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THE VIEW Australasian Perspective Prof Phil Charles


How to do more with less in the face of reduced budgets


Phil Charles is Professor of Transport at the University of Queensland, Brisbane. p.charles@uq.edu.au http://transport-futures.com


M


any transport agencies are being required to significantly reduce


expenditure, reflecting tightening government budgets. For example, in 2010 a UK


Government spending review reduced the Highways Agency funding levels 23 per cent over five years, in the face of increased demand and inflation. A 30 per cent reduction in their administration budget was also required. Efficiency savings alone are insufficient to meet these budget cuts and the catchphrase has become “Do more with less”. However, oſten the approach taken in the public sector is a uniform across- the-board cut. Unfortunately this results in achieving less with less! In the private sector, there is a


straightforward way to measure success, using return on investment or profit, so when cutting budgets the focus is on boosting areas delivering the highest returns and reducing the emphasis on the rest. But it is not so simple for the public


sector, with numerous measures, plus the need for accountability, transparency and equity. Here the penalties for getting it wrong are of far greater concern than the benefits of getting it right. Tis all adds up to making it much harder to move quickly, be flexible, innovative and take risks. So what is the answer?


Focus priority: Te first requirement is focus on key transport priorities. In 1994 the Canadian Government reviewed every program using six criteria1


, in essence: Europe/Rest of the World Vol 8 No 3


1. Does the activity continue to serve a public interest?


2. Is there a legitimate and necessary role for government in this activity? If not abandon.


3. Is the current role appropriate for government, or should it be reassigned? If so, transfer.


4. Can activities be transferred to the private or voluntary sectors? If so transfer.


5. How can efficiency be improved? 6. Is the resultant package of activities affordable? If not which should be cut? Typically transport agencies need


to focus on safety, mobility and access. Underpinning principles include value for money and sustainability. Assess trade-offs: An objective, fact- based review, clearly understanding cost drivers and the trade-offs is critical for any efficiency decision being made. Te key trade-offs are between cost and level of service or performance level. Tis is followed by a refocus of transport infrastructure and services budgets, reducing service levels, culling non-essential services and affordable staging delivery of infrastructure. So the key question that needs to


be addressed is: what level of service will be acceptable to users and the community? An example is reducing the frequency of bus services in line with lower demand in off-peak periods. Abandoning services or deferring infrastructure is politically sensitive and needs to follow a clearly articulated set of policy priorities and decision criteria. Clarify roles: Te next consideration is clarifying roles and relationships, looking to streamline and dramatically increase the efficiency of delivery.


thinkinghighways.com


In the private sector there is a straight- forward way to measure success: using return on


investment or profit


❞ Corporate and strategic management


units need to be lean, innovative and agile. Te central role is to set priorities, focus accountabilities and embed incentives to make change happen and deliver efficiency benefits. Efficient delivery requires clarity


of roles for policy, regulation and operations, ensuring fit for purpose in assigning roles, including partner agencies and the private sector. Te focus must be on capturing benefits. Reduce costs: Having established what and who, then need to cut costs. Tis involves reviewing all viable alternatives to assess potential for savings, while delivering required outcomes. Invoke best practice procurement, matching risk and incentives for efficiency. Managed motorways is one


example where the addition of technology has dramatically increased capacity for a fraction of the cost of additional infrastructure. Innovate: Stepping back and rethinking what is required and how can it be delivered in a more cost- effective way involves innovating. Te emergence of big data and


NOTE 1 Bourgon, J (2009) Program Review: The Government of Canada’s experience eliminating deficit, 1994-99 – A Canadian case study, The Centre for International Governance Innovation.


sophisticated analytics, plus the growth of cloud-based applications, means there are new ways of doing business. Transport agencies in the past undertook expensive development of traveller information systems – now largely being replaced by low-cost smartphone apps. Build capability: Crisis initiatives requiring dramatic efficiencies provide a unique opportunity to reshape organisations and build the required skills. Use the opportunity to reshape the skills profile needed. So, you can achieve more with less, but it takes a lot of effort.


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