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Why Ireland needs real decentralisation

This was first published on RTÉ Brainstorm

Opinion: decentralisation will only work if local government can make decisions about raising revenues and spending on services

Recent reports suggest that decentralisation is on the government’s agenda again. The Minister of State for the Office of Public Works and Flood Relief Kevin ‘Boxer’ Moran is leading the charge and tabling it as part of the negotiations for budget 2020. Specifically, he has identified Athlone and Sligo as ideal urban areas to act as civil service hubs and to accommodate different wings of government departments. By coincidence, one of the minister's constituency offices is located in Athlone.

The minister has argued that decentralisation will help ease the housing crisis, help free up much sought after office space and reduce transport congestion in the capital, whle also addressing under-investment in regional cities and towns. So what’s not to love about such a win-win proposition? Let's look at the case for and against such a proposal.

The case for decentralisation

Many countries have attempted to relocate civil servants, and of course we have also tried it in the past. The most recent example in the Irish case, was Charlie McCreevy’s proposal in 2003, where he floated his idea of decentralisation just hours before the 2004 Budget. In the then Minister for Finance's plan, 10,300 civil and public servants were to relocate from Dublin to 53 locations in 25 counties. Since the plan was enacted back in 2004, only a third of the planned number of workers relocated, and it was subsequently abandoned in 2011 and considered a failure.

McCreevy said back in 2003 that Ireland needed to get away from "the Dublin mindset". To be fair, relocating the hubs of decision-makers should broaden their mind-set, resulting in strategic plans that encompass whole of Ireland concerns. Other arguments often put forward for such geographical spreading of government departments is to bridge growth imbalances. It is akin to IDA Ireland directing FDI to a regional town or a sort of "manna from heaven" panacea for lagging areas.

With limited thought, it would be easy to jump to the conclusion that it might actually work. The relocation of workers to regional hubs would bring incomes directly into regional towns and help create further spin-off businesses and jobs in their localities (a multiplier effect). The added bonus often lauded with such proposals is the cost savings that could potentially be made by selling government buildings in the capital and implementing lower regional wage adjustments to new recruits. In all, it is easy to see why the proposal to move civil servants crops up so often.

The case against decentralisation

However, we need to think carefully about why it hasn’t been successful before and why it is often abandoned. The reason why agglomerations such as Dublin exist in the first place is that positive technological, cultural, cognitive and organisational learning externalities and efficiencies are acquired by people, firms and sectors that cluster in geographical proximity with one-another. Consequently, locating in less densely populated areas is sub-optimal as such positive externalities are less likely to be gleaned.