Saturday 20 January 2018

It's high time we tackled public sector and debt

Let's recruit the best business brains as executives in government departments and lift the burden of overpriced mortgages that are weighing us and our economy down, says Pat Byrne

'I struggle to understand our indifference to the simply not good enough performance of our elected representatives'

I HAVE been fortunate to have had the opportunity to work on building businesses in different sectors -- ranging from financial services to aviation, strategic business consultancy and IT.

These days, my principal day job has me ploughing ahead working with a talented bunch of people in Rainmaker Business Technologies, which is designing and implementing business intelligence solutions for airlines on their operations.

We are a small, emerging Irish company who are managing to carve out a foothold with leading airlines in the US and Europe with new customers looming soon in the Middle East and Asia Pacific. What we deliver matters a whole lot to our airline customers because it gives them access to the intelligence on their operations that identifies where waste lies and productivity is being lost. That means recovery of real dollars and it is how Rainmaker earns our keep because we deliver tangible value.

Being totally export-oriented, we are probably categorised as a small part of the 'recovery engine' for Ireland.

I could go on to talk here about the importance of other emerging Irish companies just like Rainmaker who are all trying to boost Irish exports as we build our respective businesses and the role we all play in the drive for an Irish recovery story. But I am a pragmatist who has been too long in business to know that any outward looking venture has to be supported by the home fires burning but certainly not with the home on fire.

Ireland will not recover on exports alone as the supply lines of committed and talented people and their ideas will dry up if we do not nurture the homeland. I fervently believe it is absolutely critical that we urgently attend to the economy at local level and repair what is broken.

It is all fine for people like me to continue to focus on how we can drive on with the growth of our businesses but we tend not to speak out loudly enough about what our business intuition is screaming at us regarding the ineptitude of those supposedly in charge of the economy.

We Irish are often praised for our balanced temperament in the face of adversity. We are marvelled at for swallowing our austerity medicine without taking to the streets in protest.

We were even recently admired by many for singing in Poland while weeping would be more natural given the performance on the pitch.

We are acknowledged globally for our above-average command of current affairs both national and international. We are an incredibly informed people and yet I really struggle to understand our indifference to the 'simply not good enough' performance of our elected representatives and senior public sector management.

Our Government does not stand up to the bullying behaviour of the ECB and Germany and any potential concessions on the unmanageable level of bank debt foisted on the shoulders of Irish citizens will only be won as a lucky by-product of the efforts of other countries playing hardball with the Germans. Of course, our guys will still put the macho spin on it that their tough stance paid off.

There are many things wrong with the state we now find ourselves in and everyone has their list, but I am focused on two principle things which, if addressed, will remove a lot of the blockage standing in the way of us getting to a much better place and well on the road to recovery as a nation.

The first of these 'Big Two' is the jaded cliche of public sector reform, which is probably more accurately described as an oxymoron. The requisite level of change will, of course, not happen as long as this is left in the hands of the public sector itself.

The problem with the public sector is that with very few exceptions, notably the IDA and Enterprise Ireland, it is just not fit for purpose. When our commercially inexperienced elected political leaders rely so heavily on the incumbent senior civil servants for advice and guidance in their dealings with the EU, in this hour of appalling difficulty, then we are truly in deep trouble. We need to urgently and radically overhaul the management structure of each government department by hiring, in the open market, people with talent and proven expertise in the form of executive management teams covering the roles of chief executive, chief financial officer, chief information officer and HR director. The appointed government minister with responsibility for a department should act in the role of chairman of his/her respective executive board. Contracts for this executive team should be of five years' duration with remuneration heavily weighted towards performance-led incentives and highly visible indicators.

There will, of course, be wholesale industrial strife as radical change is always resisted but this is one pain barrier that has to be gone through to bring about an efficient high-performance and value-for-money public service capable of giving appropriate advice and guidance to a cabinet devoid of pragmatic business experience.

My Big No 2 is household debt. We have a morale problem in our communities of epic proportions with too many people facing the terror of household financial meltdown. Irrespective of how it happened, the reality is we are a nation of people weighed down by personal debt. The promise of a revised bankruptcy law is no solution. Besides, the legal infrastructure will choke under the volume of cases that need processing.

I want the Government to direct our banks to implement a debt forgiveness programme centred on a meaningful reduction of a household's outstanding primary residence mortgage balance. To be equitable, this should apply to all primary residential mortgage accounts regardless of whether they are performing or non-performing accounts.

I don't countenance the 'moral hazard' argument on this one because for me the greatest moral hazard lies waiting for us at the end of a very short road if we don't sort out the problem of no money flowing through each of our local communal economies. We cannot sustain the accelerating closures of small businesses. Apart from the obvious hardship that befalls the unfortunate small business owner, the real casualty is the very soul of the local community. It dies a little bit with every shutter that gets pulled down for the last time.

The detail of how this 'forgiveness' is paid for is, of course, important but in many ways we have already provisioned for it by recapitalising banks who in turn know they have to sooner or later recognise the scale of the inevitable default on their mortgage books.

All I am advocating is bringing to a head something that is going to impact anyway but do it now in a constructive hope-boosting way and we may just get a huge benefit out of it in terms of restoring some belief in people about their futures.

If this country is to recover, we have to bring about credible change quickly in the way the place is managed and the average citizen has to be given a leg up to climb out of their sea of debt. We must use every single avenue open to each of us in everyday situations to stand up and say we want better from those who should deliver more. We must break the habit of tolerance of the unacceptable. This change has to happen soon. It starts with each of us talking to each other and then it will gather momentum.

Pat Byrne is CEO of Rainmaker Business Technologies and is also chairman of Cityjet

Sunday Indo Business

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