Civil Service economics body poised to fill a crucial gap

ECONOMICS: 'NOTHING IS possible without men; nothing is lasting without institutions." So said the 20th century's institution-builder par excellence Jean Monnet.

The right people and the right structures are needed to make things happen, and to ensure that the right things continue to happen. That is as true of managing the smallest organisation as it is of managing an economy.

This week the sister departments of Finance and Public Expenditure and Reform both made big changes. The former announced its new top man; the latter unveiled its newest institution. Both are to be welcomed.

At Finance, John Moran has taken over as bureaucrat-in-chief from the hapless Kevin Cardiff. That amounts to a major change. Just one year ago Michael Noonan brought Moran into the department to provide know-how on financial crisis management and to help end the plodding and dithering on dealing with the banks.

Until very recently it would have been almost unthinkable for someone not pickled in the culture of the Department of Finance to be appointed to what has traditionally been the most powerful position in the Civil Service.

It would have been utterly inconceivable that the job would have gone to someone who just two years ago was running his own small business in France (after having left a career in the financial services industry five years earlier).

That someone as exotic as Moran is now running the Merrion Street show is a sign of a Government prepared to do things differently.

If an outsider at the helm of Finance can help squeeze inertia out of the system and add momentum to the much-needed reform process, better institutions are needed to design and implement reform and ensure that changes – and the habit of embracing change – become embedded.

The creation of a new Irish Government Economic and Evaluation Service – announced with no fanfare by the not usually timid Brendan Howlin on Tuesday – is a potentially very important innovation. If it works well it can play a central role in improving the effectiveness of the core of the policy-making and implementation machine. That is very much needed.

The Irish bureaucratic system, like so much of the infrastructure of State, was inherited from Britain.

Because of a strong anti-reform bias, it still looks more like Whitehall in the middle of the last century in many respects – from recruitment to the championing of the generalist, to the frequent amateurishness of policy-making and the siloisation of departments.

A country could get away with doing things like this in the past. At independence, and for some time thereafter, the role of the State remained, by and large, that of a night watchman. It did far less than it does today and the world moved at a much slower pace.

Now the State is a hyperactive, high-spending behemoth, engaged in a mind-boggling number of activities – from services provision and regulation of complex industries, to never-ending tinkering with the tax system and the design and rollout infrastructure, and much more besides. All of this takes place as the pace of change is endlessly accelerating and in an environment which is hugely influenced by developments at EU level and globally.

Doing all that a modern developed state does in such an environment is hugely challenging. It requires a great deal of hard thinking, knowledge of a vast evidence base and a capacity to identify quickly what works and what doesn’t.

The new economics and evaluation service is designed to carry out these functions, and in the process address many of the system’s institutional deficiencies.

A core of expertise with cross-cutting knowledge and a strong evaluation capability can bring more intelligent design into the policy-making process and improve implementation by identifying problems and proposing fixes.

But it won’t be easy. Both Ministers and bureaucrats are ever alert to what they can see as encroachment by other departments.

The new economics service will be viewed by some as a threat – Public Expenditure and Reform people could easily be perceived as poking their noses into the business of other departments.

Persuading them that the new service is not a threat but a resource will be key.

The choice of who heads the unit will be hugely important in doing that, and much else besides, including defining its role and shaping its institutional culture.

The rank given to the unit’s boss will also be important.

If its head is not immediately below secretary-general level those who see it as threat will more easily be able to ignore it. The decision has yet to be made.

It is a space to be watched closely.