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Speech by the Minister for Public Expenditure and Reform, Mr. Brendan Howlin, T.D. at the Croke Park Agreement: One Year On 30 June 2011

 Ladies and Gentleman,

I am very happy to be in a position to speak to you today and in this particular venue. 

This Conference is an important opportunity for all of us to come together to review the progress made to date on the Public Service Agreement 2010-2014 and to discuss the significant challenges that face us, and the Agreement, over the next few years.    

 The Agreement has been criticised….

From its first day, this Agreement has been known by its nickname of the “Croke Park Agreement”.  It has been said by some that the management of this great venue must be very forgiving, given that the moniker “Croke Park” from its very first days has been denigrated and dismissed, generally by those with a very superficial knowledge of its contents and purpose.  Some though have real concerns that the Agreement is like its predecessors, with much promised but not delivered. 

 … but it can be an important enabler of change.

More thoughtful commentators have pointed out that the Agreement can enable substantial change to the way in which the public service does its business to be delivered in a different public service industrial relations environment.  We have already seen some solid and measurable progress in the first year of its operation as recently reported by the Implementation Body.  I want to thank you here, and all public servants, for that. 

The potential of the Agreement is that better public services can be delivered with fewer people and less resources. But the people in this room, and the public servants you lead and represent, are the ones that have to deliver on that potential, and now, with no delay.

The Agreement was reached against a difficult background…

Given the events of the last two days in Greece and today in Britain, it is worth briefly reminding ourselves of the background to the Agreement.  In 2009 the Partnership process that had encompassed public service reform and pay determination for over two decades stopped, in part due to the pension related deduction applied to public servants in early 2009. That year ended in the failure of talks around an agreed approach to public service paybill savings in December of 2009 and, as all here know, the imposition of pay cuts ranging from 5% to 15% to all public servants.   

In the early part of 2010 there was escalating industrial action in the public service, including widespread work to rules and refusals to cooperate with consequences of the moratorium on filling of vacancies, which posed serious challenges to management in delivering public services.

Despite that inauspicious background, leadership was shown on both sides by sitting down together and reach agreement on a way forward for the public service. I feel I must acknowledge, in particular, the leadership shown on the part of trade union leaders.  It is not easy to have to say to your membership that industrial action would not benefit them in the long run.  It is not easy to convince people that a deal, which offered commitments to no further reductions in pay and job security in return for far – reaching commitments to flexibilities and change, was a valuable thing to have in the circumstances. 

…and the value of the commitments given to public servants has been shown by events in the last year

Events in this country in the last year have shown all to clearly how farsighted that was.   A year in which the national banking system has come under State control almost in its entirety.  A year in which we had to reach out to our European neighbours and the IMF to give us external financial support as international markets became progressively less receptive to Irish Government borrowing during 2010.    And a year in which people exercised their democratic right to change who governed them and gave their trust to the new Government to lead them through the coming very difficult years.

The new Government has taken on a very difficult task in handling the most serious economic crisis our country has ever faced.  As a direct result of reckless economic mismanagement, both during the property boom and in its catastrophic aftermath, Ireland’s bills are being paid with borrowed money, and at a heavy price.  These are the hard facts before us, as we consider how we spend borrowed money.

In total since July 2008, six separate policy announcements of significant budgetary consolidation have been made and budgetary adjustments designed to yield some €21 billion or over 13 per cent of GDP have been implemented. This has led to a slowdown in the growth of day-to-day public expenditure, from an increase of 12.1 per cent in 2007 to an estimated contraction of 2.7 per cent this year. This reduction has been achieved in the face of considerable pressures associated with rising numbers on the Live Register and the downturn in the economic cycle.

But the Government has to go further: it is committed to reducing the General Government deficit to under 3 per cent of GDP by 2015. The Government is also committed to the aggregate fiscal adjustment which underpins the Joint EU/IMF Programme for the period 2011-2012.  That means a €3.6 billion budgetary adjustment for 2012.

Continued access to funding under the Programme is conditional upon the delivery of the budgetary adjustments agreed under the terms of the Programme and outlined in the Memorandum of Understanding. As the cost of borrowing on international financial markets remains prohibitive, it is vital that the terms of the Programme are adhered to so that we can continue to access funding at reasonable rates of interest.

The actions of the previous government have bequeathed us the economic straitjacket that is the EU-IMF deal.  It is a priority for this government to work our way out of this deal, and to regain full sovereignty over economic policy.  Public service reform is, of necessity, a major part of that.

…with public servants paid on borrowed money.

This year, our country will spend €18 billion more than it will earn.  A part of that borrowed money is being spent on the €15.7 billion that your wages and my wages will cost in 2011.  That situation would not be sustainable for any employer. 

Substantial additional savings must be made over the coming four years in the public service paybill – under the Programme we are committed to reducing the paybill by a further billion euro by 2014, through numbers reductions and other measures.  The Government wants to go further than the last was prepared to go with public service staff numbers reductions of


from end-2010 to end-2014 targeted in the Government Programme, with a further


reduction in 2015.  

The Government cannot achieve those targets without the support of all public servants.  By maintaining the impressive level of industrial peace delivered over the last year, public servants are helping to underpin Ireland’s reputation abroad as a country that can work its way out of its problems.

But the position that your employer now finds itself in, of living on borrowed money to keep the lights on and the doors open, just lends urgency to the demand for far reaching reform in our public services. 

The new Government has a vision for the public service…

Reform of the public service is and must be constant.  Even if there had not been the economic crisis of the last few years, the world is now changing so fast, and the public’s expectations with it, that the public service has to constantly reform just to keep up.   The dynamics for change at this time, where the impetus must be to save money and cut costs while seeking to maintain or improve service delivery, is on a different scale to our past experience.  Reform must take place in weeks and months, not years.  We have to achieve a Public Service that it is smaller, more efficient and better integrated. 

If this does not happen, then even greater reductions in public expenditure and services will be necessary.  No one in this room or in this country wants to see that, so the imperative for reform is very clear. 

My overall vision is for a Public Service that does ‘better for less’; that supports the return of economic growth and prosperity, while delivering high-quality services to the Irish people despite very significant resource constraints.  At this time of huge challenge, citizens and businesses are more in need of quality public services than ever before.  We have to respond to their needs by achieving:

-        a Public Service that is modern, dynamic and ready to meet current and future challenges;

-        a Public Service that provides value-for-money to the taxpayer by maximising efficiency and eliminating waste, and by making greater use of online delivery, shared services and improved business processes; and

-        a Public Service that is focused on continually improving organisational and individual performance, with public servants that are motivated by an ethos of public service and a commitment to excellence in administration and service delivery.

To achieve this, the Public Service has to be reorganised, and public bodies and individual public servants will have to work in new and more innovative ways. 

The Government wants to make progress on our programme of Public Service Reform quickly, and detailed plans for the implementation of the commitments to reform in the Programme for Government are currently being developed.  These plans will focus on the key actions now required and how they will be implemented to ensure that substantive and tangible change is delivered within clearly defined timeframes.

… with public money spent in the most efficient way.

Also key to meeting the challenge of spending money in the most efficient way is the Comprehensive Spending Review, with the first reports to be submitted in the coming days.  This is a forensic examination of how we spend public money in this country and, crucially, to what end.  Its results will determine the scope of our public services in the years to come.   The core of this Review lies in investigating not only how we can spend less, but also how we can do more, and how we can achieve our objectives differently. Put simply, I am asking public servants to deliver excellent services as cheaply as possible.  That will reduce the fiscal burden the economy faces to pay for them and underpin economic growth to allow us trade our way back to good financial health.   That will require changes in the way public servants do their work, changing the way and what we buy from the private sector, and in some cases moving away from the public service delivery model.

The key question to be asked of all public servants is whether they are performing functions that are absolutely essential. This Review process must deliver a more efficient, more effective and more modern public service for less money, because we have, as a country, less money to spend. There is no escaping this fact.

The objectives of the process will be to provide the Government with a comprehensive set of decision options:

  • to meet the overall fiscal consolidation objectives, both as regards spending and numbers reduction targets;
  • to re-align spending with the Programme for Government priorities; and
  • in this context, to consider new ways of achieving Government objectives throughout an ambitious agenda public sector reform.

The Comprehensive Spending Review is not an exercise that is being done to the public service:  it is being done by the public service.  It is a collective project, where each of us – as public servants, as citizens and as taxpayers – have a stake in its success. 

CrokeParkmust play a core role…

Of course, the ‘how’ of implementing reform is now a critical issue.  We have had plenty of plans for reform over recent years but it is at the implementation stage that previous efforts have failed.  That is where I see the framework provided by the Croke Park Agreement playing a major role in the coming months and years. 

I have already mentioned the recent report by the Implementation Body established under the Agreement: that sets out the challenge clearly.  The Report firstly concluded that, over the first year of this four-year Agreement, solid and measurable progress in meeting their commitments with numbers falling substantially, more quickly than previously estimated, and services being maintained and in some cases expanded.   

But the Implementation Body went on to warn of the need for greater urgency.  The Taoiseach and I met with the Body yesterday to tell them that we agreed with their analysis. I know that the Body intends to challenge management when they meet them in the coming weeks to say how exactly they plan to deliver on the priority issues in their Action Plans over the remainder of 2011, and to advise that no sector can be allowed to lag behind.

As everyone in this room knows, there is a lot still to deliver in the sectoral agreements under the Croke Park Agreement over the remainder of 2011.  But we can’t afford to lose any momentum in this process. 

The fundamental flexibilities around redeployment and cooperation with change that all have signed up to under the Agreement will continue to be key, as the public services are rationalised and reorganised.  But we can expect that some initiatives the Government will pursue next year in order to generate savings may not have been expressly identified when management and unions were here in Croke Park last year. 

The Agreement allows for the pursuit of additional measures where necessary to support the maintenance of key public services.  Once the decisions have been taken by Government under the Review of Expenditure, we will be in a position to identify those measures that are appropriate to be dealt with under the Agreement and consult on delivering those changes in the way that the Agreement sets out.  I am not talking about a Croke Park 2, rather we are going to have to ensure that staff live up to the commitments they have already made under the Agreement to ongoing reform.


… and cooperation with reform not an optional extra.

Those representing management here have a very serious responsibility under the Croke Park Agreement.  It is the context and opportunity for driving change and reform if used proactively to handle the ‘people’ consequences of change.  I was quoted earlier this week as saying that public service managers were stymie-ing reform. I don’t believe that happens deliberately but if public service management do not drive structural change to the service delivery structures in each sector, the opportunity for substantial and far-reaching change will be squandered. 

I acknowledge that large scale organisational change, particularly in long-established entities, is challenging.  And the Public Service is no different.  It will take a lot of effort.  To achieve that, public service leaders and managers, such as those of you here, will need to be innovative about their approach to the changes needed, good at delivering a consistent message about those changes, opportunistic in availing of external assistance when necessary, and resilient in ensuring delivery over time.

That is not to say it is solely the responsibility of management to deliver change.  There is no easy cop-out for staff representatives.  Unions have committed to change the way in which they do their business under the Agreement and to cooperate with driving reforms and efficiencies through the system.  Yes, they must represent their member’s interests, but in this instance, it is in their member’s real interests to cooperate with reform. 

I want to restate that maintenance of the commitments given around pay and job security are conditional on change.  Reform is not an optional extra this time.

The new Government is clear in its commitment to the Croke Park Agreement – but only so far as it is a genuine and equal agreement, honoured in deeds as well as words.

I am honoured by the important role that I have been given as Minister for Public Expenditure and Reform.  The establishment of the new Department of Public Expenditure and Reform is in itself an innovative development.  It reinforces the importance attached to delivering on the Public Service reform agenda, and the role that the Government believes a streamlined and high performing Public Service can play in our national recovery.  The Secretary General will be talking to you later today about the role we intend the Department to play in this process. 

But reforms of the scale that is required cannot be delivered from Merrion Street:  they have to be managed locally. 

We want to empower those who work in the public service to take initiatives; to manage risk; to solve problems; and to be innovative.  I firmly believe that in addition to structural change, rationalisation and reorganisation, there must also be a strong focus on the greatest asset in the public service: its people.  We need to empower them to initiate change where it is needed and increase their skill levels through training and mobility.  We need to build on their traditional Public Service values of integrity, impartiality, diligence and commitment, to create a culture of high performance and greater openness, transparency and accountability at all levels.


People sitting in this room have already made personal sacrifices to help their country. I know that.  And change can be intimidating or inconvenient.  But all will have to get involved with delivering change, even when that means changing employer or location, flexibly retraining to do different things, sharing central office functions like ICT or HR, or changing the way in which we interact with customers and the private sector.  It means addressing traditional but over-generous entitlements and working arrangements.  It means working harder, working more productively and working differently.

I strongly believe that public servants – including myself and my colleagues in Government – will meet, indeed surpass this challenge posed to us.  I also believe that the strong traditions of public service, of which we can be proud, will be maintained.

It will not be easy.  There will be difficult decisions. But we need to make those decisions now, and on our own terms. 

If, together, we take bold and decisive action; if we are not afraid to think differently; then we can, finally, make lasting progress.  Not only that, but I believe that we can fully restore public confidence in, and public support for, the public service.

Changing the public service, visibly and permanently, will be central to this overall endeavour.  The Croke Park Agreement commits public service management, staff and unions to work together to find new and more efficient ways of delivering public services.  This opportunity will have to be availed of the fullest extent over the months to come. I call on all of you here today – both managers and staff representatives – to rise to the challenge that is now before us.

The Government is committed to doing this – I look forward to working with all of you to deliver what the country needs now and for the future.