The Study Of Government Financial Security Of Public Crisis Management

In recent years, public crises have occurred now and then in our country, including the Rain and Frost Disaster in Southern China in2008, Wenchuan earthquake, the2009influenza A (H1N1), the debris flow disaster in Zhouqu, the economy impact from the2011debt crisis in the United States and Europe. After entering the21st century, as the trend of globalization, industrialization and information technology comes into everyone’s life, the frequency of facing crisis has been going up substantially, which makes the people feel like being surrounded by different crisis. Therefore, the response to the crisis should increasingly become the focus of attention all around the world. Disasters can not be easily solved by individuals or organizations. Disasters need strong support from the government. In this case, we should focus both on the government public crisis management mechanisms and the management innovations.Public crisis management might occur transaction costs, which could be divided into the costs prior to transaction, the costs in the transaction, and the costs after the transaction. The costs prior to transaction consist of the costs from crisis management regulations establishment, crisis information searching, early warning of the crisis, as well as the maintenance costs of crisis management system operations, and the material reserves and update costs, etc; the costs happening in transaction include the efforts and expenses for an effective response to the crisis that needs information collection, action coordination, negotiations and supervision; the afterwards transaction costs should consider the cost for the recovery or the reconstruction.The costs in public crisis management are generally difficult to turn into private costs via market mechanism, and in the end it must be covered by the government. The public finances are the material basis for the government to fix market imperfections and fulfill the public needs of society functions. Therefore, it needs to have a solid public finance emergency system when dealing with public crisis, aiming to minimize the losses caused by the crisis. From the perspective of fiscal emergency support and the consideration of the new characteristics of the public crisis, the financial security of our public crisis management should include:First, building up the public financial contingency plans and systemSecond, clarifying the functionality of the financial contingency plans and system,Third, defining the financing channels.However, the entire financial security system has not yet been established. We could identify the factors or variables that bring impact to social welfare, with the analysis of cost-benefit maximization, then to find a method to increases social welfare and improve the social security system.First, to increase financial investment, including the increase of the source of reserve fund, the reserve fund accumulation management, the crisis transferring capability, and the treasury bonds issuing.Second, to establish a complete financial security system for public crisis. The Specialized management agencies and managing staff could effectively improve the income of the fiscal expenditure of public crisis management, besides this, the establishment of legal system, management structure and information systems could also reduce considerable costs.Third, the most important measure is the preventive investment in public crisis management. Based on the analysis of policy model, it brings much more benefits from monitoring/controlling within the public crisis than the reconstruction, and much more effectiveness from preventive measures than monitoring/controlling the public crisis.It is a long-term and complicated system for public crisis management, drawing experience from both domestic and international perspective, and it is challenging to fulfill the long-term goal if it is only to implement the measures or methods from only one or two aspects. What it really takes is to considerate all possible features or solutions from a full-view picture. This article is trying to illustrate the possibility of building up a solid financial security system for public crisis management through the study of public crisis management, and the study of theory for public financial contingency plans.First, to re-build the concept of public crisis management. It has to break the traditional concepts, and to increase the responsibility awareness for public crisis management and establish timely information disclosure and release mechanism, with integrating all aspects of resources for efficient crisis management.Second, to reconstruct the financial security system for public crisis management, which should focus on improving the early warning mechanism, the public finance emergency plan system, the public finance rehabilitation mechanism and the early warning prevention system. Also, it needs to ensure that the assessment mechanism should be strictly implemented throughout the entire process of crisis management.Third, to re-shape the national budgeting system for public crisis management expenditure, including adjustment for the existing budget structure, the government and social mobilization, the establishment of national public crisis fund and the establishment of disaster insurance system.Fourth, to re-organize the financial expenditure of public crisis management, mainly focusing on adjustment of the structure for fiscal expenditure, the establishment of an early warning system with multi-stakeholder involvement, and the implementation of the Fund management.Fifth, to supervise public crisis policy and assess public crisis financial performance, including the public crisis financial budget performance audit, the establishment of assessment mechanism for the effectiveness of public finances, and the complete system for monitoring and supervision on public financial capitals, as well as the establishment of specialized assessment agencies for public finance expenditure.Sixth, to re-establish the public crisis financial legal system, defining the clear objectives and principles for the fiscal legal system, and improving the legislation system of China’s public crisis financial emergency.