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Speech given to – Chartered Accountants Ireland – Public Sector Forum

Speech given to – Chartered Accountants Ireland – Public Sector Forum

February 22nd, 2012

I would like to thank the Institute of Chartered Accountants for inviting me here today to address individuals and representatives of organisations who have a crucial role to play in putting Ireland on a new course, one that I hope will lead to a better, fairer, more inclusive society.

During the Tiger years, many people in responsible positions in this country did not do enough, or did nothing. Neither course is really an option for any individual or organisation occupying a leadership role. Politicians, trade union leaders, senior public servants, bankers, regulators and individuals in the media and the professions all have a part to play and have a duty to remember that the common good should take precedence over self-interest. Along with the churches and our cultural and educational institutions, they constitute the spine which binds our society together.

A few discs in that spine slipped, and remained dislodged, under the weight of the boom, when greed crept in and duty was forgotten. Some of those discs still need attention.

Hands were either in gloves or washing one another; nods, winks and nudges were the order of the day; guard dogs did not bark and conflicts of interest were ignored.  With a few notable exceptions, voices, that should have been loud and powerful advocates for good governance, caution and rigour, whispered or stayed silent, as hares were let sit and kings walked naked.

Caution was thrown to the wind and concerned voices were ignored, as greed took hold and the fabric of our society was torn apart. Seduced by the tinkling from what Yeats called “the greasy till” we forgot our obligations to each other, our country and our children’s future.

 We comforted ourselves with the thought that a rising tide lifts all boats.  It certainly did that with the good ship Ireland before testing its construction and sinking it, without discriminating between the foolish, the greedy, the guilty and the many innocent people who were on board. The captains and officers of that ship still have serious questions to answer.

Now we blame many things for our fall from grace: German lenders, rapacious builders, bad bankers, etc, etc. But, I believe, without any doubt, that the real cause was absence of good governance in many areas and the lack of backbone that makes that possible.

Leaders across our society did not lead. They did not keep their people, their organisations or their country safe. They did not make the difficult choices on behalf of their people that their contract with those people demanded.

I want to make this point very clear, this country is governed by politicians, but that is not where it stops, there are other respected powerful voices who should not stand back when duty calls. Without denying in any way the responsibility of government and politicians in general for some of what happened, it has to be said that the backbone of this country was tested and found wanting. We now have three technocrats in Ireland telling us to do what we could, and should have done ourselves, while our politicians go with begging bowls to the EU.  It is shameful.

In politics, if the government was weak, the opposition was asleep. Softened by many years of power and plenty, politicians did not lead or challenge, relying on the Irish people’s reluctance to punish, in the ballot box, lack of ability, weak leadership, broken promises and bad policies, an attitude that I hope is now changed forever.

The people of Ireland must understand that if they do not use their votes to support quality and ability, wherever it is found, and ruthlessly deal with incompetence, they are putting their country and their children’s future at risk. The price of democracy is eternal vigilance.

When governments spent, opposition parties called for more and trade unions asked for, and were given, more; which largely went into the pay packets of senior civil servants who, in many cases, were doing the country a lot less service than they were doing themselves. Power was delegated and often abused, and responsibilities were shifted to such a degree that control was impossible and, in the end, no one was to blame for anything.

 In the private sector, it is very hard for the public, and me, to understand how regulators, solicitors and accountants looking for needles could not find or fall over stacks of them. I believe it is now time for institutes such as yours to look carefully at standards to ensure that, for instance, in accountancy, Chinese walls between consultancy and audit practices in the same organisations are resistant to both pressure and conflicts of interest. It also looks to me that the common good would be better served if these services were separated, with large audits rotated between the big three or four, every few years. This would substantially remove the possibility of conflicts of interests and doubts in the minds of the public.

The trade unions too really must look at their model and shake the dust off it. Trade unions are necessary, they give workers a voice and, in general, collective bargaining is a good thing. But they also have a duty to consider the bigger picture in relation to their leadership role in our society; their openness to advanced industrial relations thinking in other European countries; the transparency of their own accounts and the creation of a two-tier membership.

There is growing concern among some senior union officials, who have spoken or written to me about systems of financial control in unions, and recent events in a number of unions have highlighted this. Unions and large charitable organisations come under the Friendly Societies Act. Given the substantial sums of public money many of them deal with, and ignoring the question of whether unions are charities, this is like being satisfied that Bo Peep can look after a pride of lions. I believe all organisations handling large sums of money should prepare a full set of independently audited accounts and submit them to the Revenue. This would ensure proper controls are in place and alleviate public concern. If, as a member of the Dáil, I and my colleagues have to submit comprehensive accounts, which are subject to audit, surely large social organisations should do the same.

There is also disquiet among private sector union members that they are being discriminated against. It is easy to understand this: either their pay and conditions should be the same as their public sector brothers and sisters or it should be the other way around. Also, private sector workers are contributing through tax to public sector pensions and payoffs, at a time when their wages are being cut and jobs are being lost. Wasn’t there writing on a gable end in Orwell’s farmyard which cast light on this!

I am sure there are a number of you out there desperately suppressing the desire to ask me where I was before and during the crash. It is a fair question to ask a Fianna Fail T.D.

I could give you the answer Khrushchev gave to a delegate at a convention he was addressing, who loudly demanded to know where he had been during the Stalin years. Khrushchev challenged the heckler to stand up and when he didn’t, said “Now you know. Like you, I was lying on the floor.”

My answer is that I did what I could, which was not enough. I was concerned about weak leadership, beurocratic indifference and lack of decision-making.  I did not realise the crash was going to be as big as it was. Like the late Brian Lenihan, who gets too little credit for his bravery and diligence, I initially believed the bankers. It was a national emergency and I did not consider that they might be misleading us or simply did not know the true position. After all, they were independently regulated and audited and neither the regulator nor their accounts had set alarm bells ringing. 

Well now we know. All has been revealed and we are where we are, as they say.

Now, while the smell of burnt fingers, charred egos and incinerated wealth hangs over Ireland, we should all take time to contemplate and accept our mistakes, before putting them behind us and, using the information and insights we have so painfully and expensively gained, pull down, rebuild and make better.

The road we take from here will demand great leadership across our society, plain speaking and a good deal of courage. We have been given a painful and powerful lesson, which requires a powerful, positive response.

This is a call for change in the way we think, in the way we live and in the way we are governed. We need to grow up. The question – the really big question is -are our leaders up for that challenge?

Do they have the stomach for straight talking, hard facts, and, decisions, devoid of spin, fudge, euphemisms, obfuscations and the long grass into which generations of politicians, senior public servants and trade union leaders have kicked every  ball that looked even vaguely like a hot potato, largely without censure. That long grass is now home to a number of sacred cows, the biggest of which is the Croke Park Agreement – the others are resistance to the reform of the public service and the in-house  auditing of local government. All of these will have to be slaughtered, because they are wandering across our pathways to progress.

Political parties too should consider their thinking, and their positions. They should move away from the tired ideologies they cling to, which often demand rhetoric that is damaging and socially divisive, simply because they believe it is a unique selling point that encourages brand loyalty. Yes, it is as cynical as that.

I am tired of hearing from the left that the rich should pay and from the right that greed is good. There are many rich people in and, legally, out of this country who are committed to Ireland and make a huge positive contribution here and abroad. Demands for more tax on them, just to maintain an ideological position is a cheap shot which will yield very little, but could well encourage them to take their talents elsewhere, fed up with being tarred by a brush only a few deserve.  On the other hand, excess at the top and disregard for our society’s norms and standards by a few should not be tolerated. We need to accept the Jesuits advice about the lesser evil for the greater good and reflect on the fact that a society dominated by rule books, which treats all sins as mortal, leaves little room for forgiveness and redemption and squeezes out moral codes that have the flexibility and tolerance to deal with messy humanity, without pushing it into a corner.

The Civil War is over, the Iron Curtain is down and the Irish people are now more interested in truth and performance than the collected thoughts of De Valera, James Larkin or Michael Collins, with the greatest respect to those giants. The world has moved on and most major political parties are already in, or close, to the centre, whatever they tell their supporters.

Political parties should give up the twaddle and hypocrisy that is giving politics a bad name; they should drop the rhetoric and positions of the past and define themselves by the way they deal with real problems in the here and now. God knows there are enough of them.

I think a synthesis of the ideologies of the left and right is emerging, which agrees that capitalism needs to be contained and socialism needs to be sustained. It avoids arguments about big or small government and concentrates on its quality and effectiveness. It acknowledges the rights of the individual, but upholds the principal of the common good, while accepting that it is best served by people standing on their own feet and making their own way, with as little state involvement as possible. It argues that social support systems – the welfare state – are hallmarks of a civilised society, but believes that they should be efficiently and cost-effectively run by bureaucrats who are required to understand that thought, care and reasonable flexibility are good and necessary. It recognizes that capital and labour are well on the way to understanding and respect, under the influence of cutting edge thinking and the practicalities of the market place, which is not going to disappear anytime soon.

If you look at capitalism as a square and socialism as a circle you can see that the discussion might be about which one contains the other, but there can be no doubt that they need one another and must live together. I wish they would settle for a party called Commonsense.

I have been called right wing, which greatly surprises me, and my constituents. In fact, I am that strange animal,  indeed, an oxymoron, a pragmatic socialist, which is one of the reasons I joined Fianna Fail, the least ideologically driven of our three major parties, although it more than lost that sharp edge in the last ten years.

Ideology is not going to take me anywhere that my common sense tells me is not worth the journey. I stay in the middle left, picking the best of what I see around me and what my own experiences and common sense tells me is sound.  And if I had my way that is where Fianna Fail would be too.

My grandfather was a labourer in Kilkenny Gas Works and my father was a shop assistant in Lipton’s before getting his own 8-to-10:30, seven-days-a-week local grocery shop. You could say my family was upwardly mobile until I came along.

I am telling you this because I want you to know that I know what hard work, little money and long hours are about. I experienced them myself and served people in the shop who had to struggle to make ends meet. Men and women who crucially, had pride, dignity and the quiet satisfaction that came from being able to support their families, which their dependence on the welfare system seems to have stolen.

Now we have generations with little understanding of anything other than the social welfare system, which has made them totally dependent and has robbed them of their dignity and self respect, because it gives them money without thought or care. This is a failure of the right but, actually, more particularly of the left, as I will explain later, which will haunt our society for generations, as we struggle to deal with the problems emanating from ghettos that now exist around every town and city in this country. 

I know very well the indifference and systematic failure that has brought these generations to the dreadful place in our society that they now occupy.

I do not need lectures from the left about social justice. Social justice is not about ideology, it is about the quality of the delivery and that’s far from good. Indeed, it is one of the reasons why I am happy to be here today to talk about the need for public sector reform.

While remembering Ibsen’s advice that anyone standing up for truth and justice needs to bring a change of trousers with him, I will try to be as objective and honest about this difficult subject as I can.

The management and administration of the public service, its systems – such as they are – and its human resources and work place practises are not fit for purpose. It costs too much to run and does not give good value for money.

I want to be very clear. I am not talking about front line workers, who are cynically used as human shields every time anyone attempts to touch the creaking ancient structures their hard work is keeping erect. Neither is it about the many good people at all levels of the public service, including senior management level, who know that change must happen and would willingly engage with it were windows and doors to be thrown open and reactionary attitudes and tired useless systems thrown out.

It is about the culture in the public service that has grown up over generations and is now a dominant force in the way public servants think and act. That culture denies people the opportunities, pleasures and satisfaction that a modern efficient well run organisation can bring to its workers.

It is about the loss to our economy of a public service which, if it has been run according to best practise standards in the private sector, would be worth its weight in gold in Ireland‘s effort to right itself.

It is about the lack of courage of governments, political parties and trade unions in facing up to the challenge and properly starting the work of rebuilding and renewal. As far as I can see that is still not being done. We are getting press releases, revolving doors, and activity of one sort or another, but we are not getting action.

In the meantime, the public and front line workers, who are worrying about cuts and the security of their employment, must watch many senior public service managers and politicians, riding off with saddle bags of pensions and pay, towards a sunset full of semi state and EU positions. There is something deeply disturbing about all of this.

The Croke Park Agreement, ladies and gentlemen, will go down as the most expensive and troublesome grab since Paris put his arms around Helen of Troy. ……Although, in his case, he did have something beautiful to look at.

There is very little beauty to look at in the way the public service is run. One of the reasons for this is that it is a monument to the Peter Principle; people are regularly promoted beyond their ability, because promotion in the public service is usually a matter of time, but wide shoulders and elbows help a great deal too. The result is that the aggressive, determined and those skilled in work place politics get promoted faster, but they may not necessarily the best. Another result is the creation over time of a collective mindset. The one system in the public service which is powerful efficient and hugely effective is its system of self protection.

New entrants to the service are given jobs for life. That attracts the cautious and they enter a system that appears safe and encourages caution. Anyone who does not fit is simply squeezed out by the governing DNA of what is essentially a hive. Anyone venturing too close gets stung. Change is never spoken about and resisted at every turn. The culture of the public service, developed over generations, is hugely conservative, reactionary, very quick to defend itself and to that end quietly prepared to interfere with the creation of government structures, like the Public Accounts Committee, to ensure their powers are curtailed.

 For example, the PAC secretariat is too small to give members the support they need to do a really good job, although we do our best. The Comptroller and Auditor General, the highest financial officer in the state does not audit Local Government and, therefore cannot monitor the spending of over five billon Euros of public money each year. This is an exercise in territory protecting that should be dealt with immediately, particularly because there is an absence of qualified accountants with private sector experience in Local Government.

Ultimately over time, as always happens, this culture will destroy itself and evidence of that inevitability is already appearing. Look at what poor management and lack of qualified private sector trained professionals in the Department of Finance caused before and during the crash; look at the way retirement is being handled now, which Gerry Robinson correctly described as a shambles.

Actually, you can see this quite clearly when you look at what external objective forces are telling us about the public service and its ability to manage its own affairs: the outsourcing by the public service of services it runs at a loss to companies that run them at a profit. It is a classic market squeeze on an organisation whose cost base has lost touch with reality. It is also a finger pointing at management and the ridiculous systems that prevented the organisation being modernised many years ago. Those responsible should apologise to the workforce and get on with it now, before further damage is done.

Look at the Public Accounts Committee meetings and consider the tens of millions that the public sector’s lack of knowledge, experience, and inability to negotiate with the private sector and control spending properly, costs the state each year. Look at the creation of rules made to deal with the few and pester the many who are innocent, using enforcers that cost more than the money saved.

A reformed public service must have a strong central core of qualified professionals with private sector experience. It is ridiculous that huge sums of public money are being handled and distributed, generally, by well meaning and maybe, sometimes, gifted amateurs. This is not an opinion. It is as fact that is revealed nearly every week at the Public Accounts Meetings.

We need a considerable number of your members in the public system controlling the purse strings and introducing modern financial management systems.

We need human resources professionals to supervise recruitment and training, because the current system whereby public servants interview themselves only perpetuates the culture and ensures that private sector applicants are subject to bias, however unconscious or disguised that is.

Recently, I wrote to the Department of Public Expenditure & Reform to ask, essentially, if the new Comptroller and Auditor General was going to be interviewed by some of those who would be reporting to them and asking why TD’s could not be on the selection committee – I was thinking particularly of members PAC – and was told that this would be perceived as compromising the independence of the C&AG. By whom I wonder, but more importantly, is it not a reflection on the integrity of members of the Oireachtas: if they are not considered sound enough to sit on an interview panel by the public service – who have no difficulty putting their own people on panels- why should the public believe they can be relied on to legislate.  Politicians should stand up and resist this nonsense. The recent record of senior public service managers does not encourage me to believe they should be allowed to impose their mindset on interview boards or anything else.

Yet, the truth is that there are many, many good people in the public service, at all levels, who do great work and I do not want to decry their efforts. I deal with them every day in my political life and I am grateful to them for their diligence and support. I only wish they would be given the chance to work in a vibrant organisation. There are also those at senior level, who called for reform some years ago. I hope they are there now to participate in the debate and guide their colleagues to a better place. My aim is to begin a debate that will result in a more efficient, open, satisfying, happier workplace for all of them, and a powerful outward creative public service for the country.

I want the public service completely overhauled. I want the many good people in it to be given their chance to understand that the freedom, excitement and workplace satisfactions and challenges they would experience in a state of the art, efficient, proud organization, where ability and effort are recognized and rewarded, would be an infinitely better place for them as individuals and as workers than the Victorian, paternalistic and sometimes bullying disorganisation they now spend their time in. I want them to demand change, work for change and welcome change. I want them to know that they have a hugely important role to play in rebuilding Ireland.

Unions have to respond to this. They have a duty to the country as well as their members. I hope they will contribute and help by assuaging fear of change and confidently engaging with the process of reform.

The government has to be pressed very strongly on this, it has to be encouraged to take radical steps rather than make radical statements. The public service in its current state is costing this country a fortune. It is time for change. This needs more than committees, acronyms, press releases and initiatives that never seem to get anywhere. It needs decisive action which sweeps away obstacles to progress. It will take conviction and courage to put in place new structures.  But it must be done.

I believe that if the following actions are not taken no progress will be made:

° The creation of an external negotiating body to represent the government in its negotiations with trade unions. The current situation, where unions, effectively negotiate with union members who stand to benefit most, is the genesis of the Croke Park Agreement, and about as big a conflict of interest as you can get. I would also like the Agreement to be scrapped or substantially modified

°   The creation of an external interviewing board for all public servants above a certain level, with a considerable majority of rotating private sector professionals, on pro bono or limited expenses, hopefully, as we form a society where people and companies will give something back. This would ensure that any unconscious or disguised bias on the part of public service members does not carry undue influence and exposes them to interviewing and human resources best practice, which would help them on in- house interview boards. It would also level the playing field for applicants from the private sector.

°   All positions within the public service requiring professional expertise should be filled by qualified professionals. You will be pleased to hear that I believe qualified professionals are desperately needed and should be well represented in the hard core of professionals and senior public service personnel around which a reformed public service should be built.

° The internal auditing personnel within Local Government should be placed under the control of the Comptroller and Auditor General, who should have the power to investigate any aspect of public expenditure.

° Dáil Committees should be given greater powers. The Senate should be retained providing that it becomes less of a Limbo for politicians on the way out and in, and more of a place where respected figures from Irish society are given a forum and the opportunity to make a contribution to the state, perhaps on a pro bono or limited expenses basis.

° The practice whereby legislation is guillotined and ministerial order and regulation used excessively should be stopped. Members of the Oireachtas are either legislators or they are not and scrutiny of Bills should be part of the work of the Dáil, Oireachtas committees and a reformed Senate.

I suspect that much of this will not happen unless pressure is put on the government by you and people like you in our country, movers, shakers, opinion makers and commercial and social organisations of one sort or another. Will you and they stand up for the future of this country.

Will you stand up  and risk some department or some semi state that you are doing business with, or want to do business with, discovering they don’t need you right now, as happens? 

Will you decide that your best interest and your country’s future is best served by you and others campaigning for and forcing change.

You too may have to buy a second pair of trousers, but it might be worth it.  And I would like some company.

Thank you for your time.

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