Now's not the time to delay cuts -- we need leadership
THE only surprising thing about the Bord Snip report is that people should be surprised that they went for the big spending battalions. Willie Sutton, a notorious New York con man and serial bank robber, when being sent down for the dozenth time, was asked by a weary judge "Mr Sutton, why do you keep on robbing banks?" "Because that's where the money is, your honour."
Colm McCarthy is neither a con man nor a bank robber, but as an economist he follows the figures. If the job is to find savings of the order of billions, you have to go to where millions are being spent -- and this leads inevitably to health, education and social welfare. Five billion euro is not to be found easily in €10m and €20m lots here and there but in a few large tranches which will break the back of the task. Health, education and welfare make up most of public expenditure. All have benefited from such substantial increases in expenditure in recent years that they, especially health services and education, are an obvious target.
Despite the cries of doom from an army of critics, and special pleading to beat the cuts, this does not mean a return to the Dark Ages, or even to the levels of expenditure of the 1980s and 1990s.
Even if the proposed cuts are implemented, spending on health and education will still be at a higher level than at the millennium.
The question to ask is why such a substantial increase in investment did not lead to a correspondingly higher level of service. The answer is that most of the benefit went to those working in the services rather than to their clients.
It was axiomatic in Britain's National Health Service (NHS) that for every £5 of new money you were lucky to get a £1 improvement in services. The rest went into improved terms and conditions for staff, higher salaries and greater numbers.
Health administration in Ireland is a case calling out for reform where substantial savings could be made without going near a patient. The amalgamation of health boards into the Health Service Executive would, in any business setting, have meant a large reduction in senior staff.
The reverse has happened, and managers have increased as nurses were sacked. Doctors are much better paid in the South than in the North (and have more private practice). Health workers are generally better paid than in the NHS and, as Ed Walsh never tires of telling them, Irish teachers are among the best paid in Europe. The challenge for management is to minimise the impact in classrooms and wards, while interest groups come out waving shrouds at the first sniff of a cut.
The trouble with the public services is that they are heavily labour-intensive. If two-thirds of the money goes on paying wages, the only way to secure radical savings is to reduce numbers. In this case the suggested reductions would amount to less than half the growth in numbers in the public sector since 2000. As well as that there are all sorts of Mexican practices to be eradicated, overstaffing and the uncritical use of bench-marking which was once described by a trade union leader as an ATM for public servants.
The proposed cuts in social welfare payments constitute a problem of another order, as much social and political as economic. Not for the first time it will seem that "It's the poor what takes the blame" -- at least to the extent of having to pay inordinately for the excesses of others. Even here, though, benefits are paid at a significantly higher rate than in the North.
IT is now de rigueur to castigate the bankers, financiers and developers whose recklessness got the country into the hole it is in -- but most of the population seemed happy to go along for the ride. In any case it is for the moment less important to find out who dug the hole for the economy than to find practical means of getting the country out of it.
This calls for leadership of a high order. Politicians must now take centre stage from the economists. The social welfare cuts need to be considered carefully in order to protect the weakest and most vulnerable, but changes here will mean cuts somewhere else, despite the outbreak of nimbyism in which various interest groups will support cuts, but not on their patch.
Politicians might just convince social welfare claimants that it was a common struggle if they too were to bear even a symbolic part of the burden -- by a sizeable salary cut for all, for example. There should be a willingness to don the hairshirt right across the board, for conspicuous consumption and unnecessary expenditure to be eradicated across the whole gamut of the public sector from the Aras to Dublin Zoo.
Delay is not an answer. Each day that cuts are postponed the debt increases as does the cost of borrowing, while credit ratings fall. A declaration of war by public sector union leaders, threatening the withdrawal of services, can only hurt most those vulnerable people they profess to be protecting. It is time too for the Oireachtas, which has been denied a role as national agreements were made by interest groups behind closed doors, to shoulder the burden of leadership.
There has been too much waste already -- they should not now waste time.
- Maurice Hayes
