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James Fitzsimons: Moran's juice bar is an illusory oasis in the desert

IF YOU trust the Department of Finance to raise your standard of living you're in luck, because John Moran, the new Secretary General, claims that is one of his primary objectives.

If I had any reservations about the reform of the department, they were vindicated and I am now certain that the department will not emerge from its ashes any time soon. It will be consumed by its own flames. Mr Moran wants even more money to sink into this black hole. Moran's juice bar is more like an oasis in the desert. When you finally get there you will realise it was all an illusion.

It didn't take me long to focus in on where he is getting his terms of reference. Mr Moran has been recruited by Mr Noonan, the Minister for Finance, to implement the recommendations of the Independent Review Panel, chaired by Rob Wright, a Canadian Public Servant, and set up by the late Brian Lenihan. That report commended the staff at the Department of Finance

for warning the Government in the run-up to the financial crisis. But it castigated them for sitting back when their advice was ignored.

Mr Moran has clearly been appointed to change how things work. But it would be easier to get the rich to pay 1 per cent more tax than it would be to shake up the Department of Finance. The 2010 independent report fell short of labelling the Department of Finance as "not fit for purpose", but that is what it is. When the chips were down the department bottled it, and even if some could see that the economy was in trouble, those in charge failed to perform as they should have. Bankers and developers called the shots. Politicians danced to their tune. Senior civil servants failed to do their job when they let inept politicians dictate policy.

If this is all he has in his repertoire, his department will emerge no better off than it was, but it will cost the taxpayer a whole lot more. At best he has introduced some commercial experience to the civil service, but in reality he is a glorified middle manager tasked with the job of implementing the recommendations of a commission that failed to come up with a solution. Senior staff at the Department of Finance were under-qualified, many were overpaid, and, when it counted the most, they were ineffective.

When they warned against the stupidity and reckless lending that would lead the economy to overheat, they kept no records. They couldn't even get their own financial records right. They overstated the national debt by more than €3bn in their 2010 accounts. You cannot blame the general staff for this. But neither did the Secretary General of the time, Kevin Cardiff, accept responsibility. To make sure he was totally absolved of any failings, he was kicked upstairs to a cushy number in the European Court of Auditors, even though they didn't want him either.

Mr Moran won't change anything. If he has skills that no one else in the department possesses, they are not being used for the benefit of the public who pay his wages.

It is now clear that there is no one individual willing to do what is needed to reform the Department of Finance. If Mr Moran was the right man for the job he would have reshuffled his staff, getting rid of at least 25 per cent of them now and as much as half within two years. The entire management team should have been changed, with the exception of a small number who have learned from their mistakes and embraced change.

It is disingenuous of Mr Moran to claim that his department is responsible for generating €34bn of annual tax revenue. That is the result of private sector resilience to withstand everything that has been thrown at it since the downturn.

However, the department can claim responsibility for the reckless borrowing by the State since the downturn and the collapse of annual tax revenue by as much as €16bn. We don't need PhDs in the department to know that we shouldn't be borrowing to pay for bureaucracy.

He also claims responsibility for restoring credit lines to the SME sector. The banks may have reached their annual targets of providing an extra €3bn a year. But those who know anything are aware that most of this lending would have taken place anyway and the rest of it is accounted for by recategorising overdrafts as loans, and redefining existing facilities. But the banks have stuck to their old ways that created the problems in the first place. It's on their terms or not at all. Nobody is walking away from their debts unless they are being forced to by inflexible banks, or the system creates the opportunity. The Department of Finance has done nothing to improve the situation. In any event that should be a matter for the Central Bank and the Financial Regulator. They already have the expertise, even if they are not using it as well as they could.

The situation for homeowners in negative equity and those struggling to pay mortgages ranks among what Mr Moran claims are achievements of the department last year. Most of the recommendations for reform of homeloans came from within the public sector (the committee that was set up last year to advise on homeloans was comprised almost totally of public servants). Mr Moran, more than most, should understand that those in the private sector who cannot meet their financial commitments need more than the prospect of a roof over their heads to sustain them into the future.

Mr Moran has become an instrument of bungled government policies. His previous commercial experience should fool nobody. Bring back the career civil servants. At least they might have learned from their mistakes.

The Department of Finance was the place to start with winding down the Croke Park Agreement. Nobody should be immune from the ravages of the recession when its devastation is so far reaching. By all means quell union unrest for this large workforce so that management can do its job. But why was management protected too? They get paid to compensate for the risks they take. If they are not accountable, how can we rely on them? If Mr Moran's department is to be effective and its staff are as capable as he claims, there is no need for the Croke Park Agreement. They should give it up immediately, starting with management at all levels.

The department, whose objectives include balancing the national Budget, should force all other government departments to exit the Croke Park Agreement in the national interest.

If change does not come from within the public sector, it will not come at all. If they are as capable as they claim they are, they no longer need this agreement to justify what they have. If they do, their reward is too high. They have been given long enough to sort themselves out. Now it's time to take the pain with those in the private sector who have shouldered an unfair share of the burden.

It is disappointing that Mr Moran has not taken the initiative. Let us hope he won't sit on his hands and leave it to the private sector to sort out his problems.

James Fitzsimons is an independent financial adviser specialising in tax and financial planning

Sunday Independent