Senator Paschal Donohoe:   In preparing for today’s debate, I came across a very appropriate quote from one of the pioneers of our public service, Mr. T.K. Whitaker, who stated: The day-to-day decisions of government, no less than those of individuals, tend too often to respond to the pressures, the needs, the provocations and the opportunities of the moment. Good management demands the longer view.
In this debate and the report from the OECD, what we are clearly seeing is the longer view, in terms of the challenges that face our economy and society and the need for our public services to respond to those challenges. In examining how the public service responds, we must recognise and emphasise the wonderful contribution our public services have made in dealing with so many pressing needs and challenges faced by the country, from our engagement with the European Union, to Northern Ireland, to the status and recent success of our economy. However, the report does not believe there is a need to review the structures of our public service, rather it believes there is a need to review the culture of our public service. I am not sure how in recognising the significant challenges we are facing, we can get to a point where we can review our culture in the delivery of those public services without first looking at the way they are delivered and the structures in which they delivered. It is appropriate for us to pause and reflect on the kind of challenges faced by the public service and our economy and society. There are three that are most appropriate for the discussion in which we are engaged. The first is what is happening with our economy. Over the past ten years, we have seen our economy grow on average by about 7.5% per year. The OECD report acknowledges that for the next 20 to 30 years, we are likely to see economic growth of around 3.5%. The second point is what will happen to the countries against which we have needed to be competitive and perform in the past. Many of those peer countries will change. The centre of economic gravity will move east. The countries that will decide what the benchmark is in terms of competitiveness and how societies are performing are more than likely to be the Indias, Chinas and Russias of the world. This will pose huge challenges in respect of how a small open economy like ours performs. The final point relates to the role of technology and globalisation given that so many of those influences are coming together to create a rights-based culture in respect of how people interact with public services and to create profoundly different expectations on the part of people in terms of the information to which they believe they are entitled about how their public services perform and the standard which they expect those public services to attain and deliver for them. I am critical in that I do not get a sense that this report recognises the breadth of those challenges and the fact that in our future, we will need superb public services more than in the past. The statistics on the economy that appeared earlier in the week showed that many of the public sector parts of our economy were leading the overall economy in terms of output and economic development. We will need that performance more than we ever have in the past. At the same time, our ability to pay for it and our economy’s ability to sustain it will perhaps be challenged more than at any point in the past. There is a real pincer movement, to use an unfortunate phrase. I am concerned because I do not get a sense of urgency or vision from this report about what we as politicians will do and what the public services will do to respond to this profound challenge. The report talks about an integrated public service that acts increasingly through networks rather than top-down structures, greater staff training and mobility, the quality of performance indicators and information, and the need to for them to be improved. I had a real sense of déjà vu in that we have said these things before. My question is whether those recommendations are strong enough and radical enough to respond to the kind of challenges we as a small open economy will face in a globalised world and economic environment that is changing very quickly. There is an omission in this report in that it does not place sufficient focus on the need for the individual using these services to have choice about the services they use and information about the quality of performance they receive. It says additional consideration should be given to the development of both quantitative and qualitative performance indicators that are comprehensible to the citizens and that reflect societal goals. That is the only reference I could find to the need to empower individuals in the services they are performing. This report is good and merits discussion but my point is whether it goes far enough in helping us rise to the kind of challenges we face because we have risen to those in the past and our public service has been instrumental in allowing us to do so. Senator John Hanafin: I again welcome the Minister of State to the House and am pleased to welcome the OECD report on integrated public service reform. It gives us an opportunity to remind ourselves of the role the public service has played in Ireland’s development. We have one of the finest public services anywhere.  4 o’clockIt was only in the 1960s when Dr. T. K. Whitaker and Seán Lemass began a process of developing the economy of this country. Prior to that, we had a public service that provided services for the nation that the private sector was not in a position to provide. I am thinking of services such as the Irish Sugar Manufacturing Company and Bord na Móna, which supplied our energy needs, especially during war years. I am conscious that the Land Commission was necessary to redistribute land during the founding years of the State. This took place across so many facets of Irish life that we now take for granted, many of which have subsequently been privatised. These include Telecom Éireann, which is now Eircom, and other State-provided boards such as the Shannon Free Airport Development Company, which was an example to so many others throughout the world. Other examples include the IDA and Forfás. We have a public service that brought the nation along with an integrated plan for development. It is a very well-educated and highly regarded service which is somewhat on the French model where it is rightly seen as a great public service. We should also remember the great work done by the Institute of Public Administration in providing education. As a graduate of that institution, I can say how very well-organised, committed and focused it is. I welcome the OECD review. Not surprisingly, this review shows that we have one of the most cost-effective public services. Of the OECD nations, we have the third lowest cost for our public service which again must be welcomed. We are in the midst of changing with decentralisation. This decentralisation is to be welcomed because it is bringing into the provinces many of the services of the State which can, through better communications facilities, be just as easily undertaken in rural areas. As a student of this particular aspect of public service, I am conscious there is a timescale involved, primarily because one wants to allow people in the public service time to stream. I am conscious of the French model where over ten years it was decided that if a department was going to Lyon, which may not have suited everybody in the department, they were given sufficient time over a ten-year period to stream into that area or department that was going to where they wished to go. Of course, decentralisation was handled very well. The purpose of the OECD review was to benchmark the public service in Ireland against comparable countries and make recommendations regarding future directions for public service reform. There was a particular emphasis on how the various parts of the public service relate to each other, including the Civil Service and particular sectors such as local government, health, education and justice. The review was undertaken by the OECD’s public governance and territorial development directorate. In addition to the core OECD team, national experts from other OECD countries have been involved as peer reviewers. The OECD, which is based in Paris, was established in 1961, with Ireland as one of its 20 founding members. It is an international organisation with 30 full members which promotes dialogue and the exchange of good practices in public and corporate governance issues, including issues relating to the economy, policy making, human resource management, ethics and information technology. Much of the OECD work is based on peer review and dialogue. It has extensive databases and access to key policy makers throughout its network of committees and working parties. The OECD is a reputable organisation. We are proud founding members of it. The findings of the 375 page report are that general Government employment is relatively low compared to other OECD countries. Ireland has the third lowest public expenditure as a percentage of GDP. We have low cost and low employment, yet we have excellent results and service. We need to enable co-operation and co-ordination to ensure there is no disconnect between the Civil Service and the broader public service. The OECD recommends that the public service think more as an integrated system. We can only welcome this, which is not a criticism but a recommendation. I would happily take on board this recommendation. There are many aspects of e-Government that have yet to be rolled out. The public service will continue to play its leading and proud role. Senator Mary M. White: I welcome the Minister of State. I was fortunate to be in Dublin Castle at the launch of the OECD report on the integration of the public service. Having experience over 40 years in both the public and private sector, I am in a position to comment on it. There are as many clever people in the public sector as there are in the private sector but the management standards in many places in the public sector are not adequate to deliver the service. The core of this report is that we need a more integrated public service and that the public services should be citizen oriented. The principal of a school and the Secretary General of a Department must act as if they were the chief executive of a private company. Speaking of my experience working 24 hours a day, seven days a week for 16 years, unless a company has nous, and looks after its customers, it will not survive. A public company survives because it has first-class management systems. Many improvements have been made in the 20 years since I left the public sector. Management is the most difficult science in the world. If a person is taken on, the job should be explained and performance evaluated. The boss must spell out if the person is doing the job right or not. If this did not happen in a private company it would disappear. Many of our problems in delivering public services are due to the lack of good management. Professor Drumm stated recently that the day must come when Irish people have the courage to demand better public services in the health sector. They forget they pay for the public service. It is taxpayers’ money that pays for the service. They must become more self-confident and demand a better service. They should demand that the treatments for our citizens are as good as those for citizens of other countries. If we find that cardiac arrests here are higher than in Nordic countries or another OECD country, we must demand that our standards of cardiac treatment be improved to reach that standard. Our patients in the public health service should not be patient with long waiting lists. Even with private consultants, to whom one pays big money, one might have to wait one hour in a waiting room before seeing the consultant. The citizen must be empowered to demand an excellent service from the public service, for which the citizen pays. There are at least 360,000 people working in the public sector in Ireland. It is responsible for one in three euros spent in the Irish economy. It sets the policy environment for economic and social development and provides a wide range of essential services. We must take note of the OECD report. The number one change is that we must get metrics to evaluate the service provided by the different Departments. To be a good manager, one must be a leader. People in key positions in the public sector are afraid to be bold leaders. In contrast, one must be a bold leader in the private sector or one is gone. There must be a mechanism to allow people with leadership skills in the public sector to come forward and take risks without fear of losing promotion opportunities if they make mistakes. If one is a bold leader, everything one does will not be right. If we do not make this change in the public sector and this generation does not get this right, the taxpayer will get very bad value for money. Those in the public sector are not less clever than those in the private sector. There should be free movement from the private sector to the public sector and vice versa, giving a cross-fertilisation of skills and innovation. For any good business or policy to survive, it must innovate. We must have innovation in the public sector. Senator Fiona O’Malley: I welcome the Minister of State and congratulate him on his appointment. I requested yesterday that he come to the House but I did not expect to see him so quickly. I will not, however, raise the matter I raised yesterday. The OECD report is vital to the current position of the economic cycle. As Senator White stated, the public service is enormous and responsible for a huge budget, and we must get it right. A good public service is critical to our economic survival. It is timely to undertake such an assessment. The report is, by and large, positive reading. This is to be expected because the public service was set up to perform a particular duty and it did so exceedingly well, particularly in the 1950s when various public bodies were established. The mark of a good public service is its ability to adapt and, by and large, it has adapted well. The public service has expanded by 30% in five years. This has caused a certain amount of alarm. When we had the money we needed the capacity which came with it. At present, we need to examine reform and how we can get the best out of the public service. Previous speakers alluded to a synergy between the public and private sectors, which is a good way to innovate reform. Senator Mary White referred to it. We need an ability within our public service for public servants to move from the public to the private sector. It would be to our mutual benefit that this is the case. The public service would benefit from many practices in the private sector. If we had a better synergy between the two sectors it would improve the performance of our public sector. I wish to speak in detail about motivating performance in those involved in the public sector. The report states that Ireland is at a stage of performance reporting rather than managing performance. It states, “There is a need to develop a performance culture that is based on achieving outputs and outcomes rather than compliance with processes”. This is the essence of what our focus should be. We need a dynamic public service where risk, achievement and innovation are rewarded. I fear this is part of the problem we inherited in an overbureaucratic public service and it is where we need to focus our efforts. From speaking to public servants I know that a sense of drowning in a deep bureaucracy is demotivating and will never deliver the results we need. Reform of the public service is one of largest challenges we face, particularly in terms of the pay talks and agreements, and it is vital that we get it. We need to be able to reward innovation on the part of public servants. To attract people from the private sector to the public sector we must ensure that payscales are appropriate. We may not have performed very well in this area in the past. The other side of the equation is that those in the public service have great security and enjoy great benefits. This is why people in the private sector look at public sector workers with a certain level of resentment. This is where tension can exist. If people were able to work in both sectors, these misunderstandings might go. Reform of the public sector is its single greatest protection. We do not need greater bureaucracy. We need a public service which is motivated, paid appropriately and has an enthusiasm for innovation, which is celebrated and rewarded. Senator Paul Bradford: I thank Senator O’Malley for taking the Chair. I had not intended to speak on this motion but I heard her contribution and that of the previous speaker and now wish to state a few words on public service reform. I must concede to the Minister of State that I am not an expert on the report. However, we have had discourse on public service reform and pay during recent months and we all have a passing knowledge on it. I acknowledge the outstanding service and performance of the Irish public service since the foundation of the State. Many problems have yet to be addressed and we face many challenges. However, looking at the history of the Republic of Ireland during the past number of decades, we have made great progress. Much of this is due to the fine public servants working for Departments, State agencies, local authorities and many other projects throughout the country. We will always have a need for change, reform, fresh thinking and new approaches and we should focus on this. If there is any difficulty with regard to our public service, and we must acknowledge that we are all public servants, perhaps it is that it does not have the flexibility it needs to face the challenges ahead. Will the Minister of State comment on the decentralisation programme? We can see the difficulties in trying to put in place a scheme which is desirable and worthwhile and which will be good for the country economically and socially. Our difficulty in progressing such schemes illustrates blockages and a lack of flexibility and, perhaps, work practices which are outdated and need to be challenged and changed. The other immediate issue facing the Government and the body politic is public service pay. This is part of the reform package as are the questions of productivity, bonuses and performance related incentives. We need fresh thinking in this area. The public sector unions have been clear and strong in defence of their staff during recent weeks, pointing out that there can be no pay restraint or reductions. We must acknowledge that in the new economic climate we face, all sectors will have an obligation to respond, starting in this House. We must recognise that while the public sector and public servants have legitimate requirements and demands and will make a case for further wage increases, on the other side of the equation are certain advantages to working in the public service from the point of view of security of employment and pensions which must be considered in the overall balance. If, over the course of the next twelve or 18 months or two years, restraint is required and, let us be honest, the Government must put in place some degree of control of public expenditure. We must be realistic from a political point of view and the public sector and public service unions must also be realistic. This is a challenge which I acknowledge will be difficult for the Government to face but it must be faced. We must work as much as possible with the hundreds of thousands of people in the public sector, acknowledge the great strides and progress made but also respond to the fact that we are in a new Ireland and Europe in a modern world where new challenges are emerging. We will not solve all of the old questions with the same answers as we may have done five or ten years ago. This is why flexibility and a more modern approach to our public sector is required. I hope the Minister of State and his Government colleagues will be able to respond to this report and put in place some of the practices recommended. Often, we discuss shortcomings in the health service. However, more than 100,000 people work in this sector. We must ask ourselves whether we receive value for money and whether we could do things better. This also applies to many Departments. The public service budget as well as the Government’s budget all comes back to the taxpayer who pays the bill at the end of the day and, therefore, we must always demand value for money. Those are a few brief, inadequate comments and I apologise for my lack of preparation. This issue will require much debate, attention and reflection over the next few months and years. New challenges lie ahead and we need to work with the public sector to address them. We will also need the public sector to work with us and to be realistic in facing these challenges. It should acknowledge things cannot be as they always were and we will have to do things differently in future. Minister of State at the Department of Finance (Deputy Martin Mansergh): I thank all those who contributed to the debate. Thinking back on my own time as a Member, I miss the pronounced views on these subjects one often hears from the Independent benches. The only politicised contribution was made by Senator Twomey. We have had excellent political leadership over the past decade, especially on the economy. The past 20 years have been miraculous and, inevitably, a positive cycle will not continue forever but it has put us on an entirely new plane. Benchmarking was vastly superior to the special pay claims systems that existed previously. From time to time, agencies are created and then rationalised. Senator MacSharry’s father rationalised agencies 20 years ago. Many large towns live in hope and their chances are better if they have IDA sites. Inevitably, they will not all be filled and that is not necessarily a criticism. They should not be provided for excessively but they are necessary. It was stated there were no reforms of the health service. What was the establishment of the Health Service Executive? One might have mixed views on the outcome and Senator MacSharry made an important remark about management for performance rather than performance reporting. I would be concerned if the aim of the public service was merely to satisfy certain bureaucratic criteria rather than service improvements on the ground. I am interested in Senator Kelly’s experience in Fáilte Ireland. Many Members of the Houses, including myself, have spent time in the public service. I refer to the comment that semi-State bodies are below the Civil Service. When I was dealing with energy issues, I was never under the impression that the ESB was below the Department of Energy and I doubt Senator O’Malley’s father was either. I agree with Senator Boyle that the social partnership system has been highly effective and I also agree about the need for more mobility and interoperability. Senator Donohoe correctly stated the OECD report presented the longer view and, like many good OECD reports over the past 40 years, it will be referred to for a long time to come. I also concur with him that many of our benchmarks will be outside the country. I join in Senator Hanafin’s tribute to the public service and I agree with his reference to France and giving people time to stream. I also endorse his praise of the OECD. I attended an OECD ministerial meeting a few weeks ago but, as a public servant in the 1970s, I attended such meetings and the organisation is an enormous resource for western democratic governments. While it does not take decisions, it provides peer reviews and discusses issues and common approaches. I agree with Senator Mary White’s comments about the calibre of people in the public as well as the private sector. She stated people should be encouraged to take risks and make mistakes and I concur up to a point. However, Irish Shipping was sunk by two executives who took speculative risks and put the company in an impossible position. Senator Bradford rightly praised the social partnership system and we all hope the current talks will come to fruition. It is important that, in the current challenging climate, that be the case. In an address to IBEC on 25 June the Taoiseach stated: A new deal on pay and related issues would provide much needed stability and reassurance at this time. It would convey a strong sense of confidence domestically and internationally by showing that we are prepared to work together to safeguard the economy and our competitiveness as well as the interests of workers and the more vulnerable in society.
I also agree with his criticism, which has been made by many heads of government across Europe, that it is all very well for organisations to call for pay restraint and moderation but, as he stated, “It is clear that the headline rate of pay increases for top level executives in the private sector has not been aligned with this general message and this is a source of concern.” At its heart, public service modernisation is about delivering excellent public services and improving the service provided to citizens at all levels in the most efficient and cost effective way. It requires good structures and business processes and it also requires that the quality of service delivery to the citizen is central to the work of public servants at all levels. We have come a long way in delivering on this agenda and this is recognised by the OECD but we also recognise there is much more to do. Public service is predominantly a people business run by people for people and I want to be clear about the Government’s commitment to our public services. We want a public service fit for purpose of which the public and our public servants can be proud. According to the OECD, the public service and, in particular, the Civil Service are doing more with less relative to the size of the overall economy and workforce and this has been a factor in Ireland’s international competitiveness. I once served in the Department of Foreign Affairs and relatively small embassies do for this country what larger embassies do for bigger countries. The OECD recommends not only improved governance but also performance dialogue for increased sharing of information and expertise and shared agreement on performance targets to hold each party accountable for the realisation of such targets. That must be a real and not an artificial process, otherwise pursuit of targets becomes an end in itself. One can think of other countries where it has been alleged figures have been massaged to meet targets and we do not want to get into that. The OECD recognises that instead of focusing on outputs and processes, more information must be gathered on outcomes and what has actually been achieved, as this can better assist in measuring how the public service is meeting overarching targets and objectives. The terms of reference for the task force refer to an appropriate framework for reviewing the establishment, operation and governance of State agencies. As already indicated, this area will be important to the next phase of public service modernisation. With regard to decentralisation, which is of interest to many Members of both Houses, almost 2,200 posts have been relocated to date. Decentralising organisations have now established a presence in 34 locations around the country and over 11,000 civil and public servants have applied on the central applications form to decentralise. I receive representations and correspondence from individuals on this almost every day. I dare say many other public representatives receive similar communications. It is clear that public service reform has increased importance, particularly in the current economic climate. We will be looking to the public service, in conjunction with political and Government responsibility and the co-operation of all other sectors of society, to help us to steer through the current difficult phase in the hope that we can hold onto and consolidate many of the gains that have been made and retreat as little as possible. This is a valuable report that will be carefully studied, as is the case with all such reports. It is not a bible so not every recommendation is necessarily perfectly adapted to our culture and circumstances, but it is certainly a resource from which ideas and inspiration can be drawn so we can improve our performance. I will finish as I started by expressing my high regard for the public service and the contribution it makes, and will continue to make, to Irish society. With regard to a point made by Senator O’Malley, I have looked at the figures for the public sector. The figures for the Civil Service are different. The growth in the public sector in the past five years has been 7%. It is not a large expansion of the public service. Certain sectors have grown but others have contracted in compensation for that. We have a reasonably lean public service but we must get maximum value for money from it. I thank the Senators for contributing to this useful debate. Acting Chairman (Senator Paul Bradford): Provision was made on the Order of Business for questions from party spokespersons. Some of the spokespersons are not present so is it agreed that questions can be taken from substitute spokespersons? Agreed. Are there questions for the Minister of State? Senator Paschal Donohoe: The value of a report such as this is that it provides hard figures which one can discuss and from which one can make evaluations. In his contribution Senator Hanafin said that the figures indicate we have a fairly lean public service, while Senator O’Malley inferred something quite different in her contribution when she referred to the perceived over-manning and bureaucratic structure in the public service. Evaluating the size of our public sector against that of other countries only becomes valid when one considers the type of country we have. The population of our country is predominantly young and growing, which is very different from the situation in France or Germany. One could expect, therefore, that our public service would be smaller at this stage in our demographic development than the public sectors of those countries. However, that is not the case. The core issue I tried to raise in my contribution is the fact that the need for a well funded and excellently delivering public service will be greater in the next ten or 15 years than in the past but our ability to pay for that public service will be under more pressure than it has been in the past. As a Minister of State in the Department of Finance and somebody who is aware of the discussions taking place, what is the Deputy Mansergh’s thinking on how we will rise to that challenge? What will be the contribution of the Government, in light of this report and the discussions taking place, to squaring that circle? The discussions about the funding of the HSE will be of an entirely different nature if, in a few years, we have economic growth that is probably less than half of what we have enjoyed over the last decade. Deputy Martin Mansergh: The Senator has a legitimate point when he refers to the demographic structure of this country compared to that of other countries. However, we have a significantly smaller public service than some of those countries. I do not believe the size of the public service is disproportionate or out of kilter, even taking account of our stage of development. I disagree with the Senator on that point. Most bodies who make projections for ten or 15 years, or even beyond that, see that period as a time of opportunity to eliminate or largely eliminate some of our historical deficits. In other words, the demographic and social provision pressures will not really begin to impact seriously until the 2020s and beyond. There is a window of opportunity, therefore, over the next ten to 15 years. That would be part of Government thinking; for example, there is heavy emphasis on getting our infrastructure up to speed because we might have resources to do that now that might not necessarily be available to the same extent in the future. It is probably always a danger to take any given point in time, whether things are going well, badly or indifferently, and extrapolate that into the future. We simply do not know how matters will develop. Let us take the example of the current economic situation. I was in the public service in the late 1970s and early 1980s. It was thought then that the recession at that time, while quite deep, would be of relatively short duration. That was not the case. It was quite a long siege that lasted several years. We can hope, as turned out to be the situation in 2002 and 2003 or in the early 1990s, that any downturn — and by downturn I do not mean recession but simply greatly diminished growth — will be of relatively short duration. However, we cannot know whether it will be, for which reason the Government must act prudently. Were one to have an absolute assurance that growth would resume at 4% or 5% next year, one’s response today might be different than is actually the case, as the volatile international climate and specific domestic factors must also be taken into account. What public services can be provided is materially connected to the state of the economy and the revenue supplied. There is no doubt that the buoyancy since 1993 or 1994 has enabled us to make significant improvements in public services, but they cannot be divorced from the level of resources available. I agree with Senator Donohoe’s basic point in that challenging times lie ahead for everyone in the public service, which includes the Government and other political parties in its broadest sense. For this reason, the report is timely and we must pay close attention to anything capable of improving public service delivery and efficiency. Sitting suspended at 4.40 p.m. and resumed at 5 p.m.  Cancer Services: Motion.
Senator Paddy Burke: I move: “That Seanad Éireann, noting:
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