Government cutbacks

[The Wedger]

The big squeeze

Wednesday July 09 2008

The Government will cut nearly €1.5bn from its budget over the next 18 months as it begins a major squeeze on public spending.

But Taoiseach Brian Cowen and Finance Minister Brian Lenihan were accused of putting together figures that don't add up and leaving a €750m black hole in their calculations.

The plan announced yesterday was extremely vague on specific details of where savings would be made, leaving major question marks over infrastructure projects and the numbers working in the public sector.

And economic observers believe the €440m to be cut this year and a further €1bn in cuts next year may not be enough to make up for the fall in the tax-take caused by the downturn.

In a presentation that lacked precise figures for the amounts being cut in each area, Mr Cowen and Mr Lenihan set out several belt-tightening measures:

l A halt to controversial ministerial pay rises.

l All government departments other than health and education to reduce their payroll bills by 3pc by the end of 2009.

l Scrapping some state agencies.

l Reduction in the use of consultants, advertising and public relations services.

lPrioritising infrastructure projects.

l Redundancies in the HSE.

l Possible redundancies across the public sector.

l Curbing tribunal costs.

l Cutting Third World aid.

The Government's troubled decentralisation plan was left dead in the water after the Government put a stop to buying any further property.

Despite Mr Cowen claiming it was only a "pause", his coalition partners in the Green Party let the cat out of the bag by welcoming the decision "to effectively halt the decentralisation programme". The announcement now places a major doubt over the future of decentralisation projects planned for towns across the country.

Although €186m has been spent on property already, out of a planned total spend of €900m, doubts are now being cast over projects in Monaghan, Thurles, Drogheda, Waterford, Cavan, Claremorris, Dungarvan, Edenderry, Thomastown, Enniscorthy, Youghal, Kanturk, Macroom, Clifden and Fermoy, along with a major three-department relocation to Carlow, Mullingar and Portlaoise.

The savings on the public- sector pay bill will amount to €250m, excluding the health and education sectors where the level of reduction has yet to be resolved.

When all other elements are taken into the equation, there is up to €750m in cuts yet to be accounted for, prompting Fine Gael and Labour to suggest it will come from cuts to front-line services or infrastructure projects.

Slash

Savings of €144m were announced by the Department of Health but it emerged this is just the beginning, as the HSE is about to slash spending by another €190m in the coming weeks.

The biggest blow in the Department of Health's plan will be felt by disability services, mental health care and some cancer services which will not get €38m of the promised extra funding for new developments outlined in the Budget.

The €110m set aside for the delayed Fair Deal scheme, allowing the State to wait until after a nursing home resident's death to recoup the cost, is also being put on hold. But the glaring omission from yesterday's announcement was the HSE cost-cutting plan to stem its €300m deficit at the end of the year. It will be unveiled in the coming weeks.

The proposed HSE redundancy scheme will become a reality but around €30m has yet to be found to fund it. Mr Lenihan said the tough measures were the "minimum required" to kick-start the economy.

[Zapatista]

Is this a case of to littile to late? For years this Government have mismanaged the budget leaving them with huge a surplus to waste on a feel good factor for the electorlate.

The curb in tribunals will be welcomed but I fear it is more sinister motive and may lead to token tribunals with very limited remit. How about curbing the way tribunals are intentionally delayed by some? If the tribunals lead to a higher level of honesty and accountability in Government then it can only serve to help the economy.

I also think the down turn will be used to intensify the pace in which collocation is happening. Futher bring the HSE to it's knees. If there was ever a need for decent public health now is the time, but it will be used to drive forward the privatisation of our health care.