Cuts well short of Bord Snip target
Debt woes to worsen as Government fails to meet two-thirds of €5.3bn in savings proposed by McCarthy
Published 11/04/2010 | 05:00
The Government has failed to implement over two-thirds of the spending cuts recommended by An Bord Snip Nua last year, which will severely impact on the country's soaring debt, it can be revealed.
According to new figures obtained from all government departments, less than a third of the €5.3bn cuts recommended in the McCarthy report will be achieved by the end of 2010.
The lack of progress on the cuts is highly damaging to Finance Minister Brian Lenihan, who has garnered considerable international respect for his tough fiscal reductions, given Ireland had to borrow in excess of €20bn to run the country last year.
According to the figures, out of hundreds of specific recommendations made by UCD economist Colm McCarthy and his working group, which completed its work last July, only 40 are being implemented in full and 96 in part.
At best this year, the Government hopes to achieve €1.7bn in savings, far lower than hoped, and from here on in the McCarthy report is set to be used only as a "reference point" on departmental expenditure.
The worst performer was Justice Minister Dermot Ahern, who only managed to make €6.9m worth of savings out of €136m recommended by An Bord Snip Nua. Defending the poor performance, Mr Ahern's spokesman said: "While it was never the intention that the full €136m savings recommended in the McCarthy report would be delivered in 2010, significant progress in this regard has been made.
"This is through a combination of the recommendation in the report and other measures being taken as part of the Government's budgetary policy."
Communications Minister Eamon Ryan's department made less than €6m worth of savings compared to the €65m identified by last year's report.
McCarthy also identified over €1.8bn worth of savings in Social Welfare, but the newly named Department of Social Protection confirmed that it would save just €688m by the end of the year.
Of that, €437m is to be achieved from the 5 per cent reduction in social welfare rates, far lower than the €850m McCarthy said it should save.
Out of €1.3bn worth of savings singled out in Mary Harney's Department of Health, it has been confirmed that less than €250m will be taken off the expenditure budget.
According to a department spokesman, at least eight of the areas singled out by McCarthy are not being implemented. Several other areas were not being looked at because no savings would accrue as a result.
In education, McCarthy reckoned that a €745m reduction in spending was achievable. However, according to Tanaiste Mary Coughlan, only €121m will be cut by the end of this year.
The biggest single saving in education is coming from "pay and other efficiencies" in the third-level sector. Despite Ms Coughlan's difficult week at the teacher conferences, just over €21m of the savings have come from the primary and second-level sectors.
Noel Dempsey's Transport Department saved €48m out of the €127m recommended and Mary Hanafin's Arts, Sport and Culture saved €35m out of €105m.
One of the better performers was Brian Lenihan's Finance Department, which has managed to reduce its costs by €58m, compared to the €82m McCarthy said it could.
Another golden boy is new Defence Minister Tony Killeen, whose spokeswoman said yesterday that all of the €53m savings measures identified have been implemented, or alternative savings have been implemented.
Top of the class, however, is Micheal Martin's Department of Foreign Affairs, which will save a total of €60m despite McCarthy only calling for €41.7m in cuts.
Responding to the low level of implementation, Colm McCarthy said that his list of cuts was far higher than the amount of spending reductions that were demanded by Mr Lenihan.
"It was never the case that all of these would be done. There was far more than was needed because there had to be political choice of what would be kept. Also, many of the measures aren't black and white and the savings can't be measured immediately. It will take two or three years to see some of them."
In response, Fine Gael's Richard Bruton said the figures show that ministers have totally failed to tackle the main problems with the public sector.
"They cut social welfare and they reduced pay ,but yet they have ducked the really tough subject of deep-rooted reform in the public sector. These figures show how they have simply ignored the real problem which we need to tackle to get ourselves out of recession," he added.