Introduction
In this short overview we draw attention to the key aspects of the new Programme for Government and reflect on the impact which the EU/ECB/IMF Agreement is having on shaping the broad policy environment in Ireland. We will look at some of the key points in the two Political Manifestos published by the parties in the new government. We will reflect on their impact on the Programme for Government which is central to policy development at both local and national level. The article will also provide an overview of the re-structuring objectives in the programme and how these apply to public bodies generally and how they might impact on local governance arrangements in the State.
Overview of Party Manifestos
One of the features of the two Government parties in opposition was that they put a considerable effort into developing their ideas across virtually every aspect of the policy spectrum which would confront them on becoming a part of government. For this reason, the two parties had built up a considerable set of policy priorities which they embedded into their respective political manifestos prior to the general election. Some of their ideas were subject to detailed scrutiny by both local and national media but other aspects of their political planning received limited if any public scrutiny. Nonetheless, in trying to understand the purpose and intent of the two parties and what is now in the Programme for Government it is important to appreciate the depth of thinking both parties showed in the run-up to the election. Whether, of course, this thinking can be seen as truly valid against the backdrop of the severe economic pressures confronting the last government is something which, no doubt, historians will debate but it is important to acknowledge that across all three main parties in the State there would have been broad consensus on many of the challenges confronting the country. The importance of this was not lost on our international partners, most notably those negotiating from the international side, the support package which is currently underpinning the Country.
Overall, the two manifestos did highlight an ambitious set of policy objectives among which include:
Constitutional Reform and Legislature/Executive Re-structuring
Clearly flagged up was the need to make a radical adjustment to the way the State is organized. This included, among others, abolishing the Seanad, re-orientation of Oireachtas oversight, over sight of state spending and the necessary accountability which comes with such arrangements, provision for further constitutional obligations on the State in regard to social issues, the rights of children etc. The effect, if fully applied within a process underpinned by a constitutional convention, would result in a much changed constitutional environment for all public services at all levels of government. There would be considerable enhancement of citizen based rights, democratic overview and a re-balancing of the relationship between, what is seen by both manifestos as, a hugely unbalanced relationship between Parliament and Government. Equally, we would see considerable delegation of responsibilities and accountability to individuals who would be clearly identified as holding responsibility for the implementation of policy and delivery of public services.
Public Sector Re-structuring and reduction of public agencies
There is no doubt that some of the most critical aspects of both manifestos may be found in their respective examinations of how the public service in Ireland is organized. Notwithstanding various reform efforts by the outgoing government it is clear that there was considerable dissatisfaction with the range and nature of the public service in Ireland. Regardless of the basis for such dissatisfaction the two parties reflect this and make more than several proposals regarding the organisation of the public service.
Clearer accountability and transparency in how government works was a central theme in both manifestos. This reflects a real sense in both parties that decision-making generally had become opaque and confusing for the public. In addition, the frustrations of having been excluded from the policy environment for over a decade was reflected in the demand for increased participation on the part of the national and local democratic process. This is demonstrated in both manifestos having clearly thought out demands on democratic reform. Perhaps, even more fundamentally, both sought in detail, to seek greater local democracy in the form of local elected mayors and councillors with real powers rather than the existing situation where councillors had become local ombudsmen with limited scope for real influence. Equally, the empowerment of a newly energized Dáil Éireann would be underpinned by a radical re-focusing of public administration and a de-layering of public bodies. This would arise through a programme suggested by both, of merger, re-orientation or just plain shut-down of both local and national bodies, something which the outgoing government had been unable to deliver.
The proposed reduction in bodies and agencies, would, it was argued by both parties, lead to significant efficiencies. These, over time, would generate considerable reductions in public service costs. There would also be a minimal impact on the range and quality of coalface services. In turn, the reduction of the number of bodies and agencies would allow for greater accountability for individual public servants, as managers in a newly re-configured public service.
Overview of the Programme for Government
The above thinking did allow both parties to relatively quickly bring together their ideas in the form of the new Programme for Government. In fact, in some respects, the speed at which the two sets of political objectives were brought together suggests some inconsistencies in the Programme. These will, no doubt, be ironed out and considered in greater detail as the government is more fully embedded in the coming months. Notwithstanding the prospect of inconsistency, the Programme clearly sets forth the political agenda for the coming 3-5 years and does provide some perspective on the longer-term, which arguably was missing towards the later part of the out-going government. In the overall strategic context however, it is clear that many of the decisions taken by the outgoing government were broadly accepted by the new government. Most particularly, this would be the case in the approach taken in relation to the Troika Agreement and the management of the banking crisis. Notwithstanding the “nuanced” perspectives of the political campaign, the new government essentially accepted the principal components of the Agreement and is recognised for having taken its implementation forward with some speed in contraste to other countries. The broad commitment to the support package and the achievement of its targets, particularly by 2015/16 is seen as critical to regaining economic sovereignty before a clearly, historically, significant deadline.
From a public service reform perspective, of equal significance is the commitment to introduce a comprehensive spending review process on a whole of government basis. One of the defining characteristics of the management of public expenditure in Ireland, and in fairness, in many other public sectors across the globe, is the on-going nature of such spending in the absence of genuine review in policy terms, of the validity of such expenditure. Put simply, once a spending programme gets off the ground it can be almost impossible to bring it to a conclusion when the original policy driver is no longer relevant. This can and does lead to situations where public spending might not reflect the policy priorities of a government. In an effort to try to align government priorities (and frankly those of the Troika!) the new government has commenced a comprehensive spending review (CSR) which will seek to place all aspects of public expenditure within a policy regime which is driven by the objectives of the Agreement and the priorities of the Government. The model for the CSR is based upon a similar process which is now a central feature of the budgeting process in Canada and to a more limited extent in other European Countries. The key point to understand here is that if a spending programme falls outside of the policy priorities agreed with the Troika and within the Programme for Government it will be cut, with limited regard for local priorities or indeed the individual corporate priorities of government agencies which at times do not necessarily fit with those of government.
In Canada the process has led to considerable, if very painful, savings which have allowed it to come through the recent international recession with little obvious, negative effect. The necessary re-structuring of services ranging from health to education, defense and transport have been considerable in Canada, even with the benefit of the increasing demand for its primary resources such as oil, gas and metals. In the Irish case, underpinned by the economic and financial challenges confronting the exchequer, there must be no doubt on anybody’s part, that if as intended, the CSR process is fully applied, the public sector will be fundamentally different from what we have become accustomed to over the past decade. This will bring with it considerable political challenges and will mean that there are many organisations and other institutional arrangements, local and national, which will not survive the CSR process.
Change of this order will require a considerable re-focusing of local priorities to fit with national policy obligations and necessary targets. It is critical therefore, that a more integrated whole of government approach is taken and it is clear that the establishment of the Department of Public Expenditure and Reform will be central to this process. Given this, a necessary feature of change has to be the establishment of an integrated decision-making structure at national level, something which many commentators on joined up government and the local government sector have called for on an on-going basis for several years.
Labour Market Policy
One of the criticisms of international commentary on the Irish economy of the past decade has been concerned with the passive nature of our labour market policy. It comes as no surprise therefore that a central feature of the New Programme and indeed that of the Troika Agreement, is that a revitalization of our labour market policies has to be central to addressing our appalling unemployment and emigration. This is clearly recognized in the new programme and the government has begun to give effect to pro-active labour market policies through the recently announced Jobs Initiative and “JobBridge” the internship programme. In overall terms, the re-orientation of labour policy will see the provision of some 60,000 additional places for the unemployed along with a range of initiatives to increase access to further higher level education. More significantly, is the intention to move towards a mainstream European approach to addressing the needs of both employed and unemployed by way of active case management of those in need of re-training or re-entry to the labour force. One of the more constant criticisms of previous labour policy in Ireland was that it was primarily based on benefits provision rather than on an active engagement with the long-term career development needs of the Irish labour force. The effect of what was essentially a passive support regime through benefits was that as the recession hit the economy the labour force, principally those in construction did not have the skills or the necessary career supports to meet the on-coming tsunami. In other mainland European countries a different model of labour policy has applied resulting in a reduced labour force impact and the continuation of greater flexibility in meeting the changes coming with the recession. A key aspect of taking a career based approach to labour force policy will see the merger of all employment and benefit support services within a single delivery unit managed by the Department for Social Protection.
This in effect will see FÁS re-configured into a new national employment and entitlements service focused on the need to have a flexible labour force with the range of skill based development necessary for all in the labour force to meet the challenges of a SMART Economy. This will be a huge ask in terms of reform and re-structuring but frankly given the limited impact previous national policies had on meeting the challenges of the past 5 years there is really very limited choice but to move in this direction.
Reforming the State Bodies
While much of the focus of the media in recent months has been (for good reason) on the nature of compensation packages for senior management across the public service there is a much bigger picture when it comes to reform of the public bodies operating in Ireland. In general, and as previously identified by the OECD and others, there has been limited overview by successive governments of the role and purpose of both commercial and non commercial state bodies. Under the programme for government it is envisaged that the operational, and legislative environment for such bodies will be changed considerably. In addition to normal shareholder overview the Oireachtas will receive greater powers of review. In addition, we will see significant re-structuring of some state bodies to bring together strategic assets under the direct supervision of a new holding company “NewEra”. This could allow for the off-loading of non-strategic assets by way of privatization and contracting out. It is envisaged that such moves will allow for the raising of limited capital funds which could be used to lever international investment in water supply, energy and communications, areas which require further significant investment and which are central to the long-term sustainability of the Irish economy. The process will underpin a new National Investment Strategy due for publication in September following completion of a capital needs analysis currently underway. The existing priorities in the Jobs Initiative will support relatively short term employment gain though local construction activities among others. The new investment programme is however, most likely to focus in on long term investment such as creating greater energy independence, providing better water infrastructure as well as the completion of a limited number of critical transport infrastructure projects.
A further aspect of the re-structuring of the public bodies will see a significant level of mergers. In some instances, there are public bodies which have corporate objectives which do not complement those of the government. These could be expected to be closed down. Alternatively, they will have to develop funding lines which are not dependent upon exchequer resourcing. In this context, the immediate implementation of many of the recommendations in the Local Government Efficiency Review can be expected in the next budget. It is also likely that, as a result of the comprehensive spending review, many other public bodies (or those dependant on state funding) will go out of business. These changes are driven by a simple financial reality i.e. that as part of the Troika Agreement Ireland will get its budgetary position back into shape by 2015/16. This means, in broad terms, moving our expected 2011 general government balance from a negative 15.7 billion euro to a (still) negative 5 billions euro in 2015, a saving in the order of 10 billion euro.
Public Sector Reform
One of the more significant differences between the Irish public sector and other such sectors across the OECD is the degree to which public service organisation is disaggregated. The system can, as a result, be difficult for citizens to understand. Who is accountability and where responsibility rests is difficult to recognise. We have, therefore, a model of governance which is high on ambiguity. This is recognised in the programme and efforts to confront this model of disaggregated ambiguity are highlighted as central features in the programme. These include:
• The introduction of concrete mechanisms to improve performance, using a range of external standards and benchmarks, and to deal with persistent under-performance.
• Devolution of accountability/responsibilities to individual public servants
• Employment of new personnel from outside the current system, particularly experts in change management
• Providing citizens with a basic right to key information on the performance of key services
These changes are fundamental to improving a general understanding of how the public service works and its value (which is considerable) to the general population and future of the economy. It also, if it is to work, will mean among other implications the wiping away of inconsistent work patterns, poor supervision and inadequate management practices. There will be the challenge of applying greater resource accountability and transparency in the public service. Decision-making which is based on clear definition of policy and outcomes/outputs to measure and evaluate will be required delivery across all levels of public management. Increasingly we are likely to see a more integrated and unified public service rather than moves towards greater devolution. In this we are moving towards, (with apologies to EU Commission Rehn!), “a more normal public service system”.
The thinking required to design the systems to make the above happen is hugely challenging and it will call upon levels of capability and capacity which previous public service reform efforts failed to identify and apply. Nevertheless, if Ireland is to move towards a balanced financial environment there is no choice. The Government has to deliver better value in order to reduce the deficit and protect frontline services at a level never previously attempted in the history of the State. It will be a huge ask against the backdrop of the Croke Park Agreement, with no compulsory redundancies and the protection of front line services, alongside a reduction of between 18,000 and 21,000 public service employees by 2014, compared to the total number at the end of 2010. A further reduction in numbers (by 4,000) by 2015 are also envisaged.
Summary
The challenges confronting the incoming government have no historical parallel anywhere in the OECD. While Sweden and other countries did have to sustain broadly similar levels of re-structuring in their banks, public services, taxes and deficits, they did not have to do so with all these factors impacting at the same time as is the case for the Irish State. In addition, they had the benefit of considerable growth in the international economy whilst undertaking their re-structuring, something which could be problematic in the next couple of years, given current trends on debt in China and the other BRICS. Our own main markets in the OECD are also likely to be similarly challenged in light of their on-going problems with levels of debt.
Nonetheless, the Irish government has limited choice but to advance the programme of reform and to hope that, in the event of other major economic shifts in the international market place, the country is better insulated than has been the case in the past three years.
