More on McCarthy

The Irish Times editorial at the weekend as regards the McCarthy Report is well worth a read. For from the off it assumes that the Report is the evidence of… well, read on if you will…

SO NOW we know the real extent of the problem and the gravity of the steps required to remedy it. It is overwhelming.

The idea that the Report charts the ‘real extent’ of ‘the problem’ is an interesting reading of it. Is the PS bill the problem? I’d have a different analysis, and I’ve articulated many times why I take that position. We have a relatively small and not unreasonably paid PS by international standards. What we have is far from extravagant in terms of service provision. Since the financial crisis corrections that I support, to no small degree, have occurred as regards pensions. Personally I’d like to see a proper universal provision society wide. As regards examining for waste there is in any system always room for improvement. But even beyond me and my thoughts one of the most striking results of the McCarthy analysis, as noted by Michael Taft, is how little there actually is to cut. Where are the vast savings we were promised from our coddled, pampered, massive Public Sector? This, after all, was the Report that was meant to forensically cut away to reveal a leaner more efficient entity beneath. But oddly that hasn’t happened (what has happened has been a number of indications that McCarthy wasn’t quite as forensic as was presented).

But a sense that the Report in and of itself is a justification for all that flows from it is strikingly pervasive through our media… what of Richard Bruton’s words at the weekend in the Sunday Business Post?

The huge number of recommendations in the McCarthy report gives some indication of the scale of the challenge.

The fact that the continued existence of two government departments and 98 agencies is now in doubt gives some indication of the amount of waste and bureaucracy that has flourished under Fianna Fáil.

Uh-huh?

We now live in a postMcCarthy world. The sheer scale of the reforms needed to restore the public finances and reform the public service is now clear. So it’s disappointing that the only element of outsourcing implemented by Fianna Fáil to date has been the cabinet’s efforts to use Colm McCarthy as a scapegoat for the tough reforms that the government should be implementing. Rather than try to explain the report to the public, the cabinet seems to have gone to ground.

And it’s striking the direction of some of the reporting of it. For my money the best example of that was Mark Henessey in the Irish Times who sought to praise with faint praise. So after the somewhat odd compliment that the Report was ‘beautifully written’ which he appends to “it does flog a few horses that have been around for years, including the need to find ways to force doctors to use generic drugs” he notes:

Such magic-wand solutions have rarely produced much worthwhile, while the fascination for outsourcing in the report can be questioned given the past inability of the State to limit such bills.

Fair point.

Then he launches into musings on the Report and the issues it raises.

Should social welfare rates ever be cut? Should they be cut last? Should they be drastically reformed to root out waste and abuses (and they exist, and by the score) to ensure that those most in need are protected until the last?

It’s an interesting question, I suspect the answer is – as ever – it depends.

Problem is that the accompanying statement is incorrect. Go back and read the last appearance of personnel from Social Welfare before an Oireachtas Committee and one will see that far from waste and abuses existing by the score they’re actually fairly easily quantifiable and of a much lesser extent than the media proposes.

Hennessy argues that:

Extra taxation should be levied, but not in the form of income tax. People should not be discouraged from going out to work. We should pay property taxes, we should pay for our water and we should stop behaving as children thinking that services can be provided for nothing.

Who though is this we? The left argued across the decade, with a number of important exceptions, for higher taxation. Income tax as it happens because the left has also argued that universalism is better in such matters than fragmenting it, as with water charges, etc. However, note how that bangs straight into the ‘don’t raise income taxes’ mantra. A mantra that makes little sense if at the end of the day taxation is being levied (and by the by is a wedge issue in order to lower taxes and decrease public provision, as has been seen in the United States and elsewhere).

But, equally, we cannot have a situation where Middle Ireland is always the mug forced to pay more. Social welfare cuts may be the last thing to be done, but, if it has to be then so be it.

Are we at that point yet? Are we anywhere near it? Unfortunately he doesn’t actually come out and say we are.

The report’s focus on health, education and social welfare makes it easy to portray McCarthy and his colleagues as hardliners, but his opponents must make it clear where savings can be made.

Siptu president Jack O’Connor has poured scorn upon it, favouring a stimulus package to get people to spend what they have stored away. It is a well-articulated argument, and one would dearly wish to believe that he is right in thinking that such a stimulus and extra taxes on the rich are the way to get us out of this hole. However, I doubt that this can be done without pain for all.

No one is disputing there will be pain for all, indeed I’d argue that already there is pain for all. But McCarthy provides the polar opposite of what O’Connor suggests. A fiscal stimulus built on ‘pain for all’ is, to my mind, a vast improvement on a fire sale of public sector provision across education, transport, health and so forth.

Some realities have to be faced. Firstly, a decade-long boom when money could be thrown by the State at everything was funded by Lotto-style winnings from property taxes, and other one-offs. Those taxes are long gone, and will not be coming back any time soon.

However, the services they funded are still around. General taxation must rise to pay for them, or else we have to accept that some must fall. Undoubtedly, reforms could save some programmes. More could be done for less, but this will mean that public sector workers – who are as reluctant as any to accept change – must abandon old ways.

Except, and here’s a key problem, precisely what old ways is he talking about? The only truly fundamental ‘reform’ that comes out of McCarthy, and incidentally it’s one I support fully, is the idea of greater mobility in the Public Sector. Other than that we see no evidence of pan-systemic ‘old ways’ or restrictive practices. Instead we see practices that have developed in certain areas, such as the Garda, and practices that are specific to those areas. Indeed the very phrase ‘restrictive practices’ is used only once in Vol. 2 of the report in reference to some aspects of the primary and post primary education sectors (which I largely, although not entirely, would have little problem agreeing with their amendment).

Many in the health service work crucifyingly hard for patients, but the service is littered with restrictive practices that can stand comparison with the worst of the nonsense tolerated for decades from trade unions in Fleet Street.

Again, having read the text I’m not as certain as he that that’s what we see there are restrictive practices. For example, is working on a Saturday or Sunday for a pay premium genuinely restrictive, or is it a reasonable enough added extra? At the very least it’s debatable. Are all allowances unreasonable? Again, debatable.

Teachers can look to their own laurels. Perhaps Batt O’Keeffe last year exaggerated the impact of sick-leave days, but the idea of 31 days of uncertified leave is a joke. McCarthy is right when he says that Ireland is over-governed and over-administered.

Again, one wonders… what of the small but significant fact that it is primary teachers who get 31 days, secondary teachers, not VEC teachers who get 7 days uncertified, do indeed receive 30 days. The take-up rate is as follows:

At second level, 9,353 teachers took 1-4 days of uncertified sick leave; 3,208 took 5-9 days; 533 took 10-14 days; 88 took 15-19 days and 17 took 20-24 days.

So, if one proposes that three or four uncertified sick days is not an unreasonable provision (and realistically I suppose it’s possible that teachers are more exposed to infectious but short term conditions than most of us, otherwise why the latest thought from the WHO that schools may have to be closed in order to stem the transmission of swine flu – as it happens during the year I lecture in a third level institution on a weekly basis and I’m very conscious that vectors are much greater there than generally, and trust me, I’m watching the swine flu issue with more than ordinary interest) we can see that around 70 per cent of teachers cleave to something approaching the norm. As for the other 30 per cent? And in particular the magnificent 17… I can’t say I have much sympathy there, most importantly because one wonders how they could possibly do justice to the responsibilities they have to their students. Still, I can’t blame Hennessy if he misses the nuances of this. Because they aren’t in the Report, the text of which goes…

Sick leave arrangements: Teachers’ sick leave arrangements are more generous than the norm in the public sector, with an entitlement to 31 days uncertified sick leave each year at primary level, and no requirement for a medical certificate unless the absence exceeds 3 consecutive days. At post-primary level, the allowance is 30 days uncertified, with a certificate only being required for absences of more than 4 consecutive days.

Which is demonstrably incorrect since it ignores VEC teachers.

As regards it being overwhelming, well, riddle me this. The full measures proposed by the Report would amount to about €5.3 billion. We know that, as the IT puts it…

The first thing to be said is that this report presents a menu of financial options to the Government without any reference to the social policy of this State. The savings required by Government are significantly smaller than the scale of reductions identified in the report as being feasible. Since last year, some €9 billion has been taken out of the economy, largely through tax increases. A further €3 to €4 billion will have to be found next year and the expectation is that the bulk of this money will come through savings and public service reforms.

On Monday he was on RTÉ, and arguing that a unicameral chamber was a potential cost saving.

In its report the review group says that in order to realise substantive savings in expenditure within the Houses of the Oireachtas, it would be necessary to bring about major structural changes with considerable political, legislative and constitutional implications.

Think about that for a moment. It’s not whether the structures are in and of themselves good or bad or whether they have a societal value. It is instead ‘in order to realise substantive savings’. And what sort of savings? €28 million. There’s no comparison with other European polities to assess the ‘cost effectiveness’ of our highest democratic structures or contextualisation of any sort other than to note that a range of other European countries have unicameral parliaments. Given the very specific nature of the development of the Seanad one would reasonably expect more than that.

McCarthy admits that:

… reducing the number of TDs by 10 or so would not save as much as people thought.

He added that €120 million or €130 million annually was the total cost of the Houses of the Oireachtas Commission out of an overall public spending total of €60 billion.

“But there is a demonstration effect involved, and we felt we ought to look at it,” he said.

But what demonstration effect? It’s one thing, and here I’d fully support reforms, to argue for cutting wages and allowances for our political class. It’s quite another to actually argue for structural change. That the distinction appears to elude McCarthy is instructive. By the by, on another topic, for many years we were told that the ‘demonstration effect’ of Sinn Féin TDs, the one Socialist Party TD and before them Workers’ Party TDs taking the average industrial wage and giving the balance to their parties was showboating on a grand scale. Of course that was then and this is now and I guess when the likes of Eoghan Harris are trumpeting their self-imposed wage cut of…er… 10% as if it were the height of parsimony we should expect little or nothing.

There really needs to be serious debate about all this, not just on the proposals themselves, although on that there presumably will be, but on what they represent and what they mean and what sort of Ireland they will attempt to usher in…because while there are undeniably some good ideas in there that should be adopted there is also, unfortunately, a very clear underlying dynamic. McCarthy argues that he does not call for the dismantling of the welfare state. That’s fine as far as it goes, but the approaches taken fundamentally weaken what provision we currently have. Look at what we lose… current child benefit payments, Garda stations (may not matter to some but I have a certain respect for the force and having seen the necessity for good policing a sense of how important that can be), a cut in unemployment benefit, a ‘rationalisation’ of our public sector, free education, direct impacts on farming subsidies, rural transport, health, a ‘restructuring’ of our actual democratic system. And so on. And so on.

More on this to come.