The McCarthy Report once again underlines the appalling failure of the government to live within its means and to deliver public services efficiently. It exposes the lazy habits of creating an agency for every problem, of paying out benchmarking without reform, of buying out problems instead of confronting them. The government has created a spending machine that requires €400m a week of borrowed money to keep it afloat.
This style of government has also trapped committed public servants in a system that is failing them. There is no connection between budgets and performance. There is no devolution of power to local managers. There is no accountability. Under-performance and poor work practices are not systematically confronted. Ambitious managers are frustrated. Plans for major change routinely end in failure.
The McCarthy Report is welcome. It has started the debate about how we re-engineer our public service to do more with less. However, its focus has been narrow, looking for short-term costs savings and not the wider agenda of how we transform the public service and create a smart state.
It is not surprising that some react to McCarthy with raw anger. No matter how you select from the menu, people will be hurt who had no hand in creating the unholy mess that we face. People will not accept pain without hope. If people are to accept the painful adjustment that lies ahead, it must be accompanied by a clear strategy capable of rebuilding our economic strength and protecting jobs. This is not just a political necessity, it is an economic necessity too. We cannot cut our way out of this recession, we have to grow our way out.
It is remarkable how the government have gone to ground since the publication of the McCarthy Report. When this work was first commissioned, the Minister for Finance furiously dismissed the notion that he was outsourcing the task of finding savings and efficiencies. He insisted that McCarthy’s work was being done from within his department with the support of his officials and the input of various departments. Now it suits him to push it out at arms length – important, but just one consultant’s view of the world. Clearly the Minister hopes that some particular proposals will become the lightning rod for public anger and these can then be jettisoned at an appropriate time. This is undoubtedly a good tactic.
However, the government cannot dine from this menu with a long spoon. They cannot duck a substantive engagement on the choices until they finally produce their selection on Budget Day. If they genuinely want the Opposition to play a constructive role, they must have a structured debate on the options and impacts in the committees of the Dáil. They cannot talk about the need for consensus while completely concealing their own hand. They cannot appeal for public patriotism while playing the cute role of waiting to see which way the wind blows.
A Framework for Recovery
For our part, Fine Gael will draw up an economic framework for the next five budgets. We will use McCarthy as an input into this process. Our priority will be to protect frontline services and minimise the need to resort to extra taxation on hard-pressed families and businesses struggling to stay afloat. We need to find €2–2.5 billion savings in current spending each year for the next two years. If this process makes vulnerable groups the soft targets, we will have failed. We must not compound the failures of the past by now shying away from difficult structural reform in the administration of the public services. Nor can we afford to ignore the issue of public service pay levels and pensions. Even though McCarthy came up with no figure for savings on this front, he clearly signalled that in a crisis of this scale changes in pay and in pensions are unavoidable.
In doing this work, Fine Gael will not confine itself to the narrow canvas that was given to McCarthy. If we are to deliver more with less, we cannot focus solely on a menu of cuts. To create a smart state we need to embrace much more transforming change. In Health we have shown that an entirely new way of funding and managing the health services without a monstrous centralised bureaucracy can deliver services 10% cheaper. This was not considered by McCarthy. He did not consider radical change in the budgeting system that would tie money to performance right across the whole range of public services. He took a very narrow view of Social Welfare simply identifying cuts that could be made, and ignoring the need to change the whole system of welfare support away from one that makes idleness the pre-condition of payment. The Social Welfare system can be made into a developmental tool that helps connect people to the labour force with contracts that link financial payment to positive actions for the individual themselves and for their community.
McCarthy did not address the task of driving high performance and harnessing the talent for innovation that lies within our public service. Even his agenda could kickstart a new way of doing things. For example instead of using a central slide rule to remove 4% of teachers and 20% of Special Needs Assistants, why not ask school managers to decide locally the staff changes to be made to live within a 5% lower pay bill. Then flexible and innovative working can protect what is most important to meet local needs.
Devolving power, creating a culture of excellence and accountability – these have to be tackled now in this time of crisis. Without changes to create a smart state and to reinvent our economy, cutting will become a vicious cycle. Like medication, cutting may be good for us, but it doesn’t work by taking one massive dose and praying that the patient will pull through.
