Bertie Ahern: The Man Who Blew the Boom: Power & Money (42 page)

A report of the Competitiveness Council in 2003 found that Ireland ranked thirteenth of the sixteen countries it examined on the issue of domestic competition, where coming first would mean the greatest intensity of competition. Transport, distribution, wholesaling, private refuse collection, communications and energy were among the areas cited. An important aspect of this issue is that it was capable of being reformed through domestic effort. Furthermore, the state was very often by far the largest purchaser of the services the council considered to be overpriced. To tackle the problem would have required the Government to go up against a succession of vested interests, but this was precisely the sort of challenge that Ahern tended to avoid.

Chapter
15  

WHAT GOVERNMENTS CAN DO

G
overnments influence economic growth and social direction, but the effects of their actions have a wide range of time-scales. The unexpected proclamation of free secondary education in 1966 by Donogh O’Malley was seen as a key factor in the economic boom enjoyed a quarter of a century later. On the other hand, changes to tax rates and to transfer payments can have an almost immediate effect on an economy. There can often be a tension between what is fiscally prudent and what is politically tempting, and a review of the economy since independence reveals a tendency to succumb to temptation.

For certain areas of the economy the Government has direct and often monopolistic influence. Transport, planning, health services, education and of course the running of the civil and public services themselves are matters on which politicians have direct influence and for which they have responsibility. While the Ahern Governments made great political use of the buoyant economic backdrop in which they operated, their record in managing aspects of society for which they had direct responsibility was generally recognised as being very poor. Yet efforts by opposition politicians such as Richard Bruton to draw attention to the waste of money and the lack of reform created little by way of political return for him or his party.

Bruton believes that the idea of public-sector reform ‘collapsed’ when Ahern came to power because his Governments used the public service as part of its electoral strategies. Ahern’s instinctive response when confronted with any difficulty, according to Bruton, was to pretend it wasn’t there and, if that didn’t work, to throw public money at it.

In the five years to 2006 the public-sector pay bill rose by 59 per cent, and the staff increased by 38,000. The largest increases were in health, education, security and the civil service. Government politicians, when challenged, asked which nurses, gardaí or teachers the critics would want to let go. It was a reasonable riposte from a political point of view, but the plain fact of the matter was that the scale of the increase was not sustainable and was, as we shall see later, funded not only by boom-time taxation receipts but by foreign borrowings as well.

Salaries increased greatly, according to Bruton, ‘but there has been no
quid pro quo
for the taxpayer because ministers did not build the necessary reforms into the benchmarking structure.’

It is worth noting that the benchmarking process led to salary increases for Ahern himself, his ministers, his senior civil servants and such figures as High Court judges. The master of the art was overseeing the biggest patronage scheme of them all. According to Joan Burton, the trend in top-level remuneration among the social partners reflected a view that they had presided over the creation of one of the richest countries in the world and deserved something for their achievement.

Apart from pay and the increase in its size, the other major initiative on public-sector management during the Ahern years was the unexpected announcement by McCreevy in December 2003 that the Government was going to move a large proportion of the public sector out of the capital. Arguably this was the most cynical use of the public service since the foundation of the state.

There were fifty-three sites involved, and electoral considerations appeared paramount. Tom Parlon of the
PD
s assumed responsibility for the effort in his position as Minister of State at the Department of Finance in charge of the
OPW
.
FÁS
was to move its head office to his constituency as part of the plan—something he sought to use for electoral gain.

The head office of the Central Fisheries Board was in Ahern’s own constituency, in an unusual 1930s’ building on a lane off Mobhí Road. Speaking of his continued commitment to the decentralisation policy after his party’s disappointing results in the 2004 local elections, Ahern told the Dáil: ‘The Central Fisheries Board were on the banks of the Tolka for years, protecting the pinkeens.’

A huge amount of money was wasted on the project before it was eventually called to a halt. The planned move of
FÁS
to Co. Offaly never went ahead. It bought a landlocked site outside Birr, Co. Offaly, in 2006 for €1½ million. At about the same time it rented office space in a converted mill in Birr that had been developed by some local business people, a tax inspector and two accountants as part of a public-private partnership with the Shannon Development Authority. The office space was to be used as the
FÁS
head office, pending the construction of a new building in the field outside the town. The premises were upgraded at a cost of €1 million, with the contract for doing so being awarded to a building company belonging to one of the landlords and without the matter being put out to tender. However, the head office was never moved to the well-fitted spanking-new offices. The former director-general, Rody Molloy, who is a native of Birr, retired in November 2008 because of a scandal over spending controls at the authority. His replacement, Paul O’Toole, had only visited the
FÁS
premises once, as part of a courtesy visit, when he was asked about the matter in September 2010. The lease on the offices costs approximately €100,000 a year. Tom Parlon, who trumpeted the move to Birr during the 2007 election campaign, lost his seat and almost immediately took up a post with the Construction Industry Federation.

Richard Bruton is very harsh on Ahern in relation to reform.

The big decisions his Governments made were disastrous. The damage they did to the ethic of performance in the public service is a big legacy: paying out benchmarking without regard to what was achieved; having decentralisation without any cabinet papers, without any consultancy. They just pushed it through under the secrecy of the budget and then pushed civil servants around like pawns on a board. When amalgamating the health boards into the Health Service Executive, the one advantage was that you could rationalise your administration, and then Bertie goes in and says there will be no rationalisation.

All those things were saying to ambitious people who wanted to work in a high-performance organisation that our political leaders don’t care about a high performance. All they care about is a quiet life. It was about satisfying short-term political needs in the case of decentralisation; avoiding a row in the case of benchmarking. All of that now has to be massively undone, unfortunately at a time when there is no money to pay public servants, and you are going to be cutting the pay bill while saying to them we now have to have a performance culture. There has been a wasted decade.

They spent heaps of money, but the system was undermined. And I think that’s another legacy that he has. He bought out problems instead of confronting them. That is his instinct. I don’t think history will be that kind to him.

The explosion in economic activity that occurred during the Ahern years was facilitated by the availability of labour. The huge numbers of unemployed and the number of women who did not take part in the work force constituted a huge resource for the early years of the Celtic Tiger.

The increased participation of women in the work force was seen by many in the Government as a positive development, even if it entailed an increasing number of mothers leaving young children in care. The explosion in the price of housing also put pressure on young parents. It was difficult for one salary to support an entire household, including mortgage repayments. The rising cost of child care increased the pressure on young families.

The issue of child care had been a subject of discussion for more than two decades, as was evidenced by the number of reports commissioned on the subject. However, subsidising those who wanted to put their children into child care so that they could work was perceived by some as an assault on mothers who wanted to remain in the home—even on traditional family life and Catholic sexual morality. By the late 1990s the matter of how best to raise children had become a subset of the drive towards economic growth. The strains on families caused the matter to become politically charged.

The Partnership 2000 ‘Report of the Expert Working Group on Childcare’ pointed out that quality child care can have both social and economic benefits. Ireland’s childcare policy was characterised by a lack of co-ordination and a lack of state support, despite the wide range of international studies showing the beneficial effects of pre-school education, particularly for children from disadvantaged backgrounds. The returns were huge, the report pointed out.

One widely reported longitudinal study from the United States found that children who attended a carefully designed programme, known as the High/Scope Programme, were more likely to stay on into third-level training and education, were less likely to get in trouble with the law, and were more likely to be supporting themselves when compared to a control group who had not experienced the programme. When reviewed in terms of cost benefit analysis, the researchers found that for every $1 invested in this type of early education programme, the State saved $7 per child by age 27 years.

There had been severe pressure on the Government in the period before the 1998 and 1999 budgets to provide tax relief on childcare costs, but the issue had not been grasped because of the political sensitivities involved. This changed in the two expansionary budgets that preceded the 2002 general election. In his budget speech in December 1999 McCreevy announced a range of measures to support the existing system of child care. He also announced an increase in child benefit. In the budget speech of a year later he announced what he called the largest package ever of support for children and their parents. Again, grants and other support for the existing system were a major element of the announcement, but so too were universal transfer payments to all mothers. McCreevy increased child benefit by £25 per month for first and second children, to £67.50 per month. For third and subsequent children the increase was £30 per month, to £86. These were huge increases, but more was to come, he said.

This increase of over 50 per cent in current payment rates marks the first step in a three-year programme. At the end of this process, an additional one billion pounds will have been invested directly in our children’s well-being. Child benefit monthly payments will stand at over £117.50 and £146, well beyond [partnership] commitments. This will mean up to £90 per month extra for each child at the end of three years. By then, a family with four children will be receiving the equivalent of over £120 per week in Child Benefit support. This unprecedented increase will help all parents with the costs of caring for their children and will represent a major move towards achieving the goal of ending child poverty in this country.

The striking increase in payments delighted all types of parents around the country. However, the announcement constituted something of a rejection of the expert working group’s reports and of other reports. A very detailed study of the issue and of all the previous studies and reports that had been carried out was initiated by the National Economic and Social Forum, chaired by the psychologist Maureen Gaffney.

As already noted, Ahern and his party held a meeting in Inchydoney, Co. Cork, in September 2004 which received extensive media coverage. The following year the equivalent meeting was held in Ballyconnell, Co. Cavan. This time they invited an American academic, Robert Putnam, author of
Bowling Alone: The Collapse and Revival of American Community
(2000). Ahern let it be known that he had read the book twice. ‘He’s a fascinating guy,’ he told the
Irish Times
. ‘He was a big adviser to Clinton, who has huge, huge regard for him. He continued on that road with Bush and Blair as well. I’m glad to say we were talking to him before either of them, since the early 1990s.’