Monday, 28 June 2010

There's got to be someone to blame

Slí Eile: The Department of Finance has come in for increased criticism and attention in recent times. Periodically, Eddie Molloy has written about the failings of that Department (see for example his latest article in the Irish Times here).

Typically, the following assumptions and assertions are made:
1 The Department of Finance has lacked economist skills and specialisms
2 The Department lacks expertise in relation to banking
3 The Department is excessively deferential to politicians
4 The Department doesn't like to be criticised
5 The Department is not accountable in the same way that other bodies are.

Each of these assumptions (or assertions) has a ring of truth. But, is that the whole story?

Employ more economists in Merrion Street?
If more economists were drafted in to Finance in the last 10-15 years would this have made any fundamental difference to the fiscal and other policy outcomes? Methinks not. Some clue to the answer lies in what was being said or not said by ESRI, the media and financial market economists and, last but not least, academic economists (the only true economists around according to academic economists). It should be borne in mind that many civil servants with an economics degree and some research training either fled the ship for greener pastures elsewhere (for the impoverished private sector) or aspired to a generalist career where specialisms can be a liability. If only Merrion Street were packed with PhD economists? With the greatest of respect to economists I would not have many of them deciding on levels of public service, taxation and investment going by what some of them were saying then and now.

The Department of Finance completed, itself, a review in 2009. It got little attention. You can read it here. It was bland. for example, it said (page 24):

Overall, the view was that economics, policy analysis and appraisal skills are available in the Department, and will continue to be required. However, it was suggested that Taxation, Governance, Regulatory Impact Analysis, HR and Employment Law skills needed to be built up to meet future challenges. There was a view that specialist technical skills, such as Legal and Drafting Skills could be “bought in” as necessary. This would be to address particular tasks, for example legislative requirements, or to deal with periodic demands for technical skills

Expertise in banking?
Clearly many officials did not have a grasp of financial reality in the summer and early Autumn of 2008. It was knee-jerk time following a predictable cycle of, first denial, second disbelief, third panic, fourth blanket guarantees and the rest is history (nationalisation, recapitalisation and black holes). Guarantee everything from deposits to bonds in haste and regret at leisure as the saying goes about lifelong commitments. If Finance lacked banking expertise it is not obvious that the experts from the banking world would have advised or acted differently. Even those academic economists caught in the glare of the September 2008 crisis had 40 different opinions about what to do over banking (easier to agree that NAMA is wrong; harder to defined exactly what can and should be done exactly both then and now).

Yes Minister?
Clearly a feature of civil service cultures the world over is deference (or obsequiousness) to the Minister of the day. A strength of the Service, here, is the degree to which it is independent of the political and offers a vital resource and continuity as Governments change over the decades. Still, one cannot avoid the impression that civil servants tasked with advising and then implementing the decisions of politicians could have been clearer and more courageous about contesting various received wisdoms including the costly and idiotic 'de-centralisation' scheme beloved of some local chambers of commerce or the drive to cut capital gains tax, income taxes etc

Thou shall not criticise?
Nobody likes to admit that they got it wrong or that they have a part in the current social and economic malaise. Is there a risk that people can put up straw men: Seánie, Fingleton, the Central Bank, the Department of Finance, the Public Service Unions, the Church, the British, the European Union, your parents, your children. In reality, it seems to me that we are just have an exceptionally wicked and severe bout of economic slump. That's global capitalism for you. The fact that it is being prolonged at global level by deflationary strategies (and in the case of Ireland made worse due to bad decisions in the past as well as present) means that we need to balance domestic self-flagellation against the financial and political hurricanes that continue to sweep the world (with the divine Markets in foul mood like the deities of old).

Who is accountable? The Oireacthas has very limited powers to initiate, call to account and to rectify. The Committee system plays a constructive role but the Government parties call the shots when it comes to follow-through.

The real danger of moving public ire to just one Government Department is that we can miss the more fundamental point about public service in a democracy.
Public service should be renewed and viewed as a calling and vocation to serve the public (common) good. Whether the service involves nursing, policing, teaching, administering or regulating it has been viewed as something undertaken under trust and within a framework of accountability, ultimately, to the Oireachtas where expenditures and legal provision apply.
It is clear that there have been individual as well as systemic failures within the broad public service. At best, these failures relate to lack of planning, lack of openness and lack of transparency. At worst, these failures reflect a marked lack of responsibility in regulation and proactive response to clear societal risks. In a few cases, corruption has been present (e.g. in regard to land re-zoning and bribing of public officials). It is regrettable that these failures have been used by some commentators to sully the image and reputation of the entire public service. Assertions, unsubstantiated by data or evidence, have been made about a service that is bloated, inefficient, sclerotic and incompetent.

The 2008 review by the OECD of the Irish public service paints a different picture. It suggests a service that is relatively smaller than in other countries and one that has managed to deliver significant success over the decades. Nevertheless, the Irish public service needs to be reformed and practices, culture and working approaches need to change. This is more than just an attempt to import business planning and customer service speak into public service delivery. It is, also, more than a mere opening up of competition for various posts in the system which has thrived for too long on time served and restrictive practices in regard to promotion and recruitment.

One of the first principles of public service reform should be a return to the idea of public service as a noble calling to serve the common good. Idealism, leadership and service to the public good must inform service delivery and policy design. For too long, managerialism, pragmatism and excessive deference to the political establishment has held back the public service from offering more independent and provocative advice as well as assuming greater responsibility and accountability where individuals and teams are held responsible to implement a project within a given timeframe.
Public service reform needs to involve a cultural shift away from secrecy, top-down control and detached decision-making. Bringing about change is never easy. The introduction of legislation such as Freedom of Information and Ethics in Public Office along with Equality legislation in the 1990s involved contestation.

The Labour Party has already stated it support for:
* greater mobility of staff within the public sector;
* full flexibility of movement between all branches of the public and civil service for relevant grades (where there has been much talk but no delivery to date); and
* Open recruitment to all public service posts (not universal in many cases)

With the follow-up to the OECD Review published in 2008 on Irish public service reform, change is happening at snail's pace and it very much 'top down' rather than led from the ranks.

Paradoxically, the imposition of 'control and command', more than ever, in regard to every single post subject to the public service moratorium allied to micro-management form the centre of relatively small grant payment runs counter to the spirit of the OECD report which advocated more delegation of responsibility and authority to decide on resource allocation allied to 'working within budgets' and being called to account for outcomes and delivery rather than micro-management of input and process. The system does not seem to learn or apply the lessons of past failed initiatives from the 1960s Devlin Report onwards.

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