For this issue, we asked a number of CIMA members from around the world what they would do if they ran their country’s economy, and how they would both generate income and cut budgets. Here are their personal responses – which do not necessarily reflect the view of their employers.

INDIA
Venkataraman Ravichandran, vice-president – global business services, Hewlett-Packard
The Indian economy has recently seen GDP growth slow down to seven per cent, inflation rise to 9.6 per cent, the rupee depreciate to an all-time low against the US dollar and the fiscal deficit increase to 5.6 per cent of GDP.

The key drivers to improving the country’s economic performance will be to create more employment, reduce inflation and improve income distribution.

One of the key ways to improve the country’s economic performance is to shake up the agricultural sector, which is one of its major industries, but which is also inefficient and expensive.

For example, more than 25 per cent of India’s production is lost in the supply chain due to poor storage facilities.

The government also needs to embark on a course of land reform to help large-scale agriculture through better land acquisition legislation and process.

This is not the only area of India’s spending that could be reduced. The government should disinvest holdings in companies operating in sectors other than agriculture, food, rural health and education, infrastructure and security.

The private sector should invest in all other areas. It should also aim to cut 20-25 per cent of government jobs.

There are plenty of other areas that could use increased investment – and quickly. India should aim to invest around nine per cent of its GDP in overhauling its infrastructure.

The investment should be used not only to improve the railways, roads, ports and airports, but also to improve capacity in the power sector, with large-scale investment in solar energy for cleaner and more reliable power

The government also needs to invest around five per cent of GDP in improving the country’s rural and semi-urban areas.

There should be a greater focus on education and health to help reduce significant income disparities, while helping to address concerns related to unemployment and under-employment, and improving the nation’s productivity.

NEW ZEALAND
Gavin Shing, regional manager – Wellington, commercial and agri, ANZ
Like many developed nations, New Zealand has been adversely affected by the global financial crisis. As our government enters its second term, public spending cuts are evident.

While some would argue public expenditure cut backs are not appropriate at a time when economic stimulus is required, I believe there will always be areas in which public expenditure can be appropriately rationed or reduced.

I would firstly seek to defer any non-essential capital expenditure items in areas such as infrastructure and defence.

My rationale is not dissimilar to that of a private company, which would generally seek to prioritise capital investments that forecast a sufficient and timely return on investment.

While I would not seek to reduce expenditure in areas such as health and education, I would investigate ways to reduce waste and excess across our ministries, regional councils and other government agencies.

While they play an important role in society, cost efficiencies are there for the taking.

Lastly, I would look to reduce the level of government bail-outs, guarantees and contingent liabilities, which have been evidenced over recent years.

This may not be a short-term cost-cutting measure, but one that would nevertheless seek to reduce moral hazard and serve to balance the books.

AUSTRALIA
David Abbott, semi-retired business consultant based in Brisbane, Queensland, Australia
We have a two-speed, or two-tier, economy. The minerals sector is charging along in the fast lane and the big question is how the sectors that are not participating in the minerals boom can be stimulated.

The need to rebuild confidence in the entire economy calls for a mixture of direct and indirect investment in several areas.

First, there needs to be more investment in education (including vocational and continuing education) to develop and maintain the brain power and skills needed for a sustainable economy, recognising it as an investment and not a cost.

Rebates and incentives for private providers – as well as direct investment by government – should be considered.

People expect vision and leadership from government. Therefore, money should be spent on creating an environment conducive to increasing public confidence and creative and responsible entrepreneurship.

Examples include cutting red tape and complex regulatory processes. The most widely used description for the Australian public sector in the media is “bloated bureaucracy”, but the longer-term benefits of cost-cutting are questionable.

However, the areas that could be tackled include introducing common systems and eliminating duplications between each of the three tiers of Australian government, federal, state and local.

The government should also try to achieve cost savings on major infrastructure investment with improved procurement and project management, as it has with the acquisition of defence equipment and large technology initiatives such as the national broadband programme.

NEW ZEALAND
Richard Ray, corporate finance manager and technical director at Beca Group, an employee-owned engineering consultancy
New Zealand is fortunate to have an economy that is in pretty good condition, relative to most of the Western world.

However, growth is still quite anaemic compared with the 2000s, and the government and current account deficits remain a problem.

There are always plenty of things that can be done to improve the economy: one area is tax.

The country’s tax regime is better than most, but still has areas for improvement.

Key among these would be to align a range of tax rates (personal, company and trusts), ideally to “flatten” taxes, introduce a capital gains tax (which we don’t have and distorts investment incentives) and to introduce tax concessions to both foreign and local businesses to establish new “greenfield” enterprises – but not to buy existing businesses.

There also needs to be more long-term investment in a range of areas, but particularly education, training and infrastructure. At the moment, much of government expenditure isn’t done with an eye to the “cost benefit” ratio.

Focus spending where there will be a payback, such as efficient transportation, government systems, education and training.

There are also many areas of public spending that could be cut – interest-free student loans is one example.

This was an election bribe that costs a fortune and provides all the wrong incentives. It is much better to “bond” students so debt would be gradually forgiven as they earn income and pay tax.

If they don’t want to be bonded, they can pay their loan back. Welfare policies that are disincentives to work should also be cut.

New Zealand has a range of welfare programmes that result in very high effective marginal tax rates for those who get to a particular tax income level.

It is better to have a lower, flattish tax rate and to just not take the tax in the first place.

INDIA
Girish Bhat, CFO Gammon India, an infrastructure and construction company
India needs to attract more direct foreign investment if it wants to improve healthcare, social welfare and infrastructure, and the best way to do this is to divest government funding from public ownership and allow partial privatisation.

The government can still maintain a majority stake in these companies, but the market needs to be liberalised in order to attract greater investment and to improve competition.

Private sector ownership will improve cost efficiencies, make these organisations more profitable and remove some of the bureaucracy that delays output and decision-making.

The money that the government raises from selling off stakes in publicly-owned enterprises can also be used to fund other programmes, such as improvements in healthcare and agricultural reform. India also needs to invest more in education.

The government needs to do more to recognise the importance of human capital. By 2025, young people will account for around 60 per cent of the population so it is vital that education and training is improved so that they have the necessary skills to meet the requirements of the labour market.

IRELAND
Bernie Cullinan, CEO of Clarigen, an HR and software services firm
There needs to be a better balance between the public and private sector.

The Croke Park Agreement in 2010, whereby the government agreed not to impose layoffs or further public sector pay cuts while the unions agreed to co-operate on wide-scale reforms of the public sector, needs to be revoked.

In Ireland, it has become more lucrative now for people to find work in the public sector because private sector pay has gone down, and that will have real long-term and damaging repercussions for the country in the future.

We simply cannot afford to continue to pay salaries to half the country’s workforce that are higher than those in the corporate sector.

It also makes the country more risk-averse and less entrepreneurial. There needs to be more investment in education, from primary level upwards.

Class sizes here are becoming too high and there is a shortage of skilled teachers. If this trend is not reversed it will have a massively detrimental effect on the country’s long-term future.

Furthermore, there needs to be a greater realisation that government can leverage the skills and research that is being produced in the country’s universities to attract foreign investment and innovation.

Ireland has been investing heavily in university-led research in fields such as medicine and technology for more than a decade, but we have not tried to commercialise on it. This needs to change.

Neil Hodge is a regular contributor to Financial Management