise the police service.. I mean i costs us 70 million a year… How much savings you think that will generate?
You only privatise things that make or are expected to make money.. YOu really think this will help the post office or the busses?
The difference there is that people need the police service and receive constant benefits. But when people no longer require a post office, we should just keep it open? Nobody likes layoffs but if not even the workers want to own it, the Government (and therefore the people) shouldn’t be forced to either.
Do you have any idea how close you are to being on to something there? Why should those who do not use the BPS pay for the BPS? Make the fines fit the crimes as much as possible. For instance fines for traffic offences should cover the costs of operating the traffic squad & traffic courts. As an incentive give the cops on the street a percentage of the fines, sort of like getting that automatic gratuity in restaurants. Howzzat???
Government is there to provide services to its people !!!!!!!!!!!!!!!!!!
Yes, if the services are needed.
Thats what governments are there for, service to the people they are elected to govern, not make a profit at the expense of those same poor people.
But this government is running Bermuda like a business aren’t they?
This govt is tied to a sinking ship. Bob is trying to plug the holes to save ya a**.
The Government is there to provide certain services to the public, not to be a service to the people. It is not there to be an employment agency to employ the surplus population at an unsustainable cost. That is the main problem at the moment – too many employees sucking up the Government revenue plus debt and providing no services.
“The Government is there to provide certain services to the public, not to be a service to the people.” Interesting statement.
You are wrong!! It gives the staff motivation and a chance in life!! If this brilliant idea comes to fruition, you will be amazed at how the productivity level will rise and it will quickly separate the good employees from the bad ones because the good ones will not tolerate the slackers because now they have a vested interest!!! Sick days will drop dramitacally which will make it apparent that they are over staffed!!! The best way to make people understand how hard it is to be successful is to make them responsible for it!! This can only help all of our futures because they soon will understand the fact that the previous government only talked nonsense about our true financial situation when they controlled the purse strings!!
OBA, you are brilliant!!!! The naysayers are that because of their blind support of that disastrous plp that put us in this mess!! You can’t fix stupid!!!
This is not a panacea but it sounds like a good idea.
Think about it……if this was to happen (not saying it will or should) but who’s responsible to make the business or service succeed? The employees i.e. the shareholders. I’d like to hear more.
In principle I agree, but I can’t see this working for a lot of things, and certainly not our money drainers such as post office and busses. Mutualisation doesn’t work with money sucking enterprises, so it sounds nice but its far off.
The Post Office is a great example. Why have a sub post office when a counter in a store, supermarket or convenience store would provide the same service? All the PO needs is the main facility at the airport to receive and process items.
Why not buses (and ferries)? At present there are about 3 people for every job because of the need to cover holiday and sick leave benefits.
The whole purpose is to stop the money sucking enterprises, although there will always be some functions of Government that have to remain loss making and with Government just to provide a service the private sector can’t and won’t.
Excellent point about the post offices. Look at Canada for example, if I need to send something I walk up to Lawton’s (pharmacy) and there is a Canada Post counter at the back. Same deal at a lot of the big grocery stores.
Canada Post is actually looking to phase out home delivery of mail as well in the next 5 years and move to community/grouped mailboxes.
Money sticking enterprises need to either be restructured, scaled down or scrapped. The post office is not viable if it costs 14M to operate but it only generates 5M. Why should we keep it open at such a substantial loss? It is overstuffed by approx 80%, hence the operating loss. If that wasn’t bad enough, you still don’t get mail in a timely fashion !
Skin in the game is the name of the game. If workers have no financial interest in a company and they get paid either either way, then business is doomed.
I like the idea. That is empowerment.
No harm in floating the idea.
It gives time for people to discuss and may generate some good ‘target’ areas.
The next stage is to provide the community with a viable example.
IDEALISM AT IT’S BEST. I HAVE A DREAM…………….
No, it’s called capitalism and accountability !!!! Hope that helps you understand??
It’s a great idea, but I can hear the teeth sucking over at Union HQs already.
Yup! Furby on the ZBM news was sucking his teeth so much that he is probably sitting in a dentist chair right now having braces installed!!!!
Uh Oh, the combined sucking of teeth will exceed the noise of a jet engine in no time. The office seat warmers are not going to like it at all.
More details are needed but the idea seems to be transferring the management of services to private entities. The management of these services is put out to contract. Government will still pay for them. Government will still have an interest in them even if it is just a rep of the Ministry concerned. As far as shareholding by staff goes, nothing new there. It is not unusual to have companies partially or entirely owned by the staff. A bonus or dividend is an incentive to make the company a success.
Will people lose jobs? Yes they will. But not the ones who are worth keeping & needed.
Details are plenty. For instance, the ferry service. No way can it be self supporting. The boats are overcrewed & the fares don’t come anywhere near covering operation cost even if loads were doubled. Government will still own the boats but, like the airlines lease planes, the company running the boats will be leasing the boats from Government. The difference will be in the efficiency of managing & operation. right now fast ferrys are being operated at costly high speed on runs other than commuter times with next to nobody onboard. Why?
Mutualisation is more than a word.
Government has to be prepared to fully understand the process and set up the correct framework for new entrepreneurs.
It is not something that can be simply copied from the UK.
wonder if there would be as many sick days if people were employees and shareholders?
I really like the plan and support it. However, even if I did not, I don’t have a better idea to put forward and it seems like no-one on this site does either. You should not / cannot criticise without proposing an alternative.
The best plan most can come up with is “something” needs to be done. No clue of what but “something”.
Then there are the pie in the sky ideas like one heard the other day on talk radio. A caller was advocating having big boat shows here. I don’t suppose the slightest thought was given to the logistics of such a thing.
Make The Civil Service accountable,and introduce pay cuts before we are beyond the point of no return.
Mr Richards,thank you sir,but most will not want to understand our situation and think we can continue to BORROW $300Million Dollars every year as we have been doing for the (5)FIVE years plus.
There have been (140) different studys done of recient years in reference to peoples WEIGHT.And as our population according to Government is 70% overweight or OBESE.
In all (140) studys the conclusion is the more over weight you are the less BRAIN you have.
That should answer many of our questions.
Won’t the public now have to pay for trash service?
Now where did you get that idea from? We already pay for trash pick up. Where do you suppose the money comes from to pay for it now?
Government would still pay. No different really from what they already do, contracting out to a private company to pick up the recyleables.
The difference is that the private company is motivated to earn a profit through the contract & get the job done much more efficiently. Right now the office seat warmers don’t care how inefficient they are. It is not their money being wasted on poor labour use & crazy benefits. They get paid no matter what.
Good question. I get the idea from living in the U.S. In my area, I pay about $43 a month I believe for trash pickup. Because it is privatised.
If I’m right, you cut costs to government by doing this, yet you add an additional bill to the people. Either way, the people will pay. The only thing is to see which is more cost effective.
If government can show us the numbers, we’d be in a better position to make an informed decision. And, if this government is for ‘power to the people’, then a referendum should be held to give it to the people to vote. It may work, but it has to be thought out thoroughly.
I notice too many people are desperate to give the OBA props for some new invention, without thinking things through to come to an agreement on the best choices for the working people.
Just my two cents.