14 - 20 September 2000

Governments should join private sector to raise revenues

Frank McDonough, deputy associate director of the US General Services Administration, was keynote speaker at the Hubert H. Humphrey Fellowship programme meeting held in Malta. He spoke to David Kelleher on the current trends in IT and e-government

Globalisation and the Euro-Med region. How is Information Technology affecting globalisation?

Information Technology is driving globalisation. It has enabled the movement of data, the setting up of large databases and connectivity between regions thanks to high speed networks. IT has still to make a large contribution to globalisation and I believe that it will take another two or three years before its full impact is realised and after security and privacy problems are resolved.

Globalisation has created a scenario whereby boundaries are falling, trade is being liberalised and closed economies are opening up. What is the role of IT in all this change?

Electronic trade has changed the way people and countries do business. Governments are now realising that they need to collect taxes from electronic sales.

How this is going to be done is a major obstacle. The US is opposed to collecting taxes from e-sales even though State governments in the US are in favour. It will take a tremendous amount of work to find a way to collect taxes and a universal agreement must be reached first.

Then again, the question arises who should collect the taxes - the country where the product is bought from or else from where the person is domiciled. Will taxing e-sales inhibit trade? Maybe. At present sales are subsidised by the companies selling their products. The value of the products most of the time is cheaper than that in the stores. In a sense, there is a need for revenue generation without putting pressure on the consumer.

The US has taken the lead in Information Technology and access to the Internet is relatively easier for Americans than for people in Europe. Why?

Internet access must not be taxed too heavily. This prevents a wider section of the population from gaining access. Secondly, a lack of competition keeps prices at a relatively high level.

The secret is to reduce costs and to attract as many users as possible.

It is interesting to note that the introduction of the Interent and email was not as smooth as many believe it to have been, especially among top-level organisations. For example, members of the International Council for Technology and Public Organisations, which was founded 33 years ago, used faxes until 1993. We felt the need to start using email to correspond between us. Unfortunately, at the time, due to standards used for names, this was very difficult because an email address was too long and composed of numbers of letters. Thus it was impossible to remember someone's email. That held back many delegates.

In 1993 there were over 30 members, but only three or four actually used email. It took three years before email was used instead of faxes.

Obviously standardisation of the naming procedure helped no end. Governments also played an important role by embracing the technology and using it themselves. In a sense, they set the ball rolling.

How important is IT training for young children? Should governments ensure that IT education begins at a very early stage in a child's life?

Developing an IT literate society depends on the culture in that particular country. Parents have a very important role to play in creating an environment that is conducive to using computers and technology. In schools, kids should have access to the tools.

We want children to be creative and part of an emerging society that is becoming dependent on technology. If people want it, then they must have it.

The major obstacles for the Maltese government is funding. The government wants to see Internet access in all schools, at all levels, but raising the money for such a project is not easy. Can this be overcome?

A number of federal governments in the US have come up with ways to increase revenues. They have introduced what is known as Alternative Funding or Innovative Funding. The idea is to get more money for new initiatives but tapping areas that were not revenue earners. Governments are not doing it alone but have teamed up with the private sector to reach their aims.

For example, in Detroit, the State was having problems collecting outstanding traffic fines. A company approached the government saying that it would devise a programme to collect the fines. The system worked and the government started getting half of what was nothing. This is one example, but there are numerous variations.

Governments must look at other ways of raising funds and entering into agreements with the private sector has proved to be an excellent means to do so. Government must become more business-minded. Such partnerships not only bring in added revenue but also reduce the risk on the government. Another important factor is that the capital is provided by the private sector thus reducing government expenditure.

Alternative funding schemes benefit both the government and the private sector. At the end of the day, the economy stands to gain.

Frank McDonough

Frank McDonough currently heads the Office of Intergovernmental Solutions in the Office of Government-wide Policy in the General Services Administration.

This organisation is a focal point for sharing lessons learned and good practices between federal, State, and local governments in the US, and between nations. This office is responsible for six initiatives in vice-president Gore's Access America programme.

McDonough has an international reputation as a leader and visionary in information management. He has led organisations at the field, agency, department, and corporate levels in the Federal government. He has private sector experience with IBM, and has consulted with a leading university. He works with officials in other governments. He has contacts with Information Technology managers in 26 countries and in many State and local governments in this country. In addition, he has many contacts in industry and in academia.

He conceived the idea and worked with the President of the National Academy of Public Administration to establish the centre for the Analysis of IT issues.

McDonough has experience working with Congressional committees while implementing six pieces of legislation. He has testified before several Congressional Committees on emerging information management issues.