Saturday 19 October 2019

Thomas Molloy: We need clarity on pay, not cloudy salary caps

Thomas Molloy

THERE is a good argument to be made for paying certain people handsomely, based on the L'Oreal defence that they are worth it.

We have seen that the wrong man at the head of a bank can cause damage that will cost citizens billions.

The Government is rightly eager to ensure that top talent is placed into the higher echelons of our financial system.

But talent costs money, and while the Government is sometimes willing to shell out, it is not always forthcoming with information to back up its decisions.

The latest example of a pay award at variance with the spirit of the Government's pay policy is the salary paid to Stefan Gerlach.

Prof Gerlach is a 54-year-old Swede who is now helping to repair the tattered reputation of the Central Bank and Ireland Inc -- and doubtless he deserves every cent of his new wage packet.

What grates is not the money but the trumpeting of a salary cap in public and then by-passing it, without making the reasons clear to the public.

The Coalition came to power promising transparency and an end to fat-cat salaries.

Since then, it has displayed the same hostility towards transparency shown by previous governments.

But the problem here was not the person given the job, nor to a large extent the salary, but instead the secrecy surrounding the salary.

And Prof Gerlach would almost certainly agree -- because he has the good fortune to come from a country that is famous for transparency, as well cheap furniture, good tennis players, and beautiful women.

In Sweden, publication of Prof Gerlach's salary (and many other matters kept quiet over here) would be routine.

A highly developed freedom of information regime is one of the reasons why Swedes are still enjoying sovereignty, a good economy and a cradle-to-grave social security system.

But in Ireland, Prof Gerlach's salary was redacted when the Irish Independent obtained correspondence via a freedom of information request. Queries then had to be put to the Central Bank before the €250,000 figure was confirmed.

A typical aspect of the latest dissembling was the reaction of the Department of Finance and the Central Bank; each organisation referred to the other institution.

This is just a game of pass the parcel with just two players and no winners.

The inability or unwillingness of public institutions to confirm the simplest questions is making it harder and harder to track or understand what they are up to these days.

It also betrays a bad conscience and a chronic unwillingness to take responsibility for decisions with even the faintest whiff of controversy.

None of this clouds the fact that much of the indignation about high salaries in the public sector is thoroughly misplaced. There is no reason why a few hundred individuals should not be paid well.

But there must be clear guidelines.

At present, too many people are rewarded for taking the helm of an already successful organisation rather than turning it around.

Simply asserting that people are worth a certain salary is common but makes no sense.

It also makes no sense to say that they would earn more in the private sector. Those employed by the State are not working in the private sector.

It is also a common mistake to assert that high salaries guarantee the best people for the job. This is so obviously not true that it is an insult to the public's intelligence.

Sean FitzPatrick was the best-paid banker in Ireland for many years.

Bertie Ahern was the best-paid Taoiseach in the history of the State, and much of the Western world.

We should also be prepared to take more risks. Institutions here are full of grey-haired men and women and we should take a risk on younger and cheaper faces.

But the fact remains that some good people are worth their salaries.

The State now needs to abolish all of its discredited salary caps and draw up new guidelines.

Everybody should be able to understand how our masters are paid and everybody should be able to look up the total salary (including pension payments, relocation grants and benefits-in-kind) of anybody paid from the public purse.

At present, every little benefit, every little expense has to be obtained through freedom of information requests or leaks.

It was the mother of all leaks that finally told the British electorate just how much their MPs were taking from them. We are still awaiting a similar leak here to find out which TDs are taking from us.

Those government organisations must also include institutions such as the former Anglo Irish Bank -- where more than 10 people earn more than the Taoiseach -- and NAMA, which is paying developers princely salaries to manage their own mess.

Without knowing who is being paid what, it is impossible for the public to judge whether our money is being spent wisely. This means that it is impossible to vote responsibly which means that we will continue to get the sort of governments we have endured in the past.

The Government's heavyweight ministers are showing increasing signs of impatience with the electorate. Finance Minister Michael Noonan's warning last week about the referendum and Environment Minister Phil Hogan's straight talking about the poll tax on households are examples of this.

But they cannot complain about voters acting like children when voters are kept in the dark.

So often they are treated like children who belong to a Victorian family where financial matters are never discussed, despite teetering on the brink of bankruptcy.

Irish Independent

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