IT would seem we are at a historic turning point in the history of our public service, and indeed of the nation. The system of partnership, the special relationship, between the Government and the unions is over, for now at least. As people scrabble around in the ashes of Croke Park II to try and figure out where to from here, they could do worse than indulge in some blue-sky thinking.
Perhaps we shouldn't get hung up on pay cuts; perhaps we shouldn't get hung up on looking at solving the €1bn puzzle in this particular way. Maybe we should view this sundering of the special relationship as a chance to start afresh. Maybe this could be the beginning of a new era in how we manage the money we all pay in taxes in order to protect the weak and vulnerable and in order to get basic services for living. Maybe this breakdown could become a breakthrough, a chance to forge new habits.
For some reason a system has evolved whereby the money we pay in taxes is not spent the way all other money is spent. Perhaps because the disconnect between who puts in the money and who spends it is so large and so distant, there does not seem to be the same sense of value with State money that you would get with money in general.
If they spend it all or spend too much or spend it badly, there are few, if any, consequences for the people who spend taxpayers' money. So a system has developed whereby huge amounts of taxpayers' money is poured into large institutions like the HSE and where there seems to be very little control over the efficient spending of it. Instead there are large budgets, imposed from the top down, based on previous year's budgets.
People's main goal in these situations is to spend up to their budget or more, so that they will get a similar – or bigger – budget the next year. There is no incentive for anyone to come in sub-stantially under budget. They are not generally rewarded for this, apart from maybe having their budget cut the next year. It is a bizarre system, a set of bad habits, that has grown up over the years. It is a system that used to exist in many large bureaucracies in the private sector too, but in the private sector it has largely been weeded out by competition and by the demands of shareholders in large companies. But this system, whereby no one is really encouraged to save money, has remained in many areas of the public sector – due to a lack of incentive and a lack of accountability.
Efficiency has largely been forced, with great pain, on many organisations in the private sector, because when income falls, outgoings have to be pared back accordingly. The same job then has to be done with less. But these rules do not always apply to public enterprises. This is because they are not expected to make a profit anyway, and also because it is much more difficult to change the rules in public enterprises. Look at the situation right now: the whole enterprise that is the State is bankrupt and still it proves very difficult to cut back expenditure without using very crude instruments like cutting the services provided, cutting the monies handed out to various vulnerable sectors, or cutting the pay bill.
Croke Park II took a more convoluted but crude instrument. It was to make the public service cost less by cutting people's pay, but with a plethora of side deals depending on whether your union played ball or not. As we know, that didn't work. And it is perhaps understandable. Some public servants will argue that they have already taken an effective pay cut of 25 per cent. You would also imagine that the vote against Croke Park II was, to some extent, an anti-austerity vote. There has also been a suggestion it was the women who voted it down because the extra hours would have disrupted the childminding. Whatever it was, it is over and we are now at an awkward impasse where the Government has vowed to enforce pay cuts, and if it does, the unions are committed to striking. No one wants this.
So let's think a little outside the box. No one is in any doubt that you could save €1bn a year if we truly rationalised the public sector. Obviously it is being reformed as
we speak and we have all seen Croke Park implementation bodies claiming what seemed like fairly nebulous savings through efficiencies. But why not be brave? Why not really go for it? Now that everything is up in the air, and now that the special relationship is over and the public sector has in some way relinquished its special position, refusing to accept further pay cuts, why not capitalise on this changing of the nature of the relationship?
So, into the public sector in the morning, root and branch, and change all the bad habits. As John McGuinness pointed out a long time ago, when he became one of the first politicians to talk openly about the problems there, the public sector is full of good people who want to do a great job but who are frustrated by bad systems. We have all seen it ourselves in our dealings with the public sector. Good people governed by bad habits. And habits are very powerful things.
So let's take this opportunity to change the habits of a lifetime. Let's have some fresh eyes in there walking around saying, "Why are you doing that?" or, "Why are you doing that like that?" Let's appoint tsars: hospital tsars, school tsars. And let them ask the big questions, and let them walk around the wards and the classrooms asking the little questions. And let them encourage people to change their habits, habits that cause inefficiency, waste, death even.
When Paul Allen, who would ultimately become Secretary of the Treasury, took over at Alcoa, the Aluminium Company of America, he baffled shareholders and stakeholders at his introductory speech by announcing that his focus would be on worker safety. As one investor said at the time, "The board put a crazy hippie in charge and he's going to kill the company." In fact, within a year Alcoa's profits had hit a record high. By the time Allen retired the company's value had risen by $27bn and income had increased fivefold. All by focusing on one key issue.
What Allen did, by focusing on employee accidents, was change everyone's habits. "You can't order people to change," Allen told Charles Duhigg, author of The Power of Habit. "That's not how the brain works." So instead Allen disrupted some keystone habits and that changed everything.
Paul Allen cut his teeth in government in the US, he told Charles Duhigg, and he noticed that everywhere he looked in government he found "these habits that seemed to explain why things were either succeeding or failing".
A disruptive time is the perfect opportunity to disrupt habits, to replace bad ones with new ones and to completely change an organisation. Public sector workers want to keep their pay and their conditions? Fine. But they need to change their habits. They need to mainly get into the habit of cherishing every penny they spend as if it were their own, of doing everything as efficiently as they can.
And you know what? They will welcome it when it happens. And soon enough the ones who do nothing will be gone, because the public sector will get out of the habit of there being people who do nothing because "that's just how it is around here". And everyone else will be doing things well and efficiently, and not wasting a penny. And we will not only save €1bn a year, we will give future generations a gift that is far more valuable than the blunt instrument of cuts. We will give them a functioning public sector with good habits.