Axeman cometh: Howlin ready to wield the hatchet
The 'Cuts Minister' tells Daniel McConnell how he intends to help slash '€3.6bn or so' from State spending
Published 26/06/2011 | 07:45
It's Thursday evening; in his plush corner office within the Department of Finance, the new Minister for Public Expenditure and Reform, Brendan Howlin, welcomes me.
With the evening sun peeping through the windows, I ready myself while he gets his photograph taken.
Following directions from photographer David Conachy, he quips: "Now be careful with the Minister for Cuts."
Noting his telling comment, we get down to it straight away as time is short.
"We are in an awful place and it means that everybody has to make significant adjustments to balance the budget and to reach a situation where we regain our economic sovereignty," he begins.
I then ask him, why has it taken so long to get his department up and running?
He goes: "Why did it take so long? From day one I have been doing the job, there has been no delay. From day one I'm doing the job. It just meant I didn't have the legal entity so decisions had to be signed off."
He adds: "It is a complicated process. There hasn't been a fundamental shift in the way the Department of Finance works since the 1920s. Every enactment and over 200 statutes had to be cross reference and gotten right, so that took a lot of time and energy, but that didn't stop us hitting the ground running."
Of great importance to Ireland's recovery will be Howlin's relationship with Finance Minister Michael Noonan. So who is in charge and who is the deputy, I ask.
"There is no deputy and there is no one person in charge. That was the absolute structure of the department. We have two cabinet-based departments and two cabinet-ranked ministers who have different functions," he says.
"On a personal level, because both of us led our parties in the negotiations for government, we have a great mutual respect. We worked together in government together previously, the two of us. There is no senior or junior, there is no larger or smaller ministries, both have a hugely important task to do," he adds.
But where will the power lie, and given that your department will be doing the line by line examination of the numbers, won't you be the one to decide where the axe will fall? Howlin, the 55-year-old Wexford native, responds by telling me that he and not Noonan will be the one decided where the cuts will have to happen, hence the 'Minister for Cuts' comment.
"The way it will work is this. The overall envelope of expenditure will be decided by the Minister for Finance in consultation with me. I, of course, have to prepare for that, by discussing with each line minister to see what the shape of the bid is.
"When we have decided the size of the envelope, I will allocate the resource to each department and that is a matter for me. But, of course, all of this will be done with the authority of government. Take for example capital spending; we are going to have a new capital spending programme, which will have to be signed off by Cabinet. I will be making recommendations because I am in charge of expenditure, but how much is spent on roads, schools, hospitals and transport -- all of these things will be decided by Cabinet as a whole on my recommendation."
Earlier in the day, Noonan appeared to state at a lunch in the Shelbourne Hotel nearby that the planned cuts at Budget day may be more than the previously stated €3.6bn figure. "€3.6bn or so" is how Noonan put it. So I ask Howlin what his position is.
"We are in a very volatile situation, events in Greece underscore that calls you make today may need to be adjusted next week. So we will make the call when we have done the arithmetic. As of now, the agreement is that we would make an adjustment of €3.6bn next year, and that is what we intend to," he says. I press him to clarify then whether the €3.6bn figure is a minimum, but he fudges.
The previous day, Howlin announced his plans to slash the pay of a host of public sector fat cats. This plan brings all civil servants down to the Taoiseach's pay level of €200,000 and bosses in semi-state companies, except the ESB, down to €250,000.
Not included in the list of cuts were the NTMA and Nama, where at least 16 people are paid more than €200,000 a year. Howlin said he wants to get full clarity and transparency on how much people are paid within those organisations.
"There are employees of the NTMA and Nama who are above that figure, 16 I think. I would like to have transparency on that," he said.
"They were never included. The NTMA and Nama, they are not employed by the public service, they are not public servants, we don't know what they are paid. They were individually headhunted with individual personal contracts with the NTMA. They are a unique entity in the same way as senior broadcasters in RTE, who I think people would regard as public servants."
So when, I ask, does he think those within the NTMA and those top broadcasters within RTE such as Pat Kenny, Miriam O'Callaghan and Marian Finucane should also volunteer up pay cuts in solidarity with everyone else.
Howlin is in no doubt that they should. "I would hope the same moral swage would apply to them," he says.
He also reveals that he is seeking to reduce the pay of the Comptroller and Auditor General, John Buckley and the Director of Public Prosecutions James Hamilton who each earn €215,000 a year.
"We will have to deal with that. I don't expect anybody to. But we'll have to deal with it. There are not that many [over the €200,000 mark] that are outside the norms. And we have to filter across to the DPP and the C&AG and all these people but I expect everybody to play their part in this."
On the issue of bonuses, he says the Government has been categorical in its demand that no bonuses are to be paid this year. "Each line minister has already told the boards of every State company, the Government does not want bonuses paid this year, full stop."
However, 24 hours later, the Dublin Airport Authority embarrass him and Transport Minister Leo Varadkar by awarding boss Declan Collier a bonus of €106,000 as part of a staggering €612,000 package. In the wake of the news, Howlin gets in touch to say that he strongly supports the view of his colleague the Minister for Transport, Tourism and Sport on this issue and restated that no bonuses were to be paid.
Two weeks ago, Howlin welcomed the first review of Croke Park, saying progress has been made, but he is adamant that the pace of reform must be significantly increased if the IMF/EU targets are to be met. He is less than certain such reform will be achieved.
"Well as far as I'm concerned, as long as Croke Park delivers, and that is a tall order -- we, the Government, have agreed that there will be no more pay cuts."
Howlin, then goes on to say that the reform agenda has been stymied and frustrated by managers within the public sector, who, he said, have not been ambitious enough in seeking reforms.
He says: "In fixing the ceiling of senior public sector pay at the Taoiseach's level, the Government was making a statement that needs to manifest itself across the public service.
"Croke Park will [have to] deliver more vigorously. At the next meeting of the implementation body I intend attending with the Taoiseach to ensure people understand -- what we are hearing is that managers are not ambitious enough in the changes they want to bring about. We have to drive that to ensure there are ambitious programmes for people to change."
I suggest that the unions have had far too much influence on public sector reform in the past, and ask if he intends that situation be allowed to continue.
"Clearly there is enormous pressure to deliver further reductions in staff numbers and pay bill savings, given the fiscal situation. Everybody has a part to play in achieving the required savings -- that goes for government ministers, for public service managers, and for unions."
Howlin says it is totally unacceptable that key economic decisions are now being taken by outside agencies, and it is his job to regain our sovereignty as quickly as possible.
"Our task is to restore economic sovereignty to this country. Right now, crucial decisions on our spending and on our legislation are being made by external parties whom we are dependent upon to give us money to function. That is an unacceptable position to be in.
Our task is to get out of that as expeditiously as possible. We have to balance our budget to do that," he says.
I conclude by asking him does he, as a Labour minister, worry about the impact such drastic cuts will have on his party's core vote, and is he worried about the threat from the likes of Sinn Fein and the United Left Alliance?
"The only judgement call is the one at the end of the five years. As a Labour minister I want to do that in a fair way. But, we will do what has to be done, we will take the adjustment that has to be made. We are determined to do that across the full Labour Party and across Government."