The public interest - an ill defined phrase
September 20, 2010
As many western governments grapple with the economic crisis, it appears the big quandary they all face is how quickly to cut government borrowings without jeopardising the vulnerable shoots of growth. It's at times like this that even economists are split as to the right answer.
So it comes as no surprise to find a growing schism occurring between the private and public sectors when the solutions on the table are tax rises or reduced public expenditure. The pain of downsizing the public sector will be significant but many argue no more than that which has been, and will be, felt in the private sector through restructuring activity and tax increases.
At the same time we arguably have an even bigger elephant in the room to deal with - unfunded pensions. I watched a TV debate last week on the subject and was reminded what an explosive subject it is. Many of those already in retirement are having to work part time just to make ends meet - perhaps they're the lucky ones. Those close to retirement seemed to resent the changes currently being made to defined benefit schemes - "it's their right, it's what they have been working for all their lives".
In contrast those starting out on their working lives feel the baby boom generation have stripped the shelves bare - faced with a decade of low growth and a weak job market, difficulty in buying a house (with little likelihood of capital gain), and a sure fire need to work until they are 70, while making personal provision for their own pensions.
All these challenges laid at the door of many governments brings into harsh focus the issue of the public interest. It's an overly used phrase; no doubt because it makes simple such a complex set of value trade offs. It's a phrase close to my heart given all the work I do around the corporate reporting agenda and audit.
The reason I raise this topic now is that the UK government's consultation on the future of narrative reporting arguably has this issue at its heart. Corporate reporting is done for the "public interest", but what do we mean by this and has the growth in corporate reports, their complexity and clutter, been in the public interest?
And who amongst the public are these reports for - shareholders and investors or a wider audience where regulators and legislators act on behalf of the general public? I suspect this is a critical question that needs answering if we are to make corporate reporting accessible, understandable and relevant - so do make your views known.
As for the bigger economic and social issues facing governments around the world, I sense it’s the definition of the public interest which drives politics and the reason most of us are able to go to the ballot box every few years.
As always, I look forward to hearing your views and comments.