Obvious institutional fiascos include Anglo, Nationwide, AIB, Financial Regulator’s Office, Central Bank, social partnership. But one profoundly culpable organisation has escaped beneath the radar. Its flaws are fundamental to our failure.
Who can this be? This outfit says about itself on the tin: “has a central role in implementing government policy and in advising and supporting the Government on the economic and financial management of the state and the overall management and development of the public sector. Its mission is to promote a growing economy which will deliver a high level of sustainable employment, social progress and living standards.
“This mission involves promoting policies which deliver international competitiveness and internal efficiency; advising the Government on and managing the overall process of resource generation and its allocation between investment and consumption to secure sustainable economic and social benefits; and achieving ongoing improvements in efficiency and effectiveness across the public sector.”
Under each objective, the Department of Finance has failed. The European Stabilisation Fund will soon emasculate their overall responsibilities. No growth, instead the worst GDP contraction in the eurozone. Our competitiveness has dropped from third to 20th in international league tables. Employment has contracted by 300,000, with resurgent emigration.
Public service efficiency has not even been attempted. Their forecasts during the boom and the bust have been woefully inaccurate. Their systematic inability has precipitated our collapse. The formalisation of this failure is imminent, with a botched bailout.
Who’s who? Up to recently, the main man was David Doyle (secretary general), since replaced by Kevin Cardiff. Four second secretary generals include Donal McNally, Ciarán Connolly, Jim O’Brien and Anne Nolan. Beneath this upper echelon there are up to 10 assistant secretary generals. The entire staff totals 640 members. The golden rule of their modus operandi is zero personal visibility.
Finance occupies central axis in government – €55bn of public expenditure cannot be spent without their prior approval; €33bn of tax revenue is designed by their architecture. Every infrastructure project, public service programme, cutback or tax hike originates in Merrion Street. It’s by far the most powerful department of state. It was reputed to be staffed by the brightest and best. It’s feared and flattered by every line department. Tragically, it has been found not fit for purpose.
Finance is staffed by people with high academic attainment in the Leaving Cert and at university. These career civil servants have little outside experience of the real economy or private sector. Very few have qualifications in finance or economics. Only three have real banking credentials. There is no statistician. They were ill-equipped to cope with the credit and property bubbles, banking collapse and structural deficit.
They were incapable of supervising the Financial Regulator. They outsourced problem-solving to NAMA, NTMA and umpteen quangos. They authored the disastrous decentralisation programme through their own Office of Public Works.
Their loss of credibility is self-evident. Alan Ahearne was hired by Brian Lenihan to advise on finance from NUI Galway. The department seconded Jim O’Leary from Maynooth to remedy its own incapacity. They persist with top-level appointments committee selections on an internal ‘Buggin’s turn’ basis.
Finance is the largest paymaster in the state with 307,000 employees. The HR manager of an SME with their abysmal record would be fired. Despite the IMF knocking at the door, privilege days remain. Outdated travel practices from still provide extra days off at Easter and Christmas. Time off is still granted for local race festivals at Galway, Punchestown and Tramore. Absenteeism levels, at an average of 11 days a year, are double that of the private sector.
Despite bankruptcy, Finance authorised the Croke Park agreement that gives the proceeds of efficiency and productivity gains back to public sector personnel. Finance facilitated the squandering of a decade of resources.
Benchmarking was their contribution to public service reform – all gain, no pain. Parent/teacher meetings were to be held out of school hours. Despite being bought and paid for, it still doesn’t happen. The Comptroller and Auditor General’s annual report is a yearly testament to their woefully inadequate supervision.
The Oireachtas Joint Committee on Finance and the Public Service last week published the Report on Macroeconomic Policy and Effective Fiscal and Economic Governance.
Unusually, Minister Lenihan attended the launch. The politicos politely destroyed Finance’s reputation – the lack of ‘fiscal rules’, pursuing pro-cyclical instead of counter-cyclical budgetary policies and decrying the department’s modelling and surveillance capacity. It proposed the establishment of an economic advisory council and a new independent body to mirror the British and US budgetary offices. Oh my God! Papering over the cracks. This was akin to referring a vehicle, with a shattered gear box and engine, for a car wash. . We must reform the Department of Finance. Organisational consultant Eddie Molloy is correct. He was a member of the Mullarkey group who updated accountability procedures for accounting officers and secretaries general in 2003. An ex-employee of the department, he observed detailed defects. The Ministers and Secretaries Act, 1924 shields civil servants from non-disclosure, even to Oireachtas committee investigations. This faceless façade allows ministers to claim they acted on “best advice”, while accountability probes run into the sand.
MY ministerial experience of senior civil servants was extremely positive. Individually, they were able and adept. Their collective failings were cultural – excessive secrecy and an abiding CYA (cover your arse) syndrome. Their bona fides, integrity and motivation cannot be impugned.
Dysfunction in Finance has inflicted massive reputational damage on the entire civil service. The cloud of our economic catastrophe can have a silver lining if Finance is dismembered and reconstructed.
There was much mirth and denial in the Dáil last week about the ‘Germans’ and a tall Hungarian overseer who allegedly have taken up residence in the department, riding shotgun over bungling bureaucrats. Inside sources tell me the real story is that Canadian mandarins have been asked thoroughly to assess structures and personnel. More than a makeover must be mandatory.
The next government must set up a new Department of Public Service to act as a singular HR department insisting on modernisation. Transparent procedures of individual accountability for the Sir Humphreys are long overdue. All power and no responsibility is untenable. Finance ministers are front-of-house concierges for their speeches and briefs. The Ken Whitakers have been replaced by mundane muppets. A generation of our kids will pay the price for their systemic failings.
The final insult? In 2006, Finance muzzled and modified an OECD report which accurately predicted Ireland’s property crash. Thanks a lot, lads. Good night, goodbye and be safe on the way home.