Some areas, however, remain susceptible to further efficiency gains, particularly the services sector. … but the public sector still lags behind. At the meso or sectoral level, some important measures were announced in the Budget for 2006, including the decision to intensify efforts to improve efficiency in the public service. Hopefully this will also involve the adoption of output-, rather than input-oriented management practices. The recentlysigned collective agreement for the public service, moreover, is an example of what a responsible social dialogue aimed at balancing competing interests can achieve. There remains, nevertheless, ample room for further progress. The country needs to undergo a culture change so as to realise the fallacy inherent in the perception of unlimited government power to levy taxes, which leads to the assumption of jobs for life regardless of performance or need, and of universal and free welfare services irrespective of their sustainability and of equity considerations. Such thinking is incompatible with an ethic based on efficiency and accountability, and with the need to reduce the burden of taxation, foster initiative and encourage investment. Social dialogue can, and should play a crucial role in promoting acceptance of the policies necessary to bring about this change. The attainment of greater efficiency in the public sector is a key objective because it provides vital support services to the productive sectors of the economy. It must, therefore, become better geared to ensure that the intentions of policy-makers are implemented rapidly and effectively.
The issues now range from the choice between the use of rule versus discretion on bank capital, to the use of leverage ratio, and to the implementation issue that includes how to exercise the measures effectively in the context of a financial system that is non-complex, as is the case of the SEACEN economies. On this, I have a view that vigorous stress-testing by supervisors and banks can help keep the effects of procyclicality manageable. I hope this conference will further discuss this issue. Finally, the complexity and cross-border linkages of financial systems will continue to increase, not decrease, following this crisis. On the other hand, the right and effective global regulatory and supervisory structures to handle cross-border implications are still evolving, while information flows and cooperation among regulators and supervisors, at this time, continue to be limited. It is clear that without significant improvements in both information flows and cooperation among supervisors, it will be difficult to prevent or contain future financial crisis spillovers effectively. Ladies and Gentlemen, this eleventh SEACEN conference provides us with an excellent opportunity to discuss these current and important issues. Our challenges are similar, and through our coordinated views and collaborated efforts, the SEACEN economies collectively will be in a stronger position to address these challenges. I wish all of you a successful conference with a fruitful exchange of ideas and a wonderful collaboration.