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Analysis/Comment Last Updated: Nov 19, 2010 - 3:47:53 PM


OECD Irish Public Service Report: The Buck Still Stops Nowhere; Brian Cowen has no record of challenging conventional wisdom
By Michael Hennigan, Founder and Editor of Finfacts
May 4, 2008 - 10:40:40 AM

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Time Magazine cover of July 12, 1963, following the State visit of US President John F. Kennedy to Ireland - - Sean Lemass, Irish Taoiseach (Prime Minister) 1959-1966 who together with T.K. Whitaker and former Minister for Finance Gerard Sweetman (1954-1957), are the architects of the modern Irish economy

The key message of the recently published OECD report on the Irish Public Service, is not that Irish public sector workers cannot produce outputs comparable with private sector counterparts or that the quality of some public services are not of an acceptable international standard but that the political and senior management have been seriously lacking. The bad news is that the Irish system of governance where the Buck Stops Nowhere, is not going to change despite the new political leadership at the top and it's not simply a matter of who is Taoiseach.

Brian Cowen has no record of challenging conventional wisdom and besides, the OECD report suggests that Irish parliamentarians have shown very little interest in using the reviews sent to them to hold public sector management to account. The same politicians have since 1997, headed the pay rankings in the Irish public sector and they have had more pay adjustments than any other group in the sector.To put it simply, despite the provision of research services in recent years, the "messenger-boy" syndrome of local clientism still dominates Irish politics and selecting 35 ministers - some with titles but no real jobs -  from just over half the Dáil membership of 166, produces managers who have had no experience of management.

This year is the fiftieth anniversary of the publication of the seminal paper, Economic Development, that provided the blueprint for the modern Irish economy. Incoming Taoiseach Brian Cowen has said that his role model is Sean Lemass who became Taoiseach in 1959. From the latter half of the 1950's, the Irish public service was headed by a remarkable man, Thomas Kenneth Whitaker (1916- ) who worked with political leaders to develop the structures that were the genesis of the later Celtic Tiger period. The 39-year old Whitaker had been appointed in 1955 as Secretary of the Department of Finance. In the 1956 budget that was presented by Fine Gael Finance Minister Gerard Sweetman, the exemption of export-related profits from tax, was introduced and in 1958, all controls on foreign ownership of businesses were lifted. The Industrial Development Authority, which had been established by statute in 1950 during the first government of Taoiseach John A. Costello, now had the tools to market Ireland overseas. As a public agency, IDA Ireland has done an excellent job and State agency Forfás confirmed last January that in 2006, more than 90% of Irish merchandise and service exports were made by foreign-owned firms.

T.K. Whitaker (1916- )The man who really changed things was Ken Whitaker... I don't think there is any other official who has a remotely comparable impact upon Irish history in the second half of the 20th century- - Professor Ronan Fanning, Department of History, University College Dublin
A half century ago, there was political vision and inspired leadership in the public service. There was also a willingness to sail against the wind as the vested interests of protectionism feared the consequences of free trade in industrial goods.
Whitaker who was the principal author of Economic Development, was focused on preparing the Irish economy that had been so linked with the UK's, for eventual membership of the new six-country member European body that had been created by the Treaty of Rome in 1957. Today, if there is a T.K. Whitaker in the public service, he or she is unknown to the public. As for political leadership, the portents do not promote optimism.

In recent years, Opposition parties have put forward reform proposals but a series of baby steps is no substitute for a programme of change that would capture the imagination of an apathetic public. Some 900,000 workers in Ireland for example have no occupational pensions while the insiders including parliamentarians have a system that most private sector companies could not afford for any staff. A public tribunal has been investigating planning corruption for more than 10 years and the underlying system of land rezoning that creates an artificial land scarcity in a country that is 4% urbanised, is immune to reform. The Irish obsession with property is attributed to the British landlord system but when sellers of Irish farmland with development potential, become multimillionaires at the expense of first time home buyers in particular, they don't have any qualms about becoming landlords in places like London and Berlin. In 1996, the Constitution Review Group, which was chaired by Dr T.K. Whitaker, recommended a partial list system, which would allow parliamentary representation proportionately to parties but let parties choose some members of parliament, thereby raising the work experience standard of potential ministers. Other countries have altered their political systems including New Zealand, which has only one chamber and 121 members. Ireland is still a very conservative country with governance systems that are largely unchanged since the 1930's. The failure of four Ministers for Health - three former schoolteachers and a small town solicitor - to reform the Irish health service at a time of plenty since 1995, illustrates how serious the lack of management skills and vision can be. Nevertheless, Irish politicians are paid 50% more than New Zealand counterparts and more than counterparts in such countries as the UK and Australia.

At ministerial level, the Cabinet and Ministers of State have nearly 130 civil servants and privately-recruited staff working solely on constituency queries/scouring death notices in local papers/claiming credit for public housing allocations etc, costing the Exchequer at least €4 million annually. Eight civil servants, costing €249,750 a year, and one non-civil servant, costing €36,276, handled Bertie Ahern's Dublin Central constituency business in 2006, according to figures released to Fine Gael Dublin West TD Leo Varadkar, last November. Green Party leader and Minister for the Environment John Gormley has seven staff working in his private office on ministerial duties and four more in his constituency office.  Ministers of State Tony Killeen announced in January 2007, that his constituency office mails 14,000 letters annually.

Brain Cowen, expected to be Taoiseach from May 06, 2008

Brian Cowen has shown little inclination for challenging conventional wisdom up to now. He has made a few minor changes in the annual budget process but the national accounts are still presented in a pre-computer age format. Apart from data on pay and pensions, information on other categories of expenditure in global terms are only generally available piecemeal via parliamentary questions or Freedom of Information requests. For example, the recently highlighted €15 million spent by Minister John Gormley on climate change "awareness" or the €3 million to be spent by Transport Minister Dempsey on a Transport 21 plan "awareness" campaign, raises the question on the total budget for what is often a symptom of actionless action. The State is the biggest procurer of goods and services and last year, the tenders section in the Department of Finance advised Finfacts that we would have to make individual requests under the Freedom of Information Act to 15 Government Departments for central government procurement data. The catch is that each Department can charge the cost of gathering the data and it would be unclear in advance what that cost would be.     

Brian Cowen said that the OECD Review, concludes that there is a need for a more integrated Public Service. He said it recommends that:

  • there needs to be improved governance and performance dialogue in order to address the current disconnects between the central Civil Service and the broader Public Service;

  • rather than create new structures, there should be a networked approach to working across existing structures to allow greater connectivity between different sectors;

  • there must be a move towards a performance focus, with more information being gathered on outputs and outcomes and what has actually been achieved;

  • in a potentially tighter fiscal environment, there is a need for prioritising spending within budget frameworks;

  • eGovernment must be developed to deliver integrated and citizen-focused services;

  • in an integrated Public Service there will need to be increased flexibility for workers;

  • a Senior Public Service would create a single, integrated Public Service leadership cadre.

  • there needs to be a strong leadership role for the centre.

Last January, Irish public service staff member, Comptroller and Auditor General John Purcell, published a report that was critical of the two departments which played a key role in the development of e-Government, those of Taoiseach and of Finance, for not setting measurable targets.

In response, the Government said that it was reasonable to set targets that were ambitious "even to the extent of leaning towards the aspirational".

Aspirational?

Remember sham benchmarking and an average special pay increase of 9%? Ministers got 2 benchmarking payments and all retirees got the same while aspirational targets became the vogue.

Last October, Ministers and senior public service staff together with all living predecessors, were awarded special pay hikes ranging from 14% to 36%. The Secretary General in the Department of the Taoiseach got a 25% pay hike and within months assumed operational responsibility for the current partnership pay talks where "restraint" is the vogue term.

Industrial earnings (inc management staff) increased 23.8% in the period Sept 2001-Sept 2006. In June 2007, the Department of Finance reported that excluding the Health sector, public sector earnings increased by 32%.

The Department said:

  • the net Pay and Pensions bill for 2002-2007, was projected to increase by 52.7%;

  • increases over the period due to general rounds total €2,739m (or 23.8%), “special” pay increases (including Benchmarking) total €1,322m (or 11.5%), and other factors (such as extra numbers) total €1,992m (or 17.3%);

  • the net Pay and Pensions bill as a percentage of net non-capital Exchequer spending having risen from 49% in 2002 to 51% in 2004 has been decreasing and is 47% in 2007;

  • the education sector had shown the greatest increase over the period at 58.6% (compared to a 50.1% rise in the rest of the Pay and Pensions bill), and was expected to account for 32% of the total Paybill in 2007 as opposed to 31% in 2002. The proportion accounted for by the health sector has increased slightly over the period, while there have been small decreases in the proportions accounted for by the civil service, security and the non-commercial State sponsored body sectors ;

  • the number of Exchequer-funded public service employees (excluding local authorities) was 267,974 at 1 January 2007 (whole-time equivalents), an increase of 28,886 or 12.1% over 2002 mainly in Health and Education

  • the health sector accounts for 41% of the total Pay and Pensions bill, the education sector 32%, the civil service 13%, the security sector 11% and the non-commercial State Bodies 3%;

  • Public service numbers including pensioners based on an annual average measurement increased to 350,571 from 337,798 in 2006 (due mainly to additional numbers in Health, Education and Gardai) .

  • pensions now account for 10% of the total Paybill, up from 8.6% in 2002. Overall, the pensions bill has increased from €985m in 2002 to €1,751m in 2007 representing a 77.8% increase over the period (pay in contrast rose by 50.3%); the increase in the health sector has been 93%.

For every 100 public sector workers, there are 29 pensioners and the latter have a system that gives them the same increases as current holders of their last rank in the public service.

At the launch of the OECD review, the then Taoiseach-elect Brian Cowen, promised a review of the huge growth in State agencies over the past decade. Outgoing Taoiseach Bertie Ahern, also speaking at the launch, said there were now some 800 State agencies and this represented "too many by half".

There was no acknowledgement of failure. The dictum of US President Harry Truman that the buck stopped at his desk, doesn't apply in Ireland. In the week of the OECD launch, Fianna Fáil TDs were reported to be opposed to the lowering of the drink driving alcohol limit. An issue like that has much more potency than public sector reform and most of the private sector workers who will take the brunt of the current downturn, have no access to the public megaphone in contrast with the farmers and public sector trade unions. 

The sign "The Buck Stops Here" was on President Harry Truman's desk in the White House Oval Office (1945-1953). On the reverse side, i.e. the side that Truman saw, it was inscribed, "I'm from Missouri". That's a short form of "I'm from Missouri. Show me". Natives of that state (a.k.a. the Show Me State), which included Truman, were known for their skeptical nature. As President Truman said, "The President – whoever he is – has to decide. He can’t pass the buck to anybody. No one else can do the deciding for him. That’s his job."

The saying "the buck stops here" derives from the slang expression "pass the buck" which means passing the responsibility on to someone else. The latter expression is said to have originated with the game of poker, in which a marker or counter, frequently in frontier days a knife with a buckhorn handle, was used to indicate the person whose turn it was to deal. If the player did not wish to deal he could pass the responsibility by passing the "buck," as the counter came to be called, to the next player.

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