18 May 2007
It's the public services, stupid. As Ireland's voters prepare for a general election, the focus is on problems in the country's huge state sector. The rival parties all have their own solutions, explains David Harding
It's five hours after the Irish general election has been called and the man who would be king, or at least taoiseach, Fine Gael's Enda Kenny, is in a central Dublin park pressing home his would-be government's message.
'I think public services will be critical,' he tells Public Finance. 'It's the lack of public services that is the real problem for this election. That's why I'm delighted the vote is taking place. We have had ten years of broken promises.'
And after a handshake or two the opposition leader leaps into a waiting car and speeds off to the well-heeled constituency of nearby Dun Laoghaire.
Despite his obvious anti-government message, Kenny is right. The election on May 24 will in large part be decided by the Irish people's faith in their public services. And that faith, it appears, is being sorely tested despite huge investment in the past decade.
Crumbling hospitals; a nationwide series of work stoppages by Ireland's 40,000 nurses amid demands for a 35-hour working week and a 10.6% pay rise; the threat of other public sector strikes, especially by hospital consultants and teachers; an overwhelmed transport system; the embarrassment of contaminated state water supplies in Galway; and the efficacy of care services have all hit the headlines in recent weeks.
The next government, which will be a coalition administration – thanks to Ireland's system of proportional representation – will have to pick up the baton of change in the public sector.
Current Taoiseach Bertie Ahern, who called the election on April 29, is seeking to become only the second leader to be elected for a third term. He has pledged his Fianna Fáil government to raising state pensions and increasing investment in school, health and transport.
Kenny has announced a 'contract' with the Irish people that includes plans for thousands of extra gardai (police) to be put on the beat and thousands of extra beds placed in the state's hospitals.
Other parties have followed suit. Labour and the Progressive Democrats talked about health and education; the Green Party and Sinn Féin about transport.
The economy, the housing market, immigration – 10% of Ireland's 4 million population is now from overseas – crime, as well as a continuing payments scandal surrounding Ahern, and disenchantment with a leader who has been in office for ten years (sound familiar?) will all be crucial in deciding people's votes.
The growing rapprochement between Northern Ireland and the republic may have led to a general feelgood factor. Ahern and Ian Paisley have met each other several times in recent weeks, with smiles and handshakes, including at the hugely significant site of the Battle of the Boyne in County Meath.
But in a state where hospitals, trains, schools, buses and even the greyhound industry are run centrally (until last year the state portfolio included hotels and the national airline Aer Lingus), the performance of the public sector will be crucial to deciding who the next government will be.
'The whole public sector needs to be reformed from top to bottom, a new broom needs to sweep it clean,' says Mark Fielding, chief executive of the Irish Small and Medium Enterprises Association.
Fielding is a long-term irritant of the public sector status quo and his view is more radical than others. He believes the public sector is a profligate, high-waged, low accountability and underperforming arena. It is the place where up to 300 people are placed on hospital trolleys every day because there are no beds, where money is wasted on expensive IT projects, such as the €160m on a back-room computer system for the health sector that doesn't work. Or where €52m is spent on an e-voting system – only for people to end up voting with pencils on the 24th.
And, according to the latest statistics, where wages and pensions in the public services cost the Irish Exchequer €10.2bn in 2001 and €16.2bn five years later.
In the same period, pay costs rose by 65% in education and 63% in the health service, while the civil service had to get by with just 48%.
The average weekly earnings for non-health service public sector workers stood at €848, while for banking and insurance workers it was €754.
'Public service workers have a nice cushy job, security of tenure, an indexed pension and very little responsibility,' says Fielding.
'That's a myth,' counters Tom Geraghty of the Public Services Executive Union. But it does seem as if there is a real appetite for change.
And this appetite extends to the very top. Last October, Ahern said problems in the public sector could be solved only when state staff stopped working 'only six hours a day and taking a half day on a Friday'. He also talked about the need for an independent assessment of the sector.
By January, everybody was clear what he was talking about. His government commissioned a report from the Paris-based Organisation for Economic Co-operation and Development. It is the first review of its kind. Other countries have asked for reviews of specific parts of the public sector but no-one has asked for a review across the board. And Dublin is paying €500,000 for the privilege.
The OECD is very excited. Barry Anderson, head of budgeting and public expenditure, says: 'Ireland approached us because we can provide them with benchmarks of the Irish public service against other comparable countries and because we can make objective, non-conditional recommendations as to future directions for reform so as to deliver quality services.'
But Ahern warned: 'There may be some stark messages for us arising from this review but we should be prepared for them and… to make the hard decisions which reforms often require.'
One source close to the discussions says: 'We want to know how good we are, what the current trends are in modernisation and reform, have we given the right jobs to the right departments, have we got the right
distribution between local government and central government.'
Ireland is a centralised country. Local government might be responsible for delivery of up to 65% of all state projects, but the 29 county and five city councils have few powers. They cannot raise money except for commercial rates on businesses. Most of the money they receive is from the centre and, bizarrely, through the money collected centrally on motor tax.
Instead, it is up to central government to determine how services are planned. For example, in 2004, the national Health Service Executive was created, dispensing with the need for regional health boards. It is probably the single most important public sector reform in the past few years in Ireland. And it is a microcosm of what could happen in other areas. The HSE focuses not just on resources but also on structure. And, as in the UK, health is the most criticised part of the state enterprise.
The state is looking at opening up promotion and recruitment to the public sector by cherry-picking the best from the private sector at senior level, changing the pay grades in place, 'embracing' partnership approaches and 'measuring outcomes'.
The measuring outcomes aspect will be crucial. The greatest disenchantment with the public sector in Ireland is that resources have increased dramatically over the past decade or so – some €39bn is spent each year on services – but this has not been matched by performance.
In 2007, €14.5bn will be spent on the health service. In 1997, it was €3.6bn. Yet still many patients find there are not enough hospital beds, and this is not just because the nurses are outside striking. Expenditure in the criminal justice system has increased by €500m in the past decade, yet detection rates are down by 6%.
The increased funding has been brought about by Ireland's dramatic economic transformation. Just over 20 years ago, Ireland was 'the sick man of Europe', with tax rates at 60%, huge unemployment and mass emigration. A visit by the International Monetary Fund was always a distinct possibility.
But low corporate tax rates, €10bn of European Union money, a more skilled workforce and better economic management has transformed the country. Growth levels during the 1990s Celtic Tiger years were in double figures. For the past few years it has hovered around the 6% mark, dropping to around 5% for the current year. But, even amid the global economic slowdown, Ireland is doing well. By one count last year, it is, per capita, the second richest country on the planet.
One area of public sector reform where there has been noticeable 'improved outcomes' is in education: 57% of young people now go on to university, with the number going into higher education more than doubling between 1991 and 2002, from 300,000 to 650,000. In the 1960s, over half of all pupils left school at 13. There have also been dramatic improvements at primary and secondary level.
One sticking point likely to emerge from the OECD review are performance indicators. The organisation is certain to recommend them but the Irish are lukewarm to indicators such as league tables.
The nearest there has been to anything like that is the internet publication of 'whole school evaluations' by education minister Mary Hanafin. League tables, say those close to the OECD evaluation in Ireland, are seen as ineffective, producing the results in areas only that are measured and to the detriment of the rest of the service.
Some of the concrete proposals that could emerge might have been previewed in a National Economic and Social Forum paper published in February. It came up with a whole host of proposals, primarily by 'putting the citizen at the centre of public services reform – a goal now actively pursued across OECD countries'.
The forum called for an integrated 'whole-of-government' approach to 'address more effectively the complex problems that many people face nowadays'.
'Given ongoing demographic and societal change, we need to better plan ahead to ensure that schools, transport, health care services, etc, are in place as communities need them, rather than following on years afterwards, as has often been the case in the past.'
It called for a stronger 'evaluation culture' so the public sector can better determine which policies work and which do not.
But proposing change and seeing it implemented are two different things. Anderson accepts that it is up to the new government to turn things around, but hard political choices could mean all his hard work counting for nothing.
One of the problems will be any resistance to change from the heavily unionised public staff. Of the 360,000 Irish workers in the sector, 95% are in the unions and ready to flex their muscles. By comparison, only 23% of private sector workers are in a union.
Mark Fielding says the nurses will get what they want and public sector reform will be rebuffed. 'Ministers by their very nature are loath to tackle the problems and they will be nobbled. I don't see that our politicians have any appetite to tackle the unions.'
The OECD will report this autumn. The document will be among the first the new taoiseach will read. It will also reveal if election pledges to reform the public sector will be honoured.
Main players in the election
Bertie Ahern 55, leader of the biggest party, Fianna Fáil (defending 78 seats). Was favourite but financial scandal has seen him wobble.
Enda Kenny 55, leader of Fine Gael (with 32 seats). Derided in many quarters, he is so far having a good election campaign.
Pat Rabitte 57, leader of Labour (21 seats). Has pledged to go into government with Kenny but could side with Fianna Fáil for a high-profile Cabinet post, possibly as deputy prime minister.
Michael McDowell 55, leader of the Progressive Democrats (eight seats), which has been in coalition government with Fianna Fáil since 1997. Ireland's most controversial politician. Expected to perform badly at the election.
Trevor Sergeant 47, leader of the Greens (six seats). Could be the kingmakers in the new Dáil (Parliament).
Caoimhghín Ó'Caoláin 53, Sinn Féin (five seats). Like the Greens, they could become the smallest party in the next coalition and in government north and south.
It will be the thirtieth Dáil. There are 43 constituencies and 166 seats up for election. Apart from the main parties above, one seat was held by the Socialist Party and 15 by Independents.
PFmay2007
