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Analysis/Comment Last Updated: Mar 8, 2015 - 7:37 AM


We wish Martin Shanahan - new IDA Ireland chief - well but...
By Michael Hennigan, Finfacts founder and editor
Jun 13, 2014 - 8:22 AM

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Martin Shanahan, the head of the Forfás policy advisory unit within the Department of Enterprise, Jobs and Innovation, has been appointed the next chief executive of IDA Ireland, the Irish foreign direct investment promotion agency. We wish him well but with reservations as both he and the chairman of what is a key public agency, are both insiders in a system in recent decades where ministers hone the enterprise policy making message for political impact while dissent, at least in public, is as rare as a black swan.

On Monday the board of IDA Ireland made the announcement that Shanahan was getting the job and it said: "IDA together with the Public Appointments Service, and PwC (the Big 4 accounting firm), undertook an extensive search program to find the best candidate to lead the organisation through a new phase in its successful development."

In the non-spin world, it was Richard Bruton, enterprise minister, who made the appointment as he did for the chairmanship position, when he selected Frank Ryan, a former IDA Ireland executive who had retired as chief executive of Enterprise Ireland.

Martin Shanahan (41) has been with Forfás since 2005, which in recent times became part of the enterprise department. He held management responsibility in Fáilte Ireland for the professional development of the tourism sector. Earlier in his career, Shanahan held a number of general management posts in the private sector in tourism and hospitality. He holds an M.Res (Educational Research) from Lancaster University, a M.Sc. and H.Dip from DIT and a B.Sc (Mgmt) from Trinity College Dublin.

IDA Ireland faces challenges as international tax reform in coming years will mean that the tax avoidance Irish offshore company vehicles will no longer be available to cut effective tax rates to low single digits.

Jobs in the foreign-owned exporting sector in 2013 were lower than in 2000, despite a 22% growth in the workforce.

The Government has floundered since massive corporate tax avoidance became an international issue eighteen months ago and we don't know what advice has been given by enterprise agency chiefs but what we do know is that in recent decades all of them have occupied an amen corner for some dubious public policies .

None of them will be remembered for saying anything of consequence through boom and bust.

It maybe somewhat different behind closed doors but what to do when it's faith not evidence that is the guiding light?

The Department of Jobs, Enterprise and Innovation told Finfacts last December:

Minister Bruton and the Department of Jobs are unashamedly ambitious for the potential of scientific research in Ireland to support economic growth and job-creation in Ireland. In recent years we have improved our ratings for basic research to the point where we are now very competitive internationally - the challenge now is to achieve greater returns in terms of commercial outcomes and jobs from this research."

So they are "unashamedly ambitious for the potential of scientific research in Ireland" and this is effectively the  main enterprise policy. An inflation adjusted €24bn has been spent in the past decade in this area and all they can cite are citations in journals while patent applications are at a 30-year low.

Last year Prof Frank Barry in a paper, 'Politicians, the Bureaucracy and Economic Policymaking over Two Crises: the 1950s and Today' [pdf], compared the disastrous Irish policy making of the Lilliputians of  recent times with the times of giants like TK Whitaker, who was appointed secretary of the Department of Finance in 1956.

Barry said the philosopher Plato could not explain 'where he would find the wise men who would govern his ideal state'. Experience since seems to show the best results come from the paradox of competing sources of power jockeying for their own advantage.

He said this is the key that draws together the findings of the three independent reports of 2010 and 2011 into the weaknesses and failures of the Department of Finance, the Central Bank and Financial Regulator - - besides 'deference and diffidence', the reports refer to 'groupthink'.

Prof Barry says that this is less of a problem of course if the institution in which it prevails is only one voice in the mix.

The paper says:

As far back as 1987, TK Whitaker said that he would like to see “a restoration of the old (civil service) principle that you were independent of ministers. You gave your views on any new proposals fearlessly, critically, honestly. You did not care whether your views were likely to commend themselves to the minister, whether for their own sake or politically. Once a decision was taken by minister or government, however, you carried it out as loyally and efficiently as you could. That was my understanding of the function of senior civil servants but I’m afraid it has been undermined. The young men who are preoccupied about this generate deep disappointment in me by telling me that that was an old world that has vanished. In the new world, the civil servant is all the time trying to please the minister, over-conscious of what might be politically acceptable, arranging the options so that they will appeal, rather than in strict order of eligibility”]

Why would ministers want iconoclasts who could publicly dissent from the official spin line?

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