News Colm McCarthy

Wednesday 17 September 2014

Reform of quangos by politicians just not happening

And the new water authority is the most serious example of Government backtracking on change, writes Colm McCarthy

Published 08/12/2013 | 02:30

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NEW OPERATION: Dave Fenton of GMC Sierra installing the first Irish Water meter in Maynooth, Co Kildare

In the Budget for 2009, delivered in October 2008, more than five years ago, the then government committed itself to a programme of reforming how the Irish State operates. There were simply too many State agencies at national, regional and local level. Aside from cost, the duplication of effort and competition between agencies was a hindrance to orderly public administration.

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The current Government entered office after the February 2011 election and committed itself to an intensified spring-cleaning of the administrative structures. It has now become clear that the commitment of the Irish political system to structural reform is uneven at best and singularly absent in numerous areas. There has been no cull of the quangos.

The report of An Bord Snip, released in July 2009, listed a total of 870 Exchequer-funded quangos at local level. The list may have been incomplete, but included 42 Citizen Information Centres, 59 Money Advice and Budgeting Centres, 182 Community Development Projects, 107 Family Resources Centres, 60 Local Partnership and LEADER companies, 41 Community Training Centres, 330 Community Service Projects, 16 Volunteer Centres and 33 County Childcare Committees. The cost was €350m per annum at the time. No doubt many of these bodies do valuable work but it is simply impossible to identify which ones, in the absence of any coherent governance structure. The report recommended the wholesale rationalisation of these activities into a far smaller number of operating units which would enable proper supervision and oversight.

The report also recommended a rationalisation of the plethora of State agencies charged with providing support to business enterprises. Nationally the two key agencies are the IDA, which is focused on bringing foreign firms into this country, and Enterprise Ireland, which concentrates on domestic firms and export promotion. But in addition there are 35 city and county enterprise boards, business innovation centres, a western Development Commission as well as Udaras na Gealtachta, local Leader programmes, Shannon Development and special quangos for specific sectors, including Bord Iascaigh Mhara for the seafood sector, Bord Bia for agri-business, the Film Board, the Digital Hub Development Agency and numerous other bodies with enterprise support as part of their mandate. There are so many bodies that they sometimes compete for clients.

The same report also recommended a sharp reduction in the number of local authorities and fewer third-level educational institutions (there are over 40, believe it or not).

It would be unfair to deny that some progress has been made in cleaning up the State's organisation chart. Environment Minister Phil Hogan has done much of what was recommended in regard to streamlining local government, including the reunification of Tipperary. There have been amalgamations of some agencies belonging to other government departments and a reduction in the extraordinary number of vocational education committees, absorbed into a new local education structure. But overall the results are meagre: the Government remains vulnerable to the charge of austerity without reform.

The most serious example of backtracking on reform has come just recently, as the fine print of the new water system has become available. There is to be a new national water body, Irish Water, intended to become a commercial State company along the lines of the ESB. There are currently 34 water authorities in Ireland, corresponding to the city and county councils. It has long been acknowledged that this was far too many and the Government put through a new Water Act earlier this year creating a single semi-state body to charge water users, including those households for whom water supplies have hitherto been free. It was also to take over the assets and staff of the local authorities. But along comes the Water Services (No 2) Bill of 2013, introduced in the Oireachtas last week. It now transpires that a deal was done with the trade unions during the summer which will, for all practical purposes, see the reorganisation of the water industry deferred until the year 2025, believe it or not. The charges for water will come immediately.

The explanatory memorandum accompanying this bill includes the following: "The bill provides for the making of agreements between Irish Water and each local authority for the delivery of water services." This makes perfect sense. During the transition period, the water system must continue to operate. But how long do you think the transition period ought to be? The explanatory memorandum continues: "An agreement has been reached between the Department of the Environment, Community and Local Government, Irish Water and the local authorities that the first service level agreements will cover a period of 12 years". Twelve years, not 12 months.

No such provision appears in the actual bill, only in the explanatory memorandum. It is most unusual for an explanatory memorandum to stray beyond a summary of what is actually contained in the proposed legislation. The Government has apparently committed itself, outside the actual legislation as proposed, to setting up a brand-new super-quango (Irish Water has already recruited 300 staff) while leaving the pre-existing, and inefficient, structures fully in place for a minimum of 12 years. The local authority staff in this €1.2bn per annum industry will remain in place and will transfer, with all pay and conditions intact, into the new quango 12 years hence. What is going on here?

It would appear that, below the radar, our long-lost friends the Social Partners are back in business. The explanatory memorandum (but not the actual legislation) refers to an 'agreement', hitherto undisclosed, contained in an intriguing document dated June 27 last, from the Labour Relations Commission, a quango. Something called the Irish Water Forum, chaired by Kevin Foley and apparently including public officials and trade unions, had been meeting and its report included the following: ". . . work is progressing on the development of an overarching framework to reflect the proposed collaborative arrangement between Irish Water and local authorities. This framework will encompass a . . . period of 12 years, with a review after the first two years and again after the first seven years, neither of which would involve a break clause." The language ('overarching framework', 'collaborative arrangement') will thrill fans of the Department of the Taoiseach in its Bertie-era pomp.

The legislation includes a power for the minister to compel local authorities to sign up for these 12-year service level agreements. The bill also includes a cost-recovery formula for Irish Water and, in the absence of proper regulation, the new quango will simply recover the costs of the existing (and supposedly inefficient) system from customers for 12 years, and will then become an Irish semi-State with all pre-existing cost structures preserved by statute. After a 12-year apprenticeship, Irish Water will be free to achieve the glittering efficiency levels and industrial relations practices visible in, for example, the ESB. Game, set and match to the trade unions. It would make perfect sense, in the light of this agreement, to defer the establishment of Irish Water until 2024 and fire all staff already engaged. This is another HSE in the making.

The 'arrangement' requires some involuntary patsy to pick up the bill, and this is provided for in the draft legislation. The patsy, dear reader, is your good self. The bill identifies the existing energy regulator as the body to patrol the allowable charges to be collected from the general public, and then states, in section 30, that regulation will be on a cost-recovery basis. There is no point to regulatory oversight if all that regulators are empowered to do is to pass on monopoly costs to the public.

It is now almost six years since the realisation dawned in 2008 that Ireland needed reform as well as austerity. The austerity is still not completed and there will be several more tough budgets. The prospect of eventual emergence into the sunny uplands of a well-functioning modern economy is entirely dependent on reform, not on austerity which is unavoidable as every adult knows. The political and administrative classes lack a real commitment to reform, appearing to make changes slowly, under protest, or because outsiders have made reform a condition of lending the State more money. The system of public administration remains bloated, largely unaccountable, costly and inefficient.

The reorganisation of the water industry is the biggest single test of the Government's reform commitment. There has been modest progress in small things, but when it came to water, they bottled it.

Sunday Independent

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