Pat Leahy: Varadkar’s reshuffle may lead to his first mistakes

Merging the Departments of Finance and Public Expenditure could be the wrong move

Leo Varadkar with current Minister for Public Expenditure and Reform Paschal Donohoe. Photograph: Sam Boal/RollingNews.ie

Leo Varadkar with current Minister for Public Expenditure and Reform Paschal Donohoe. Photograph: Sam Boal/RollingNews.ie

 

Nothing demonstrates the gap between the political bubble around Leinster House and the public at large more than when a cabinet reshuffle looms.

Those of us who watch politics professionally love it when this time comes round. Days of endless, fact-free, unprovable speculation. A constant stream of who’s-up, who’s-down, who’s-in, who’s-out rumour and gossip.

Every throwaway comment, every shrug by those who might be in the know (but usually aren’t) is endlessly dissected, every statement scanned for a telling nuance.

Varadkar’s opportunity is to use next week’s reshuffle to demonstrate change, rejuvenation, forward momentum

Politicians are by nature disposed to prioritise their own employment. This is not as selfish as it sounds. The idea of representative democracy requires people to believe that it is a good thing that they are chosen for office. And nowhere is this more evident than when it comes to the disbursement of cabinet jobs. They are utterly, utterly obsessed by it.

The public, in contrast, couldn’t give a monkey’s about the reshuffle. Most people don’t know, and couldn’t care less, who is the Minister for Jobs and Enterprise and Innovation and whatever-you’re-having-yourself.

But the choice of ministers matters, as does the disposition of the departments. Varadkar’s opportunity is to use next week’s reshuffle to demonstrate change, rejuvenation, purpose, forward momentum. It could launch his administration. It could also see him make his first mistakes.

One of the most prevalent reshuffle rumours concerns the reintegration of the Department of Public Expenditure into its former home in the Department of Finance, or at least the appointment of Paschal Donohoe as minister for both departments. This is not a reshuffle flyer: I understand this is being seriously considered by the incoming Taoiseach. I think he might live to regret it.

Old monolith

The department was created at the height of the financial crisis, as the Fine Gael-Labour coalition took office in early 2011. Essentially it took the parts of the old monolith of the Department of Finance that monitored expenditure and managed the public service and placed them in a new, standalone department.

The architects of the arrangement once told me that it was the solution to the political problem of the Labour Party not getting the Department of Finance, which Fine Gael was determined to hold on to. But it also made policy sense.

Cutting public expenditure (DPER or “dee-per” in official speak) was one of the most pressing tasks of that government, and giving responsibility to one minister and one set of officials for the task clearly produced results.

Abolishing the Department of Public Expenditure would make finance more powerful, to the detriment of the Taoiseach

The growth in expenditure on public sector pay and pensions (which had grown from €6.5 billion a year in 1997 to €17.5 billion 10 years later) stopped when the crash hit; but the bill actually fell after DPER was created. Perhaps this would have happened under the old Department of Finance. But we don’t know, do we?

Making Paschal Donohoe minister for both departments is a step before reintegration, and in some respects would amount to the same thing. Brendan Howlin points out to me that there are situations required by law where the two ministers must consult on policy. How would Minister for Finance Paschal consult with Minister for Public Expenditure Paschal? He is an engaging conversationalist to be sure, but still.

Howlin also cites the record of DPER on reform – laws to regulate lobbying, protect whistleblowers, strengthen the powers of the Ombudsman and restore the Freedom of Information Act.

“DPER was set up for many good reasons. One was the failure of the old Department of Finance. To reinstate that old Department would be to unlearn the lessons of the crash,” he says. Even allowing for his bias as the founding minister, these are persuasive arguments.

Wise to ponder

There’s another point that Varadkar might be wise to ponder.

The old axis of power in Government between the Taoiseach’s Department and the Department of Finance was bipolar but asymmetric – for all the personal power of the Taoiseach’s Office, the Department of Finance ran much of Government.

DPER changed that relationship to a more equal, triangular one. It actually increased the power of the Taoiseach’s Department. Abolishing it would make finance more powerful, to the detriment of the Taoiseach. Perhaps this is what Varadkar envisages, but I doubt it.

It is hardly controversial to say the interests of the public and the interests of public sector workers do not always coincide

Two events this week demonstrate that the task of controlling public expenditure is still a vital one.

Yesterday’s astonishing result in the British general election shows us many things; chief among them is that political volatility is the new norm. That will inevitably impact on the economic situation faced by a small open economy such as ours.

The other development is the proposed pay deal for public servants, which will see pay increases across the public sector costing some €900 million over the next three years.

The pay deal shows that now conventional economic health has been restored to the public finances, pressure on public sector numbers and pay will be a constant for any government.

The public sector unions have been immensely successful over the years in conflating their interests with the public interest. Think about it: has there ever been a problem – security from terrorism, problems in emergency wards, whatever – that you haven’t heard representatives of public sector workers on RTÉ saying can be solved by more money for their members?

This is not meant in any way as a criticism of their leaders – we should all be so fortunate to have such effective representatives dealing with our employers on our behalf. But it is hardly a controversial statement that the interests of the public and the interests of public sector workers do not always coincide.

The Department of Public Expenditure is a bulwark against all that pressure; its job is to push back against it.

It has been the Department of Reality Bites, and Varadkar should think very carefully about whether he ends its independence or abolishes it altogether.

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