Varadkar stresses public service reforms over extra spending
Interview: Number one priority for Budget 2018 is to balance the books, says Taoiseach
Taoiseach Leo Varadkar photographed at Government Buildings, Dublin, September 17th, 2017. Photograph: Dara Mac Dónaill/The Irish Times
The Taoiseach is quoting Joe Biden, the much-loved US vice-president who visited recently.
“He used to say, ‘Don’t compare me to the Almighty - compare me to the alternative!”
Some of his more excitable TDs would take either comparison. But Leo Varadkar stresses he is going for the latter. He reckons he can do OK by it. He is nearly 100 days into the role and reckons himself to be pretty much “on top of the job”.
“Insofar as anyone can be on top of a busy job - I’m not on top of everything all the time, but I’m on top of most things most of the time,” he says,
He is in his office on Sunday morning, before he goes to Croke Park for the All-Ireland football final. The Artane band plays the Taoiseach’s salute before the minor match, so he needs to be there early. Requirements of the job.
“I’m still getting used to it,” Varadkar says. “I suppose I’m still doing a lot of things for the first time.
“I’ve done it in other ministries - you have to go through a full year of doing certain set-piece things for the first time, and that’s the ‘getting used to’ period. And then the second year, you know, you are used to it and you can adapt things the way you want to do things.”
The Dáil is back this week, and he reaches the 100 days mark on Thursday. On Monday week, he travels to London to meet British prime minister Theresa May in Downing Street. He’ll probably keep his observations about Love Actually to himself this time.
He reiterates the Government’s objections to direct rule in the North, should efforts to reform the powersharing institutions fail. But he denies there is any coolness between Dublin and London, despite public differences on the North (highly unusual) and on Brexit (probably to be expected).
“Relations are fine . . . they’re not cold. Every other day there’s contacts at senior official level,” Varadkar says.
The coming weeks in Government will be dominated by preparations for Budget 2018, the first of Varadkar’s administration. At his party’s think-in in Clonmel last week he was stressing the importance of tax cuts to the package. But today, the message is a bit different. So much for strategic communications.
While he is reluctant to engage in discussion about the budget - “I’ve asked my Ministers not to engage in too much pre-budget speculation, so I won’t make it any harder for them by doing so” - he’s not completely reluctant.
The number one priority is to balance the books - the first time in 10 years
He acknowledges the budget-day package is likely to expand somewhat, and says the previously agreed 2:1 ratio for spending increases to tax cuts probably won’t survive.
“I don’t think the 2:1 will be maintained,” Varadkar says. “The number one priority is to balance the books - the first time in 10 years, I think that’s enormously significant. And the second priority is making sure that we’re able to cover the full-year cost of improvements in public services and find more money for infrastructure. So that leaves a relatively small amount of money for tax reduction, which will be very targeted.
“Our focus in tax reductions over the coming years will be on middle-income people. We’ve already taken about 30 per cent of earners out of the tax net altogether - so those on the lowest pay now don’t pay any USC or income tax.”
Would he like to expand the number of people who don’t pay tax?
“No. No. We’ve already protected people on low incomes by removing them from USC and income tax . . . So the focus in terms of tax reduction will be on middle incomes.”
The budget will also continue measures to reduce tax on the self-employed and Dirt, he says. But it’s unlikely that any sort of tax incentives will be introduced to stimulate house building, despite the obvious crisis in housing supply.
“It would be hard to convince me that any sort of tax incentive would make a significant difference,” he says. He pooh-poohs a recent suggestion from Fianna Fáil’s Barry Cowen on cutting Vat on builders.
However, he suggests changes are on the way in the planning regulations that will make apartment construction easier and more attractive.
Between the canals
“Some of the planning regulations around apartments have made them unaffordable to build in our cities. Times have changed - lots of people want to live between the canals or in city centres. They don’t necessarily want to own a car and have south-facing and north-facing windows,” he says.
“I’ve travelled all over the world and people live well in the kind of apartments that we don’t allow people to build. So I think a change can be made there.”
The other change he expects is help for builders to get access to finance. “Perhaps we can do something about that.”
That may be through Nama. The Taoiseach floated the idea of repurposing Nama for the provision of housing at the Fine Gael think-in, but the idea didn’t seem fully formed.
“The proposal is quite well developed,” he protests. “We have been talking about it for some time.
“I saw in one of the papers there was a suggestion that Nama would build social housing. That’s not being suggested.
“The role we envisage for Nama is as an agency that could provide development finance.”
Nama is currently financing developers, but only those who are its own clients. The emerging idea is that the agency could partner with other developers who are finding bank finance hard to come by, though the plan will probably require new legislation and the approval of the European Commission. Neither is a speedy process.
In Ireland it often seems to me that the only people in the broader public service who ever have to resign or lose their jobs are politicians
One of the perennial headaches of this administration and the last one is the supervision and leadership of the country’s police force.
Varadkar lists the reforms already under way - “increased recruitment, more vehicles, investment in new buildings and IT, a new promotions system under the control of the Policing Authority, extended powers for Gsoc” - and insists that public confidence in the Garda remains high, even if official and political confidence in the leadership of the force is plainly on the floor.
Would he like to see more personal accountability among officers at all levels? “I’d like to see more personal accountability across the public service,” Varadkar says.
“In Ireland it often seems to me that the only people in the broader public service who ever have to resign or lose their jobs are politicians. So we’re the ones who are very used to individual accountability, and often take the fall for other people’s failings within our departments and the agencies that are under our aegis.
“I’d like to see us moving to something more like a British culture - where you actually see CEOs of NHS trusts resigning because of failure to meet performance targets or comparing poorly with their peers.”
He instances the chief executive of Kensington and Chelsea council resigning after the Grenfell fire.
“So it’s not something that I think should be particular to the gardaí. I’d like to see a change across the public service.”
Wouldn’t this require a huge culture shift in the public service?
“It’s not going to be easy. One part of recognising the reality of that is that there’s a difference between dismissing somebody and asking them to go or asking them to resign. So, to dismiss somebody you have to go through quite a complex legal process.
“But if somebody is asked to step down from a senior position, you do have to accept that they will still get their pension, they will still get their exit package ... To strip somebody of that is a very different thing.
Varadkar says that such a move would require a “cultural shift”, but says “it could really improve results”.
“It doesn’t necessarily mean that if you lose your position, that’s necessarily the mark of Cain on you for the rest of your life, that you’d never hold a senior position again.
“So part of the move towards greater individual accountability is an appreciation that it doesn’t mean that that person is a pariah and should never be allowed to hold office again.
“I’ve said to my Ministers - you know, if you feel, whether it’s a local authority, whether it’s in education, whether it’s in any part of the public service, that you feel that somebody needs to be asked to move on, I’ll back you in doing that. Once that starts to happen, you’ll see a change in performance.”
Is that approach especially applicable in the health service?
“One thing that’s definitely the case in the health service is that there’s huge variation in terms of performance.
“Take for example, emergency department overcrowding - there are a number of hospitals in which overcrowding is at its lowest since records began, or second-lowest. And they include places like Beaumont, Drogheda, Connolly, Cavan. And then you’ve other places where it’s never been worse - Limerick and Kilkenny.”
The health service needs to reward good performance and impose consequences for poor performance, Varadkar says.
Hospitals that are not performing well, he says, “get more resources and more attention. And that’s a cycle that I think needs to be broken.”
There is a plan for the health service, of course. An all-party Oireachtas committee has produced a 10-year blueprint for the health service, which envisages huge investment and the total separation of public and private care.
Varadkar expresses support for the principles in the report, though expresses concerns about the costs.
What would you expect from a Government department a few weeks before a budget except a pitch for money?
“They accepted at that meeting that according to their plan ... that in year one the cost would be between €1 billion and €1.3 billion. Now everyone knows and they accepted that €1.3 billion in year one is not something that the taxpayer can afford.”
The health budget is bigger than it has ever been before, he says.
“Based on 2015 OECD figures, we’re the fifth-highest spender in the EU. When the updated figures for 2017 come through I think we’ll be second. I don’t think anyone can argue that we get value for money. And the idea that the solution to the problems we face in health is more money, more staff, and more of the current style of management, really just doesn’t stand up to scrutiny,” Varadkar says.
He is dismissive of recent reports that the health budget can’t meet current demand or capital plans.
“What would you expect from a Government department a few weeks before a budget except a pitch for money?” he asks.
“But I can assure you that leaking pitches for money is not a good way to get money. It isn’t well received either in this office or the office of the Minister for Finance. So if it is a strategy, it’s definitely a counterproductive one.”