The Irish Economy

Shamefully, it has taken me several weeks to realise the full import of the attached Irish Times piece by Garret FitzGerald. He has for many years sought to draw the attention of the Irish public to the role of the European Commission as defender of smaller states’ interests. Here he warns, in much more modest language than that with which I have entitled this entry, that the current German-French proposal for euro zone reform “represents a new attempt to bypass the union’s tried and tested decision-making system… There is a new danger that the decision-making system that for over half a century has sustained and kept in balance an inherently cumbersome union… may lose its hitherto carefully preserved cohesion, and for the first time become dominated by some larger states.”

The recently issued Programme for Government of the Fine Gael/Labour coalition gives some hints as to the extent to which regulation will be maintained and developed as a mode of governance over the next few years. The transformation of governance modes from welfare state to regulatory state models in Europe has been observed over the last twenty years and characterised by tendencies towards separation of policy making from operations, displacement of bureaucratic discretion with greater reliance on rules and the use of arms-length (semi-)independent regulatory agencies to monitor and enforce compliance with regulatory regimes. As a governance mode regulation is attractive, particularly in hard times, as it is offers relatively inexpensive (to government) mechanisms to symbolise policy commitments in areas such as financial markets, consumer protection and the environment. The Programme for Government makes extensive use of regulatory proposals, not only affecting business regulation but also regulation of the public sector and self-regulation.

In respect of regulation of business the central themes of the programme for government include a degree of rationalization, notably seeking to bring together the various organisations concerned with the regulation of financial markets, and a new emphasis on enforcement, represented by a proposal to merge enforcement activities of the Health and Safety Authority and the National Consumer Agency. A reader might wonder why these two enforcement agencies were singled out and other enforcement organisations such as Health Information and Quality Agency, the Food Safety Authority of Ireland (which received separate attention in the document) and the Environmental Protection Agency were not included in plans for a more ambitious enforcement agency. However it is done in organisational terms there is clearly great scope for the diffuse agencies involved in enforcing social regulation (broadly defined) to learn from one another, a central theme of a recent NESC report Re-finding Success in Europe: The Challenge for Irish Institutions and Policy ( and in particular its discussion of the network built around the Office of Environmental Enforcement, pp136-141). A distinct set of proposals for sale of state assets, to be guided by a report by Colm McCarthy to be published imminently, will reduce the capacity for the state for control through ownership thus continuing the shift from welfare state to regulatory state modes.

The renewal of the regulatory state is perhaps more strongly represented in coalition plans for operation and oversight of public sector activities. This emphasis implies an analysis that Ireland’s problems lie as much with public sector as with private sector activity. The stringency of regulation of public sector organisations and representatives is targeted by proposals:

to reinforce freedom of information legislation
to extend the ambit of the public sector ombudsman
to introduce whistleblowers legislation
to more tightly regulate political party finances
to revise legislation governing the relationship between ministers and their civil servants
to establish an Investigations, Oversight and Petitions Committee in the Oireachtas linked to a proposed referendum to permit Oireachstas committees to undertake full inquiries (reversing the Abbeylara decision)
to require the publication of Regulatory Impact Analyses prior to the taking of government decisions
to introduce greater ‘choice and voice’ for users of public services such as schools and hospitals
to put the Inspector of Prisons on a statutory basis

At first glance the proposed abolition of the HSE would shift us back towards a classic welfare state mode of governance with direct ministerial control and, we might presume, a greater degree of bureaucratic discretion. Proposals to progressively introduce primary health care services which are free at point of use also shift Ireland closer to the welfare state model of healthcare. However these measures are balanced by the proposal to free hospitals from direct governmental control and, presumably, establish a contractual basis for both the procurement and regulation of healthcare provision. Accordingly the Department of Health may be substantially restricted to policy rather than operational matters in healthcare.

A third trend identified with the shift towards the regulatory state is a reduced emphasis on self-regulation as the state seeks to take on a greater oversight role. Such a trend is found in the document in the commitment to establish in independent regulator for the legal profession, which will to some extent displace professional self-regulation. This reproduces a commitment already found in the EU/IMF aid package and which follows from the Competition Authority’s 2006 report on the legal profession.