THE GOVERNMENT could save €1 billion a year in State spending by forcing State departments and agencies to be more efficient, the head of one of the country's banks has declared.
National Irish Bank chief executive Andrew Healy said the Government should redeploy officials where necessary, cut the number of agencies and put some services out on contract.
Meanwhile, the Department of Finance has rejected charges Minister for Finance Brian Lenihan has rowed back on a proposal to offer voluntary redundancy to some civil and public servants.
Mr Healy cited the example of the UK to the Institute of Directors, saying every government department there was required to make efficiencies of 1 per cent in its budget every year.
"If we adopted the same approach now in Ireland, we could reduce spending by at least €500 million in the first year, €1 billion in the second year and so on. The cumulative impact could be very large, very quickly - €3 billion in the first three years," he said.
There are 800 State agencies, "that's one quango for every 5,000 people in Ireland. Quangos, if they exist at all, should come with a built-in life expectancy," said Mr Healy. The Euro Changeover Board, set up to manage the euro's introduction, showed the Government "can get it right, it was set up to do a job and it did so, excellently by all accounts. When the changeover was complete, it was shut down.
"To be effective, the Government should be asking if a particular service or back-office function should be done by the public service at all. It is questionable if the public sector should remain top-heavy with jobs that are not focused on front-line services.
"Pensions, payrolls, IT services, information-processing are all areas which could be competitively outsourced, freeing up civil servants for more crucial work," Mr Healy argued.
"Right across the public service spectrum, thousands of people are in jobs that don't need to be in the public service at all."
He emphasised that while many of the current challenges require Government action, private enterprise, and in particular the banking sector, must play its part .
"International financial markets clearly have impacted on the domestic economic situation but there is also an obligation on the domestic banks to help get the economy back on its feet . . . We have a responsibility to continue to partner prudently with our customers and work though the challenges we both face. What I will say is that the underlying banking system is strong, it's well-regulated and Ireland remains a good place for banking and financial services generally," he said.
The Government will have to take "bold and sometimes unpopular decisions" to reform the public service, but such a change would help to avoid cutting back social services.
Meanwhile, the Department of Finance responded angrily to assertions the Minister for Finance had backtracked on a declaration in the Dáil on Wednesday that he favoured voluntary redundancies among civil servants.
In a written parliamentary question on Thursday, Mr Lenihan said he had announced in July the Department of Health and Children would draw up "a targeted scheme to reduce surplus staff in the HSE [Health Service Executive]. "A framework for such proposals has recently been received by my department and this is now being examined. The extension of such proposals to other areas is also being examined," he said.
Yesterday, the Department of Finance said: "On the early retirement scheme, we're saying that the Minister stands by all of his comments."
