Mission accomplished?

 

The imminent departure of John Moran as secretary general of the Department of Finance is the second early resignation from a key position in the public service. Last year Matthew Elderfield, deputy governor of the Central Bank, cut short his tenure as financial regulator after 3½ years. Mr Moran, who is now leaving after serving two years of a seven-year term, has said there was “nothing sinister” in what was nevertheless a surprise resignation. He, like Mr Elderfield, helped to fix a broken banking system, and to restore Ireland’s financial standing in international markets.

In better economic times Mr Moran, a lawyer by training with a background in international banking would, most likely, never have applied for – nor indeed ever been offered - the post of secretary general. Desperate economic times, however, called for desperate measures, and the bailout terms also called for some exceptional public servants to ensure that programme targets set, were achieved. Mr Moran risked his professional reputation in taking on the job, accepting what many regarded as a poisoned chalice. By his performance in the past two years, he has greatly enhanced that reputation. And he also helped to rebuild greater public trust and confidence in the Department of Finance.

As Mr Moran told the Committee of Public Accounts last week, his decision to leave was based on Ireland’s exit from the bailout programme, and its successful return to private debt markets. By bowing out early, the outgoing secretary general has given time for his successor to be in place before next October, when the 2015 budget is introduced. As yet, however, that budget does not mark the end of austerity, despite contrary indications in some Coalition quarters. Last week the Organisation for Economic Co-Operation and Development (OECD) warned that even with a full €2 billion adjustment – via spending cuts and tax rises - Ireland would struggle to meet a budget deficit target of below 3 per cent of GDP in 2015, as agreed with the troika of international lenders.

The economic reality is that correcting the deficit by 2015 does not mark the end of austerity measures. More – albeit less onerous – acts of fiscal consolidation are required in the years ahead, both to achieve further reductions in the underlying deficit, and to ensure the level of public debt continues to move down towards 60 per cent of GDP – half the current figure. The Government, after some weeks and with great difficulty, struggled to agree the terms and conditions of a water tax for households. The budget, although five months away, has already seen more evidence of Cabinet strains, following the Minister for Social Welfare’s pre-emptive claim last week for no further welfare cuts next October - a worrying sign of weakening solidarity at a critical time.

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