Sunday 24 September 2017

Noonan hit out at failure of Finance, papers show

Tom Lyons

Current minister said mandarins were too close to political masters

Michael Noonan, the Minister for Finance, slated the performance of his department during the boom as being embedded with its political masters just six months before he took it over.

In October 2010, Noonan told the Wright Commission set up to reform Finance that "in his view the department was tied into their minister".

Noonan blasted Finance for failing to identify the property bubble and said "advice of opposition and others was ignored". "There is no evidence the views expressed by opposition deputies are heeded or taken into account," he said.

The current Minister for Finance said in documents released under Freedom of Information that he warned it in June 2007 of what would happen to the State's tax income if house prices fell and was frustrated when there was "no effective action" taken for a further 18 months.

Noonan said when he was chairman of the Public Accounts Committee in opposition the department was "weak" and failed to take "effective action" in response to its concerns.

Damningly he said the department responsible for the Budget had "no economic model", and said it was useless at costing proposals from political parties.

A series of other documents relating to the department under mandarins like David Doyle, who retired with a hefty pension, and Kevin Cardiff, who was promoted to a high-paying job in Europe, reveal just how dysfunctional Finance was in the boom.

Michael Tutty, a former second secretary general in the department under Charlie McCreevy, for example said that social partnership "became a means of distributing largesse as time went on".

Tutty also described a bizarre culture where "there was not always written communication to the minister regarding contentious issues ... Most disagreement was verbal". Tutty also said that property tax reliefs were allowed to "spread beyond their original purpose".

Anne Nolan, head of the financial services division, admitted that the department was still out of touch with other important arms of the State even two years after the bank guarantee. She said there was "a requirement to create and formalise the key relationship with the main stakeholders, ie NTMA, Nama, Regulator, Central Bank, banking and financial services sector".

Ciaran Connolly, the department's man in charge of public service pay, said the department had a "lack of capacity to lead change and manage the agenda".

Donal McNally, head of sectoral policy in Finance, said he was concerned about the "impact of social partnership commitments on overall policy". He also said the department needed a "well articulated system to manage expenditure" and there was "inadequate analysis" of policy decisions.

Michael Howard, the secretary general of Defence, said Finance had a "lack of sectoral expertise" and a "lack of a 'bigger picture' approach".

Michael Scanlan, secretary general of Health, said Finance's "focus is on inputs not on outputs/outcomes and quality of service", when it came to health.

Separately, John Moran, the new boss of Finance, is to be quizzed by the PAC on Thursday following the completion of two reports into how the department managed to "lose" €3.6bn last year.

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