Joe Wallis Joe Wallis Irish Fiscal Reversal since 2008: Two Questions - - PowerPoint PPT Presentation

A SOCIAL CONSTRUCTIONIST COMPARISON OF A SOCIAL CONSTRUCTIONIST COMPARISON OF THE IRISH DEPARTMENT OF FINANCE AND THE NEW ZEALAND TREASURY

Joe Wallis Joe Wallis

Irish Fiscal Reversal since 2008: Two Questions

• 1. Can this development be attributed to

external factors or to fiscally irresponsible y p policy decisions?

• 2. Can advising officials, particularly in Central

Budget Agencies (CBAs) be blamed for failing to warn about the risks of preceding fiscal to warn about the risks of preceding fiscal policy decisions?

Wright Inquiry into the Performance

• f the Irish Department of Finance

i di Findings The DOF had consistently warned against the risks

• f pro‐cyclical fiscal action.

p y The DOF may have been inappropriately reticent in The DOF may have been inappropriately reticent in taking the lead in (i) the formulation of economic strategy; and (i) the formulation of economic strategy; and (ii) public service modernization.

Proposition Proposition

The erosion of respect experienced by the DOF b ib d i f il d l can be attributed to its failure to develop a culture that is both integrated and adaptive.

Proposition Proposition

The erosion of respect experienced by the DOF can be attributed to its failure to develop a p culture that is both integrated and adaptive. A social constructionist approach

• can explain this process and

hi hli ht k diff b t th DOF

• highlight key differences between the DOF

and the New Zealand Treasury.

What is social constructionism? What is social constructionism?

Following the publication of Berger and Luckman’s The Social Construction of Reality’ y (1966) social constructionism has been applied in many fields including policy studies in many fields including policy studies.

What is social constructionism? What is social constructionism?

Social constructionism is

• a cross‐disciplinary movement
• that challenges the Western intellectual tradition
• which seeks certainty in the representation of reality
• by means of propositions that can be established through

positivistic scientific inquiry.

What is social constructionism? What is social constructionism?

• It is fundamentally subversive since
• it not only questions the findings of experts

b t i th ibilit th t th i

• but raises the possibility that they may arise

from an interpretation of reality

• that legitimates their claims to expertise and

quest for policy influence quest for policy influence.

For example: the social constructionist perspective on….

• The positions of social welfare workers, police

and religious authorities on the causes of a g rise in the crime rate?

What is social constructionism? What is social constructionism?

• Social constructionists argue that
• (

)

• ‘taken‐for‐granted realities’ (‘facts’) are

produced from interactions between and among social agents among social agents.

• Multiple realities can compete for legitimacy
• Th

liti t t d th h i l

• These realities are constructed through social

processes in which meanings are negotiated, consensus formed and contestation is consensus formed, and contestation is possible

What is social constructionism? What is social constructionism?

• Policy‐making is a rich field for social

constructionists to explore how constructionists to explore how

• actors bring personal, agency and political

biases biases

• to the process of constructing an

interpretation of policy reality and interpretation of policy reality and

• how the public interest can be advanced

from that reality that from that reality that

• other actors accept as reasonable.

The Relationship Between Problems, and Solutions (Grint 2005)

Problems Solutions Problems Solutions Critical: Urgent action with minimal Command Authority to activate compliant Urgent action with minimal uncertainty about what needs to be done. Authority to activate compliant responses down well‐established hierarchies. Tame/technical Clear path to resolution and limited Technocratic/managerial Expertise, resources and processes p uncertainty about what needs to be done. p p are applied to solve the problem. Wicked No unambiguous solution and h t i t b t h t Collaborative Leadership Networks engaged in learning huge uncertainty about what needs to be done. processes .

Social Constructionism in Public Management and Policy Literature

d li h i f Underlies theories of

• crisis framing (Boin et. al. 2009),
• policy and organizational myths (Yanow 1992;

Christensen et.al. 2007), )

• reform rhetoric (Hirschman 1991),
• advocacy coalition frameworks (Sabatier 1988)
• advocacy coalition frameworks (Sabatier 1988),
• public leadership (Ospina and Foldy 2010),

l i d i i i l ( d 1998) d

• alternating administrative styles (Hood 1998) and
• public service bargains (Hood and Lodge 2006).

Serial Loyalist Bargains Serial Loyalist Bargains

The privileged insider status of CBA officials derives from th ‘ i l l li t b i ’ th h ith Fi the ‘serial loyalist bargains’ they have with Finance Ministers.

• Provided these civil servants are able to maintain a

threshold level of respect threshold level of respect,

• they can expect to exchange loyalty for access and
• ‘a measure of anonymity when it comes to public
• ‘a measure of anonymity when it comes to public

praise or blame’ (Hood and Lodge 2006, p. 56).

Respect Respect

• To accord ‘recognition respect’ to senior civil

servants is to

• ‘take seriously and weigh appropriately’

(Darwall 1977 p38) their advice (Darwall 1977, p38) their advice

• on the basis of an implicit recognition of their

distinctive competence and professional integrity. integrity.

Agent Risk Agent Risk

• Whenever individual officials participate in the

policy process they can expose the respect p y p y p p commanded by their institution to some risk.

• Their decisions to take or not take the lead can

inflict both positive and negative externalities.

Agent risks from taking the lead Agent risks from taking the lead………

Respect for competence

• Following questionable

Respect for integrity

• Breaching confidentiality;

methods in solving ‘tame problems’;

• Intimating private

disagreements with Cabinet

• Misinterpreting problems as

‘tame’; h i d d i i policy direction;

• Being perceived as being

l l i l

• Unauthorized deviations

from agency’s policy line. too loyal to particular ministers;

• Visible advocacy that raises
• Visible advocacy that raises

questions about neutrality

Agent risks from not taking the lead Agent risks from not taking the lead………

• There may be a long term erosion of respect

relative to other agencies by allowing them to g y g repeatedly take the lead on cross‐cutting issues issues.

Agent Risk Asymmetry Agent Risk Asymmetry

Individual officials may be excessively averse to taking the lead since the risks of doing so may g g y be

• more easily attributable and
• more easily attributable and
• greater in the short term

than the risks of not taking the lead.

Proposition Proposition

• Organizational culture can perform both a

constraining and empowering function in g p g terms of the willingness of CBA officials to take the lead in policy deliberations take the lead in policy deliberations.

Organizational Culture Organizational Culture

Researchers into organizational culture have distinguished between the depth and visibility of g p y its dimensions.

Levels of Culture Levels of Culture

Visible

Culture that can be seen at the

Visible

1. Artifacts such as dress, office layout, symbols, slogans, i be see a e surface level ceremonies

Invisible

2. Expressed values, such as “ h i ” Deeper values and h d “The Treasury Line” 3. Underlying assumptions and deep beliefs, such as those reflected in policy paradigms shared understandings held by organization members

22

Culture and Performance

Researchers into organizational culture have also found its internal integration and external g adaptability to be related to performance. A relationship can also be hypothesized between these factors and the capacity of advisory agencies to sustain respect. advisory agencies to sustain respect.

A Strong Integrated Culture A Strong Integrated Culture

Productive Organizations CBAs Helps members Sustains respect by

• Develop a collective identity
• Know how to work together
• Constraining officials to follow

the agency’s policy stance and Know how to work together effectively.

• Follow a set of unwritten rules

the agency s policy stance and ethos in giving advice imprinted inside their minds.

• Develop teamwork,

ll b ti d t l

• Empowering them to take the

lead by interpreting issues di t thi t d collaboration, and mutual trust. according to this stance and ethos

An Adaptive Culture An Adaptive Culture

Productive Organizations CBAs Determines how the i i l d Sustains respect by D i f id

• rganization meets goals and

deals with outsiders.

• Drawing from idea

developments to construct authoritative policy Helps members respond rapidly to customer needs and authoritative policy paradigms

• Adjusting its advisory scope

to competitors. to focus on those issues that legitimate its expertise Adj ti t th liti l

• Adjusting to the political

leadership style of successive Cabinets successive Cabinets

The Relationship between Problems, Solutions and Political Leadership Styles (Adapted from Grint 2005)

Problem Solution Required Associated Political Problem Solution Required Associated Political Leadership Style Critical: Command Decisive Urgent action with minimal uncertainty about what needs to be done. Authority to activate compliant responses down well‐established hi hi A willingness to act decisively with little public doubt or empathy hierarchies. Tame/technical Clear path to resolution Technocratic/managerial Expertise, resources and Delegative Take credit for effective and limited uncertainty about what needs to be done. processes are applied to solve the problem. delegation to agencies with expertise required . Wicked No unambiguous solution and huge uncertainty Collaborative Leadership Networks engaged in learning processes . Deliberative Encourage diverse perspectives and take the about what needs to be done. risk of appearing indecisive

Propositions 1.

h li i l l i bli h d

• Where a strong political culture is established

with persistent interpretative biases that are misaligned with those of the CBA

• The relative respect, policy influence and

p , p y capacity to apply core competencies of the CBA may erode y

• Until a crisis occurs that can framed as an
• pportunity to launch capacity and respect‐
• pportunity to launch capacity and respect‐

building processes.

Propositions 2.

i i h ‘ k’ li i l l

• In countries with ‘weak’ political cultures,

where it is hard to predict the style of successor governments.

• CBAs can build respect through smart policy

p g p y entrepreneurship as they

• maintain their capacity and ‘lie in wait’ for

maintain their capacity and lie in wait for windows of opportunity to open in which they can advance solutions that legitimate their can advance solutions that legitimate their core competencies.

Application Application

Comparison of Cultural Adaptability of Control A i i N Z l d d I l d b Agencies in New Zealand and Ireland between 1987 and 2008

Irish ‘Social Partnership’ Irish Social Partnership

h i l i d i l il The National Economic and Social Council (NESC) and the Department of the Taoiseach (DOT) took the lead in bringing social partners together

• to generate a strategic plan that integrated

monetary, fiscal, incomes and industrial policy y, , p y

• while addressing ‘wicked’ issue of how to

equitably spread the burden of economic equitably spread the burden of economic adjustment.

Consequences of successful experience with ‘ i d ’ ‘negotiated governance’

• The NESC (with the support of the DOT) demonstrated

the confidence and capacity to take on a broader range the confidence and capacity to take on a broader range

• f wicked issues as its strategic reports became the

basis for three‐year social partnership agreements;

• A stronger political culture emerged to reproduce a

deliberative political leadership style deliberative political leadership style;

• The respect and authority commanded by the DOT
• The respect and authority commanded by the DOT

grew so that it came to be seen as the primary source

• f policy leadership at the center of the civil service.

Erosion of Respect Commanded by the DOF

• The social partnership agreements often

contained specific fiscal commitments without p a full economic analysis by the DOF that was left to only debate their pace of delivery left to only debate their pace of delivery

Erosion of Respect Commanded by the DOF

• Despite repeatedly warning about the risks of

Despite repeatedly warning about the risks of pro‐cyclical fiscal policy in its June memoranda

• n Budget Strategy ‘the quantum of spending
• n Budget Strategy, the quantum of spending

and tax relief outlined in December Budgets b ll b h was very substantially above that advocated in June’ (p. 22).

Erosion of Respect Commanded by the DOF

The DOT and not the DOF took the lead in bringing departmental secretaries and social g g p partners together to interpret public service ‘modernization’ as a wicked problem that could modernization as a wicked problem that could

• nly be addressed through cultural change

across the Irish Public Service across the Irish Public Service.

Erosion of Respect Commanded by the DOF

O i di f O bl d f DOT given credit for……. DOF blamed for …………

Being the catalyst in launching in 1994 a Disappointing progress made by 2002 on the ‘more technical’ themes of SMI (PA Consulting 2002). g system‐wide process public service modernization ‐ ‘The ( g ) The piecemeal imposition of reporting requirements that blurred the link between individual contribution modernization The Strategic Management Initiative’ (SMI) blurred the link between individual contribution, department outputs and strategic outcomes and the allocation of resources including performance bonuses and promotions Progress made on the ‘outward‐facing’ themes f SM (PA C l i promotions Retaining control over budget and resources in a way that ‘li i d h i l d l i h i i ll

• f SM (PA Consulting

2002). ‘limited the managerial devolution that was originally envisaged (OECD 2008, p. 33).

The DOF strikes back by influencing the Wright Committee

The Wright Committee served the DOF well by:

• Giving it an opportunity to clear its name without

Giving it an opportunity to clear its name without compromising confidentiality conventions;

• Endorsing the recommendation of a 2009 internal

i h i li f i i b i ll review that, in a climate of austerity, it substantially increase its hiring of post‐graduate economists ‘Of 542 staff, the Department has only 39 economists trained to Masters level or higher’, a proportion that is ‘extraordinarily low by international standards’ (Wright 2011, p. 45).

Question Question

What lessons can the Irish DOF learn from the NZT that

• has long had a substantially greater complement of

post‐graduate economists who have used h l d

• authoritative economic policy paradigms to

integrate culture and empower officials t t k th l d b d f li i

• to take the lead on a broad range of policy issues
• including economic strategy formulation and public

sector reform? sector reform?

Lesson 1 Lesson 1

• Allow the more catalytic department at the

centre of government take the lead in driving g g forward public service modernization.

Lesson 1 Lesson 1

NZT experience suggests that where advisory

• fficials interpret public management reform as a
• fficials interpret public management reform as a

‘tame problem’ susceptible to ‘contractualist solutions’ they can provoke a backlash that draws solutions , they can provoke a backlash that draws attention to purported agency bias. Since 1999, it has limited this reputational risk by assuming a ‘silent partner’ role as the SSC has g p sought to catalyze cultural change in the public sector.

Lesson 1 Lesson 1

In Ireland the Fine Gael coalition formed after In Ireland the Fine Gael coalition formed after the 2011 election responded to the Wright Report by transferring modernization Report by transferring modernization responsibilities from the DOF to a (recreated) f bl Department of Public Services.

Lesson 2 Lesson 2

• Take advantage of the escalation of budget

reporting requirements to enhance p g q professional capacity and respect commanded as guardian of fiscal responsibility as guardian of fiscal responsibility.

Lesson 2 Lesson 2

• The New Zealand experience suggests that the

Fiscal Responsibility Act of 1994 strengthened p y g the hand of the NZ.

• Compliance with its more stringent reporting
• Compliance with its more stringent reporting

requirements legitimated an enhancement in f l h h h its professional capacity through either redeployment or recruitment so it could claim special competence in this area.

Lesson 3 Lesson 3

• Allow the CBA to build respect by playing a

relatively transparent and independent role in y p p the policy process, even where this involves public criticism of fiscal policy initiatives public criticism of fiscal policy initiatives.

Lesson 3 Lesson 3

I N Z l d th i f i d d t d t

• In New Zealand the expression of independent and, at

times, dissenting views by the NZT have been normalized.

• For example in a 2008 post‐election ‘Economic and Fiscal

Update’, the NZT publicly expressed reservations about tax cut proposals by the incoming government cut proposals by the incoming government .

• In Ireland it would still not be considered for the DOF to

In Ireland it would still not be considered for the DOF to play this role. For example the Wright committee argued that ‘a public airing of serious policy differences between the DOF and its Finance Minister could have serious the DOF and its Finance Minister could have serious implications for financial markets’ (p. 29)

Lesson 3 Lesson 3

• In Ireland it would still not be considered

legitimate for the DOF to play this role.

• For example the Wright committee argued

that ‘a public airing of serious policy that ‘a public airing of serious policy differences between the DOF and its Finance Mi i t ld h i i li ti f Minister could have serious implications for financial markets’ (p. 29)

Conclusion Conclusion

Alth h i l l li t b i i CBA i il d

• Although serial loyalist bargains give CBAs privileged

access to Finance Ministers, they can also render them unable to defend themselves against implication in g p policy failures since they are ethically obliged to preserve the confidentiality of their advice.

• Recent Irish experience indicates that external inquiries

may provide vindication but may also uncover the may provide vindication but may also uncover the corrosive impact of cumulative leadership failures by highlighting skills deficits and situations where Cabinet i i h i h i d l k d h b di ministers have either ignored or looked to other bodies to supply economic policy advice.

Conclusion Conclusion

S i l t ti i id i i ht i t th

• Social constructionism can provide insight into the

leadership opportunities government agencies face in carrying out their advisory functions.

• In comparing two CBAs that represent opposite extremes
• f the first form of leadership avoidance an important
• f the first form of leadership avoidance, an important

lesson has emerged: to the degree that CBAs increase their employment of post‐graduate economists, they may both i t it t t k th l d i acquire a greater capacity to take the lead on economic strategic issues and a develop a bias toward interpreting problems as requiring ‘tame’ solutions through the application of this in‐house expertise.

Conclusion Conclusion

• This rendition can have varying success.
• In the case of the New Zealand’s model of fiscal

responsibility, it was both sustainable and replicable elsewhere (including in Ireland). replicable elsewhere (including in Ireland).

• However, on both counts, it was less so in the

f th NZT’ d l i f bli case of the NZT’s model version of public management reform, suggesting that other CBAs l f h hi h i l can learn from the way this agency has quietly taken more of a back seat in this area since 1999