Reality gets ignored in latest strategy

The new Department of Finance strategy is an attempt to convince the public that it knows how to run the country.

It involves putting forward five strategic goals to solve the nation’s economic and social ills. It then provides a new model for a managerial shake-up in the department. It finishes with a back-slapping exercise on the Government’s achievements in office and re-states its existing policies in the appendix.

The plan has five goals: Economic growth; improved standard of living; better public finances; returning to the markets for borrowing; and completion of the restructuring of the banks. Despite international evidence, “quality of life” is not a priority.

Believe it or not, the Government’s No 1 goal is: “A resilient Irish economy founded on sustainable and balanced growth and leading to significant increases in employment numbers.”

Can this really be the austerity government of the past 15 months? It has done everything possible not to achieve this goal. Its austerity has reduced the employment rate from 62% to 59% since mid-2009 and driven the unemployment rate from 12.7% to nearly 15%, while GNP fell 3% in 2010 and 3.4% in 2011.

However, with the election of François Hollande in France and his demand for an EU growth pact, alongside the German government postponing the ratification of the fiscal treaty until it can see favourable growth plans, the Government must at least be seen to go with the flow.

The department and the Government don’t want to be caught offside being an austerity-only, one-trick pony. Yet, this is what has happened and despite the rhetoric of the plan, there is little to suggest any real change. The document still commits to a state investment bank, a commitment it made in the Programme for Government in Feb 2011, and to rolling out improvements in infrastructure to deliver jobs. These include areas such as water, energy, broadband, and forestry.

Guess what? Apart from a commitment that these will be “commercially funded”, the investment money needed is non-existent and they haven’t happened. They continue to ignore the €5.3bn left in the National Pension Reserve Fund; loans from the European Investment Bank to the tune of billions and matched funding accordingly; or any attempt to offer incentives to pension schemes to invest in the economy.

The financial deficit target is based on the general government deficit target of 3% of GDP until 2015. There is no mention of the infamous “structural deficit” which is the one being heralded in by the fiscal treaty, even though the treaty is due to come in to force in Jan 2013. Neither does it give a target for government debt as a percentage of GDP, which will be 114% according to government forecasts and which will be punished under the 2013 fiscal treaty. The document just hopes Ireland will get a lower rate of interest on its debt which would ultimately reduce its overall repayment.

The document insists on reforming the credit union sector, which means making these more like banks and makes getting a loan more difficult. !It also proposes to help distressed mortgage holders but says nothing about what it intends to do.

There is a thin but discernible layer of apology for past mistakes running through the document. The Department of Finance states it “requires a commitment on our part to review thoroughly suggestions made to us” and manage “conflicts of interest” as well as “departmental enhancement of our risk capabilities”. One could read this as an admission that the Department of Finance took the wrong advice in the debacle of the 2008 bank guarantee.

A large amount of the report is focused on improving the organisational management structure in the department. The new model will have the secretary general on top as before but now several main units of the department constitute the next layer of management: International; financial; fiscal and economical with responsibility for EU policy; banking; tax and budgetary function; and economic forecasting. There are also four new functions/areas designed to ensure compliance across the board.

It is obvious that a lot of money has been spent working with hard-hitting management consultants to come up with this model. The four new compliance functions are designed to monitor the whole department and have strong executive teeth. Expect some high profile successful ex-private sector HR managers to be offered posts soon. There is a clear focus on bringing truculent civil servants to heel.

The document is almost a celebration of “managerialism”, also known as New Public Management, which has been imported from the UK and US since the 1990s. The document is a clear response to the perception that the civil service is ridden with bureaucratic systems and inflexible work practices, which the Croke Park Agreement is now trying to rid the system of.

Finally, when we look at the heavy reliance on spin doctors in this Government, and the parachuting in of more “experts”, who will most likely be selected for a particular purpose, it’s time to get worried. The dogmatic doublethink that this is likely to produce, alongside the failure in this document to detail anything tangible in terms of a plan for jobs or for people in general, will likely evidence continued government failure in economic and social development.

* Tom O’Connor is a CIT lecturer in economics and public policy

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