Highly paid public workers colluded in a series of policy disasters that have bankrupted the country, writes STEPHEN COLLINS
THE DECISION of highly paid senior civil servants to back the public service strike on Tuesday is deeply ironic given that as a group, they come second only to the Government in being responsible for the mess in which the country now finds itself.
While the politicians take ultimate responsibility for the decisions that led to the structural deficit that turned the country into the sick man of the EU, senior public servants, in what they did and what they failed to do, colluded in the series of policy disasters that bankrupted the country.
One of those disasters was the undemocratic edifice of social partnership which resulted in unsustainable pay rates right across the public service. It led to the absurd position in which our politicians, senior civil servants, judges, academics and policemen are among the highest paid in the world.
It is a pity that nobody at a senior level in the public service appears to have shouted stop. After all, their absolute job security is designed to give them protection if they feel they have to stand up to their political masters. Instead, during the Ahern years we entered the era of the “can do” public servant who facilitated government ministers in a succession of hare-brained schemes from benchmarking to decentralisation. Allied to that was the failure of supervision and regulation by a range of agencies responsible for the State’s activities that has resulted in billions of euro being paid out in compensation in a variety of judicial tribunals.
At the height of the boom one insider lamented the passing of the “can’t do” civil servant who stood up to ministers and made it as difficult as possible for them to implement foolish and expedient policies that were clearly designed for short-term political advantage.
Now that the State revenues have collapsed, senior civil servants should know better than anybody else that the pay scales thrown up by benchmarking are no longer sustainable. Naturally, the problem is not as apparent to public servants lower down the pay scales but those at the top surely have a responsibility to give a lead and show some moral authority. As was pointed out in this newspaper recently by John O’Hagan, professor of economics at Trinity College, there is an overwhelming case for reducing public service pay rates in the direction of private sector norms, on the grounds of equity and competitiveness, apart altogether from the crisis in the public finances. When the decline in the cost of living and the collapse of tax revenues are factored into the equation there is simply no argument about what needs to be done.
Of course the Government has to take primary responsibility for the current state of the country. Not only did it behave with cynical irresponsibility during the boom, its slowness in coming to terms with the downturn made things worse. However, now that it is facing up to its responsibilities it is time that others who benefited during the good years do the same.
Even assuming it goes ahead with cuts in public pay the Government will have no choice but to make cuts in the social welfare budget. If the public service unions do manage to intimidate the Coalition into backing off on pay, it will only make the welfare cuts deeper and that is something that they need to keep in mind.
It is not clear at this stage whether the one-day stoppage is designed as an exercise in letting off steam or whether it represents the first instalment in a determined campaign to derail Government policy. If it is the second then senior civil servants would need to think very carefully about their next steps.
On the political front, the Dáil debate on the Pre-Budget Outlooklast Tuesday clarified some of the issues in the run-up to December 9th, even if there are continuing differences between the Government and the Opposition about the precise nature of what should be done in the budget.
The Government and main Opposition parties are at least agreed that adjustments of €4 billion are required in order to bring about some improvement in the exchequer finances next year. Fine Gael is in broad agreement with the Government that about €3 billion of the adjustments should come through savings in spending with €1 billion coming from taxation. Differences have opened up between the main Opposition party and the Government over where exactly savings should be made. Fine Gael has ruled out cuts in child benefit while the Government appears to be ruling out cuts in pensions. The McCarthy report recommended cuts in both but it seems as if the axe will fall on child benefit, among other things.
Labour has taken a very different position from either Fianna Fáil or Fine Gael. Under its plans most of the adjustment would come on the taxation side with the elimination of tax reliefs contributing a significant amount. Party leader Eamon Gilmore has ruled out cuts in public service pay rates or welfare although he is prepared to consider cuts in allowances for public servants, but only through agreement with the trade unions.
Sinn Féin has disputed the need for serious cuts in public spending and proposed instead a range of extra taxes on the well-off which it claims would raise enough revenue to solve the problem in the public finances. Regardless of their differences, all of the parties in the Dáil accept the seriousness of the situation and the need to get the public finances back on the rails.
Almost all economic theory, never mind our own experience during the 1980s, preaches the hard lesson that by far the fastest and best way out of our current troubles is through reduced public spending rather than increased taxation. The Government’s main problem is not that it has committed itself to taking hard decisions, but that its past actions may have eroded its authority to do what is necessary. Once Tuesday’s protest is out of the way it may become a little clearer whether the broad mass of the electorate is willing, however reluctantly, to accept the need for what has to be done.