Speech
Minister McGrath's speech to the IPA Governance Forum - 10 September 2020
From Department of Public Expenditure, NDP Delivery and Reform
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From Department of Public Expenditure, NDP Delivery and Reform
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Last updated on
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Ladies and gentlemen,
I am very pleased to be here with you this morning for this Governance Forum event, to mark the 4th anniversary of the introduction of the Code of Practice for the Governance of State bodies. I want to thank Tom Ward and Aidan Horan and all at the IPA, both for their invitation to this event, and more generally for the leadership role played by the IPA in promoting an appreciation of good governance practices across our public service and beyond. I’d also like to thank all those of you who are engaged in delivering good governance, whether as members of Boards or supporting staff who are here today, for your work and commitment in this area.
It is timely to reflect today upon the role of the Governance Code of Practice, not just for the enduring values that it underpins within our State boards, but also for the progress and dynamism that is has instilled across our public bodies. Within that spirit of dynamism and change, I will be pleased to announce this morning some important evolutions to the Code of Practice – the first major changes to the Code since its launch back in 2016.
But before moving on to those announcements, I would like to take the opportunity to take stock of the progress we have made under our Code of Practice. I think it is fair to say that the Code of Practice for the Governance of State Bodies has now become well-established as the ‘bible’ of good corporate practice right across our public sector. The Code embodies what we have learned over many years about how to run State boards in a way that puts integrity, performance and accountability at the heart of our work. The Code has earned plaudits for its clarity of presentation, for its rigour and comprehensiveness, and I believe that it bears up very positively to comparison with corresponding Governance Codes right around the world.
In past years, one might have asked the question, Why do we need a governance code for public bodies? Isn’t corporate governance really a matter for private companies, with boards answerable to their shareholders, and with a focus on their financial bottom line? Don’t public bodies have a much simpler and purer mandate, that can be handled with clear leadership, direct reporting and with no need for extra layers of oversight?
It’s a mark of how far we’ve come, in my view, that corporate governance in the public sphere no longer needs to justify or explain itself. As the OECD has stated, and as the Code of Practice itself reiterates, high standards of corporate governance in State bodies are critical to ensuring a positive contribution to the State’s overall economic efficiency, competitiveness, social cohesion and regional development.
Thankfully, it is now the norm in our public bodies to have effective boards, skilled and independent chairpersons, and well-understood rules around ethics, disclosures and risk management.
Effective boards bring a range of benefits directly to the organisation. Board members, with a diversity of views and backgrounds, bring a resilience to the quality of decision-making. A culture of debate and scrutiny helps to provide the checks and balances to ensure that organisational strategy is robust and sustainable.
Effective boards are a pre-requisite for effective public bodies, on whom we rely for securing Ireland’s place as an attractive place to grow a business, to foster development in our communities and to participate in our social and cultural life. These are critical outcomes for our nation, and the quality of our governance plays an important role in better delivering these outcomes.
And of course, we need good governance to manage and respond to change. I don’t need to tell anyone here this morning that our country, and the world, has endured a most difficult year to date, and faces further challenges ahead. Although this pandemic is a strikingly vivid illustration of the risks and uncertainties that we face in a globalised world, we know that today’s world is characterised by change, and indeed by an increasing pace of change. If we want to continue to provide a high quality society for all our citizens, our institutions and organisations must develop the foresight to anticipate such changes, and the agility to manage and adapt to them. Our Government Departments and our public agencies have risen admirably to the challenges of Covid-19, whether in terms of putting in place supports to our citizens and our businesses, or adapting rapidly to new ways of working and of delivering public services. This kind of responsiveness and adaptability does not come about by accident; it is brought about through strong systems of governance that span our public and private sectors. This is a capacity that will become ever more important into the future.
It is against this background that I am happy to announce today some significant developments to the Code of Practice, which will further improve governance in our state bodies. While as I have said, it is critically important that our public bodies can respond to change, there are some areas where we need to step up and drive this change from within. One of these areas is gender balance.
As you know, it has long been an objective of public policy that we achieve 40% representation of women and of men on State Boards. The requirement for gender balance is today well understood as not just a moral imperative of equality between women and men, but also as a prerequisite for sound corporate governance. Balanced and diverse representation on State boards widens the State body’s access to a broader range and depth of experiences, perspectives and skillsets. This strengthens Board independence and challenge and reduces the likelihood of ‘groupthink’.
Balanced and diverse Boards are also in a stronger position to give appropriate attention to areas such as risk management and internal controls, human resource management and staff wellbeing. By bringing greater diversity to board expertise, this can also lead to positive changes in the behaviour of all Board members, as well as promoting a healthy and inclusive culture within the organisation as a whole.
The existing Code of Practice already recognises and supports the move towards gender balance on public boards, and we must recognise that significant progress has been made. A survey in July 2018 showed that the 40% gender balance target was met for the first time in respect of average board membership, in aggregate terms, when women held 40.7% of the membership of State boards. In December 2018, the average gender balance across all State Boards stood at 41.5% female and 58.5% male members. On the other hand, less than half of individual Boards had met the 40% target.
In summary then, Ireland is making good progress at achieving gender balance on State boards, but the progress is uneven and is far from complete. We need to do more.
With this in mind, I am announcing today a set of reforms to the Code of Practice, which are aimed at stepping up our progress towards gender balance, diversity and inclusion in State bodies. I am also conscious that our successful, well-established Code of Practice should not be tampered with lightly, and that we must avoid at all costs any new bureaucratic burdens that would only do more harm than good. That is why I am introducing a carefully selected set of refinements to the existing provisions, which can be summarised as follows:-
Many, if not all, progressive public bodies will already be well-positioned to meet all of these new measures. For bodies that still have work to do to meet their gender balance requirements, the new Code of Practice Annex of Gender Balance, Diversity and Inclusion will both support them, and press them, to step up to the challenge.
I look forward to the implementation of these measures and to further progress in achieving full and complete equality and strengthened diversity on our State Boards. My Department will keep these measures under review, to assess the changes, and I expect, improvements that will arise in organisational performance.
I intend that equality, inclusion and public wellbeing will be hallmarks of my tenure as Minister for Public Expenditure & Reform, and watch-words for Ireland’s public service into the future. I look forward to advancing this important agenda still further in the upcoming Budget 2021, when I will be providing further details of progress in equality budgeting, and in shaping our budgets by reference to the wellbeing of the nation.
I’d like to close by thanking Tom and Aidan again for the opportunity to join you this morning, and to wish this Forum and subsequent Fora continued success in supporting our shared journey to improve Governance within Ireland.
Thank you all.