IT PASSES unnoticed in the chatter that probably the most powerful economic influence in the State is just off-stage in the wings as political talks gather pace. It seems we may have a new government next week. It is not certain, and matters could drift into the week after. But the 32nd Dáil will likely facilitate government formation.
The Department of Finance, more accurately the nexus of it and the Department of Public Expenditure and Reform, has incredibly high stakes in the negotiations. It would in any talks to form a government.
On this occasion what is at issue is not just public money and economic policy. There is an existential threat to the overarching authority of what has been the driving economic power in the State. So-called new politics could rapidly make the department as we know it old hat.
New structures, as much as new policies, are of imperative interest to it institutionally.
Like life before the ready availability of anaesthetics and flush toilets, the next government may be nasty, brutal, and short. Everything is relative to expectation and achievement can only be measured against what is possible.
Against that sober metric, a relatively short-lived government that delivers one budget to justify its existence and perhaps a second to exceed expectation would be success of sorts.
The critical qualification is that it avoids spending more than is prudent and narrowing the tax base foolishly again.
It is perplexing that the success of government is almost solely judged in terms of how ‘stable’ it might be. Longevity brings some benefits for sure. The critical issue is whether economic recovery survives the loss of economic discipline by the outgoing government in its final months and its political composure during the election, in circumstances where the international outlook is volatile.
Now there will be a fresh onslaught for additional spending, unadulterated by constructive thinking about how public spending can be reduced.
In the best of circumstances, putting together a budget for 2017 that is economically prudent and politically possible is fraught. For the Department of Finance and its sister department, this challenge meets an emerging, probably permanent and irreversible structural change which impacts powerfully on how it operates.
If half of what is promised happens on budgetary process, nothing will ever be the same again for the Departments of Finance and Public Expenditure.
A reformed budgetary process, promised and immediately abandoned by the outgoing government, is on the cards again. In principle, this will involve fuller, earlier public engagement with an Oireachtas budget committee on broad para-meters and then greater specificity on departmental budgets, with respective committees.
What is at stake is a radically different use in other hands of potent instruments of control — namely time and information. Hitherto, the two departments have sought to influence both in their institutional interest and, as they would see it, in the public interest.
But the use of time in a budgetary process over months is a fine, sharp tool. It shapes debate and influences choices. If more time is accompanied by more information, earlier budgetary formation, as we know it, is over. This is called ‘reform’ and is awaited with varying degrees of enthusiasm and horror, depending on the perspective.
In parallel to a changed, earlier, more open process, all of which will bring influence to bear, including raised expectations, comes an essentially changed institutional landscape. The creation of an independent Oireachtas budget office, a sort of CSO for tax and spending, answerable independently to the Dáil will over time exert an alternative influence.
The Fiscal Advisory Council has already succeeded in widening the institutional debate, and, under Professor John McHale, is a public reminder to the finance minister that his office does not come with authority to do the imprudent with impunity.
An institution within the Oireachtas will be a beast of a different stripe, however. It will not be an irritant like Thomas à Becket; it will be an alternative source of the essential information that is the basis for budgetary and economic policy. It will be a permanent, alternative source of costings and data.
It means the control of information is gone, as the controlling instrument of time is removed. This is all fundamental to what our Department of Finance is. It seeks to control, in the public interest, the public purse.
The impending fundamental changes are not arriving in a vacuum. There is wider societal change where access to informa-tion is a given, and nothing less is politically tenable or culturally acceptable. There is recent history, where government at official level, as well as politically, fundamentally failed, in tandem.
The status quo is not scented with success. The problem the Department of Finance will face the day a government is formed is how is marries new levels of accountability with effective level of control.
The irony is that since the deserved demise of social partnership, institutionally it has been resurgent. Certainly the Economic Management Council within government was a constraint and the awkward advices of the Fiscal Advisory Council were too. But in historical terms, recent years have been ones of revival for the twin-departments after catastrophic reputational collapse.
Social partnership, which had honourable beginnings, became a government within government, and a driver of exponential growth in public spending.
Power shifted from the Department of Finance to the Department of the Taoiseach. A finance department that was intellectually undistinguished and politically weak failed in its fundamental purpose — to shout ‘stop’.
There are strict limits to what a department can do in the absence of political will. Unlike social partnership, for which there was at least an approved if lengthening guestlist at the gates of Government Buildings, the new process will be beyond control of any part of government. The guestlist will be at the gates of Leinster House.
This reflects the reality of our new politics. It will be the legacy of the 32nd Dáil. Its full impact will not be realised fully for years. Its first influence, however, will be felt in weeks. The Departments of Finance and Public Expenditure are going to have to walk and chew gum on Budget 2017 immediately.
If a government is formed next week, it coincides exactly with the timing of last year’s spring statement, the opening tableau of the government’s plans for the following year. That was followed in July by the National Economic Dialogue. Budget day was October 13.
Palaver about ministers having detailed consultations with committees never happened. So we are behind on the old process. Intruding on it will be an untried new one taking shape as it goes along. All the talk about government has missed far more consequential, potent changes in governance. After this Dáil is done, that will be the actual issue of importance.