Scrooge must wrest control of civil service from the big spenders

COLM McCARTHY is a wily old fox. From past involvement in the late 1980s, he learned the mechanics of Government finances. Every year an annual ritual commences in early summer. Each line department submits its proposed budgetary outline for the following year. A series of bilateral meetings then takes place with dedicated officials in the Department of Finance. This arm wrestle usually involves incremental adjustment for inflation and the occasional initiative.

Over the past decade, due to bountiful tax revenue largesse, Finance was a pussy cat for every pet political project and new quango. McCarthy’s modus operandi turned this process on its head. He asked each spending department to submit their own evaluation paper of each programme — the benefits, justification and costs.

Separately, he asked Finance to provide its critique of the same work. Bord Snip could deal the cards and look into everyone’s hand, without them knowing what cards it had.

What transpired was a primary questioning of two decades of automatic continuation of schemes. The fundamental shift is to reverse the balance of the book of estimates process in favour of Finance. Now the upper hand is back in Merrion Street. This was the way Government used to be. The brightest and best mandarins were in Finance and they held the purse strings.

That department’s brain-drain, social partnership’s political supremacy and the Department of the Taoiseach overriding Finance combined to usurp the latter’s authority.

As Taoiseach, Bertie Ahern had a distinctive style of government. Along with the government secretary, Dermot McCarthy, Bertie controlled all through centralised consensus. This deteriorated in 2005 when Charlie McCreevy was sidelined to the EU Commission.

The last vestige of resistance in Finance was removed. Ahern had learned from Haughey who as Taoiseach effectively ran the Department of Finance in 1980/’81.

The legacy of this period has been wanton waste, featherbedding and inefficiency.

Teachers’ unions have skilfully negotiated amazingly restrictive work practices. They are allowed 30 days a year uncertified sick leave on top of 14 weeks holidays. They are further entitled to certified, paid sick leave of up to one full year in four. Substitution costs are €300m a year.

Garda pay is €643m a year. Gardaí have an amazing package of up to 57 allowances on top of their pay rates. These cost €217m in total. They are entitled to a housing rent allowance, costing almost €60m per annum. They get a ‘plain clothes’ allowance of €1.9m — presumably to wear ordinary gear like the rest of us.

The most incredible payment is the compensatory element for gardaí on holidays. As other allowances (eg, working unsocial hours) are not payable when they are on annual leave, they obtain a €9m special allowance to compensate for the lack of top-up payments while they sunbathe. What muppet in the Department of Finance could have sanctioned that?

Overtime payments seem to be routine at €80m yearly. Similar allowances are paid to prison officers.

The TV drama Yes Minister accurately depicts life in government. When the departmental secretary, Sir Humphrey, had a problem that could not be resolved by manipulation of his minister, he would trot along to his gentleman’s club.

There, he would have sherry with the cabinet secretary. Very soon, order would be restored, political authority would be undermined and bureaucratic control reasserted.

A radical overhaul of the senior civil service is vital for implementation. The first secretary general of Finance, David Doyle, is due to retire. The ‘doves’ need to be replaced by expenditure control ‘hawks’. Otherwise a cabal of self-serving departments and their civil servants will obfuscate and obstruct Bord Snip’s menu.

Ministers contemplating a ‘solo run’ should be asked to sign up to the reform agenda. If they don’t have the bottle, they should get the boot.

The terms of reference of Bord Snip Nua excluded consideration of three vital areas of public expenditure. The public capital programme, levels of public sector pay and pensions of public personnel were off-limits. This year these respective items individually cost €7.3bn, €17.5bn and €2.3bn. This political exclusion was unfortunate, unnecessary and unwise.

Any business enterprise, faced with a weekly shortfall and consequent borrowing of €400m per week, would not hesitate to implement change. A key difference between business and politics is a sense of urgency to act decisively. Commercial executives know time is money, so delays are costly. Our politicians are off on a 10-week recess. No action will be taken on these recommendations prior to the Lisbon referendum on October 2. This postponement provides the ideal opportunity to procure a Benchmarking III report prior to the budget. Beyond the public sector union response, the most interesting negative critique of McCarthy’s recommendations has been the clamour for public sector pay cuts instead of social welfare reductions or public sector job losses. The ESRI has bluntly called for a 6% cut in public pay rates. The Central Statistics Office has estimated that these pay rates are 48% higher than in the private sector. The estimated cost of defined benefit public pension arrangements, notwithstanding the levy, is about one-quarter of total average salary. The purchase of up to 10 “added years” is unattainable elsewhere.

SAVAGE criticism of Bord Snip has come from our country cousins. Agriculture faces a very difficult future. Commodities such as milk have fallen to the lowest prices in 20 years, perhaps below the cost of production. Teagasc forecasts cereal prices could drop sharply relative to 2007 prices. Farm subsidies from CAP are not guaranteed beyond 2013 due to EU enlargement. The WTO/GATT agenda is a continuous force for free trade, resulting in downward pressure on prices.

Staff cuts of 1,140 in the Department of Agriculture, Teagasc and Bord Bia are advocated. The scrapping of disadvantaged area payments, suckler cow grants and the elimination of REPS will take more than €300m out of farmers’ pockets.

In yesteryear these subsidies were almost entirely financed by Brussels. Now that the taxpayer is exposed, the squeeze is on. The farming vote is a declining political force.

The amalgamation of rural national schools, closure of garda barracks and smaller district courts are symptomatic of a new regional policy — designed to consolidate facilities into larger centres. This process of urbanisation is common throughout Europe. Tradition, custom and practice are under scrutiny and attack. This battle will be hard fought and unpredictable. All politics are local.

The public discourse of state expenditure internally and externally has been radically altered by the release of this report. McCarthy has put the bureaucrats on the back foot. It’s now up to the two Brians to lead and implement the public service reform agenda. The debt clock is ticking. The December budget is perhaps their last chance to do the business and thereby start to restore their political fortunes — before the dawn comes the darkest hour.