Perhaps this reconfiguration of the Department of Finance is a response to
http://www.finance.gov.ie/documents/publications/reports/2011/deptreview.pdf which has just been published on the Department of Finance's website which states that the (outging) Minister for Finance, Mr Brian Lenihan TD welcomed the recent report of the Independent Review Panel, chaired by Mr Rob Wright: Strengthening the Capacity of the Department of Finance. The Minister appointed the Review Panel to assess the Department’s performance over the past 10 years and, based on the lessons drawn from that assessment, to make recommendations for the future development, structure and resourcing of the Department.
In publishing the report, the Minister stated: “I welcome the Panel’s report. It provides a very fair and thoughtful assessment of the Department’s performance over the past ten years. While a number of recommendations are matters for the new Government and require further consideration, a significant number relate to organisation, skills set and work practices – many of which are being implemented without delay. The implementation of these proposals will assist the Department in taking on the complex challenges arising in the coming years. I have no doubt but that the Department will address the issues highlighted in the report with vigour and enthusiasm.”
The Minister explained that the Report has been published at this time so as to allow the incoming Government to consider the Report’s recommendations and then make its decision on which policies to implement: “The Government policy decisions following on from this Report will relate to the work of the incoming Government.”
To Quote from the Summary:
"To provide a focus for our review of departmental advice over the last ten years we examined three key questions:
• How appropriate was the Department’s advice on the risk of pro-cyclical fiscal policy?
• Was the Department aware of the risks of overheating in the property sector and did it provide advice appropriate to the circumstances?
• Did the Department provide sufficient advice on the vulnerability of the tax system to an economic downturn?
The Panel reviewed in detail the annual June Memoranda to Cabinet on Budget Strategy. Generally speaking, we found that advice prepared by the Department for Cabinet did provide clear warnings on the risks of pro-cyclical fiscal action. These views were signed-off by the Finance Ministers of the day who would submit the Memoranda to Cabinet. The Department’s advice was more direct and comprehensive than concerns expressed by others in Ireland, or by international agencies. With very few exceptions, however the quantum of spending and tax relief outlined in December Budgets was very substantially above that advocated by the Department and Minister in June.
We see three key reasons for this failure of fiscal policy. First, there were extraordinary expectations of Government in Ireland to create spending and tax initiatives to share the fruits of recent economic gains. These pressures were reflected in the political debate of the day where all political parties were eager to meet public expectations for more and better services. As well, the Irish economy was regarded by most as a model. The EU fiscal rules, the Stability and Growth Pact, were respected, debt fell and spending appeared to be well below EU levels. The underlying dangers were either missed or ignored.
Second, the Government’s Budget process was completely overwhelmed by two dominant processes - Programmes for Government and the Social Partnership process. We recommend major changes to the budgetary process that would enhance ministerial accountability to Parliament, expand the release of detailed departmental analysis for consultation well before Budget time and provide oversight by some form of Fiscal Council.
Third, the Department of Finance should have done more to avoid this outcome. It did provide warnings on pro-cyclical fiscal policy and expressed concern about the risks of an overheated construction sector. However, it should have adapted its advice in tone and urgency after a number of years of fiscal complacency. It should have been more sensitive to and provided specific advice on broader macroeconomic risks. And it should have shown more initiative in making these points and in its advice on the construction sector, and tax policy generally.
We provide recommendations to formalise Department’s records of Budget advice, to strengthen the rigour of the Department’s policy advice and expand resources for tax policy and medium term economic planning.
The Panel recommends formalising in legislation the Department’s accountability for assessing systemic macro-economy risks.
Turning to the issues arising from the structure and staffing of the Department; based upon our analysis, submissions from others, and consistent with views of Finance employees and managers we met, the Department:
• does not have critical mass in areas where technical economic skills are required;
• has too many generalists in positions requiring technical economic and other skills;
• is more numbers driven, than strategic;
• does not have sufficient engagement with the broader economic community in Ireland;
• often operates in silos, with limited information sharing;
• is poorly structured in a number of areas, including at the senior management level; and
• is poor on Human Resources Management.
We have been direct in our analysis and advice, but do not accept the notion that the Department is not fit for purpose. It has worked hard in response to the banking and economic crisis and must now apply the same determination to remake itself in the light of our observations in this report and the major challenges confronting Ireland".
This report would seem to answer the question I asked in the thread A postscript Re: Éirinn go Brách
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