THE salaries of hospital doctors must be cut or patients will suffer, the European Commission has warned.
A draft leaked report on our progress in the bailout programme says Health Minister James Reilly should cut the salaries of our hospital doctors, who are the highest paid in Europe, to avoid drastic cuts to hospital services.
The highly critical report also calls for cuts to some salaries and allowances in other public sector jobs. And it warns we may be in for more tough Budgets as the Commission cut its 2013 growth forecast for Ireland to 1.1pc from 1.4pc.
The Commission said it was impossible for the Government to hit targets for ?health spending cuts within the agreed timeframe without cutting salaries and other costs or cutting patient care. This contradicts repeated government assurances that health spending can be reduced while maintaining patient care and sticking to the Croke Park deal.
It also wants measures to force doctors who don't prescribe cheap generic drugs to face penalties. The cost of drugs in Ireland tripled between 2000 and 2008 and we pay more for drugs than anybody in Europe bar the Greeks.
The 72-page draft report, which must be compiled as part of the bailout programme and which has been seen by the Irish Independent, paints a picture of a health system where costs are out of control because staff are paid too much and the State pays one-third more than the EU average for hospital drugs.
Substantial additional savings through efficiency gains cannot be made within the required timeframe without damaging patient care unless high salaries and the high price of other inputs are seriously addressed," the report warns.
While the Commission takes aim at doctors' salaries, it also calls for workers protected by the Croke Park agreement to bring their pay into line with civil servants in other countries.
The report also urges the Government to scrap plans for further redundancies in the public sector, saying it will lead to worse services and push more people on to the dole.
It challenges government claims that the newest planned redundancy programme would pay for itself in three years.
The report also highlights the "significant and unexplained wage gap" between private and public sector workers.
Other problems spelled out in the report are:
* That the impact of the government job programme has been "muted".
* The new personal insolvency laws may favour more highly indebted mortgage holders over those with average borrowings.
* More houses need to be repossessed.
* Irish banks could need a further bailout if the outlook for economic growth gets much worse.
* More also needs to be done to help small and medium enterprises (SMEs), and Irish banks may not be up to the job.
* There is still no firm agreement on how the money raised from the sale of state assets will be spent.
The legal system also comes in for criticism, with the Commission saying that nothing less than modernisation of the judicial process and "the entire judicial system" is needed.
On the health system, the Commission says health spending is high here but the results are average, which implies that there is poor value for money.
This means people are dying unnecessarily. There was more scope to extend life expectancy here than in almost any other developed country, it added.
It wants every patient to have their own ID number, better GP services and a funding mechanism that rewards popular hospitals and punishes bad hospitals. Pharmaceuticals costs, which tripled between 2000 and 2008, have to be reduced.
The Commission, which highlights that Irish hospital doctors earn twice what their UK counterparts get, wants the Government to recognise more degrees from Europe and further afield. The HSE recognises far fewer degrees than the UK, for example.
While existing consultants are among the best-paid doctors in the world, the Government recently cut pay for new doctors without reaching a deal with the Irish Medical Organisation, which claims the deal breaks the Croke Park agreement.
New consultants who only do public work now have a starting salary of €116,207 compared with €166,000 two years ago. Academic consultants are paid just under €146,000, down from €231,653.
In its report, the Commission also revised down its 2013 growth forecast to 1.1pc from 1.4pc. It warned that this could have knock-on effects for the budgetary process.
"On the basis of the Commission service's lower macroeconomic projections, the planned adjustment effort over the forecast period may not be sufficient to reach the deficit targets," the report said.
The report also says that despite signs of stabilisation, the banks are still a concern.
The report says restoring profitability is a challenge.
Worryingly, the review says Irish banks could need a further bailout, if the outlook for economic growth gets much worse.
"The risk of possible further capital needs in the future cannot be fully excluded."