Luiz de Mello, OECD Directorate for Public Governance and Territorial Development (GOV)
The approval of the United Nations’ Sustainable Development Goals (SDGs) in September 2015 provides a useful occasion to explore how countries’ multi-lateral reform and development initiatives, such as those in the areas of open government, can support and advance the ambitious aims of the SDGs. Linking the SDGs to broad public administration reforms will be particularly important given their complexity; consisting of 17 goals and 169 targets, they cover a wide range of topics that will help shape countries’ priorities for public governance reform in the coming years.
Indeed, this is particularly relevant for Indonesia. As the country is both a founding member of the Open Government Partnership and simultaneously played a leading role in the United Nations Post-2015 development design, Indonesia is well placed to be a strong advocate for open government reforms, and to link such reforms to other multi-lateral reform efforts.
The SDGs deepen and expand upon the Millennium Development Goals (MDGs) and set out an ambitious agenda that aspires to be universal, integrated, and transformational. The aims of the SDGs therefore reinforce the need for cross-cutting and effective governance. Goal 16, in particular, reflects this consideration by promoting inclusive societies for sustainable development and seeking to build effective, accountable and inclusive institutions at all levels – many of the same goals that open government principles seek to achieve.
Open government policies can support both the substance of SDGs implementation (by directly contributing to the achievement of the goals) as well as to the process by which countries pursue the SDGs (namely, during their design, implementation, monitoring and evaluation).
How countries are already working towards Goal 16: what OECD data tells us
Open government policies and principles are most notably relevant to a number of the substantive targets found in Goal 16, such as those that concern the development of effective, accountable and transparent institutions (16.6), the promotion of responsive, inclusive, participatory decision making (16.7) and the expansion of access to information (16.10). Transparency, inclusion and responsiveness are indeed main characteristics of open government reforms, and OECD research and policy reviews have highlighted their role in promoting good governance.
For example, the OECD Survey on Open Government found that 88% of all survey respondents, including Indonesia, claimed that one of the key objectives they hope to achieve by implementing open government initiatives is to improve the transparency of the public sector, thereby directly supporting Target 16.10. Additionally, 73% of respondents claimed that a key goal of their open government initiatives is to improve the accountability of the public sector, responding directly to the objectives laid out in Target 16.6 (see Figure 1).
Figure 1: Objectives of countries’ open government strategies
Source: OECD (forthcoming), Open Government: The Global Context and the Way Forward, OECD Public Governance Reviews, OECD Publishing, Paris
The survey also shows that many countries are already pursuing activities to increase inclusivity, another key component of Goal 16. For example, 67% of respondents have implemented citizen consultation initiatives, and 71% are involving citizens in policymaking. In addition, 58% of the countries involve citizens in service design, and half provide for citizen participation in service delivery (see Figure 2). Together, these initiatives provide governments with feedback and new ideas and allow stakeholders to offer inputs, thereby enhancing both the quality and capacity of policies to achieve the intended outcome.
Figure 2: Open Government initiatives with a focus on public engagement
Source: OECD (forthcoming), Open Government: The Global Context and the Way Forward, OECD Public Governance Reviews, OECD Publishing, Paris
Examples from Indonesia
For its part, Indonesia has already made important progress in pursuing the kind of initiatives necessary to realise the governance targets laid out in Goal 16 and to support the process for inclusive design, implementation and monitoring of all SDGs. For example, through its creation of a National SDG Secretariat in 2016 and the establishment of the National Open Government Secretariat in 2015 (which built on previous government initiatives to support open government reforms), Indonesia has already put in place important institutional support structures.
The government has supported transparency and participation through legal protections for whistleblowers and the establishment of Pejabat Pengelola Informasi & Dokumentasi (Documentation and Information Management Offices, or PPID), which serve as essential public resources to handle requests for information. Indonesia has already established 694 offices throughout the country, with more on the way. Indonesia has also made rapid advancements in its ability to engage civil society in public affairs via its participatory forums for national and local development planning (Musrenbang) and a national online complaint management tool (LAPOR). As of September 2015, LAPOR had over 300,000 users, receiving 800 reports per day, thereby illustrating the widespread reach and interest in connecting the public and its government to solve practical challenges.
Additionally, the Widodo administration has supported programs that share the spirit and principles of open government that simultaneously help to achieve the SDGs beyond Goal 16. For example, the Pencerah Nusantara and Nusantara Sehat programs – originally established to support the MDGs – seek to improve the quality of life for people living in remote areas with limited access to health facilities. By training community members to provide such services and expanding the pool of healthcare providers, the program contributes to Goal 3, which aims to ensure healthy lives and promote well-being for all. The program has already improved the health of around 133,000 people. In this case, by applying the open government principle of citizen engagement to encourage a broader range of the population, especially young and rural Indonesians, to become involved, Indonesia is creating a more inclusive society.
The way forward
Other countries can learn from Indonesia’s experience, and Indonesia itself can expand upon its successes. As a way forward, countries seeking to support their various multilateral initiatives by linking open government and the SDGs could focus on:
- Continuing to develop the links between open government reforms and the design and implementation of the SDGs. In Indonesia, this could include supporting additional institutional collaboration between the National SDG Secretariat and National Open Government Secretariat. During consultation events for the development of the National Action Plans, furthermore, the sustainable development goals can be explained in the context of open government and each commitment in the National Action Plan can be linked with the relevant SDG goal or target (as Macedonia has done in its Third National Action Plan). This will help ensure coherence between the two initiatives and will facilitate joint monitoring of the progress and results.
- Promoting the use of open data for reporting on SDG achievements (see, for example, Mexico’s open data portal designed to track the SDGs). This would not only support the role of CSOs as watchdogs, but it would foster the reuse of public-sector information in a way that is relevant for the implementation of the SDGs.
- Increasing the involvement of citizens in the policy cycle of the SDGs to ensure that the initiatives are inclusive and that they fully reflect public needs.
The above-mentioned recommendations are included in the OECD Open Government Review of Indonesia, launched by the OECD Secretary-General on October 24, 2016, in Jakarta. The Review highlights the achievements of Indonesia in the field of open government and SDGs, as well as the country’s remaining challenges. Ultimately, by promoting transparency, accountability and participation, the Review has helped to identify how countries can use open government principles to inform their implementation of the SDGs in such a way that meets the broad range of targets.
Today’s post is by Bill Below of the OECD Directorate for Public Governance and Territorial Development
Transparency in government is the solution to many ills. To begin with, it promotes honesty. It supports accountability. It limits the effects of undue influence on policy by special interest groups. The more transparency we have in both the public and private sector the better off we are. As a societal value, transparency stipulates that the business of business and that of government shall be conducted in the light of day.
Such openness is the very foundation of trust. To launch his revolution, Gorbachev used the most radical word he could find—glasnost—meaning “openness to public scrutiny”. It could be argued that that single word brought down the iron curtain, itself a metaphor for a society cloaked in secrecy, unaccountability and the opposite of transparency.
The formal idea of government transparency can be traced back to the Enlightenment—le Siècle des lumières. In the age of reason, science, with its open inquiry, insistence on reproducible results and relentless assault on conventional wisdom became a dominant social and intellectual trope. It was a case of data vs. dogma. Politically, it offered a perfect foil to the lack of accountability of opaque and absolutist regimes. It was that very movement that gave us modern constitutional democracy.
Today, the Open Government movement, the direct descendant of the philosophy of transparency, is widespread. Openness is considered by many OECD countries to be a best practice. This has been manifesting itself over the last decades through the increasing prevalence and reach of Freedom of Information legislation. The unwritten manifesto of this movement is that “open” is the default position of government information, with exceptions made when the individual privacy, commercial information and in some cases national strategic information must be protected. This means that government institutions must prepare for and be organised to make their information available to the public. Freedom of information laws are manifested in the so-called Sunshine Laws mandating public access to government records.
Open Government Data (OGD) is yet another extension of this larger movement. Among other roles, governments are enormous data gathering organisations. Open Data means that this data must be made freely available to the public. This can be a daunting task even for governments with the best of intentions. Not because they have something to hide, but simply because many governmental agencies and institutions are poorly equipped to do so. For those who succeed, however, the benefits are significant.
Increasing public awareness of government activities is only the starting point. Just as importantly, OGD can allow government and the public to evaluate the expenditure and performance of government services with a view to improving, or axing, them—after all, if you can’t measure it, how can you know if it’s working? Also, access to more datasets will provide the tools for evidence-based government decision making and more informed public participation (that squeal you hear is the sound of pork projects running for the hills).
But perhaps one of the most exciting aspects of OGD is that part you can’t predict. That is, the plethora of useful applications that people are coming up with as more and more datasets become available. For example, the aptly named sitorsquat takes information on publicly maintained toilets to guide you to the closest public loo in working order. How practical is that?! It seems obvious but someone had to think of it and municipal data had to be available to make it happen. Appropriately, Proctor & Gamble, makers of Charmin brand toilet paper are the sponsors. Yes, private businesses will use open government data to make a buck, a euro, a yuan or other. And that’s o.k., as most governments are keen to leverage their data to support an uptick in economic activity.
On a slightly different register, the US Department of Health and Human Services has released government data allowing the comparison of health care costs for the 100 most common treatments and procedures in 3,000 U.S. hospitals. The data revealed enormous variations in rates from one hospital to another, including one procedure that cost USD 8,000 in one hospital and USD 38,000 in another. This is information that can make a huge difference in the life and wellbeing of citizens. These are but two of the thousands of ways that OGD is bringing value to the public.
As part of its Open Government Data (OGD) work, the OECD has created OURdata, an index that assesses governments’ efforts to implement OGD in three critical areas: Openness, Usefulness and Re-usability. The results are promising. Those countries that began the process in earnest some five years ago, today rank very high on the scale. According to this Index, which closely follows the principles of the G8 Open Data Charter, Korea is leading the implementation of OGD initiatives with France a close second.
Those who have started the process but who are lagging (such as Poland) can draw on the experience of other OECD countries, and benefit from a clear roadmap to guide them.
Indeed, bringing one’s own country’s weaknesses out into the light is the first, and sometimes most courageous, step towards achieving the benefits of OGD. Poland has just completed its Open Government Data country review with the OECD revealing some sizable challenges ahead in transforming the internal culture of its institutions. For the moment, a supply-side rather than people-driven approach to data release is prevalent. Also, OGD in Poland is not widely understood to be a source of value creation and growth.
But Poland, as well as other countries, can take heart. A short time ago, today’s leaders in openness were in the same boat. By addressing legal, cultural, institutional and organisational issues systematically, and by sharing the experiences of other countries, progress was made. No matter how you measure it, government, business and the public are the clear winners.
Who’d be a CEO? Back in the days when the legendary Jack Welch was leading General Electric – and increasing its market value by more than a third of a trillion dollars – chief executive officers were the heroes of capitalism. These days, they seem as likely to show up on top-ten lists of failure.
Consider Thorsten Heins, appointed CEO of smartphone maker Blackberry in January 2012 at a time when it was haemorrhaging market share to Apple and Samsung. Mr Heins struggled to turn things around, but by the time he was eased out 22 months later the company’s share price was down almost 60%. That, in turn, hurt Mr Heins’ own earnings, which were linked to the share price. However, considering that he walked away with a farewell package estimated at between $14 million and $16 million, there’s another question you’d have to ask: Given the chance, who wouldn’t be a CEO?
Whether their companies are winning or losing, the popular perception is that CEOs are always winning – showered with bonuses when business is booming, gently let down on golden parachutes when things are going badly.
The reality, of course, is more complicated. For every CEO with a $6,000 shower-curtain, there are others working long days in forgotten corners of desolate business parks. Still, there seems little doubt that as a class, CEOs are doing fairly well for themselves. The Financial Times reported figures from the International Labour Organisation showing that the average pay of top CEOs in Germany rose from 155 times average earnings in 2007 to 190 times in 2011. In the United States, the multiple is 508 times.
But if CEOs are overpaid (and some would argue that – compared to footballers like Wayne Rooney or Hollywood stars like Robert Downey Jr. – they’re not) how should societies respond? One of the biggest trends in recent decades is “say on pay”, which provides company shareholders with some role in determining executive compensation. Does it work? Views differ, as was clear during a discussion earlier today at OECD Integrity Week.
One of the key advantages of “say on pay” – at least in theory – is that it should allow executive pay to be better linked to the company’s performance. But reporting on the experience of the United Kingdom, Martin Petrin of University College London cast doubt on whether that was really happening. According to data he presented, executive pay in leading UK companies has risen by an annual rate of 13.6% since 1998, while the share price of these companies has risen only by an annual average of 1.7%.
He also questioned another of the much-vaunted benefits of say on pay – namely, that by making executive-pay setting more transparent, it leads bosses to moderate their demands. By contrast, he said, it can lead to “ratcheting up”. This is where companies declare that since their executives are all above average (otherwise they wouldn’t have been hired), they must be paid above the median for their industry peers.
But despite the potential criticisms, the panellists generally accepted that say on pay is now an unstoppable tide. In some countries, such as the UK and Switzerland, say on pay is – to some extent – legally mandated. Others, such as France, have steered more towards self-regulation.
Denis Ranque, a leading French businessman and president of the High Committee on Business Governance, argued that hard law was not always the most effective approach. Speaking in French, he pointed out that “Enron had a system of governance where all the ethics boxes were ticked.” Rather than relying on hard law, he said, we should emphasise the role of transparency in executive-pay setting and in wider issues of corporate governance. “Just remember, whatever you do will be in the papers tomorrow. Think about your mother or your daughter’s reaction when they see it.”
But if say on pay is inevitable, it raises another question – who gets to have a say? Typically, it’s limited to shareholders, but the French academic Charley Hannoun said it may be an issue that’s of less concern to shareholders and more to stakeholders, most notably the company’s employees. After all, he argued, they were the ones most likely to be affected by the growing disparity in pay between the people at the bottom and the people at the top.
OECD Integrity Week 2014 – a week of public events focused on integrity in business and government and the fight against corruption.
Corporate governance – OECD research and analysis
Board Practices: Incentives and Governing Risks (OECD, 2011)
Corporate governance: Lessons from the financial crisis (OECD Observer)
A few recent headlines: “Denmark, New Zealand and Singapore top list of least corrupt countries” , “The 10 Most (and 10 Least) Corrupt Countries in the World”, “Israel stalls in rot ranking” . In case you’re wondering, the stories were all about Transparency International, which ranks countries on a scale from zero to ten. Low scores, for example Somalia’s 1.1, indicate severe corruption; high scores, such as Denmark or Singapore’s 9.3, suggest public and commercial life are squeaky clean.
Now 15 years old, the Transparency International (TI) index is probably regarded as the leading tool for measuring corruption worldwide. Which is interesting, because it doesn’t actually measure corruption. Instead, it measures perceptions of corruption. The distinction is crystal clear in the name of the index – it’s the Corruption Perceptions Index, not the Corruption Index – but it’s often blurred in media coverage. Does it matter? In some ways, not really.
Corruption is, by its nature, secretive and can’t be measured directly. (Even detecting it is difficult, not least for tax officials.) So, instead, corruption has to be “measured” through surveys. These usually involves asking businesspeople, international officials and others questions, such as the extent to which they’ve encountered corrupt practices. TI pulls together 13 of the most reputable surveys from around the world, does a lot of number crunching, and produces its index. But, in other ways, the tendency of the media and investors to ignore the “Perceptions” bit of the Corruptions Perceptions Index may matter a great deal.
At the very least, we need to ask whose perceptions are being measured. In many cases, “it’s ‘experts’ or business managers, many of whom live outside the countries they are rating”, argue Charles Oman and Christiane Arndt in a new paper from the OECD Development Centre . By contrast, it’s rare to hear of the experiences of the man or woman in the street, in part because compiling such data is expensive and time consuming. The paper argues that there are other issues, too, that need to kept in mind when it comes to “governance” indicators, such as the Corruption Perceptions Index and the World Governance Indicators . One is the use of a single “point score”, e.g., Somalia’s corruption rating of 1.1. What does that number actually represent? First, it reflects realities – or at least perceived realities – on the ground. But, of course, reality is complex, and can’t always be represented by a single number.
Nevertheless, says the paper, because of “the well documented tendency of people to believe that numbers are facts” the number can come to be seen as the reality, and may shape important decisions on a country’s future, such as foreign investment. Second, the number represents the output from some tricky statistical calculations. Like most such outputs, it comes with a health warning – in this case a “confidence interval”. In effect, that’s a statistician’s way of indicating that the difference between, say, Somalia’s 1.1 and Myanmar’s 1.4 may – or may not – be significant.
Like any reputable agency, TI clearly indicates the survey’s confidence indicators. However, journalists and investors may be less discriminating: As Oman and Arndt write, “Users tend widely to use countries’ governance scores as if they were accurate to a degree they are not.” So, should we ignore Corruption Perceptions Index? Not at all, but like any survey it has limits. Understanding these can ensure it’s not misused, and so ultimately make it more useful.
Measuring Governance, by Charles P. Oman and Christiane Arndt
Should we read anything into the fact that the three panelists in the session on Business ethics: Restoring trust were all women?
In the face of what discussant Roland Schatz, president of Media Tenor, called a “trust meltdown”, the panelists and other discussants insisted that restoring trust and promoting ethics in business must be a universal issue, and one that must also involve the financial industry. As Amy Domini, founder and CEO of Domini Social Investments said, “The role of finance is pivotal to the success of the planet. If finance is working against the goals of human dignity and ecological sustainability, then governments and civil society will be incapable of achieving those goals.”
Anne-Catherine Husson-Traoré, CEO of Novethic, noted that there are already reams of rules and regulations on ethical business practices, the problem is that they are often not enforced and no sanctions are applied if they’re breached. Agnes Jongerius, president of the Dutch FNV labour union agreed, but argued that new regulations were also needed: “The G20 countries are not delivering what they promised in London and in Pittsburgh,” she said. “They have a very short time to deliver new rules for the financial world, for business ethics, for real corporate social responsibility.” She urged the OECD to strengthen its guidelines on multinational enterprises. “If you have good rules but none are applied, we won’t make the progress we need to make.”
Amy Domini stressed the tactical role that shareholders can play in influencing corporate behaviour. But first they have to assume their responsibility. “Nobody owns corporate America anymore,” she said, citing the preponderance of mutual funds in the US that have no real stake in the individual companies in which they invest. She suggested that European unions, which are far stronger than those in the US, and particularly their pension funds, could drive changes corporate behaviour. “Unions need to have a more robust opinion of their own influence,” she said.
But Edward F. Greene, partner at the law firm Cleary Gottlieb Steen & Hamilton, was not convinced. For him, it was governments and international organisations that could exert the most influence. “If we are going to manage financial institutions, we’re going to have to have much more sophisticated regulators in place and a broader regulatory system to identify and control risk.”
Carla Coletti, the director of Trade, Employment and Development at the International Metwalworkers’ Federation, was passionate: “There is no more time for unilateral good will. Enough public relations; enough window dressing; enough voluntary codes. They are dangerous because they give the impression that something is being done.” She urged ministers who will be meeting at the OECD ministerial council meeting later today and tomorrow to “take bold decisions” to require businesses to accept their ethical responsibilities.