What’s the point of political reform?

By Michael Gallagher

This rather provocative title is intended to raise the issue of just what end it’s hoped will be served by political reform.

Possible ends could be classed as process-oriented or outcome-oriented. Regarding the former, having a political system that is more transparent and participatory is worth trying to achieve in its own right, regardless of whether anything actually changes ‘on the ground’. The fact there was very little talk of political reform while the economy was (or seemed to be) booming might suggest that, while process considerations no doubt play some part in the minds of reformers, for most these are a secondary consideration, and they are either seen as not important or as important primarily because it is hoped they will lead to better outcomes.

The outcome-oriented arguments for reform suggest, or hope, that if the political system had been reformed ten years ago the country would not now be in its current difficult economic position. The economic crisis leads many to assume that there must be something fundamentally wrong with the political system – otherwise, how could things have gone so wrong? For a few, apocalyptically, the economic crisis betokens a rotten and corrupt political system.

But attempting to identify cause and effect between political system and economic mismanagement is not so easy. The economic mismanagement occurred primarily between 2001 and 2008, when the banks were allowed to borrow heavily abroad so that in turn they could lend money to property developers to purchase buildings or land whose value was artificially high and was to collapse at the end of the decade, leaving the banks unable to collect the loans they had given out and thus unable to pay back the loans they had taken out. Meanwhile, government entered into spending commitments predicated upon property-related taxes remaining at their high levels, leaving a huge budget deficit once these taxes dried up. Government also devised a whole range of tax breaks and incentives to encourage the building of dwellings (especially apartments) and hotels, leading to the current spate of ghost estates and zombie hotels.

With hindsight, it’s all so obvious what errors were made. Government showed no awareness of the shaky foundations upon which its spending plans were based or of the total inadequacy of the regulatory regime, if it can even be called that, that it had put in place supposedly to ensure that what happened could not possibly happen. But what changes to the political system might have prevented this?

Most of the changes discussed so far on this site don’t seem to carry the potential to have had much bearing on any of this.

No-one in any country expects MPs to spot a macro-economic problem that no-one else has noticed. MPs are rarely economic experts in their own right, but they are usually quick to pick up on concerns being expressed by those who are experts, whether in the state machinery or an academic or journalistic commentator. If the real experts had been loudly expressing concerns in the 2001–08 that economic policy was leading inexorably to crisis, TDs would have picked this up. If the Financial Regulator, the Central Bank, the civil servants at the Department of Finance, and independent (academic and journalistic) commentators had been shouting from the rooftops about the wrong track along which the economy was heading, and TDs had been too immersed in their constituency work to notice, then it would be reasonable to start thinking of ways in which to reduce TDs’ constituency focus. But, with a few exceptions among the commentariat, that wasn’t the case. And while other reforms, including many discussed elsewhere on this site, could be seen as likely to result in improvements to policy, there seems no reason to think that, with one exception, they would have prevented the economic debacle.

The one area where it seems that a reform could have made a difference lies in the area of party finance. Fianna Fáil, as the main government party of the period, was a large-scale recipient of financial donations from companies involved in building and property development. Without alleging anything nefarious, it is asking a lot to imagine that the party’s heavy reliance on finance from this sector, and its promotion and facilitation of policies sought by the sector, are unrelated.

This might suggest that a thorough reform – and the word ‘reform’ might be inadequate to sum up what is needed – of party finance should be a priority. This goes beyond simply banning corporate donations, because there is little substantial difference between a property developer donating heavily through a company or as an individual – it’s not clear what is achieved by banning the former while permitting the latter. It would require the banning of all donations over a very small amount – around €100, say – and the expansion of state finance to fill the gap. Giving more public money to parties at a time of cutbacks would not be popular, to say the least, but that is one of the paradoxes of state financing of political parties: when it is most needed, public resistance is highest. The cost of such a party finance regime over the past ten years, had one been in place, would be a minute fraction of the current cost of bailing out the banks.

10 thoughts on “What’s the point of political reform?

  1. Michael,

    At the risk of being overly simplistic, when times are good most ordinary folk are not all that interested in politics. It’s a spectator sport more than anything else. The vanity and pecadillos of the principal movers and shakers among our political class are at best a source of bemusement or entertainment, or at worst, indifference. In times of crisis, people look to our political institutions for very different things, like qualities of leadership, guidance or solutions to the problems that afflict our lives. In a crisis, politics suddenly becomes important again.

    We’re punch drunk on institutional failure in Ireland. First there was the Church, and next the banks. In terms of their particular response to the economic crisis, our political institutions – from the workings of the Houses of the Oireacthas to political parties to leaders of Government and Opposition – have all failed us miserably. Furthermore, while they pay lip service to reform of the way they do their business on our behalf, they demonstrate no interest in any reforms of substance except supplanting one another in the seats of power.

    I agree that you can’t really blame the political class entirely for the mess they made of managing our economy – they’re not experts on the economy and so on. But one of the key problems in our system of fiscal management is the absence of checks and balances on what the executive may or may not do. For example, the NPRF was established in 2000 – 01 to provide for future social welfare and public service pensions liabilities post 2025 when Ireland demographic profile will have changed. If that need could have been foreseen, and grasped as a policy initiative, why were the same politicians blind to the equal need to create a ‘rainy day fund’ from mounting exchequer surpluses instead of frittering them away on an explosion of spending on public services and tax concessions?

    I have no problem with party political donations, corporate or otherwise, provided they are transparent. Corporate interests have just as much right as anyone else to support those parties with funds, within reasonable limits, whom they believe will implement a pro-business agenda. The trades unions support the Labour Party so that it promotes their agenda. And so on. Come elections, each party and each candidiate should be required to include on all campiagn and election literature and advertising a statement along the lines of : “This campaign is supported by…” plus the amount; or “This leaflet/ad is paid for by…” plus the amount again.

    The current regulatory framework of specified ‘limits’ on corporate and individual donations doesn’t appear to be working – who believes, as I think SIPO have already drawn attention to, that the main political parties have received no donations above 5k from anyone in the past year? Further, the amount of taxpayers money already being handed over to the main political parties is excessive and unaffordable int he current fiscal crisis and since they don’t publish proper accounts, then we’re in no position to judge what it’s being spent on. Either pony up for every cent in an advance funding application or the allowances should not be sanctioned.

    The ‘Leaders Allowances’ and payments per representative etc that are paid to the political parties are matched by outrageous levels of supports for individual oireacthas members, such as the 12k ‘ turning up money’ paid to Dublin TDs for clocking into the Oireacthas on the days they’re supposed to be there anyway, or the 8k allowance available for setting up a ‘constituency office’, or the researchers’ and secretarial allowances etc. that enable them to employ lots of hangers on and go-fors at the taxpayers’ expense whose sole job spec is to ensure their own re-election.

    How we finance out political system is a topic rich in the pickings. But corporate donations are only a small part of it and, in debating terms, too often serves as a distraction from the main issue.

  2. Firstly, there were plenty of people demanding reform. Fine Gael were and got zero credit for it from the public or the media.

    The failure to reform rests squarely with Fianna Fáil and the fact it did not want reform. This is not the same as ‘no one’ was interested in reform.

    The actual issue to address is why the Irish people do not want reform, we see it now with the talk about HSE cuts in the west, how stupid are Irish people that they don’t understand how much things need to change – is it people don’t understand or that they do but only want other people to feel the pain?

    Irish people had a choice in 1997, 2002 and 2007 – all the information about what was wrong with economic policy was there to be seen, the public chose to ignore it and vote with their greed above all else.

    Not the reckoning is on its way and people don’t like it and want to blame someone else. Well, they are to blame for putting into office all the people who allowed such bad decisions be taken, and then putting them back and then back in again.

    Is it conceivable that were FG/L in office, when Lehman Brs fell, they would have a) offered a 100% banking guarantee for the entire banking system and B) taken that decision in the early hours of the morning iwth cabinet ministers asked to agree to it over the phone, and not at a full proper cabinet meeting with civil servants there and a record kept.

    So why did Cowen and Lenihan think the way they took the decision was ok, while FG/L would never have done it that way.

    There are two different types of Irish people, those who support the crony, corrupt, me fein types and those who don’t. Those who don’t need to speak up and hold those who do to account, we all know people who support FF yet we say nothing, despite the fact the corruption of that party has had devasating consequences – all of us who know someone on the dole or who emigrated etc, well that happened because of FF corruption.

    So, it’s nor true there is no interest or point in reform, it’s that not enough Irish people have high enough standards to make it happen.

    Look at the way FF pulled such a stunt on Coughlan’s pairing. She wasn’t going to meet the head of Yale or Harvard, thankfully, she was meeting middle ranking, if that, officials who were no more expecting a minister to attend than they’d expect Obama to attend. Yet the gombeenism in FF very skillfully turned the lack of pairing into a issue about FG losing the country jobs and FG of course fell for it.

    We have a minister avoiding bening held to account for the corruption in FAS and we say nothing, but try stop her going on a jaunt to NYC and we scream murder? The voice of the gombeen sleveen is still oud enough to drown out the voice of honesty and accountability.

  3. There is a very simple way to blame the political class for the crisis we are in. Price inflation of ordinary goods used to be a concern for governments because sudden shifts in prices massively affected the ordinary person. The price of ordinary goods became less of a concern in the post-materialist age. What is puzzling though, is that the inflation of house prices and property was not a concern in the same way.

    Houses are a fundamental necessity and logically, the massive price inflation in this area should have had voters up in arms and politicians promising to introduce measure to cool the market.

    But too many people were making money out this (or so they thought), and if politicians tried to calm the market, voters would have been crying that the government wasn’t letting them make a buck. Too many people benefited from the situation, giving politicians no incentive to change their behaviour. I am sure politicians knew that the market was overheated in 2004/2005, but didn’t want to take the flak for bursting the bubble. Maybe they genuinely thought that there would be a soft landing, so there would no real backlash from letting the market do the cooling, whereas there might be if they deliberately stepped in. So even leaving aside the funding issue, it is possible to understand how rational politicians with imperfect information about the market might have let allowed this situation to arise. Political reform will do little to avert such a crisis in the future.

    There are two things that could have been done differently. Ban corporate donations eight years ago to keep distance between government and the vested interests, and set a minimum statutory capital ratio for the banks. This would have ensured that the regulator would not have to be “directed” by government to rein in the excessive lending.

  4. “The fact there was very little talk of political reform while the economy was (or seemed to be) booming might suggest that, while process considerations no doubt play some part in the minds of reformers, for most these are a secondary consideration, and they are either seen as not important or as important primarily because it is hoped they will lead to better outcomes.”

    I think there was but many media-types fed on the junkets!!

    With regard to the final paragraph here :

    “There are two things that could have been done differently. Ban corporate donations eight
    years ago to keep distance between government and the vested interests, and set a minimum
    statutory capital ratio for the banks. This would have ensured that the regulator would not have
    to be “directed” by government to rein in the excessive lending.”

    The issues raised in your discussion are mostly economic but I want to add
    in the problems of *careerism* . To me politics should be vocational in their
    essence. Its not a job for life but a service ; and I think that this is forgotten.
    Reminding politicians of this by significantly reducing the 30 year rule and
    increasing personal responsibility might ameliorate the problem there.

    I really think we need a stronger Senate because the problem of reform does
    not solely lie with the Dáil from which the fast-track, undebated and oft-times
    ludicrious legislations have emanated. (cf : Guillotined debates, pairing, expenses
    scandals, fast-tracked legislations and the need for constitutional referenda ).
    There is also a communications problem : when information is not provided by
    opposition on how certain legislations effect voters ;and we are living in an era
    where this can be done most effectively online without the necessity of printed

    Actually in all , Reform should be looking at what I am now calling the ‘profound
    disconnect’ between the professional politician and the ordinary human being-
    who may not desire to vote in the absence of Reform that does not address the
    appalling defecit caused by this disconnect.

  5. The financing of political parties is an issue in every democracy. Veronica makes some good suggestions. Transparency and some limit on corporate donations may be the least worst suggestions and good practice in other established democracies should provide some useful pointers. But, in the context of the question raised about the point of political reform, the problems in Ireland are more deep-seated and fundamental than party financing.

    The configuration of political factions is entirely dysfunctional and anachronistic and there is excessive executive dominance.

    Moderate, centrist, competent governance is the order of the day throughout most of the EU’s parliamentary democracies. France, Belgium and Italy may exhibit their own peculiarities, but do not really deviate from this trend. Nor do the Netherlands, Denmark, Sweden, Austria or Hungary; the pressure there is from xenophobic parties – not from the traditional left. And the remaining left-of-centre governments in Spain and Greece are being pushed in this direction.

    Ireland really does stand alone in terms of the extent of executive dominance, factional dysfunctionality and the severity of its economic and financial crisis. And the three are not unrelated.

    Yet, while the international bond market waits to see the extent of the burden the temporary stabilisation of the banking crisis will impose on the Exchequer and assesses the ability of the Irish economy to service a rapidly growing national debt, the main opposition parties posture and jostle to be the larger at the next election.

    We’re at nothing until politicians of the calibre of Brian Lenihan and Richard Bruton look around at the rest of Europe and decide to collaborate to give Ireland the kind of governance it so badly requires.

  6. On the broader point of whether reforms should be process oriented or outcome oriented – I think that the obvious answer is that any positive reforms would have to have elements of both.

    If we wanted purely outcome oriented reform – probably our best bet would be to ask the Bundestag or the Rikstag to set up a parliamentary committee to manage our affairs for us!

    It’s really interesting to think about how certain reforms may have changed the course of history – but, in the end, it’s impossible to say. Were FF priming the property bubble because they were being paid to do so by the developers, or were they doing so because they thought it was the best way to keep people employed?

    The process of self-government in Ireland has, I think, corroded considerably in the eyes of the public – our government appears highly secretive, unable to admit that some of its policies are not working, and, most worryingly, completely unwilling to face the people via by-elections or a general election.

    There also seems to be a broader disdain for the political class as a whole – rightly or wrongly, it’s seen by many as a bit of an old boys (and I use this masculine description deliberately) club, cut off from economic reality by an extremely generous set of terms and conditions that it awarded to itself. Pat Rabbitte came out quite strongly against this tendency on the Frontline this week – trying to distance Lab and FG from FF, but it’s definitely there. My point is that there appears to be widespread disappointment with the process itself, and not just the outcomes that it has produced. Without faith in the rules of the game, it’s very difficult to move forward.

    Reform means not just changing the leadership, but trying to alter the structures of governance. The goal has to be to do things better – both in terms of the fairness of the process, and the quality of the outcome. The alternative to reform is stasis – to keep doing baiscally the same things, even though they are not working, is deeply dysfunctional behaviour.

  7. @all
    I agree with you all that if we want to change the results, we have to change the approach in a whole variety of ways, of which political donations may not be the most immediate.

    That said, I remain to be convinced that a FG-Lab government would have done things different two years ago – history of AIB and Insurance Corporation of Ireland. The only question is how events earlier during the two preceding years would hve been read – noise or signal?

    Why reform?
    To implement and use a series of checks and balances to
    • ensure competence and moderation in and by government on our behalf;
    • overcome inertia at government level;
    • limit the scope for excess by the powerful, whether they be public or private, elected or appointed.

    1)from two former Ministers – 25 years ago!
    “It has been pointed out that while the civil service has traditionally recruited the cream of the country’s talent, not enough effort was made at institutional level to exploit the full potential of that excellence. My experience as a Minister bears this out… The Government has a duty to facilitate Irish policy-making and implementation. It is true that many of the problems affecting our society at present – reflecting the trend across Europe – stem from our failure to carry through decisions on institutional modernisation. In turn, this is often the result of over-reliance on modes of thinking – which have become obsolete” Ray MacSharry 1986

    “Ireland’s political and official rulers have largely behaved like a crew of maintenance engineers, just keeping a lot of old British structures and plant ticking over” the late John Kelly 1986

    2) The results of this inertia:-
    Unemployment approaching 500,000;
    Government managment of the economy and borrowing such that today’s TTimes asks “Is Ireland restaging Greek tragedy” and concludes “Ireland, like Greece, may have bitten off more than it can chew”

    3)Senior Public Service admits complacency

    “In the past decade, Ireland’s approach to fiscal policy, prices, costs and financial regulation were not sufficiently adapted to the disciplines of a single currency.“ from NESC Press Release Press Release from National Economic and Social Council (NESC) released with a report “The Euro: an Irish Perspective” 17th August 2010.

    In short, the Senior Public Service admits that it was inert – or as Eddie Molloy put it – suffering from a sever case of Implementation DEficit Disorder.
    (The Secretary General of the Government chairs National Economic and Social Council (NESC), which is a forum for social partnership. Among the seven Government nominees are the Secretaries-General of five Government Departments ie. Finance, Entreprise Trade and Employment, Social and Family Affairs, Environment Heritage and Local Government, Education and Skills)

    4) They cannot even say they were not warned – in 1999 – when there was still time to take corrective action.
    “If the risks of overheating and a subsequent hard landing to a more sustainable rate of growth is a concern, what policy actions can be taken in the context of monetary union?” http://www.imf.org/external/pubs/ft/scr/1999/cr9987.pdf)
    and here
    “In light of the rapid growth in credit and strong housing price increases, a number of Directors expressed concern about the risks of an asset price bubble and the potential vulnerability of the banking system. Directors stressed the need to enhance the forward-looking aspects of regulatory policy and, in this regard, welcomed the supervisory authorities’ recent initiative to assess the financial system’s vulnerability to specified macroeconomic shocks. They felt that a peer review, particularly by supervisors from a country that had undergone a real estate boom, might be helpful” also from the IMF in 1999

    5)Even then, the governing class did not even start to pay attention. see this review of what did not happen between the IMF questions of 1999 and the NESC admission of 2010, look at Dan O’Brien’s piece in the ITimes on 28 June last http://www.irishtimes.com/newspaper/opinion/2010/0628/1224273464255_pf.html

  8. There is a simple political reform required to ensure that TDs carry out their legislative function. Deputies should be required to attend work in order to draw salary.I am not referring to expenses or attendance allowances. I am referring to payment of basic salary.At present a member of the oireachtas can continue to draw salary from the day of registration to the day of dissolution without ever walking through the door of Leinster House (except to register once with the ceann comhairle after election).Spokespersons for oireachtas members have succeeded in confusing this issue with presence in the chamber. Opinion editors of all newspapers have refused to print letters on the issue.
    Oireachtas members should have arrangements similar to other public servants with whom they have a pay relativity. They should be required to provide ceann comhairle with a sick note if they are ill. It is outrageous that they can give each other leave through the pairing system. All pairs should be sanctioned by Ceann Comhairle subject to strict criteria. Deputies should be required to be present and to register a vote at each stage of a bill including a registered abstention. It is a scandal that former taoisig who are deputies should be earning on the lecture circuit abroad while the Dail is in session. It is unfair to deputies who take their legislative function seriously that a rival can devote huge time to constituency work and rarely if ever attend at Leinster House. Attendance at committees of the House in addition to attendance in the Dail chamber should be compulsory.
    I completely disagree with those who advocate replacement of the multi-seat PR system with less accountable systems such as a list system. The problem is how to make government more accountable to the people not less accountable. The current crisis was brought about by individuals in banks, Department of Finance, Central Bank etc who were effectively accountable to nobody and did not have to face popular election. Government allowed them to operate in a totally irresponsible manner. The news that banks had been allwed to borrow 90 billion abroad after 2003 did not emerge until the damage was done.
    Could I suggest a reduction of the Dail term to 3 years and changes that would ensure that information reached the people not just the Government.

  9. Pingback: If Not Now, When? Why we need Oireachtas reform. « politicalreform.ie

  10. The most basic question being asked by a dissolutioned public is “who governs us – how does this work”. I approve of all the comments above, and the aim of this website in general. However, my feeling is that TD’s & Senetors are just one element of our Government. To attempt reform of the Dail without a parallel discussion/examination of the public service will achieve little. I’m not thinking about attacks on front-line workers, but a shake-up of those who set policy options, implement policies, or manage delivery departments. Is this a forum that can cover ddiscussion of reform of both the “politics” and the “administration” ? Or maybe this topic belongs on a parallel website (if such a site exists please point me at it) – I suspect the ordinary citizen of this tired 1st Republic will engage with anicdote & suggestion as to how we truely reform ourselves. I am very encouraged that ordinary citizens may find a voice through this and similar sites – our country deserves it.

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