Nat O'Connor: There are four stories in the press today that each illuminate part of a big, unanswered question, which is about what is the best way for the State to operate.
The newly elected president of the Irish Planning Institute makes a defence of planners and calls for better planning in future. Two Sandymount residents give a detailed critique of Dublin City Council's planned incinerator. An Taisce and the NRA dispute the data being used to justify the NRA's road-building programme. And NAMA seems set to decide the fate of 35 hotels.
What these stories recall is the balance that should exist between the role of the State in facilitating longer-term strategy and planning, versus the role of commercial bodies to provide more immediate goods and services (ideally within a regulatory framework that trammels market activity so that it aligns with long-term strategy).
Part of the aftermath of the economic crisis must be the widespread realisation that the over-reliance by Government and senior public servants on unregulated market forces led to a poorly planned housing system, an unsustainable hotel industry, and many other problems. Indeed, many public bodies seem to operate as if they are independent entities competing for finance and importance, rather than co-operating as partners in realising a democratically-mandated strategy.
Part of the solution must be the rise of more evidence-based policy-making and a reappraisal of the state's capacity to plan and strategize. (It is incredible that it was already the twenty-first century when, in 2004, a Taoiseach addressed a conference on the issue as if it were a great novelty!)
Yet, despite the need for strategic leadership from the State, the Government seems inevitably drawn by its 'Ireland Inc' reflex to attempt to fix our problems by relying on market-driven approaches. For example, from NAMA's business plan, we know that it will operate "as an independent commercial entity" (page 8). In relation to hotels, "Where a number of NAMA-funded hotels are competing in a location where there is only potential for a single facility, NAMA will make its decision based on the optimal commercial outcome." (page 12).
The Ireland Inc reflex is problematic. For example, NAMA will be the only market player in many situations where it owns hotels or developments of housing. Hence, there won't be a market to determine prices. And the relatively short-term decisions it makes may not reflect the long-term public interest. Hence there needs to be strategic leadership, based on solid evidence, to guide its decision-making.
The example of the incinerator critique suggests that Dublin City Council is acting like a private entity itself, by making a secret deal with Covanta that will last 25 years. The council's motivation seems to be getting a cut of the revenue stream. While I recognise the flawed funding system for local government, having individual councils make these kind of deals in order to raise money does not seem likely to be the most effective outcome for the public interest; because unlike a private company which has to pay its own way, the council is signing off on a deal that taxpayers must fund.
There needs to be a major culture shift within Government and senior public service to recognise that you simply don't run a country in the same way as a large corporation. So much of the logic underpinning the goals and purpose of the State - such as long-term planning, non-profit outcomes (like health and education), protecting the public interest and environmental sustainability - runs entirely counter to how a business operates. Yet, the row between An Taisce and the NRA, as well as the criticism of the incinerator, suggests that there is a fundamental weakness within the public service when it comes to complex analysis of data in order to guide decision-making. The NRA and An Taisce may both be making valid analyses from their different perspectives, one arguing for more roads and the other for more public transport, but where is the central strategy that describes the balance between these competing goals?
We need better quality data from the outset. Which means that public bodies need to be audited for their capacity to provide meaningful indicators relevant to the policy areas they influence. This requires a serious audit of the current data generation and data analysis capacity across the public sector - and how this can be analysed holistically by Government Departments. And, as a matter of course, all of this data should be readily available to citizens, so that secret deals become impossible!As part of public sector reform, serious attention should be paid to whether or not the universities provide enough qualifications to allow us to re-skill and up-skill senior public servants. One good example is the joint professional doctorate in Governance, jointly run by Queen's Belfast and the IPA. We need more people with MPAs not MBAs in the public service, yet nearly all the Irish universities offer MBAs but none offer MPAs.
It's time to do away with the Ireland Inc metaphor and the failed assumption that public bodies can be run along free market lines. We need a more professional approach to the role that Government must play in leading through strategic data analysis.
5 comments:
"...you simply don't run a country in the same way as a large corporation."
I think this sums up why, at a time when the infamous 'Washington Consensus' has been severely battered, social democracy has failed to advance. It appears that, in most developed economies, a plurality of voters do not want governments 'to run the country'; they simply want competent governance. And the debate reduces to defining the areas of government competence; but this appears to fall far short of the 'commanding heights' which the 'progressive-left' would wish to secure.
Paul,
First of all, your problem with the sentence is not clear. I argue that recent Governments, and some senior public servants, seem to have adopted the language and techniques of managing private sector corporations in their work (what I call the ‘Ireland Inc’ mentality). I also argue that there are different techniques required for managing public bodies, including Government Departments. Not least this is because not-for-profit goals, such as health or education, require very different auditing than simple bottom line end-of-year balance sheets. Do you disagree?
Secondly, I disagree with the claim you make that people “simply want competent governance” when it comes to the role Government plays in society. I agree that people do not want ministers running the country as if they owned it, and they do want ministers to be competent, but I argue that many people desire the Government to take an active role in addressing social problems, such as illness, disadvantage, crime, etc. I also argue that people want politicians to take leadership roles in putting forward suggestions for alternative ways of delivering core public services or implementing other public policy. Where do you see evidence that a plurality of voters don’t want this?
Ireland’s problems do not reduce down to issues of ‘governance’ alone. It is not at all likely that a new ‘board of directors’ (i.e. cabinet) would change much in isolation. There is a need for deep reform of the public service at an operational level, and an audit of its information management capacities would be a good start.
We'll just talk past each other if you restrict 'governance' to the composition of the executive and fail to acknowledge my point about defining the areas of government competence.
In the end it all boils down to questions about how much should the state do, how should it do these things and to what extent should it be empowered and resourced to do these things.
As I understand it the 'left-progressive' view is that 'free markets' have failed therefore (a) the state should do a lot more and (b) efficiency-generating processes developed by the private sector pursuing profit in these 'free markets' either have no relevance or are damaging to the provision of public goods and services.
The reality - and this is particularly the case in Ireland - is that policy governance and regulation failed. I realise you will probably remain unpersuadable, but, rather than requiring the state to do more and allocating it additional resources and powers I do not find it strange that many voters would prefer that governments got policy and regulation right, fostered genuine, efficiency-generating competition and promoted its use to the greatest extent possible.
“In the end it all boils down to questions about how much should the state do, how should it do these things and to what extent should it be empowered and resourced to do these things.”
I agree. (This point wasn’t clear to me as you phrased it in your earlier comment).
“As I understand it the 'left-progressive' view is that 'free markets' have failed therefore (a) the state should do a lot more and (b) efficiency-generating processes developed by the private sector pursuing profit in these 'free markets' either have no relevance or are damaging to the provision of public goods and services.”
I don’t agree.
Re markets, deregulation and the weak enforcement of market regulations have failed. Markets are useful for many goods and services, but they all need to be regulated so that they serve the public interest.
Re the role of the state, my major concern, in the first instance, is that the state should have the resources to do the things it is already meant to be doing – particularly in social policy – and to do them in a way that fosters greater equality. So, if we want health and education of the best quality, we need to pay for that.
In most scenarios this involves increasing tax revenue. This might create a bigger state (i.e. bigger tax-to-GDP ratio) but it does not equate to the state taking up more roles, although I have no problem with state-led initiatives in other areas, including the economy, as long as evidence supports the action.
Conversely, some state-led programmes must inevitably fail, for numerous reasons. So, I support the creation of robust mechanisms (e.g. indicators, parliamentary scrutiny) which weed out and end state-led action in areas where it isn’t doing much good.
“efficiency-generating processes developed by the private sector pursuing profit in these 'free markets' either have no relevance or are damaging to the provision of public goods and services”
The answer here must be 'it depends'. I am all for innovation and new working practices, if there are demonstrable efficiency savings. Likewise, I welcome increased flexibility in the public service, especially at managerial levels. I am wary of 'efficiencies' that are a facade for lower wages or less environmentally sustainable practices. But there is a big difference between welcoming managerial innovation and suggesting that public bodies should be run as if they were private, for-profit entities.
“policy governance and regulation failed”
I am easily persuaded that this is true!
“...rather than requiring the state to do more and allocating it additional resources and powers I do not find it strange that many voters would prefer that governments got policy and regulation right, fostered genuine, efficiency-generating competition and promoted its use to the greatest extent possible.”
This brings me back to the beginning. The state provides a massive array of services. Based on European comparison, it seems highly likely that more resources will be required to provide high quality services and strong regulation. And I think that most people want those services, even if the level of tax required would be unpopular at first.
Deregulation allowed a lot of unsustainable activity that ultimately we pay for through bank bail outs, etc. Higher taxes to pay for stronger regulation would have cost us much less than Anglo.
There is also a positive feedback loop that can be generated. More resources for the state allows stronger regulation, which should make markets work better and grow national income.
Many thanks for taking the time to respond so comprehensively to the few disconnected observations I made. I wish I had the time to respond in like manner - and may do so at a later stage (though this may not be the appropriate forum as it may be of little interest to others).
I also think we need to put this exchange into context. Globally there are huge imbalances which have contributed to the current crisis and which are hindering recovery. Huge East Asian (primarily Chinese) balance of payments surpluses - matched by a similar German surplus in the EZ and a petrodollar surplus in the Gulf - generated a global liquidity glut. The dismantling of long-established regulatory controls on the banking and financial sector - driven by wealthy and powerful elites - generated an unsustainable credit boom from this global liquidity. Since the mid-80s the share of labour in the distribution of income - and that of capital has risen - in many developed and developing economies. Increased credit was used to compensate for the stagnation of real pay and wages.
Even though the bubble has burst and economies with significant fiscal deficits are experiencing a brutal deleveraging, the big global imbalances have diminished little.
Even though it seems to have avoided the damage of the toxic assets that brought many US, UK and bigger EU banks low, Ireland contrived to generate a largely self-created implosion that is more serious relatively than that experienced in other developed economies.
Wrt the resolution of the banking crisis and the level and pace of fiscal adjustment I would contend that Ireland's sovereignty in these matters is now exercised by the institutional EU. What sovereignty remains may be applied to the composition of fiscal adjustment and the reform of the state, semi-state and sheltered sectors.
And it is here that the debate may be joined about the relative roles of the public and private sectors, but in the broader context described above. I very much wish it were otherwise, but, unfortunately, it is not.
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