For good reason much of the early talk about EPP has been focused on managers' requirement to reduce baseline expenditure by at least 5% between now and the year 2002. There is, however, a second phase of EPP being led by the Chief Secretary for Administration's Public Service Policy Group, co-ordinated by the Efficiency Unit (EU). Mr. Colin Sankey, Head of the EU, describes how this phase is progressing.

For some time Government has been pursuing improvements in the management and delivery of public services through the 'Serving the Community' programme. EPP Phase Two is the next stage in this process, one where we will be addressing more fundamental issues to achieve a lasting improvement in public sector productivity. Phase Two will build on the essential kick-start provided by Phase One. The aim is to achieve a more challenging culture where managers are engaged in a constant search for ways to achieve greater results from available resources.

A number of activities are currently being pursued under Phase Two.

Target-based Management Process (TMP)
Perhaps the biggest gains in productivity come from making sure we focus resources on the agreed priority. TMP, now being rolled out to across Government, will improve accountability and performance review. The policy objectives and key result areas specify the outcomes that Government is seeking to deliver for the community. Fully implemented TMP will align government activity with high level objectives and judge success against a balanced set of performance measures. Managers will have the structured information they need to identify which initiatives and activities deliver the best value, and to focus finite resources to best effect.

Fundamental Expenditure Review (FER)
Whilst TMP is taking hold we are carrying out a phased programme of FERs. These will examine selected policy objectives to ensure we are clear about what Government is trying to achieve and that resources are aligned to best effect. The outcome of each FER will be a rigorous picture of the initiatives, activities and resources devoted to a particular policy objective, together with agreed proposals to maximise the impact achieved from those resources. To date, we have embarked on FERs for youth, tourism, training and re-training, and planning and lands. In addition, major policy reviews on health care and social security expenditure are ongoing.

Trading Funds and Other Institutional Frameworks 
The five existing trading funds, (i.e. Post Office Trading Fund, Companies Registry Trading Fund, Land Registry Trading Fund, Electrical and Mechanical Services Trading Fund and Office of the Telecommunications Authority) have been given additional flexibility in managing resources in exchange for sharper accountability in delivering results. This has led to a more proactive management culture. We will be looking to give additional flexibility to the trading funds and considering new candidates for fund status.

We are also examining the feasibility of introducing tailored management frameworks on an administrative basis for other departments which do not meet trading fund criteria, perhaps because they do not raise revenue. The one-line vote introduced for five departments in 1999-2000 on a pilot basis is one of these initiatives. Again the aim will be give additional flexibility in exchange for sharper accountability for results.

Reinventing Front-line Services
New technology is offering opportunities to introduce new models for front-line services which provide one-stop convenience for our customers and streamline resources by cutting duplication. Telephone services are a good example, where Government currently has over 900 "hot lines". It can be difficult for the public to know which department to call, and we provide poor services and waste resources if calls are passed from department to department. A better model is set up a call centre to deal with a whole bundle of issues. Call centres provide one-number convenience for the public and improve efficiency by dealing with the vast majority of queries at the first point of contact. They use re-engineered working processes and new technology to make sure that staff have the right information at their fingertips and can make decisions or dispatch resources on the spot.

The EU is now developing the detailed business case for the first Hong Kong Special Administrative Region Government call centre - dealing with environmental hazards and cleanliness.

Transforming Support Services
Effective support services are essential to front-line delivery; and they represent a significant part of total government expenditure so we must ensure that they are delivered in the most cost-effective way. Often support services are managed as an add-on to other duties, and represent a distraction for already stretched managers. In the private sector and other governments there are moves to manage support services in new ways, for example by bringing together common support processes in one location, using specialist managers and staff. Sometimes this is linked to outsourcing. Recent improvements in records management have given a good indication of the potential benefits from this approach in Hong Kong. We have identified and are pursuing similar opportunities in other areas, including accomodation, procurement and transport services. 

Review and Develop Human Resources Flexibility
The Civil Service Bureau is leading developments on increased human resources flexibility for managers. As staff are the largest and most important resource for delivering services to the community, increased financial management flexibility will mean little unless matched by flexibility in managing staff. There is a strong link here to the recently announced reform of the civil service.

We recognise that managers and staff are working in an increasingly complex environment, and that sometimes it feels like there are lots of initiatives coming from the centre. As we move forward it will be important to explain how Serving the Community, TMP and the two phases of EPP fit together to further the Government's efforts to improve the management and delivery of public services. We will be organising a second Serving the Community Conference later this year and a series of seminars on selected topics to assist bureaux and departments in achieving productivity gains.

One step already taken has been the launch of a web-site ( which pulls together a wealth of knowledge about not only Hong Kong's efforts to improve services and management, but also best practice around the world. We would urge you to look at this and find more information on various initiatives as they are being developed. Any feedback and suggestions about how to make the web site more useful would be very welcome.

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