Sunday 23 July 2017

Recovery starts with overhaul of finance department itself

THE Department of Finance won't know what's hit it. Famed for being the most secretive and finicky department to deal with, it has been turned upside down in recent weeks.

And not before time. Last week, the Wright Report, a damning account of the workings of the department, revealed that it was not fit for purpose, chronically understaffed and in need of a total overhaul.

This week, it will be spilt into two. The Finance Minister -- most likely Michael Noonan -- will be responsible for all public finances, budgetary, taxation and banking matters. A second minister -- probably Joan Burton -- will oversee public expenditure and public sector reform.

The department will also have to deal with a new economic council made up of two members from Fine Gael and Labour. And, on top of this, the department has been told to make "urgent and sustained efforts" to double its staff number over the next two years.

The Wright Report noted that the staff in the department included only 39 economists trained to master's degree level, equal to about 10pc of the department's core staff. This was an "extraordinarily low" percentage, the report said. In contrast, 60pc of the Canadian finance department are economists trained to master's level, or higher.

"Management should define the technical needs of positions and hire the best person for the job, whether from within government, or otherwise," the report stated.

It must also seek the secondment of skilled personnel on a two-year rotation from institutions such as the Central Bank, the National Treasury Management Agency (NTMA) and the Economic and Social Research Institute (ESRI).

That the once-mighty finance department is playing second fiddle to the NTMA, the ESRI and the Central Bank marks a remarkable fall from grace for the most powerful branch of government.

One can only hope that all this new blood, from ministerial level down, will breathe new life into a department that has lost its way.

A strong academic and mental skillset will be required to implement the new Programme for Government announced yesterday. It will require a department that can deal with setting up a strategic investment bank, target up to €2bn in sales from state assets, and cut 25,000 public-sector jobs.

This will require a sufficiently agile team armed with a set of tools to see the effect of change. And not just from a rear-view mirror perspective, but looking forwards, anticipating problems created by the complexity of this change.

This new blood will also need an ability to forecast challenges through war-game simulations in response to 'attacks' such as rising unemployment, oil-price hikes, public-sector strikes, and the EU/IMF demands.

But above all, people who appreciate the importance of truth and reality are what this department needs. Brian Lenihan always struck me as over-optimistic.

Comments such as: "We've turned the corner"; "We're not being bailed out"; " I'm drawing a line under the banking crisis" -- all proved to be wildly optimistic. It's not a trait I would like to see in the next Finance Minister.

An insistence on triumphalist talk is not only silly, it is stupid and dangerous. To abstain from using the negative means half of one's vision is obscured.

Most companies, most of the time, do not win. And when they are actually losing, it is a good idea to say so right away, so remedial action can be taken. Politicians should think the same way.

The public is fed-up with false promises. So when we are dished up a helping of stark truth, the effect can be invigorating. Talking that way is rare because it takes guts. And people with guts are exactly what the finance department needs right now. We need straight-talking ministers, but we also need more straight-talking civil servants who are prepared to shout and let us all know when their advice is being ignored.

Irish Independent

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