Boost Transparency Through Public-Sector Governance Reform

Serious defects in governance in the public sector have been exposed one after another, yet they have been left unattended, becoming a cause of social pathology. Waste, corruption, and embezzlement continue to occur at various institutions and public enterprises under government control and management, but their root causes are neither identified nor corrected. By dismissing them as mere misconduct by individual civil servants, these problems have become entrenched as structural issues.

The Daejang-dong scandal, the LH scandal, embezzlement and corruption at subsidiaries of the Korea Development Bank, various financial accidents, and other crimes and incidents occurring in the government’s public sector are not matters that can be resolved simply by punishing a few officials. A single case of corruption or embezzlement is never just an isolated event. We must examine the flawed governance and corrupt structures hidden behind it. Taxes are being wasted and power-driven corruption continues across countless areas of the public sector, including government-affiliated organizations, local bodies and public enterprises, public companies managed by the Korea Development Bank, banks under government control, various organizations receiving government support, NongHyup, and associations. Yet there is virtually no discussion of how to modernize governance in these sectors.

What is needed is a sunshine policy that shines light on the public sector. If the public sector is concealed by political power, allowing corruption, waste, and misconduct to occur, then its true nature must be exposed under bright light. Bringing bright light and fresh air into dark and gloomy places is the way to improve the health of an ecosystem. Reform must begin so that the government’s public sector is no longer trapped behind a curtain of darkness.

The transparency of the public sector must be increased, especially in areas that receive taxpayer support while remaining outside the reach of audits. External audits should be mandatory wherever tax money is used, and where necessary, such entities should be subject to audits by the Board of Audit and Inspection. This is the minimum level of transparency that taxpayers have a right to demand. In fact, compared with the level of transparency imposed on the private sector, transparency in the public sector is severely lacking and deeply disappointing. Governance reform to raise public-sector transparency to the standards of advanced countries is no longer a task that can be postponed.

The government is lazy when it comes to reforming itself. It easily overturns the principles of budgeting and spending, has recklessly increased the number of civil servants, and has expanded the size and organization of government under the pretext of economic problems. The public sector is even worse. The government and the political establishment are exploiting the hidden, opaque nature of the public sector for their own ends.

In reforming public-sector governance, strengthening transparency must come first, and institutional reform must support greater efficiency through competition. To improve the efficiency of the public sector, controls and regulations must be removed. To reduce government control, shares should first be sold off and pressure from private-sector oversight should be increased. Barriers and compartmentalized regulations should also be lifted so that the public sector can compete with the private sector.

It is also necessary to harness the vitality of the private sector. Public-sector governance, for the most part, blocks cooperation with or competition from outside actors under the pretext of facilitating government control. We should make use of private-sector dynamism to help the public sector operate with greater discipline and energy.

If we lift the curtain of darkness hanging over the public sector and inject the energy of choice and competition, we can minimize tax waste and corrupt structures. Reforming governance in the public sector is the surest way to improve the transparency and health of our society.

The legislature should revise relevant laws so that institutions receiving government subsidies above a certain amount can receive those subsidies only after undergoing an external audit. This would be sound legislation that limits the opacity with which the government has spent funds at its own discretion.

The government must determine whether its affiliated organizations exist merely as byproducts of political power and must make efforts to advance their governance. We can no longer afford to leave the public sector, which creates darkness in society, unattended. The first task is to increase transparency and seek remedies to improve its efficiency.

Sung-no Choi

President, Center for Free Enterprise (CFE)

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Original title: 공공분야 거버넌스 개혁으로 투명성 높이자

Author: Sung-no Choi

Date: 2022-05-25

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=24769