Sunday 8 December 2019

Stephen Donnelly: Howlin must lead change by example on cutbacks

Minister's reform plan will fail unless the culture of spending is altered -- and Stephen Donnelly sees little evidence of that

Government spending has been out of control for years. Last week I found out that even in the middle of an IMF programme, a culture of spending more and more is still alive and kicking.



On Wednesday, I and other TDs spent several hours in public session with Brendan Howlin. We were reviewing the spending estimates for 2012 for the eight State agencies under his control.

To my astonishment, seven of the eight agencies were looking for more money than last year.

To be fair, one of these is his own department, which is new, and an increased spend is reflected in savings in other parts of the civil service. Another of the eight is the mysterious 'Secret Service', which is allocated a blank €1m for confidentiality reasons.

Last year it spent just over half of that. However, that still leaves five State agencies which are increasing their spending on last year by between 4 and 53 per cent.

Let's take the Office of the Commission for Public Service Appointments as an example. The documentation stated that the money was "to support the commission in the regulation and monitoring of public service recruitment and appointments".

On the basis that there is a public sector hiring freeze in place, one might expect some cost savings here, right?

Wrong. Travel and subsistence, up 600 per cent. Postal and telecommunication services, up 154 per cent. Office equipment and external IT services, up 250 per cent. Consultancy and value for money and policy reviews, up 600 per cent. Legal expenses, up 191 per cent.

Page after page, spending was on the rise. Take the budget line 'training, development and incidental expenses'. For the State Laboratory, this was going up by 11 per cent. For the Valuation Office it was going up by 163 per cent. For the Office of the Ombudsman, up 66 per cent. And the Office of the Commission for Public Service Appointments? It was estimating an increase of 323 per cent.

Of the 110 sub-headings I examined for the various agencies, 84 showed spending increases. For every budget line showing a reduction in spending on last year, there were over three showing spending increases.

Nothing about the meeting even hinted at our being in receivership and in the presence of the troika. I just hope none of them was watching --it wouldn't give much credibility to the line, "We've no money, can we have a writedown in our debts please."

It was pointed out to me that while the percentage increases were large, the sums involved were quite small. The total increase for the Office of the Commission for Public Service Appointments, for example, amounts to €273,000 -- a tiny figure in the context of a government budget in the tens of billions.

But this increase is for an office under the direct control of the man responsible for cutting expenditure across the public sector. To hundreds of thousands of public sector workers, many of whom struggle every day to achieve more with less, it sends a very clear message: "Do as I say, not as I do."

The empirical evidence on achieving lasting change in how large organisations behave is very clear. The single most important factor is that senior management starts doing things differently.

While people can be convinced to act in new ways for short periods of time, if the boss isn't seen to change, everyone else goes back to the old ways pretty quickly.

Brendan Howlin and his team have produced a comprehensive reform plan. It includes changes like shared services for HR and payroll and the creation of critical management information, which does not appear to exist in large parts of the public sector. Important work, but it will not succeed if the culture of spending money does not also change. On Wednesday, it was clear that old habits die hard.

Some public sector managers have costly spending habits. I recently spoke to a man who sells expensive equipment to businesses and to several State agencies. He has a private sector and a public sector price list, with the prices for the public sector being higher.

Why? Because his private sector clients routinely negotiate better deals. He confessed that in his many years of sales, no public sector procurement officer had ever asked for a reduction.

There are many reasons why such a lax attitude to spending money might exist. Some are structural, some historic. Public sector organisations can't go bust. If county councils or public hospitals overspend year after year, they are not closed down. In Ireland, the management teams are not replaced. The 'jobs for life' culture means that they have contracts guaranteeing them employment, irrespective of the financial performance of their organisation.

Similarly, budgets in the public sector tend to be jealously guarded and because managers have not, to date, had the authority to manage multi-year budgets, they have a strong incentive to ensure that everything is spent at the end of each year.

Many who sell into public sector organisations are familiar with an end-of-year spending spree from their public sector clients, who are faced with a 'spend it or lose it' dilemma.

The inescapable reality of our national finances means that tough decisions must be made on public spending. Where those savings come from matters a great deal.

Some can be achieved through central decrees, such as hiring embargos. But these come at a huge cost, socially and economically. Schools lose teachers, hospitals lose nurses, towns lose gardai. Educational outcomes continue to fall, medical care falls, crime increases.

But many of the potential savings, particularly ones which have less impact on services, can only ever come from the people on the ground. It is only they who can spot the opportunities. And critically, it is only they who can implement them.

For this to happen, they must be bought into the need for the savings and they absolutely must see those at the top doing themselves what they ask of others.

Based on what I saw last week, that buy-in is going to need some serious changes in central government.

Stephen Donnelly is the Independent TD for Wicklow and East Carlow.

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