FIFTH COMMITTEE BEGINS DISCUSSING PROPOSALS ON REDUCING AND REFOCUSING NON-PROGRAMME COSTS
Press Release
GA/AB/3216
FIFTH COMMITTEE BEGINS DISCUSSING PROPOSALS ON REDUCING AND REFOCUSING NON-PROGRAMME COSTS
19980313 Aspects of the Secretary-General's report on reducing and refocusing non- programme costs required elaboration and clarification, several speakers said this morning as the Fifth Committee (Administrative and Budgetary) met to consider matters relating to the programme budget for the biennium 1998-1999.The Secretary-General's proposals involved reducing administrative and other "non-programme" costs and redirecting them to a United Nations development account. He suggested the following elements for inclusion, totally or partially, under such costs: direct administrative costs, executive direction and management, programme support, conference services, public information costs and general operating expenses. Many speakers stressed that those proposals should be considered further after his report, on the development account and modalities of implementation had been issued. That report -- expected at the end of the month -- will consider, among other issues, the sustainability of the initiative as well as modalities for its implementation.
The representative of New Zealand said she supported the Secretary- General's objective of increasing the Organization's efficiency and providing more resources to the world's development needs. The dual objective of the exercise of refocusing funds was to improve efficiency and sustain the development account.
Savings must never be achieved at the expense of the Organization's ability to fulfil its mandated activities, the representative of Uganda said. At the United Nations, savings often came at the cost of the level and quality of services.
The United States representative said the targeted savings could be achieved without affecting the Organization's ability to fulfil its mandates. Already, changes in documentation had yielded great savings. Additional efficiencies could be achieved by streamlining bureaucracy, and other measures.
The methodology used to calculate non-programme costs -- which the Secretary-General indicated comprised 38 per cent of the programme budget -- was flawed, said the Chairman of the Advisory Committee on Administrative and
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Budgetary Questions (ACABQ), Conrad S.M. Mselle, as he introduced that body's report. Resources to be directed towards the development account must be identified without hampering the Secretariat's ability to fulfil its mandates.
Introducing the Secretary-General's report at the beginning of the meeting, the Under-Secretary-General for Management, Joseph Connor stressed that it was a concept paper, not a plan of action. He later said that the Committee's discussion had been a good beginning for a difficult subject and would provide a basis for further collaboration.
The representatives of Indonesia (speaking for the Group of 77 developing countries and China), United Kingdom (for the European Union and associated States), Japan, Mexico, Algeria, Côte d'Ivoire, India, and Canada also spoke.
The Committee is scheduled to meet again at 10 a.m. on Monday, 16 March, to continue its discussion of non-programme costs. In addition, it is to take up the offer for office accommodation at Palais Wilson, in Geneva. Both those matters will be considered under the item of the 1998-1999 programme budget.
Committee Work Programme
The Fifth Committee (Administrative and Budgetary) met this morning to consider aspects of the programme budget for the biennium 1998-1999. Specifically, it will take up the Secretary-General's report on the reduction and refocusing of non-programme costs.
(For background on the reports on redirecting non-programme costs, see Press Release GA/AB/3213 of 10 March.)
Statements
JOSEPH E. CONNOR, Under-Secretary-General for Management, introducing the Secretary-General's report on reduction and refocusing of non-programme costs, said it was a concept paper, not a plan of action. The underlying objective was to reduce administrative costs and redeploy savings into a development account to increase activities for social and economic sectors. The paper suggests ways to reduce administrative and information components, which the Secretary-General believed could be achieved through improving productivity and effectiveness.
He said the Advisory Committee on Administrative and Budgetary Questions (ACABQ) endorsed the techniques to be used, while it had questions on the proposed methodology. The intention was to distinguish between different types of activities. Efforts had been directed towards reducing administrative costs and redeploying the gains towards development costs. Non-programme costs might better have been labelled programme support costs.
The paper had intended to identify a choice, and a way of implementing that choice, he said. In a world of finite resources, choice must be made. The approach taken by the Advisory Committee was a good basis for reform efforts, particularly regarding improved productivity and cost effectiveness throughout the Organization.
CONRAD S.M. MSELLE, Chairman of the ACABQ, said the Assembly had approved the establishment of a development account, and transferred to it funds of over $12 million. The Advisory Committee did not question the existence of that account. The Assembly had been informed that the funding would come from savings in administrative and other costs. Efficiency measures to realize savings would be applied to what the Secretary-General called "non-programme costs". In its first report on the 1998-1999 budget, the ACABQ had requested clarification of the meaning of the term "non-programme" and also a sound technical justification of the claim that such costs constituted 38 per cent of the regular budget.
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After examining the report, the Advisory Committee had concluded that the Secretary-General failed to provide a workable definition of non-programme costs, he said. Further, the methodology used to calculate the non-programme costs was flawed. Assumptions made to determine the 38 per cent were arbitrary. Recent budget reductions had adversely affected the quality and level of many conference services. If the policy of nominal negative growth was combined with the imposition of unrealistic savings, conference services would decline further.
Regarding public information, he noted that the Secretary-General had said that based on current functions, 100 per cent of the costs of the Office of Communications and Public Information were non-programme costs. Yet in another report he had said that public information was an integral part of the substantive functions of the United Nations.
Taking all those factors into account, he said, the ACABQ believed that the projected level of savings of $195 million could not be realized. The report did not provide a pragmatic basis on which to proceed.
The funding of the development account should be separated from the theoretical discussion of what the Organization spent on non-programme costs, he said. The funding of the development account was not an exercise to reduce resources, but rather redeployment. The determination of resources for transfer to the account should be subjected to rigorous controls. It was essential to justify how large numbers of posts could be kept vacant and yet not hamper the implementation of approved mandates. Further, savings as a result of changes in inflation and exchange rates were not appropriate for transfer to the development account.
It was almost impossible to realize $195 million by the process and date proposed by the Secretary-General, he said. Resources to be directed towards the development account must be identified without hampering the Secretariat's ability to fulfil its mandates.
CECEP HERAWAN (Indonesia), speaking on behalf of the "Group of 77" developing countries and China, said the Group wished to express its gratitude to the Under-Secretary-General for his introduction of the Secretary-General's report and to the Chairman of the ACABQ. The Group had some questions about the report of the Secretary-General. It was not clear, for example, why some intergovernmental and expert groups were considered as "non-programme" costs. There were also problems with methodology for calculating the percentage of the non-programme costs. The Group had noted the ACABQ assertion that the Secretary-General's view that the activities of the Office of Communications and Public Information (OCPI) were non-programme was without basis.
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A decision on the reduction and refocusing of non-programme costs should only be taken after the Secretary-General had submitted his detailed report -- due at the end of the month -- on the sustainability of a development account and the modalities for its implementation, he said. The report should also take into account the comments contained in the ACABQ report. The Committee's consideration of the matter should be deferred until the Secretary-General had submitted his report.
NICHOLAS THORNE (United Kingdom), speaking on behalf of the European Union, Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus and Norway, said the European Union's support for the concept launched by the Secretary-General in his proposals last July had been consistently clear. The Union wanted a United Nations that was efficient and did the most it could with its inevitably limited resources. Fewer documents, less duplication of effort, less waste, and better use of the talents of its staff were called for.
Despite its clear stance, misunderstandings persisted, he said. Efficiency did not, in the European Union's view, mean cheap. Further, savings in costs need not mean cuts in budgets. The Secretary-General's report was welcomed as a broad outline of his proposal. That proposal was sound, but it needed to be elaborated. The European Union was happy to associate itself with the measures referred to on economies to be effected in the next two bienniums, contained in the report.
Resources should be freed up by reducing non-productive costs -- be they deemed programme or non-programme -- through efficiency measures, to be transferred to the development account and used for development activities, he said. The Union was particularly grateful for the ACABQ's detailed recommendation on how that might in practice be done. The essence of the concept under discussion required encouraging programme managers to show initiative and flexibility in the search for innovative, imaginative and efficient ways of working, so as to achieve the objectives of the Organization. The Union believed that such a responsibility should remain within the purview of the Secretary-General.
The European Union had great respect for the considerable technical expertise of the ACABQ, he said. In the informal discussions, however, further clarification of some of the Committee's recommendations was requested. Meanwhile, the European Union encouraged the Secretary-General to continue his efforts to achieve further efficiency savings.
KAZUO WATANABE (Japan) said for the efficient use of available resources, Japan had fully supported the idea of reinvestment of savings in the economic/social programmes and would continue to do so. Also, Japan agreed that the full implementation of mandated programmes and activities, in accordance with General Assembly resolution 52/12B, should not be affected by
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the effort to achieve savings. If the Fifth Committee agreed to the exact modality of the mechanism for the reinvestment of savings, its application might be extended to the whole United Nations system, including funds and programmes, and specialized agencies. Of key importance now, however, was the mechanism that linked the resources saved to the development account.
Although Japan supported the reduction of expenses through enhancing the efficiency with which the budget was implemented, it could not support the concept for non-programme costs, nor the modality for reducing the expenditure based upon such a concept introduced in the Secretary-General's report. It introduced the concept of non-programme costs, and classified every budget item as either a programme or non-programme cost, thereby setting a target for reducing expenditures. As the report of the ACABQ had stated it was not appropriate to utilize the concept of non-programme costs in the context of the United Nations regular budget. Also, the decision as to whether or not a particular budget item came under the heading of programme costs was very arbitrary. It was not convincing to establish targets for the purpose of reducing specific budgets based upon such a classification.
Japan also wished to clarify the basic idea of the development account, he said. The intention of Member States behind resolution A/52/12B -- which had established the development account -- was clear. The Assembly was to carefully examine the draft budget submitted by the Secretary-General and allocate the minimum necessary resources to implement programmes based upon the priorities agreed by States. As for the savings made available through rationalization of activities and measures to enhance efficiency, those were to be redeployed to the account at the initial stage and utilized in the economic and social programmes.
The ACABQ did not seem to have fully taken those previous discussions among States into consideration, he said. In essence, the ACABQ was suggesting that the target for savings be set at the time the draft budget was decided and that the actual savings accrued be allocated to the development account based on performance reports. If that suggestion was adopted, the amount of savings to be allocated to the development account would depend on the implementation of budgeted activities. Japan also had other concerns with the mechanism the ACABQ was suggesting.
NESTER ODAGA-JALOMAYO (Uganda), stating that he would confine his comments to those of a general nature, said most often the reports of the Secretary-General were reader-friendly. However, the same could not be said of the current report. The Secretary-General's report seemed to contradict his earlier assertion of the importance of communications as an integral part of the substantive programmes of the United Nations. Either the left hand did not know what the right hand was doing or there was more work to be done to define the terms in question.
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There would be serious consequences if the Assembly accepted the current version of the Secretary-General's report, he said. The report was flawed. Uganda had always supported genuine efficiency measures to realize savings. However, savings must never be achieved at the expense of impairing the ability of the Organization to fulfil its mandated activities. Many delegations would agree that in the United Nations, savings often came at the cost of the level and quality of services. Uganda eagerly awaited the report of the Secretary-General on the subject at the end of the month. The Secretary-General might wish to consider the proposals of the ACABQ if it was his desire to achieve genuine savings through the introduction of efficiency measures.
ERNESTO HERRERA (Mexico) said his delegation had supported the idea of a development account, and participated in the Assembly's debate on that subject. It had also participated in drafting the paragraph of resolution 52/12 B on the establishment of the account, in which the Secretary-General had been requested to present a report on the sustainability of the initiative, as well as the implementation of modalities.
He agreed with the ACABQ's statement in its report that the target of $195 million to establish the development account could not be attained. The matter should be considered after the presentation of the report requested by the Assembly.
SUSAN SHEAROUSE (United States) said that when the Assembly approved its resolution on reform, it had endorsed the Secretary-General's proposal to reduce administration costs and place the resulting savings in a development account. The United States supported those objectives, and was eager to discuss their implementation. While her delegation had questions about aspects of the Secretary-General's proposals, it did not doubt that the savings targeted could be achieved without affecting the Organization's ability to fulfil mandates. Already, changes in documentation had yielded great savings. Additional efficiencies could be achieved by streamlining bureaucracy, and other measures.
The ACABQ's report was lacking in its analysis and proposals to replace the Secretary-General's approach, she said. The Advisory Committee's proposals for achieving savings should be clarified. However, she agreed that before any in-depth consideration of the Secretary-General's proposal was possible, further details were required. Like the European Union, she supported measures to improve the Organization's efficiency.
DJAMEL MOKTEFI (Algeria) said his delegation had approved the principle of establishing the development account. However, when reading the Secretary- General's document, questions emerged regarding definitions and criteria for determining programme and non-programme costs. Proposals in the report were difficult to quantify and justify. Further, the Secretary-General's report
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lacked analysis. Therefore, he believed that the approach suggested by the ACABQ was more pragmatic and feasible.
Still, his delegation had scepticism regarding the full feasibility of the idea, particularly the idea of achieving targeted savings for the development account, he said. Further, his delegation was apprehensive about risks that the proposals might be used as a justification to further reduce the overall level of the next budget. He was not prepared to support that approach so long as the necessary justifications were not submitted in a clear and operational manner. He awaited the Secretary-General's forthcoming report on the arrangements and procedures for utilization of the development account.
WEN CHIN POWLES (New Zealand) said she supported the Secretary-General's objective of increasing the Organization's efficiency and providing more resources to the world's development needs. Her delegation understood the concerns of the ACABQ. However, the General Assembly must keep in mind two important outcomes to which the exercise was dedicated. The first targeted outcome was to do things better and in a more cost-effective manner. That did not simply mean budget cuts and staff reductions, but rather more efficient management techniques. The second outcome was the continued sustainment of the development account through efficiency gains. Her delegation supported the proposal put forward by previous speakers that the Committee should consider the report fully when it had before it the Secretary-General's accompanying report on modalities, which was to be issued shortly.
NARCISSE AHOUNOU (Cote d'Ivoire) said although the Secretary-General's report had been well structured, it was overly theoretical, he said. It was a good reference document, but basic questions had been skipped over. He would like to know what savings would be made from the simplification and streamlining of procedures. Superfluous or duplicative elements in the Secretariat had not been taken into account. A well defined matrix within a specific time-frame was desirable. He further noted that savings realized in the course of one budgetary exercise would not necessarily be repeated at the next exercise.
RAJAT SAHA (India) said his delegation had noted that he looked forward to the clarification of the ACABQ report that had been sought by the European Union. Future reports must be clear and technically sound. Various delegations had raised important points with which India wished to associate itself, and it would therefore not elaborate at the current time.
SAM HANSON (Canada) said his Government was one of a group of countries that had been advocating the reallocation of savings and efficiency gains to development. Canada was glad to see the initiative proceeding along with other reforms approved by the Assembly. However, in order for the Committee to further consider the matter it must see the forthcoming report on the development account. There was no need for speculative debate on what
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constituted "programme" and "non-programme" costs. Such a debate was not likely to be fruitful. If such a debate was avoided, resultant savings on conference services might find their way into the development account.
Mr. CONNOR, Under-Secretary-General for Management, said that this had been a different type of dialogue and was appreciated. It was clear that not everything in the reports of the Secretary-General and the ACABQ had been universally acclaimed. That, too, was welcome.
There seemed to be universal agreement on the importance of the subject under discussion, he said. The paper on the development account was well on its way. Today's discussion had been a good beginning for a very difficult subject. A somewhat different concept had been presented. It would provide a basis for further discussion and collaboration.
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