Why we won’t see reform of the public service unless we change the model we use.

(This is an unedited version of my Sunday Business Post column from yesterday)

Why do you pay your taxes? One school of thought says you pay through gritted teeth because if you don’t, you’re in trouble with the Revenue Commissioners, and you really don’t want to annoy them. Another school of thought suggests you understand you need the services the government provides, you get at some level that these services don’t come for nothing, and so you pay taxes, probably while grinding your teeth, as the price of social services and a cohesive society.

Imagine this. You don’t pay your taxes and the government suspends its role in protecting your private property. So Stephen Kinsella defaults on his obligation to the state and the police force simply say sorry, we are not enforcing this guy’s property rights. Someone can now walk into my house and take, by force, whatever they want, up to and including the house itself, if they have enough force. It’s obvious society wouldn’t work too well if the fundamental rules like the provision of property rights went out the window if we didn’t pay our water charge bill.

When you look at what the state spends its money on, it is mostly Health, Social Welfare, Education, Justice, and everything else. Huge components within those ‘big-beast’ spending departments are salaries for the 300,000 or so workers of the public service. Since the onset of the crisis, both governments have tried to reduce the cost of providing social services while increasing productivity and delivering on a reform agenda the Secretary General of the Department of Expenditure and Reform, Robert Watt, discussed in this paper a few weeks ago. When you look at the kinds of reforms of the service already enacted and now law, it is impressive. That doesn’t mean the job is done, or the correct measures were enacted. But whistleblower legislation, freedom of information legislation, agency rationalisation, open data initiatives and of course public sector procurement reforms are nothing to be sniffed at.

Public sector workers have endured three pay cuts as well as working longer hours in many cases, which is itself a pay cut. That said, even when you take their increased age and education levels into account, public sector workers are still better paid than private sector workers. As we begin a ‘social dialogue’ process after Easter, it is wrong-headed to focus on pay alone, when actual ‘reform’ is about a lot more in the medium term. The public vs private bun fights will return to our TV screens.

Reform means different things, depending on where you sit in the hierarchy of Irish society. To those at the top, reform means cheaper, more elastic services delivered by better-regulated people who face serious consequences when they mess up. Those in the middle regard reform as just more work, and more accountability for those at the top and the bottom. Those at the bottom of the pile understand reform as more and better services, and more accountability for those at the top. Each set of incentives is understandable, but only those at the top have the power to change the rules of the game, a game they have already, by dint of their position, already won to a certain extent.

For the sake of the argument, let’s define reform as more accountability for all with better services provided by more productive people using better systems. Reform like that is hard enough during the bad times, when the exigencies of crisis force traditional power relationships to change, sometimes quite literally, for the good of the nation. For example, in 2009 and 2013, a union leadership used to negotiating over the distribution of a surplus suddenly had to bring about unilateral changes in their members’ pay, terms, and conditions. The usual divvy-up was not on offer. Social Partnership had done its damage. Reading the legislation enacted to bring in about some of the swinging cuts, the intention of government in particular is clear: these cuts are here to resolve an emergency situation. The Financial Emergency Measures In The Public Interest Bills, or FEMPI, were designed to be time-specific and each has lapsing and renewal clauses within its structure. The Minister can extend the emergency measures but has to stand up in the Dáil, presumably behind plastic sheilding wearing riot gear, to do so. Less than 370 days from a general election, no Labour minister is doing that.

If reform during the bad times is hard, reform during the good (or let’s face it, less-bad) times is even harder. Everyone has their hand out. Every lobby group will run an argument for more funding along the lines of: You can’t simulatneously be the fastest growing economy in Europe and be in an emergency, so we’ll be seeing negotiations aimed at restoring some aspects of the pay and conditions withdrawn, while keeping a lid on a return to the ‘boomier’ aspects of the public sector pay process.

I’m worried the push to renegotiate the public sector’s arrangement with the government will result in a return to the kind of back room deals which did so much damage to the economy in the past. I’m open to being proved wrong. The biggest reform this government can provide us with is a transparent process where the mistakes of the past are not repeated, which is designed to remove the ability of interest groups to capture the government of the day for their own ends. There is nothing wrong with interest groups fighting their corner. It is wrong when the rules of the game ensure they’ll win regardless. We won’t see reform of the public service unless we change the model we use.