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News : Irish Last Updated: Apr 24, 2009 - 5:31:05 PM


OECD Report on Irish Public Service: Lack of Strategic Vision, Poor Leadership; Limited Accountability and Performance Evaluation; Many Performance Initiatives and Isolated Reforms that do not Reinforce each other
By Finfacts Team
Apr 28, 2008 - 3:30:01 PM

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Source: OECD

The OECD today published its Ireland - Towards an Integrated Public Service report outlining reform of the Irish public service.  It highlights a development of the public service over the last decade that has evolved in an uncoordinated manner without a strategic vision and reflecting poor competence at senior level, limited performance review and accountability. With the possible exception of the Public Accounts Committee, the interest of Parliamentary committees to discuss the reviews sent to them has been limited. 

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

The OECD said that Ireland is facing a more complex environment with increased expectations for effective service delivery, and a need for alternative solutions to developing horizontal approaches to policy and service delivery challenges. This requires boldness in developing a renewed programme for Public Service reform. Developing a successful implementation plan in response to the assessment and recommendations in this Review could lead to profound and innovative changes in the Irish Public Service and place Ireland at the forefront of new ways of thinking regarding management and delivery of public services.

While it will be for Ireland to consider the broad directions set out in these findings, and to devise a strategy and programme of actions best suited to its own political and administrative needs, success will depend on rethinking how the Public Service operates and putting the conditions in place to change behaviours.

Tyhe report says that despite major spending increases over the past 10 years, expenditures in the public domain, i.e. services funded by government and provided by government or the private sector, are small as a percentage of total GDP, compared to other OECD countries. This is because Ireland has traditionally had a small public sector, and so recent increases have been part of a process of “catching up” to more typical OECD levels. For example, amongst 25 OECD countries for which data is available, Ireland ranked third to bottom in terms of public expenditure as a share of GDP in 2005 with 34.4%, above Korea (28.9%) and Mexico (19.5%) (Table 2.2), even when factoring in infrastructure investment. These three countries however presented the strongest average annual rates of real growth in public expenditure over the 1995-2005 period with 6.4% for Korea, 5.1% for Ireland and 4% for Mexico. If however the level of public expenditure in Ireland is expressed as a percentage of GNI (40.5%), it becomes much closer to OECD average levels expressed as a percentage of GDP (42.7%).

The OECD says that the Irish economy has benefited from high levels of foreign direct investment (FDI). From 2000-2003, FDI to Ireland increased by 70% in absolute terms. In 2004, Ireland was the second highest OECD country in terms of FDI with a value representing 139% of GDP, behind only Luxembourg at 145%. Average inward FDI in 2004 accounted for 19% of GDP amongst OECD countries. These relatively high levels of inward investment mean that while some profits and other revenues are reinvested in the country, a sizeable proportion of GDP is income that accrues to foreign companies. Other measures such as average per capita GNI, account for financial flows entering and leaving the country. While for many OECD countries, these flows tend to balance out, leaving little difference between GDP and GNI, for Ireland, the outflows of profits and income, largely from global business giants located there, often exceed income flows back into the country. The result has been a persistent gap between GDP and GNI. In terms of per capita GNI, Ireland therefore does not rank as well as it does in terms of per capita GDP (Figure 2.2). Between 1995 and 2005, Ireland moved 15 places up the OECD ranking table in terms of GDP per capita, from respectively 19th to 4th position, but only 9 places according to GNI per capita, from 19th to 11th position. The difference between the two rankings for 2005 is pictured in Figure 2.2. In other words, while income per inhabitant is high in Ireland, GNI shows that less of it stays in the country than GDP might suggest, with implications for economic well-being and living standards.

Ireland ranks fourth to last among OECD countries in terms of motorway per 1 000 m2 of area (only Norway, Poland and Finland fare poorer, but mostly due to their large surface area).

Public finances have been in a healthy position in recent years .However, revenue growth has significantly lost pace in line with the economy over the last two years, contracting the government surplus from 3.5% of GNI in 2006 (Figure 2.4) to 0.5% of GNI in 2007. While Ireland is still one of the OECD's best performers in terms of fiscal performance, a budget deficit is forecast in 2008 for the first time since 2002. The government therefore needs to ensure that it has a means to prioritise spending demands and to reconcile multi-year
commitments made during a high-growth period on service levels, infrastructure and other policy priorities with its current revenue levels. It is also crucial to demonstrate returns on investments.

The report says that Irish policy documents do not state the actual or even intended links between the different performance initiatives. While there could be an implicit vision of how the different initiatives relate or should relate to each other, there is no stated strategic policy or design that links them together. Rather, they have evolved over time. This section will therefore investigate the current implementation and the challenges with horizontal and vertical coherence of performance initiatives.

Source: OECD

While the OECD has not reviewed the administrative relocation programme known as "Decentralisation" per se, it says that it should be noted that the impacts of this programme as currently envisaged does pose a number of challenges for the Irish Public Service. Staff will be dispersed widely and many will be new to departments: during interviews with the OECD, indications were that in some areas, turnover of staff who were opting not to relocate with their departments or offices could be as high as 90%. In addition to the loss of expertise and knowledge, this presents challenges for management level staff (who in many cases are also experiencing staff turnover) to ensure appropriate training is provided so that business and services continue without loss of quality or effectiveness. They will also require the following: commensurate decentralisation of additional authority; stronger governance; better accountability mechanisms; appropriate information systems; revised procedures and mechanisms regarding staff mobility (particularly as staff choosing to relocate will not be as flexible going forward in terms of re-deployment); and effective methods and systems to evaluate and measure performance. These needs will impose additional specific pressures on the Irish Public Service, as compared to the public services in other countries, which in other respects, share the same challenges as their Irish counterparts.

The report says that the Comptroller and Auditor General evaluated the Expenditure Review Initiative in 2001. This evaluation concluded that the aim of reviewing all expenditure programmes every three years was not achieved. Many departments were slow to start work on their review and slow in carrying them out once started. By the end of 2000, 62 of the 118 planned reviews had been completed. The quality of the review reports varied considerably. The evaluations tended to be better at reviewing objectives and efficiency than in assessing performance indicators or evaluating effectiveness. Departments relied primarily on line managers in the area under review to do most of the work. A few reviews were contracted out to private suppliers.

Source: OECD

Many performance initiatives are isolated reforms that do not reinforce each other. Although several performance initiatives have been presented under the umbrella of an overarching strategic Public Service reform programme, most are, in fact, not related.

While some Irish departments have embraced performance reforms and reorganised their processes and structures, such as the Office of the Revenue Commissioners, many departments have not embraced the opportunities presented by these initiatives. Since it is mainly the agencies that are delivering the service, it is important that performance criteria and targets are a key part of their oversight. However, many departments are currently meeting their agency control function by focusing on input indicators, such as the number of staff and budgets. As a result, agencies invest less energy in monitoring performance, and thus in determining and agreeing with their department on appropriate performance indicators. When this information is available, the responsible department does not usually present it. The proliferation of agencies adds to the fragmentation of the availability of performance indicators.

So far, the Dáil has had limited involvement in performance evaluation in general. This is particularly the case for Value for Money and Policy Reviews. With the possible exception of the Public Accounts Committee, the interest of Parliamentary committees to discuss the reviews sent to them has been limited. An explanation could be the minor influence that the Dáil has in determining the subjects of the Reviews, not only with respect to Value for Money and Policy Reviews, but also when it comes to the Value for Money audits by the Comptroller and Auditor General. The Public Accounts Committee cannot ask the Comptroller and Auditor General to commission these audits, as it only has the power to advise on the work program of the Comptroller and Auditor General. The Dáil’s own capacity to evaluate programmes is also limited: The Public Accounts Committee has only conducted research on two themes last year. There was little interest from Parliament in the new departmental Outputs Statements, but this can partly be explained by the fact that they were presented to the Dáil just before an election.

There are 23 Oireachtas committees with patronage provided by 99 paid positions for members of the  Dáil and Seanad

The Irish are, with the exception of the Mexicans, by far the lowest users of medical care within OECD countries. For in-patient as well as out-patient services, international comparisons show that there is no overuse of medical care in Ireland compared to other OECD countries, even if, as in other OECD countries, there is some inappropriate use. The differences in levels of medical care provided are impressive: doctors’ consultation per capita in 2005 were 2.5 in Ireland,11 3.5 in Switzerland, 5.1 in the UK, 6.6 in France, 7 in Germany and 13.8 in Japan. The same year the discharge rates from hospitals per 100 000 population was 10 227 in Ireland, 10 551 in Japan, 20 150 in Germany, 24 516 in the UK, and 26 781 in France.

Arm’s length bodies are not a new phenomenon in Ireland. Since the 1990s, however, the number of state agencies1 has more than doubled, reflecting the growth of the Public Service and the need to respond to new regulatory and service delivery challenges. This process, termed “agencification”, occurs when new state agencies are created either ex nihilo or to take over existing tasks from government departments. In Ireland, the proliferation of agencies has concerns that their benefits may be outweighed by a decrease in accountability, and a fragmentation of purpose and scale of public sector activity. International studies on agencification have concluded that agencies are not good or bad per se, but require appropriate forms of control and accountability which, in turn, depend on the agency’s function and on the wider governance environment.

When compared with international experiences, however, agencification in Ireland may have set out to achieve too much: participative management, co-ordination of policies at the local level, and a focus on results and performance. At the same time, agencies have not been given the right kind of autonomy they need to be really performance-oriented, nor have sufficient governance mechanisms been developed to ensure that they stay connected to the overarching strategic policy objectives of their parent department. This can be explained, in part, by the centralised culture in the Irish Public Service, by its organisational structure and by the limited role of the local government sector.

The HSE is now the largest single employer of public servants in Ireland, with more than 73 500 staff directly employed, and a further 38 000 staff employed by voluntary hospitals (not necessarily acute care hospitals), and other bodies funded by the HSE. Its overall budget of approx EUR 16 billion is the largest of any public sector organisation. It is estimated by the Department of Health and Children that some 68% of this budget relates to pay/administrative costs.

As in other OECD countries, the Irish Public Service is a reflection of national political and administrative cultures, and of past economic and social priorities. The Irish Public Service is composed of a Civil Service (staff working in departments and major agencies), commercial and non-commercial bodies that provide services on behalf of the State as agencies, public hospitals, schools, defence and security services, etc., and local government. While it has created structures and systems to enable horizontal co-ordination, the Public Service remains segmented overall, leading to sub-optimal coherence in policy development, implementation and service delivery. As public policy becomes more diverse and complex, Public Service organisations need to have even more interaction with each other and with stakeholders at local, national and international levels, and across these levels.

The OECD says that it it is clear from studying the Irish system, and in particular the health sector, that there are difficulties involved in leading system-level change, and in pursuing system-wide coherence. Ireland is pursuing many multi-annual, multi-stakeholder societal goals – in infrastructure development, energy, climate change, poverty, gender, health, etc. If it is to maximise the Public Service’s contribution to achieving these societal objectives and to meeting citizens’ expectations, then it needs to think increasingly about the Public Service as an integrated “system”. In doing so, it will have to amend or revise existing accountability structures and ways of working, to allow for integrated system-wide action where this is required. Moving towards a more integrated Public Service, will allow a greater sharing of expertise and knowledge, but, more importantly, will allow the Public Service to become more focused on its contribution to the achievement of broader citizen-centred societal outcomes.

EXECUTIVE SUMMARY

Achieving an integrated Public Service will require targeted actions in a number of areas.It should be noted that these action areas are interdependent: this is not a suite of options where only a few need to be advanced. Improved dialogue is needed to address fragmentation and disconnects between departments, their Offices and agencies, and other Public Service actors; the use of networks to bring together relevant players from across the Public Service needs to be expanded; performance measures need to look at outcomes rather than inputs and processes, and increased flexibility is needed to allow managers to achieve those outcomes; budget frameworks are needed to facilitate prioritisation and reallocation of spending; a renewed emphasis is needed on the role of ICT and e-government in strengthening information sharing and integrated service delivery; and greater mobility is needed to help develop and broaden the skills and competency base of generalist staff. In support of all these, a stronger role is needed to lead and support the renewed change, both through the creation of a Senior Public Service, and the development of a more strategic role for the Centre.

Improved governance and performance dialogue: While institutions evolve and adapt over time, the faster the external environment changes, the more reflection is required on what are the appropriate governance arrangements, how to achieve them, and their possible consequences. Appropriate governance arrangements rarely happen independently. The current disconnects between the central Civil Service and the broader Public Service need to be addressed, particularly between departments and agencies, for increased sharing of information and expertise and to put in place improved dialogue to reach shared agreement on performance targets, and to hold each party accountable for the realisation of those targets.

Networked approaches to working: Rather than create new structures, an integrated Public Service is one where individuals are enabled to work together across existing structures to allow greater connectivity between different sectors (central government, health, education, local government, etc.), agencies and parent departments, as well as greater connectivity with stakeholders outside the Public Service. This will allow more collaborative, horizontal approaches to policy development and greater agility in identifying and responding to societal needs. The use of “networks” within and across organisations, that span the broad elements of the Public Service will be increasingly important in an integrated Public Service. Ireland has made inroads in developing a network approach through the establishment of the Office of the Minister for Children, and more recently, the Office for Older People and the Office for Disability and Mental Health.

Expanding such approaches will present a challenge, as the Public Service will need to simultaneously operate within formal bureaucratic structures of accountability, as well as networks that exploit agility, informality and openness, and reduce duplication of coordination efforts. In an Irish context, the multi-stakeholder Social Partnership model represents another possible approach for exploring networked ways of working.

Moving towards a performance focus: As with many other OECD countries, the focus to date in Ireland has been on performance reporting, rather than managing for performance. Instead of focusing on inputs and processes, more information needs to be gathered on outputs and outcomes and what has actually been achieved, so that this can better feed back into measuring how the Public Service is meeting overarching targets and objectives.

Realistic expectations of performance need to be developed within organisations that cascade from the top to the individual, and additional managerial discretion is needed to achieve these goals. Developing meaningful outcome measures and indicators of performance is a challenge for all countries. But performance measures and initiatives need to be better aligned with overarching outcomes and high-level societal goals in order for the general public to understand the benefits of the Public Service.

Prioritising spending within budget frameworks: The need to enhance approaches to resource management and allocation is especially important in a potentially tighter fiscal environment. Enhanced performance measurement mechanisms can only reach their full potential when they are utilised by decision-makers at political and senior administrative levels for resource allocation purposes within and among programmes. Building on existing frameworks, the development of longer-term, more strategic budgetary mechanisms covering spending programmes could contribute to greater certainty for senior managers and more efficient programme delivery.

Using e-government to deliver integrated and citizen-focused services: For citizens and business, the key measure of Public Service performance is how quickly and easily they can access a service and the quality of that service once received. While a number of initiatives have improved both the quality and way in which services are delivered, additional focus is needed on service delivery from the perspective of the citizen, who is not as familiar with how structures and systems operate. E-Government, and the development of a more integrated ICT interface, provides a major opportunity to deliver faster, more readily accessible services and secure internal data sharing to simplify contact with the Public Service. While Ireland has had many successes in developing internal e-government systems, co-operation across different Public Service bodies is not widespread. Fragmentation of responsibility for different elements of e-government has meant that the full potential of ICT is not being realised by public sector organisations for citizens. The integration of functions regarding the technical and financial framework will assist in progressing e-government, especially given the accelerating pace of broadband penetration.

Increased flexibility and mobility for workers: At present, few opportunities exist even for generalist staff to move within and across the Public Service. Limited mobility creates challenges in sharing skills and competencies across the system and in re-allocating resources to those areas most in need. In an integrated Public Service, individual public servants will have, and be expected to have, more varied careers across sectors. A mobility policy is needed to promote and facilitate movement of generalist staff across the different sectors of the Public Service. New arrangements are required for the redeployment of staff across organisational and sectoral boundaries to new higher priority activities. This will assist in raising performance levels, as increased numbers of staff with more varied competencies and skills will be able to compete for a wider range of generalist positions. It will also reinforce cross-Public Service networks, supplement regional labour markets, and promote the Public Service-wide perspective that is needed in an integrated Public Service.

Senior Public Service: Increased open recruitment will allow the Public Service to rapidly acquire necessary skills and competencies that cannot be easily located or grown in the short-term among the existing cohort of generalist public servants. Supporting and driving a renewed reform agenda and developing a broader integrated approach, however, will require significant leadership from senior management who have a detailed understanding of the broad range of issues and challenges unique to the Public Service. The development on a phased basis of a single, integrated Public Service leadership cadre, through the creation of a Senior Public Service with a membership drawn from elements of the broader Public Service, would allow Ireland to strengthen a system-wide perspective at the leadership level and to reinforce core values through the Public Service.

Strong leadership role for the Centre:Success in achieving the vision of a more integrated Public Service will require strong leadership at political and administrative levels to move from a traditional control position, to one of vision, support and direction in developing the modernisation and change agenda. Over the last decade, the Taoiseach, as head of government, has championed the reform agenda, including the initiation of this Review, and this has been a crucial driver for change within the Public Service. Given the scope of changes outlined in this Review, Ireland will continue to require such strong central leadership if new ways of working are to be successfully implemented. These changes are necessary in order to ensure that reforms are appropriately sequenced, paced, and related to broad societal objectives that arise from the Programme for Government, the Partnership agreement Towards 2016 national policy frameworks, and high-level strategy documents, etc. In addition, the transformational effort will likely require achieving efficiencies and shifting resources across the Public Service in order to assist in co-ordinating and steering the renewed reform agenda. It will need to be appropriately resourced both at the Centre of Government and in each of the key sectors of the Public Service with appropriate links between all those charged with driving change in each area.

The Paris-based OECD - Organization for Economic Co-Operation and Development, is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an  ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies.

The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD.

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