OPINION:The McCarthy report called for reforms of agencies, but to date virtually none has been implemented, writes MUIRIS MacCARTHAIGH
THE BUDGET published in late 2008 announced a wave of agency rationalisations as part of an effort to reduce public spending during 2009.
Mergers, shared services, dissolutions and absorptions were to deliver considerable savings in administrative overheads, payroll and other forms of current expenditure.
The subsequent report by the group headed by economist Colm McCarthy and published last year offered a range of further options for reducing agency numbers.
Plans are being developed to reduce public expenditure by another €3 billion next year, of which €2 billion must come from current expenditure.
With the Croke Park deal now approved, and paycuts unlikely, a second tranche of agency rationalisations is inevitable.
But what lessons can be learned from experience to date of seeking to reduce the number of State agencies in the public sector?
In the first report of a new State of the Public Serviceseries published today, by the Institute of Public Administration (IPA), we learn that a number of issues are inhibiting the implementation of the budget 2009 plans. If left unresolved, these will act as a drag on future rationalisations.
They range from the absence to date of legislative provision for those new agencies, which are to result from mergers, to the problem of marrying a wide variety of employment arrangements that exist across the sector.
The economies of scale logic – by means of amalgamating financial, IT, human resources and other background support services – may appear attractive, but the evidence suggests there are considerable costs associated with the implementation of such arrangements. Moreover, several agencies earmarked to merge with other public bodies simply do not have the space to accommodate more staff. Others are tied to existing leases on rental properties which must be honoured whether or not the respective building is occupied.
Such problems go some way toward explaining why to date only 15 of the agencies identified in the budget have ceased to function in their previous form, and virtually none of the suggested agency-related reforms proposed in the McCarthy report have actually been implemented.
While some of the recent criticisms levelled against State agencies may be justified, the absence of any agreement as to how many State agencies there actually are makes it very difficult to comment authoritatively. This has not deterred speculation in the media and elsewhere.
For example, former chief economic adviser to the Central Bank Michael Casey estimated in this paper earlier this year that "there are at present something like 850 public bodies and quangos in the country" ( Irish Times, March 1st 2010).
The true figure is in fact much less than this: today’s IPA survey identifies 249 non-commercial agencies now operating in Ireland at the national level.
This represents a slight reduction on an equivalent figure for the same period three years ago and indicates the first net reduction in the total number of agencies in the history of the State. As well as agency numbers, their corporate governance has also been the subject of intense criticism, how boards and governing authorities are populated, and by whom, has generated considerable public interest recently.
In total, there are just over 2,300 positions on the boards and governing authorities of the 188 national non-commercial agencies that use them in Ireland, an average of 12 people per organisation.
These positions are filled via political appointment, election, public appointment or else are ex-officio positions.
Whether so many boards and governing authorities are necessary for the management of agencies was a core issue in the 2008 review of the Irish public service by the Organisation for Economic Co-operation and Development, but it has yet to be addressed in any meaningful way. Given the corporate governance requirements now expected of board members, the system of appointments to the various statutory boards, advisory committees and councils requires examination, as does the assessment of board performance.
In scrutinising the work of the 249 agencies, due consideration must also be given to the role of the Houses of the Oireachtas: there are simply not enough parliamentarians or parliamentary time to do so in a consistent manner.
While it may indeed be necessary to “cull quangos”, the reality is that simply dissolving or forcing existing agencies to merge will not realise the savings required when the true cost of such rationalisations are factored in.
If the goal is to reduce the number of agencies in the public sector, it demands planning and a detailed appreciation of the wide variety of infrastructure systems and governance arrangements now operating across the public sector. These are not insurmountable tasks but a more informed understanding of the challenges faced is required.
Dr Muiris MacCarthaigh works in the Institute of Public Administration and the Geary Institute, UCD. The review of State agencies in Ireland on which this article is based is available at www.ipa.ie/research