Wednesday 28 January 2015

Ingrained inertia will kill off any attempt at meaningful reform

Published 16/05/2013 | 05:00

ABOUT 10 years ago, I shared a radio studio on the late-lamented Sam Smyth programme with Mary Hanafin when she was a junior minister responsible for children – a brief that encompassed the departments of Education, Justice and Social Protection.

Judge Peter Kelly – now of Commercial Court fame – had threatened to pack some or all of these ministers off to Mountjoy with their overnight bags if something was not done about the lack of detention centres for young offenders.

Last week, Judge Ann Ryan demanded an appearance by a minister in court to explain, er, the lack of detention centres for young offenders. A new minister, Frances Fitzgerald, with full cabinet responsibility for children, insisted via her officials that the problem would be sorted soon – just as Ms Hanafin did a decade ago – but not before mid-2014.

Leap of faith

It takes quite a leap of faith to believe that a problem that has been cropping up since I became acquainted with the Irish Republic almost 40 years ago, and I daresay before that, will be fixed in 12 months' time.

It is hard to know why it is all so difficult. There is a distinction in theory – although often not much in practice – between young people who have committed an offence and those who are seriously difficult.

Some progress has been made, the judge was told. Seventeen places are available in Trinity House but eight cannot be used because of "staffing issues" arising from the replacement of 30-year-old rosters across the justice system. Ms Hanafin faced staffing issues too.

Every so often, amidst the cant of social partnerships and agendas for change, a stone is lifted to reveal the "staffing issues" which have damaged every Irish public service from health to transport since time immemorial. If the Government could drive a really hard bargain on working practices and relativities in Croke Park II, it might well be worth giving up on the €300m savings.

The irreformability of Irish public structures is a most curious phenomenon. All large organisations are resistant to change, but inertia seems a better description in this case.

I am prepared to accept that the Croke Park system has produced more change than has been seen in those 40 years – viz. the new rosters – but the tendency in the past has been for all change to revert – often quite quickly – to the old status quo.

Our official visitors have noticed. The press statement from the troika on its 10th review of Ireland's bailout programme plaintively renewed the call for "structural reform", especially of the legal system.

Distressed economies

Structural reform is all the rage in the search for a solution to the euro crisis. Brussels sees it as a way of giving assistance to the distressed economies of the south, while meeting creditor country demands for discipline.

Once out of bailout, the idea goes, governments would enter into formal contracts to engage in further reforms to improve their economies' performance. In return, financial incentives would be available, perhaps in the form of low-rate investment loans backed by European Investment Bank guarantees.

It is all very vague, but behind it is the recognition that Mediterranean countries will have to become more productive if they are to share a currency with Germany and its satellites; and they will need help while that is going on.

All the evidence, though, is that governments choose austerity over fundamental reform. Even the Irish legal profession shows the difficulty. It is a jungle of opaque restrictive practices and as transparent as mud.

But it has been one of the hardest-hit by the crash, with the collapse of property and commercial transactions. Now is not the best time to ask – or force – its practitioners to cut their costs closer to those of other jurisdictions.

But the troika never really wanted to pick a fight on this one. It takes reform more seriously in the other bailed-out states because the problems identified in them impinge more directly on economic performance than those affecting Ireland.

Legal costs

Legal costs may be one area that does inhibit production, which may explain the troika's emphasis. Banging up kids in adult jails, or leaving them dangerously wandering the streets, does not.

Other things are much more clear-cut. We have seen the disaster wrought by the refusal to modernise the central bank and financial regulation system, and staff it with suitably qualified people.

Behind that lies the more general refusal to tolerate any truly independent bodies which might cause trouble for politicians or embarrassment for officialdom.

It begins to look as if the main legacy of this Coalition will be the overt return of functions to central government, thereby reverting to the pre-1990 state of affairs.

There were, and are, too many quangos, but a bigger problem is that most of them are little more than facades. The word comes from "quasi-autonomous", but even that is too kind a description of most of the Irish ones.

That may be the significance of Matthew Elderfield's recent speech to the European Insurance Forum. Mr Elderfield is not exactly popular in the environs of Kildare Street.

Too much political trouble in border counties over the Quinn business, and too much trouble generally over costs and contingent liabilities for more bank capital.

It is widely believed that the Financial Regulator has not exactly enjoyed his Irish soujourn, either. What should concern the rest of us is whether we will return to the old ways once he is gone. He appears to believe that we might.

Regulation

True, he was partly defending the cost of good regulation, pointing out that avoiding the banking collapse would have paid for more than a millennium of regulation.

But he was hardly just reading from a text book when he said that a successful system must be "truly independent" from industry and politics.

It hasn't been in the past, and it may not be in the future. The notion that power must reside with the minister not only suits ministers, but is ingrained in the political psyche.

It is not just bad manners which makes the annual address by ministers to trade union conference such a regular pantomime. The theory which lies behind such appearances is dubious and probably dangerous.

The old system was not up to the relatively simple tasks that confronted it in the past. There is no reason to think a restored version of it, once the troika departs, can cope with what lies ahead.

Irish Independent

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