Finance Department ‘made up of generalists, not specialists’

A TOTAL OF 542 civil servants work at the Department of Finance — but just 39 are trained to Masters level or higher.

According to the independent review panel into the workings of the department, technical education standards are “extraordinarily low by international standards,” with just 10% of the staff holding postgraduate qualifications compared to 60% in Canada and 40% in Holland.

The review, which was held at the request of former finance minister Brian Lenihan and published yesterday, says the department urgently requires more staff with specific qualifications in economics, accounting and finance rather than the “generalists” that currently make up the numbers. It recommends that over the next two years, the numbers of specialists in economics, finance and banking double.

Officials must become more forceful in articulating their views to politicians, more committed to medium-term planning and engage more with the broader economic community.

BOOM/BUST RISK: The review panel found that year after year in its June memoranda to the Cabinet on the upcoming budget, the department issued warnings of the risks of overheating the economy and of the need to take fiscal action to avoid a bust scenario. By the time the budget came around in November, the advice was disregarded and the splurge of tax relief, tax cuts and spending continued.

INTERNATIONAL RISK: According to the report, the department paid insufficient attention to the broader international economic environment. The review team put this down to the lack of trained economists and its lack of oversight over the key agencies such as the Central Bank, the Financial Regulator and NTMA.

CONSTRUCTION POLICY: The department had warned Cabinet of the risk of a rapidly-expanding construction sector but it did not organise a “strategic response” to the problem. They recommend the department be enabled and accountable to report on broader risks to the economy.

LACK OF MEDIUM-TERM PLANNING: Even during the boom, the department tended to just deal in the short term — until the four year plan was ordered by the EU/IMF. The report’s authors say it must learn from this and develop a medium-term, economic, planning capacity.

PUBLIC SECTOR REFORM: A significant section of the department’s work is managing the public sector. The report authors are “convinced” that area should be managed as a “distinct entity”. It chided the department for not having “prioritised public service modernisation” in the past. Social partnership comes in for stinging criticism, being described as “not supportive of dramatic reform”.

EUROPEAN UNION: While the Irish Government has come in for criticism from Europe for its lack of oversight of the banking sector and for failing to slow the property market, the international consensus was that Ireland was a “model economy” and this was not challenged. On paper, it met EU fiscal rules, its debt had fallen and spending was still within the EU Stability and Growth Pact’s terms.