Seven things the public service needs to do

 

OPINION:The comprehensive failure of the Department of Finance to deliver on its central role in the economy and public service has a number of important implications for that department and the wider public service, which must be central to any reform programme, writes EDDIE MOLLOY

1 TRANSPARENT ACCOUNTABILITY:Either the “best advice” of the Department of Finance was bad advice or the advice they provided was good advice, but was not acted on by the Minister. A third possibility is that, against their own better judgement, they provided the “advice” to fit a prior political decision – somewhat like the civil servants in Britain and the US who provided the evidence to support the invasion of Iraq. Did the department really advise extending the tax breaks for the already over-subscribed hotel sector? When the Central Bank was advising the department and the nation in 2005 that property was over-valued by between 15 per cent and 50 per cent, depending on location, was the department party to the official policy on the expansion of lending by all banks?

The fact of the matter is we don’t know what transpires in the advice-giving exchanges between senior civil servants and Ministers. And we need to know.

Towards this end the rules must be changed to allow senior officials to comment on policy advice when they appear before Dáil committees. In circumstances where things have gone wrong, the advice should be published. Such transparency is precisely what we are entitled to in regard to the fateful night of the bank guarantee.

In the same vein, the anonymity of senior officials must be lifted. For example, in the spate of reports into institutional child abuse and other public service failures the reports refer to “the Department of Education” and so forth. But who in the department frustrated Justice Laffoy, for example? The practice of publishing reports with the names of officials blacked-out is unacceptable, such as the Monageer report into the tragic case of the Dunne family, which has page after page crudely obscured with a black felt pen. It is a physically disgusting document, quite apart from its tragic subject matter.

It is time to put an end to the game whereby Ministers can say “I acted on the best advice” and senior public servants take the blame but remain anonymous. The public has a right to know about the advice – and officials who have failed should be named and held accountable, just like errant bankers.

2 INDEPENDENT, EXTERNAL SCRUTINY:If we have learned anything in recent years, it is that self-regulation does not work. While every other department is being subjected to an organisational review by the Department of An Taoiseach, the Department of Finance reviewed itself and concluded that “the department is widely acknowledged to be a professional and effective organisation with dedicated and highly skilled staff”.

Reviews by the OECD are not much more objective than self-reviews because such reports, as we have seen, clearly pull their punches. There is a long history of external reports that have been got at and sanitised before the public gets to see them.

Matthew Elderfield, the new Financial Regulator, has said that his regulatory regime will have two characteristics – “invasive scrutiny and effective sanctions”. This must become the new norm for assessing the performance and capability of public bodies, instead of self-serving, anodyne, carefully spun internal reports or reports by biddable external bodies or consultants.

3 EFFECTIVE SANCTIONS – ACCOUNTABILITY WITH CONSEQUENCES:Many commentators have summed up the root cause of the catastrophic institutional failure of recent years as a “failure of accountability”.

I was a member of the group led by Paddy Mullarkey in 2003 that updated the “Systems of Accountability of Secretaries General and Accounting Officers”, and after 12 months of very detailed discussion there was an unsatisfactory resolution of one vital question: “How do we hold secretaries general accountable for delivering (or not) on their published strategies?”

In the end we could not arrive at a clear, water-tight, challenging system of accountability, for the unspoken reason that if the performance turned out to be poor, if they had failed to deliver, then this could be embarrassing to the Minister.

There is a large crack, therefore, at the very apex of the whole system of accountability, and as one moves down through the layers of the hierarchy, the crack gets wider.

Accountability is not just about reporting on one’s stewardship or of saying, as Ministers frequently do, “I accept that I am ultimately accountable”. Behaviour is a function of consequences, which means that if there are no “effective sanctions” for personal failure, then the problem will persist. The Comptroller and Auditor General’s (CAG) annual litany of repeated mismanagement and waste is testimony to this fact of life.

4 ABANDON THE BELIEF IN GIFTED GENERALISTS:The Department of Finance does not have the deep, professional skills in economics, banking, accounting, human resource management or large-scale institutional change to carry out its mission. Other departments, particularly policymaking departments such as the Department of Health, do not have sufficient staff with the postgraduate levels of expertise that are needed for policymaking. They have several hundred “general staff grades”. Because of the random scattering of people caused by decentralisation, large amounts of the accumulated, on-the-job-expertise was lost. One senior official told me how his department had lost over 40 key people through decentralisation who were “replaced by people who know nothing about [our area] and who are at a stage in their career where they have no interest in learning anything about it”.

General grade staff move in and out of support functions such as human resources management, finance, economics, corporate services, operations management and even information technology, as if anyone can do this stuff. There is a need to establish attractive career paths for these and other specialisms.

The top-level appointments process, which is effectively controlled by the Department of Finance, now allows for the appointment of people from outside the Civil Service to senior positions, but this provision has rarely been used. New blood is needed at senior levels. The Financial Regulator has indicated that he needs up to 100 new highly qualified people in order to deliver on his remit. How many does the Department of Finance need, given that it has a much wider remit than the regulator?

5 ESTABLISH THE MANAGERIAL ROLE THROUGHOUT THE CIVIL SERVICE:A couple of years ago a person appointed to the position of secretary general of a large department remarked to me: “I have never received one day’s training in management.” In another case I overheard a newly appointed assistant secretary general say: “It’s great, it’s a relief that I will no longer have to deal with staff.”

Levels of training in management and the quality of management practice across the public service range from excellent to abysmal. The most basic management disciplines, like setting explicit goals and reviewing performance, are absent in many places. The track record in policy execution – even when the money is available – has been described by one senior official as a pervasive “implementation deficit disorder”. The performance management system, PMDS, is widely regarded as a meaningless process. The weaknesses in local financial management are exposed annually by the CAG.

These management weaknesses constitute the main risk to any prospect of actually implementing the public sector reforms recently negotiated.

6 RESTORE THE CAPACITY AND POWERS OF THE CIVIL SERVICE TO ACT AS A BULWARK AGAINST RECKLESS POLITICAL DECISIONS:When the madness of decentralisation was unfolding about six years ago, Mary Harney rebuked those who spoke out against it, saying: “The Government runs the country, not public servants.”

The Government does indeed “run the country”, but not without some constraints. The system of accountability established by the Mullarkey group included the requirement that assessments be carried out of the “strategic, operational, financial and reputational” risks of policies. The system also provided senior officials with instruments to contest what they consider to be political decisions that lack “integrity”, “regularity”, or “propriety”. In such cases, they can insist on receiving the Minister’s instructions in writing and on receipt of the written instructions they immediately send the papers to the CAG.

In regard to decentralisation, few authentic, thorough risk assessments were carried out, and it is patently clear that proper risk management by the Department of Finance has been non-existent.

The provision whereby instructions are sought in writing has not been used to anywhere near the extent that senior officials should have used this device to protect the public interest.

The net effect of senior public servants carrying out political instructions that they know to contain unacceptable risk, or that they deem to be improper, is that these officials have failed in their duty to the public. To the degree that this is the road they have taken, then they have chosen to place the political needs of the incumbent government ahead of the public good. They have become politicised.

In saying this, I am well aware that we live in a democracy and that the Civil Service is obliged to carry out the instructions of the elected government. However, in other democracies there is more“distance” between ministers and their officials. This issue, the need to reconcile the prerogatives of ministers with the duty of civil servants to act ultimately in the public interest – “speaking truth to power” – is a matter of fundamental importance. Other countries have managed to get the balance right and we need to learn from them.

Such a system should ensure that the public record shows the many instances where the sound advice of officials was rejected for party political reasons.

We need a system where conscientious objectors are not shot and where whistleblowers are protected.

At a deep level there is an urgent need for leaders, Whitaker-like figures, to emerge within the public service who will put in place a programme designed to reappropriate the foundational values of the public service and breathe new life into them. The ethos or culture of the public service needs reform.

7 ESTABLISH A FULL CABINET MINISTRY RESPONSIBLE FOR PUBLIC SERVICE REFORM:Reform from within is extremely rare. Figures like Pope John XXIII or Gorbachev in Russia rose to the top of their respective institutions and, although they were formed man and boy by these institutions, they had the vision and courage to confront their own and lead transformational change. At a local level, Finbar Flood and others who had worked all their lives in Guinness were still able to lead radical change. Ken Whitaker was such a figure in the Civil Service and Diarmuid Martin is one in the Catholic Church.

Embedded cultures, such as illustrated in the case of the senior echelons of the Catholic Church or AIB, are tenacious. The public sector reforms repeatedly promised and paid for have never been delivered. The renewal of long-standing institutions, especially “closed systems” where people who reach the top are “lifers”, invariably requires external intervention. The palpable relief at the appointments of Patrick Honohan and Matthew Elderfield was because they have no baggage, think differently and are expected to show courage in taking the necessary remedial action. People are already wincing at the latters insistence that banks raise their liquidity ratios.

One of the best examples of large-scale institutional reform is the RUC. Among the keys to this success were a thoroughly objective external review by Chris Patten and the establishment of external oversight bodies.

CONCLUSION

In its Capacity Review 2009, the Department of Finance, which believes it has delivered on its vital national role and that it is widely perceived as a highly professional, effective body, makes a bid to be given unequivocal responsibility for public service reform.

It is time to name this as the biggest elephant in the room. The Department of Finance has failed abysmally in fulfilling its absolutely pivotal national mandate, and as such it should be first on the list for root-and-branch reform. It is not widely respected. The Department of Finance is widely feared.

The huge 10-year task of reform should be assigned to a newly formed full Cabinet ministry of public sector and Oireachtas reform to be staffed by hand-picked senior officials and experienced external people. It should have an advisory board comprised of people of demonstrated competence and moral courage – such as Niall Fitzgerald, Dan O’Brien, Jim O’Leary and Emily O’Reilly.

Senior people everywhere are now being called to account and heads are rolling in the church, Fás and the banks, but life goes on in the Department of Finance as if they had no hand, act or part in creating the national crisis. Is there anything more absurd than the idea of giving them even more responsibility for putting things right? What does Minister for Finance Brian Lenihan think?


Eddie Molloy is a consultant in strategy and large-scale change. He is director of Advance Organisation and Management Development Ltd. He has worked with numerous government departments, including the Department of the Taoiseach, the Department of Public Enterprise and the Revenue Commissioners. He has also worked with companies such as Diageo, and with IDA Ireland and Dublin City University.

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