The realignment of certain departments is ostensibly pro-business – will it play out this way? asks SUZANNE LYNCH
ECONOMIC RECOVERY, job creation and support for those who have lost their jobs – these were the three “core objectives” outlined by Taoiseach Brian Cowen on Tuesday as he announced details of his Cabinet reshuffle and realignment of government departments.
In the end, five government departments were reconfigured and renamed: the Department of Enterprise, Trade and Innovation; the Department of Education and Skills; the Department of Community, Equality and Gaeltacht Affairs; the Department of Tourism, Culture and Sport; and the Department of Social Protection.
Despite the inevitable accusations of window-dressing, the realignment of departments does involve some tangible changes. The Governments job-creation agency, Fás, which has been in the headlines for all the wrong reasons of late, will now come under the remit of three departments – Enterprise, Trade and Innovation, Education and Skills, and Social Protection. While there is still some confusion about how this will work in practice, newly appointed Minister for Enterprise Batt O’Keeffe has said Fás will remain within the remit of his department, with the training activities of the agency transferred to the Department of Education and Skills, and the employment and community services provided by the agency moving to the Department of Social Protection.
Other changes include the transfer of responsibility for third-level research funding from the Department of Education to the new Department of Enterprise – a decision that will “help to bring together a streamlined and focused programme of funding of research and development, aligned with the objectives of enterprise policy” according to the Taoiseach.
The Taoiseach’s approach in this is ostensibly pro-business. Innovation, productivity and growth were central themes of his speech on Tuesday, while the importance of generating and retaining jobs was also given particular emphasis. This is despite the fact that the words “job” and “employment” are now absent from the titles of any government department (an irony not lost on the Opposition).
But will the changes help or hinder business in Ireland?
“It’s all about delivery,” said Patricia Callan, director of the Small Firms Association (SFA). Like many people in business, her main concern is that the portfolio reorganisation will lead to a protracted transition, which will result in policies being put on the back burner. “What we don’t want is a three to four-month transition period for Ministers to settle into their new roles.”
She said that the change of Ministers is not as significant as some believe.
“Like any job, personnel are important, and having the right Minister with clear vision and strategy is critical, but the civil servants who are working in the various departments will still be in place after the reshuffle.”
Because of this, departmental reports and initiatives that are close to completion need to be brought to the next stage and implemented immediately, she says.
The American Chamber of Commerce also believes that policy-implementation rather than personalities is key. Joanne Richardson, chief executive of the chamber, said intensive media commentary about potential ministerial appointments had served to distract from the real issue, which is “the delivery of substantive change which will return Ireland Inc to a strong competitive position”.
Pointing out that three reports and policy documents – the December 2008 Smart Economy document, the Commission on Taxation report and the Innovation Taskforce report – have been published by the Government in the last 18 months, Richardson said that the chamber’s members want “a credible, time-lined implementation plan”.
Retail Excellence Ireland is more vocal about the specific ministerial changes. While chief executive David Fitzsimons said there was an element of "moving deck chairs on the Titanic" about the reshuffle, he adds his members were generally glad that Mary Coughlan still retained a skills brief in her new role as Minister for Education and Skills. They were also supportive of the decision to move Batt O'Keeffe to Enterprise, believing he was more suited to the enterprise aspect of the role than his predecessor, although O'Keeffe's appointment has been questioned by others in the business community.
On the specifics of the portfolio changes, most business groups welcomed the enhanced role given to innovation, although this was qualified by a call for more detail on how it will operate. “While it makes sense in policy terms, it’s short on operational detail,” Ibec’s head of employment and social welfare services Tony Donohoe said. He stressed that innovation needs to be explicitly linked to job creation.
John Whelan of the Irish Exporters Association echoed this view. “Innovation is becoming increasingly important to Irish exporting companies. With Irish exporters unable to compete on price point comparisons, it’s becoming the key distinguishing factor.”
Another change welcomed by the business sector was the decision to transfer the employment and community services provided by Fás to the Department of Social Protection. Ibec said that closer integration of the social welfare system and work placement schemes made policy sense, and was already in practice in countries such as the Netherlands.
The SFA also welcomed the move, and called for an overhaul of the welfare system to examine whether the current system incentivises people to work.
Similarly, the rebranding of the Department of Education and Science as the Department of Education and Skills was well received by business groups. Ibec’s Tony Donohoe said that while the Department of Education would become an extremely large department as a result, the new department would break down the “artificial distinction” between education and skills. The SFA’s Patricia Callan said the realignment would serve to lessen the gap between academia and business.
Likewise the decision to transfer responsibility for third-level research funding to the Department of Enterprise, Trade and Innovation was seen by Ibec as positive, although the organisation called for no diminution in the level of investment pledged by the Government in its Strategy for Science, Technology and Innovation.
One of the main changes to have attracted criticism from the business sector is the decision by the Taoiseach to divide the responsibility of Fás between three separate departments. Isme’s chief executive Mark Fielding said that, with three ministers now overseeing Fás, key decisions would be delayed “due to additional bureaucracy” and that “the opportunity to [pass the buck] will become very evident when difficult decisions need to be taken or when problems arise”.
He also described the decision to transfer responsibility for redundancy rebates to the Department of Social Protection from the Department of Enterprise, Trade and Innovation as “a retrograde step”, saying it would will only further exacerbate the current nine-month delay employers experience in receiving redundancy rebates.
John Whelan also expressed disappointment that the export sector was not aligned with the Department of Foreign Affairs, saying that there was a natural link between the two. “Irish embassies abroad play a role in helping Irish companies build their presence in new markets, particularly during trade missions,” he said.
Overall, the portfolio reorganisation elicited a muted welcome from stakeholders in the business community, with most adopting a wait and see approach. Asked whether it was possible for any Government to ever really effect substantial change and achieve results for businesses, Isme’s Mark Fielding pointed to the British chancellor of the exchequer. “On Wednesday, Alistair Darling introduced a range of measures for SME’s – a doubling of investment relief, a reduction of rates. He even instructed Lloyd’s to give a certain amount of lending to SMEs. If we had even some of those measures, we would be over the moon. It just goes to show what a Government can do.”
