A Modest Proposal

Cross-posted from the European tribune

The Irish Government’s popularity rating has sunk to unprecedented depths in recent weeks due to a number of crazy cutback decisions. First, there was the attempt to cut Medical Cards (entitlement to fee public heath care) from over 70 year olds, then there was the decision not to go ahead with the provision of anti-Cervical cancer injections for 12 year old girls – a decision certain to increase mortality from Cancer. Average class sizes in Irish schools, already amongst the highest in Europe, are to be increased. Special provision for immigrant or special needs students is to be cut. A huge number of charitable and advocacy groups are to have their budgets slashed, their doors closed, or their operations absorbed into an inert Civil Service.

All of this is happening because a huge “black hole” has appeared in the Government’s finances chiefly because of the end of the building boom – with its huge stamp duty and VAT revenue windfalls – and a collapse of corporate profitability and consumer expenditure – expenditure which had largely been funded by an explosion in private debt.

On the cost side, social welfare payments are spiraling as unemployment rises at an unprecedented rate.  Meanwhile the cost of living is going through the roof because of increases in Student registration fees (50%), road toll charges (50%), utility bills and private health insurance.  And whilst all this is happening, the EU Commission, living in another world, is proposing to sanction Ireland for a prospective breach in our public sector deficit obligations under the The Stability and Growth Pact.

So what is to be done?
Well it would be facile to pretend there is any easy solution.  Years of building up a very highly paid and grossly inefficient public service cannot be reversed overnight. Ireland is now a four class society:

1. A very small ultra wealthy elite who control much of Irish business but who have globalised their operations (and sometimes their tax domicile) and who are almost beyond all democratic control because they can simply shift many of their assets elsewhere if their interests in Ireland are threatened.
2. A large class of public servants with guaranteed job security, much higher than average pay rates, and pensions to die for – linked to final salary and linked not just to inflation, but to all pay and productivity increases achieved by their still working colleagues.  These salaries (and related pensions) have been bloated in recent years by the payment of almost entirely fictitious “productivity” payments allegedly “benchmarked” against private sector salaries, but in reality cherry picking the highest private sector salaries during a boom period and not talking any account of productivity at all.
3. A Large class of private sector employees, some of whom were very well paid indeed during the boom years, but the majority earning much less than public sector workers and having almost no job security or pension provision by comparison.  These are the people now losing their jobs in huge numbers, becoming at risk of defaulting on their mortgages (Ireland has the highest rate of home ownership in Europe) and with only very inadequate public housing, health care, and social welfare to fall back on.
4. A now rapidly expanding class of people who were always bypassed by the Celtic Tiger – the old, rural small farmers, unemployed, single mothers, some ethnic minorities, drug users, the ill – and who were always inadequately provided for and are now bearing the brunt of Government cutbacks.

The political trick the public sector class have managed to pull off over the years is to pretend to be the protectors of class 4, and to conflate classes 1. and 3. in order to pretend that the private sector (as a whole) did much better during the boom years, to demand parity with the best of the private sector workers, and to ignore the fact that there was never any parity whatsoever in terms of the relative productivity, flexibility, job security, and pension provision between the public and private sectors.  

Many public sector jobs could be cut, their often meager functions abolished, restructured, automated or transferred to others with almost no impact on the public good at all.  But such cutbacks are always the last to be made, because such cutbacks would impact on the power base of the Civil Service and the public sector unions, whose symbiotic alliance represents the real power in the land, beyond all public or democratic control or accountability.

Many public sector workers (and certainly their Unions) espouse this state of affairs as socialism – contrasting their salaried status with the ultra wealthy of class 1, and conveniently ignoring the realities of the vast majority in classes 3 and 4. None of this seemed to matter much during the boom years when many in class 3 were indeed doing very well in cash terms – always forgetting that there was never any parity in job security and pensions – and that those in class 4 were, if anything, more marginalized than ever by the wealth the Celtic Tiger brought to the majority.

With unemployment going down throughout the 1990’s and early 2000’s and with nominal increases in social welfare and other forms of social provision, it could indeed be argued that the public service, who manned a maze of quangos and public advocacy groups – were the protectors of class 4.  But it is these services which are now being cut back, as the public service class draws up the drawbridges around their castle walls, totally insulated from the insecurity, unemployment, and reduced living standards rampant all around by their recently negotiated pay increases, their guaranteed jobs and pensions, and totally inured of any requirement to actually produce increased value for money for their services.

And that is the nub of the problem I am trying to address in this diary.  It is not as if there aren’t many thousands of excellent civil servants, doing a very conscientious job, and who do provide good value for money to the taxpayers and general citizens and inhabitants of Ireland.  The problem is their is no structural incentive for them to do so, and every incentive not to.

The presiding culture of the Irish Civil service has been to try to increase their budgets, manning levels, and policy reach – in competition with other departments and the private sector – and no incentive whatsoever to improve the productivity by which those services are provided.  Indeed I have known senior civil service officials to refuse to countenance productivity improvements because they would undermine their case for increased budgets and staffing levels.

Anyone reading this diary would be forgiven for thinking that Ireland had been governed by Socialist parties for the past 30 years.  Nothing could be further from the truth.  Most Governments espoused the virtues of the private sector.  Unfortunately they showed a singular ineptness in managing both the public and private sectors – such that some private sector companies managed to make windfall profits by cherry picking lucrative contracts in the public domain – and their Civil Servants always managed to ensure that anything a conscientious Government Minister sought to do for (say) class 4 came at great cost in terms of increased public sector bureaucracy.

Ultimately this diary isn’t about public versus private at all, because both can be spectacularly well and badly run.  It is about a complete failure of management per se, of ensuring that given objectives are achieved in the most efficient manner possible, and that the means by which they are achieved are subject to ongoing review, continuous improvement, and cost reduction as new organizational structures, technologies and evidence based improvements in working outcomes are introduced.

I don’t have a problem with a highly paid and well reward public sector provided they also deliver commensurate benefits to the common good.  But this has not been happening in Ireland.  Sometimes the rapaciousness of some sections of the private sector has been matched only by the inertia, cynicism, capriciousness and self serving self absorption which has flourished in so much of the public services.  Indeed one has often facilitated the other.

Many reasoned voices will chaff at the lack of evidence I have produced in support of this thesis.  They will ask for evidence for lack of flexibility and productivity in the public service.  For some it is counter-intuitive to suggest that this might be so – just as it is deemed axiomatic that the private sector will be greedy and self serving.  However disallowing all scrutiny of efficiency and service levels, all accountability for decision making and bad outcomes, and all measures of value for money is what the Irish Civil Service has excelled in.

Sometimes the market can impose disciplines on the private sector that are absent in the public sector.  Some inefficient firms do lose market share and go to the wall unless they can exploit some uneven playing pitch such as preferential regulatory treatment.  However there has been no effective discipline on the public sector at all.  Our politicians are predominantly lawyers, publicans, school teachers, even sportsmen.  Worthy public figures (almost) all.  But what they have in common is almost no expertise in running truly large scale organizations at all.

Because of the doctrine of public accountability, a Minister is (allegedly) held to account for virtually everything that happens in his Department, – even things he was never told about.  It is thus easy for senior civil servants to threaten to sabotage a political career by leaking unfortunate occurrences within a Department.  In practice this rarely happens.  Ministers are quickly house trained into a mentality of “you scratch my back and I’ll scratch yours”.  Almost none have ever attempted to dramatically reorganise a department.  None have an expertise in the dynamics of organisational change, and the combination of long term benefits allied to short term trauma such change can often bring is anathema to the short term quick fix culture and reality of political life.

So what we have in Ireland is as much a crisis of our Democracy, as it is a crises in our economy.  There has been a failure of political management of the public sector as great as the market failure to manage the excesses of global financial management.  In each case the self-interests of those in power have trumped the larger interests of all market participants and citizens.  Both elites – the global financial elites – and the local administrative elites – have managed to put their interests above those they are allegedly pledged to serve.

Political constitutions – and market regulations – are supposed to be there to create more even playing fields and to ensure that those entrusted with managing the systems do not exploit their positions for personal political, professional, or economic gain.  Our political systems have failed not only to regulate the markets, but to regulate the bureaucracies which are supposed to be there for the common good.  We have been done by both our private financial elites and by our public administrative elites.  Too often they seem to act in cahoots.

The problem I have with much “progressive discourse” is that it very accurately chronicles the depredations of Capitalism whilst being blind to the total inadequacy of our political systems to manage effectively those resources already entrusted to the public domain.  Left Right political discourse is stuck in a rut of Public versus Private ownership debate whereas the reality is that both public and private elites have managed both public and private organisations in their own interests.

Government and public administration has become too complex for the average citizen – and many politicians – to comprehend.  We need a new discourse which challenges the efficacy of all resource utilization on our planet – whether public or private – and better systems of qualitative and quantitative measurement, process improvement, transparency and accountability.  Otherwise Left-Right discourse becomes degraded to two elites jockeying for advantage and ordinary people are exploited no matter whether the nominal Left or Right are in power.

So what are the principles of public administration which could improve this situation?

1. All Public Servants should be accountable for  their budgets and are are required to issue comparable and auditable statistics on their quality and quantity of services provided compared to comparable service providers elsewhere within the state and other reference EU states.  This could start at the highest levels of organistions, and gradually move down to individual units with a budget of (say) greater than €1 M.
2. Each Public service to produce annual plans on how it will improve the quality/quantity/value for money of existing services and any additional services it proposes to provide.  This should include the cost reductions it proposes to achieve where no increased, additional or changed services have been mandated.
3. Such service plans to include an audited (where required) account of the degree to which the previous plan was achieved.
4. All service plans and progress reports to be available publicly on the Government website for each budget heading and sub heading in a standard format and with comparable and historical charts of progress in comparison over time and with respect to reference groups in other nominated EU or best practice jurisdictions.

In practice, independent, commercial and community groups in receipt of public funding have to do much of the above already.  The stark innovation here is to apply the same disciplines to the Public Service itself. Don’t hold your breath.  Direct accountability cuts to the very heart of the public service empires which have emerged.  Measurability and comparability will be resisted tooth and nail – on the grounds that some things can’t be measured.  Inputs and outputs can, actions and there consequences must be, otherwise there is no guarantee that private agendas will take precedence over the public one.

It’s time Public servants were mandated to serve the public again, and became directly accountable to the public for the services provided.  This may sound so simple and obvious as to not need stating.  In practice it would represent a revolutionary change.