ANALYSIS:While Ireland's State sector compares well internationally, an OECD report makes valid points, writes JOHN CULLEN
THE PUBLIC sector employs more than 360,000 people. It is responsible for one euro in three spent in the Irish economy. It sets the policy environment for economic and social development, and it provides a wide range of essential services. Any major report on the health of that system should therefore demand our attention.
The OECD report, published yesterday, is a major international review of the Irish public service and is the culmination of two years of work. The report advocates an approach to reform of the public service which is more coherent than the somewhat disjointed approach it sees as having been taken to date. It envisages a more integrated public service, with extensive mobility between the various parts, managed strategically from the centre, but in a way which eschews detailed ex ante input controls in favour of managing performance and results.
This implies a greater degree of delegation from the centre to government departments and agencies, and even devolution of greater powers to local government. But the report points to the absence of performance metrics as something that will inhibit effective performance management. The concentration on resourcing front-line services in the past has resulted in a lack of capacity in important areas such as policy evaluation, development of policy measures and management of performance.
Finally, the report calls for a citizen-centred approach with seamless services provided on a whole-of-government basis. The OECD report has echoes of an Institute of Public Administration (IPA) publication, Ireland 2022: Towards 100 Years of Self-Government. This analysis, published last November, attempted to look forward to what kind of Ireland we will have in 2022, and what kind of public service we will need. These two works will be the frame of reference for the next phase of public service reform. So what are they telling us, and how is the Government to take things forward?
For a start, both reports agree that our public service stands up well by international standards, despite the fact that we are very much at the lower end of the international spectrum of developed countries in terms of spending on public services.
It is generally acknowledged from international research carried out by the IPA that the most advanced public services are those of the Nordic countries, but those countries typically spend considerably more on public services and are prepared to accept the consequences in terms of high burden and rates of taxation.
Ireland has quite consciously chosen a different path in taxation policy, but yet produces a creditable performance from its public service. So there is a good starting point. But improvement is necessary, and these reports point to areas needing to be addressed.
Both reports point to the need to get the machinery of government as a whole operating off the same hymn sheet. Modern government is a complex business, with much linkage required between the various services for successful outcomes. Yet, services are inevitably designed around the organisational structure of the public sector - 15 Government departments, the local government system, the Health Service Executive, An Garda Síochána, and well in excess of 500 State agencies.
Problems the public service seeks to address do not neatly respect these organisational boundaries, particularly in the social policy area. For example, an effective public service response to the needs of a family with deep problems almost certainly will have education, Garda, welfare, health and housing dimensions. But all of these services are provided by a multiplicity of agencies scattered across different layers of government, with little financial or accountability incentive to collaborate.
This is not uniquely an Irish problem: every country struggles to deal with cross-agency issues. Those with well-developed local government systems manage better.
The solution to this problem may require some redistribution of functions, a definite change in the way we allocate public money so as to create incentives to co-operate, and a better way of holding to account based on desirable outcomes for social and other policies. And the OECD report's suggestion for a unified labour market and improved mobility across the public service will be a help to breaking down institutional barriers.
The performance of the public service looms large in both reports. The OECD analysis in particular, while acknowledging significant progress in improving reporting on performance (particularly in the local government area), points to the lack of metrics in measuring performance and productivity.
The lack generally of objective measures of performance leaves the public service vulnerable to being judged by populist criticism of whatever might be its latest blunder. But measuring public service productivity and performance has proved elusive internationally due to the absence in most cases of market mechanisms.
We know intuitively that productivity in the Revenue Commissioners has improved dramatically. Tax and duty yield has grown rapidly: gross collection is now far in excess of four times the 1990 figure; tax arrears are at an all-time low and among the best internationally; and special investigations have yielded more than €2 billion to the exchequer in recent years, while the customer and business base has increased dramatically.
For example, the number of pay-as-you-earn employees has grown by almost 60 per cent in the last decade. And all of this has been managed against a background of broadly static resources. But how do you measure improvement in the quality of the service? And if it is difficult to do so in a service-driven organisation such as Revenue, how much more difficult is it to measure performance and productivity in Government departments, most of which are concerned with policy development?
It is easy to acknowledge - as many of our neighbours envious of our performance do - that as the Irish economy has been performing so well over the past 15 years, it must have a capable public service creating the right policy environment. But the public will rightly demand that performance in return for investment of taxpayers' money will be openly and transparently measured. This is a significant challenge for the public service.
So what are the next steps for the Government? The scale of the task should not be underestimated. Many of the recommendations of the OECD report in particular involve strengthening the capacity of the public service in several important respects. In particular, it points to underinvestment in the strategic thinking and human relations capacity of the system, and to the need to develop a greater evaluative culture. This comes at a price.
A fundamental consideration for the Government - and the Irish people therefore - is whether it is prepared to allow a greater proportion of taxpayers' money to be devoted to public services. The timing of the OECD report is hardly auspicious in this respect.
The report seeks a more strategic and less control-orientated approach from the centre to those at the front line. In the more straitened circumstances we are now entering, a control approach is the more natural tendency on the part of the centre.
On the positive side, there is now evidence of real political engagement with reform of the public service - an essential ingredient if the process is to be driven forward, and if all sides of the public sector and public sector unions are to buy into this ambitious agenda.
If there is one single message to be taken from the OECD report (and the Ireland 2022 publication), it is that the whole public service machine has to operate in an integrated way.
This presents a challenge to the leaders of the public service and, at the same time, a paradox. How will they create a unified public service with barriers to mobility eliminated, with career planning and reallocation of resources across the whole sector, all aimed at providing seamless planning and delivery of public services? And to do all this in a spirit of "letting go", of minimising control in favour of empowering, incentivising and trusting managers not at the centre. This is indeed the challenge.
John Cullen is director general of the Institute of Public Administration