Success or failure in meeting bailout targets will be crucial test of economic body
ANALYSIS:The four most senior members of the Coalition and their key staff meet on Wednesdays when, in effect, they set the Government agenda, writes STEPHEN COLLINS, Political Editor
A MAJOR innovation in the way government operates has been introduced by the Fine Gael-Labour Coalition through the establishment of the Economic Management Council (EMC).
The body, made up of the four most senior members of the Coalition and their key staff, meets at least once a week and in effect sets the Government agenda.
Senior members of the Government believe the EMC has played a vital role in helping them to deal with the massive problems they confronted on taking office.
However, some Ministers outside the inner circle of the EMC have privately expressed fears the development has concentrated too much power in the hands of a few and eroded the authority of the Cabinet.
One fundamental change arising from the EMC process is that the Department of Finance no longer has the right to bring items before Cabinet without giving notice, as all other departments are obliged to do.
This has led to some erosion of the power formerly wielded by Finance, and a corresponding increase in the power of the Taoiseach’s department. The splitting of Finance into two departments has also contributed to this process.
The members of the EMC are Taoiseach Enda Kenny, Tánaiste Eamon Gilmore, Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin.
They meet almost every Wednesday at 3.30pm and at other times when it is deemed necessary by the course of events. At times, meetings are held on Monday evenings in advance of the weekly Cabinet meeting on Tuesday morning.
The four political leaders are joined in their deliberations by the secretaries general of their respective departments – Martin Fraser from the Taoiseach’s department, David Cooney of Foreign Affairs, John Moran of Finance and Robert Watt of Public Expenditure and Reform.
Geraldine Byrne Nason, who heads the EU division in the Taoiseach’s department, also attends.
Two senior political advisers on economic issues, Andrew McDowell of Fine Gael and Colm O’Reardon of Labour, also attend the meetings.
Documents are circulated in advance of the gatherings and a record of discussions is kept by assistant secretary of the Taoiseach’s department, John Callinan.
There are a number of standard items on the agenda for the EMC. The first is the progress being made on issues arising from the EU-International Monetary Fund bailout and the Government’s efforts to amend the terms of the deal.
The second is the growth agenda and progress being made on costs, competitiveness and jobs.
The third is the ongoing efforts to restore the banking sector to health.
The overall architecture of the budget is another recurring item, as is the monitoring of the euro crisis and its impact on this country.
A range of day-to-day issues is also considered by the EMC as they arise.
These are usually referred to one of the seven Cabinet subcommittees for detailed consideration.
Government sources emphasise the EMC operates like other Cabinet committees and does not make formal decisions. Conclusions it arrives at have to be brought to the full Cabinet for approval.
However, it is impossible to underestimate the weight that naturally attaches to conclusions reached by the four most senior members of the Government. The likelihood of the rest of the Cabinet combining to frustrate proposals emerging from the EMC is remote – although individual Ministers do try and assert themselves from time to time.
The argument in favour of the EMC’s role is that the country faced such enormous problems when the Government took office in February 2011 that it needed a small core group of Ministers to make decisions quickly.
In theory, the Cabinet should be the forum for all Government decision-making, but this has never really been the case.
Political scientist Eoin O’Malley has made the point that in practice most issues are resolved before they ever get to Cabinet.
“Although Ireland has a comparatively small Cabinet, a group of up to 19 people is not suitable to decision-making, as noted by one former taoiseach,” he wrote in Governing Ireland, published earlier this year.
In previous coalitions, informal mechanisms were introduced to ensure that conflict between the parties in government did not manifest itself at cabinet level. The Labour Party introduced a programme manager system in 1992 whereby issues on which there was disagreement between the coalition parties were filtered out of cabinet, and only made it on to the agenda when problems had been ironed out.
It has also been the practice in coalitions for a meeting between the party leaders to take place in advance of cabinet to ensure contentious issues were resolved or deferred.
These precautions did not always work. The Fianna Fáil-Labour coalition collapsed because Albert Reynolds insisted on pressing a vote at cabinet on Harry Whelehan’s appointment as president of the High Court, despite Labour opposition.
The row brought down that government.
Cabinet splits also hastened the collapse of the Fianna Fáil-Green Party coalition in late 2010 and early 2011.
The establishment of the EMC was not simply undertaken to ensure Coalition cohesion. The real object was to enable swift decision-making at a time of national crisis.
“The context was the fact that Ireland was in an EU-IMF bailout programme and the euro zone itself was facing a threat to its existence,” said one Government source.
“Constant surveillance and political discussion was required. We needed to know who was talking to who and what precisely we were looking for at every stage in the talks with the EU. No other Cabinet committee could have dealt with these issues.”
While the EMC normally meets with departmental officials present, there are times when only the politicians meet. On rare occasions meetings only involve the Taoiseach and Tánaiste.
For instance, on the weekend before the budget last December, Kenny and Gilmore are reputed to have made a number of significant changes designed to minimise the negative political impact of the measure.
This year it may not be so easy to make last-minute changes, as options for meeting the EU-IMF targets are narrowing all the time.
Ultimately, the success or failure of the Coalition in meeting the bailout targets and exiting from the EU-IMF programme by the time of the next election will be the test of the new structure. The restoration of economic sovereignty by 2016 would be a vindication of the decision to establish the EMC.
Council members who's who
The Taoiseach is the key figure in the Government and the Economic Management Council has allowed him and his department to have an involvement in economic policy at an earlier stage than his predecessors. The success of the EMC is crucial if he is to deliver on the commitment to restore the State’s economic sovereignty by 2016.
As Minister for Foreign Affairs, Gilmore has little influence over the course of Government economic policy but his role in the EMC allows him to have a direct input into key decisions. Through the EMC he has been able to defend the Croke Park agreement as a Labour priority.
The EMC has eroded the pivotal role of the Minister for Finance as the driver of Government economic policy. But Noonan’s vast political experience has enabled him to keep control over the direction of economic policy and, in particular, to ensure that meeting the EU-IMF targets remains the priority.
Responsibility for public expenditure and reform has given Howlin a key role in Government. It has ensured that decisions affecting the public service cannot be taken without Labour agreement but it also means the party is tied into a process which it might otherwise have opposed.
Four of the five top civil servants who attend EMC meetings are new to their jobs and have been appointed since the Coalition took office in 2011.
Appointed secretary general of the Department of the Taoiseach by Enda Kenny a year ago at the age of 41. It was a sudden rise to prominence for a civil servant who had lived in the shadow of Dermot McCarthy, who headed the department for more than a decade. A Dubliner, Fraser has his predecessor’s emollient style and gets on well with colleagues. On his appointment one of them summed up his style as follows: “He is not afraid to proffer his own opinion but is mindful of his role: to advise, not to prescribe.”
The secretary general of the Department of Finance is an unusual civil servant, having spent most of his working life in the private sector. Moran, who is also in his 40s, was chief executive and a board member of Zurich Capital Markets for several years before taking time out to run two juice bars in the south of France. He returned to Ireland in 2010 to work in the Central Bank and moved over to the Department of Finance to head the banking division. He was responsible for the successful restructuring of the Irish banks in 2011. A native of Limerick, Moran has brought a new style to the top job in the Department of Finance, giving media interviews and entering public debate.
Another new-style mandarin in his early 40s, Watt, a Dubliner, started his career in the Civil Service but left for a few years to try his hand in the private sector with Indecon Economic Consultants before returning to the Department of Finance as assistant secretary while Brian Lenihan was minister. On the creation of the Department of Public Expenditure and Reform, he was appointed its first secretary general and has worked closely with Brendan Howlin on the implementation of the Croke Park agreement.
The only regular at EMC meetings who had a senior post during the term of the previous government. An experienced diplomat, Cooney was appointed secretary general of the Department of Foreign Affairs in 2009 having served as ambassador to London and the UN. Born and raised in London of Irish parents, Cooney opted for the Irish Civil Service after graduating from Keele University. He played a key role in Anglo-Irish relations during the talks leading to the Belfast Agreement and was described by George Mitchell as one of the “unsung heroes of the peace process”. He is also ambassador to the Vatican based in Dublin.
Geraldine Byrne Nason
The only woman who participates in EMC meetings, Byrne Nason is second secretary general in the Taoiseach’s department, where she has responsibility for the EU affairs division and the office of the Tánaiste. The establishment of the EU division in the Taoiseach’s department, which involved the transfer of the unit from Foreign Affairs, was another innovation of the Coalition. Byrne Nason has a crucial role in the EMC given the importance of EU affairs to the State’s future. A career diplomat, she was deputy head of the Irish permanent representation in Brussels before being promoted to her current position last year.
The economic adviser to the Taoiseach was director of policy with Fine Gael in opposition. An economist, he worked with Forfás before taking up his position with the party. He is a cousin of Michael McDowell.
Like his Fine Gael counterpart, O’Reardon is an economist and was central to Labour’s policy formation while in opposition. He undertook a doctorate at Oxford University on an ESRI fellowship before returning to Ireland to work as an economist at the National Economic and Social Council. He was appointed director of policy with the Labour Party in 2002. He is a brother of Dublin Labour TD Aodhán Ó Ríordáin.