THE DECISION by the Government to commission an external review of the Department of Finance is to be welcomed despite its tardiness. Finance sits atop the public service and is the primary source of economic and fiscal policy advice to the Government of the day. Few would argue that it is possible to establish what went wrong with the mechanism by which such policy was formulated, assessed and implemented during the last 10 years without scrutiny of the department. Equally reforms aimed at avoiding a repeat of the disaster would be half-baked if they did not include Finance.
Any objective view of the role of the department in the financial crisis has to recognise that it only has the power to advise on policy. Decisions are made by the Minister of the day and the wider Cabinet. That said, there is a very real difference between a supine department that has lost its way and a competent institution that had a firm grasp of its brief and the confidence to challenge the government. It is the apparent failure of Finance to live up to its role in this regard that most warrants examination.
Unfortunately, the department would seem to share the capacity for denial that has led its political masters to try to evade responsibility for the debacle that has engulfed Ireland. If the briefing notes prepared for the secretary general of Finance in advance of his appearance before the Oireachtas Public Accounts Committee are any guide, the department would also prefer to hide behind a retrospective interpretation of its actions rather than acknowledge that it failed to spot the economy had come loose from its moorings and was headed for the rocks.
It is the department’s apparent refusal to face its failure which is most worrying at this point. It flies in the face of evidence of structural and cultural problems and jeopardises the chances of effective reform.
One area in which the department has attracted particular criticism is the degradation of its expertise and, specifically, the emphasis on generalist skills over expertise in areas such as economics and banking. This may have suited the career ambitions of many insiders but resulted in a farcical situation whereby the Government’s chief policy adviser takes comfort from the fact that it did no worse a job – when it came to calling the economy - than Dublin’s stockbrokers.
Above all, the department must face the thorny issue of the culture that has evolved over the years, and the allegation that appropriate deference to elected representatives has given way to obsequiousness. There is always a danger of such a dynamic evolving when one party holds power for a lengthy period and has the ability to influence the careers of senior civil servants. The question it raises is whether Finance would have stood up to the Government even if it had known and been able to demonstrate that proposed policies were economic madness. For this reason alone it is imperative that the department takes this opportunity to confront its past failings and emerges from the process newly empowered.