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EDITORIAL - State companies need management shake-up
published: Monday | May 19, 2008
This past Friday, in these columns, we highlighted the economic turbulence in which Air Jamaica continues to exist and the severe burden this places on Jamaica's taxpayers.
This year, for instance, the airline will lose an estimated US$170 million, just about the same it lost in 2007. At the current exchange rate, the loss will be over J$12 billion, an awful lot of money, which could be invested in areas that are badly starved of resources, such as education, health and, critically, national security.
These numbers serve to underline our point that the administration needs to take some hard decisions about the airline quickly. We repeat our position: Either find a buyer for Air Jamaica within the next three to four months, or close it down.
Disappointed with Mr golding
Of course, Air Jamaica's problems are not new. It has been losing money for a long time: over US$1 billion in the past decade. But they are exacerbated when new people continue to do the wrong things. Or, perhaps more correctly, when governments continue to fashion inappropriate boards and inexperienced managers to run state companies.
This brings us to a matter of disappointment with Prime Minister Bruce Golding. In Opposition, Mr Golding sought to set a new benchmark for governance; one that would significantly reduce, if not eliminate, the old culture of partisanship and be driven by competence, efficiency, fairness, openness and transparency. Among his promises were that in a Golding administration, some key public-sector appointments would be vetted by the legislature and people at the top would be accountable.
It is, perhaps, true that the administration has not had sufficient time to push through all its plans, but we are not sanguine that sufficient has been done to advance this proposed new culture or for the prime minister to scale a bar he has set for himself.
Board of friendships
What has happened at Air Jamaica is a case in point - a board, that for the most part, is filled with political associates and with an executive leadership badly starved of experience in the airline industry. We believe that this has contributed to what many people consider to be too many bad decisions being taken at the airline.
While Air Jamaica is the focus, it is not the only state company with this problem. A plethora of other agencies and organisations have boards that are packed with friends, associates and partisans, but of questionable commitment and not enough knowledge in the areas they are asked to operate. This is true of the board of governors of schools, where too many members are appointed on the recommendation of politicians, who tend to pick the 'good party people' in the constituency.
A clean-up needed
This practice of appointing political disciples is not only an error of judgement, but often a very expensive exercise. It has to stop.
As part of this process, in a general clean-up, the prime minister, apart from Air Jamaica, has to take a cold, hard look at other state companies, not least of which is the Jamaica Urban Transit Company (JUTC), the capital city's bus company. This year, it is projected to lose $1.2 billion, which will bring its accumulated losses over the last three financial years to near $4 billion. That is not sustainable.
The JUTC has long had a management problem. We suspect it still does.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
published: Monday | May 19, 2008
This past Friday, in these columns, we highlighted the economic turbulence in which Air Jamaica continues to exist and the severe burden this places on Jamaica's taxpayers.
This year, for instance, the airline will lose an estimated US$170 million, just about the same it lost in 2007. At the current exchange rate, the loss will be over J$12 billion, an awful lot of money, which could be invested in areas that are badly starved of resources, such as education, health and, critically, national security.
These numbers serve to underline our point that the administration needs to take some hard decisions about the airline quickly. We repeat our position: Either find a buyer for Air Jamaica within the next three to four months, or close it down.
Disappointed with Mr golding
Of course, Air Jamaica's problems are not new. It has been losing money for a long time: over US$1 billion in the past decade. But they are exacerbated when new people continue to do the wrong things. Or, perhaps more correctly, when governments continue to fashion inappropriate boards and inexperienced managers to run state companies.
This brings us to a matter of disappointment with Prime Minister Bruce Golding. In Opposition, Mr Golding sought to set a new benchmark for governance; one that would significantly reduce, if not eliminate, the old culture of partisanship and be driven by competence, efficiency, fairness, openness and transparency. Among his promises were that in a Golding administration, some key public-sector appointments would be vetted by the legislature and people at the top would be accountable.
It is, perhaps, true that the administration has not had sufficient time to push through all its plans, but we are not sanguine that sufficient has been done to advance this proposed new culture or for the prime minister to scale a bar he has set for himself.
Board of friendships
What has happened at Air Jamaica is a case in point - a board, that for the most part, is filled with political associates and with an executive leadership badly starved of experience in the airline industry. We believe that this has contributed to what many people consider to be too many bad decisions being taken at the airline.
While Air Jamaica is the focus, it is not the only state company with this problem. A plethora of other agencies and organisations have boards that are packed with friends, associates and partisans, but of questionable commitment and not enough knowledge in the areas they are asked to operate. This is true of the board of governors of schools, where too many members are appointed on the recommendation of politicians, who tend to pick the 'good party people' in the constituency.
A clean-up needed
This practice of appointing political disciples is not only an error of judgement, but often a very expensive exercise. It has to stop.
As part of this process, in a general clean-up, the prime minister, apart from Air Jamaica, has to take a cold, hard look at other state companies, not least of which is the Jamaica Urban Transit Company (JUTC), the capital city's bus company. This year, it is projected to lose $1.2 billion, which will bring its accumulated losses over the last three financial years to near $4 billion. That is not sustainable.
The JUTC has long had a management problem. We suspect it still does.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.