Damning commentary on the Dept of Finance

Amhran Nua

An interesting piece from Eddie Molloy here underscoring the shortcomings of the Department of Finance...

Abject failures of Finance will blight a generation

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The statement goes on proudly to declare the department’s outputs with regard to each of these matters. According to its self-assessment, it “delivered” on every item– on economic growth, sustainable employment levels, Ireland’s competitiveness, and so forth.

Anyone who doubts that this is how the department evaluates its own performance may read it for themselves – but read it very carefully, because one word on the top left-hand corner of page 12 clarifies what is really meant. The Department of Finance delivered the “advice” to Government. If that is all it is claiming to have delivered, ie the advice, then it begs a question about the quality of its advice – and another about whether the Government acted on it.

The Taoiseach helpfully answered the second question some weeks ago in a television interview when he was pressed by Bryan Dobson to apologise for his part in creating the financial and other crises: “I acted on the best advice,” he said – advice delivered by Finance. He adopted the same defence when challenged regarding his role in the Dublin Docklands Development Authority scandal, and his decision to include Anglo Irish Bank in the bank guarantee.

The Department of Finance, in addition to its failures in regard to the public finances, competitiveness, taxation and banking, hosts the personnel directorate for the whole public service. In this role it has provided “best advice” that has delivered bloated public service staffing, unsustainable pay and pensions, massive upward grade drift, system-wide rigidities, abuse of flexitime, high rates of absenteeism, and weak management. To this we may add the degradation of the capacity of the public service through decentralisation, which against all reason it is still pushing through; utter failure to deliver on the long-promised reform of the public service; a set of guidelines which provided cover for the scandalous exit package for Rody Molloy; and most recently, the ill-advised reversal of pay cuts for assistant secretary grades.

As the corporate finance function of the public service, the department has presided over a situation where there is a chronic shortage of economics and financial accounting expertise throughout the whole public service, including in Finance.

The annual reports of the Comptroller and Auditor General reveal a litany of waste and financial mismanagement on a vast scale. Some small and medium enterprises making widgets have more highly qualified finance functions, and are subject to tighter financial controls than government departments and agencies with multibillion-euro budgets. The Department of Finance is ultimately responsible for this scandalous skills deficit and absence of financial discipline.

In summary, the department has abjectly failed in the performance of its vital national mission, in its “central role in the economic and financial management of the State and the overall management and development of the public sector”. It has failed more than any bank, more than Fás, more than the much maligned HSE and more than the Central Bank, and because of its “central role” the consequences will blight the lives of every citizen for at least a generation.

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The various inquiries into the collapse of the banking system and any other investigations into the causes of Ireland’s five-part crisis must look closely at the role of Finance. Quite apart from its role in causing these crises, this department sets the standard for corporate accountability and governance in the Civil Service – and the OECD has pointed out the pervasive weakness of these systems, as just illustrated with the department’s meaningless Annual Outputs Statement 2009. Measured on outcomes, which is the proper standard, their performance had been disastrous.

It would appear we need more than political reform. What if any steps should be taken to reform the civil service? I think a constitutional referendum might be needed to enforce any changes the service doesn't agree to itself.