Fionnan Sheahan

Thursday 10 July 2014

Why Reilly's €1bn wishlist will set alarm bells ringing

Published 22/10/2013|02:00

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IN TWO months, the bailout will end and the troika will depart. The IMF, European Commission and European Central Bank will still be on speed-dial and monitor the Budget process from a distance.

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And the austerity policies that were the hallmark of the bailout will continue.

But the day-to-day examination of Ireland's policy management will decline.

Remarkably, after three years of the greatest level of external scrutiny of the public finances in the history of the State, the financial management in the health sector is still setting off alarm bells.

Not even the troika were able to put discipline on health expenditure.

The underlying deficit still exists.

Overruns are normal.

Doubtless, officials in the Department of Health and the HSE will point to the introduction of procedures to ensure stricter adherence to estimates.

Nobody is really quibbling with a €200m overrun in a sector where there's an annual budget of €13.4bn and where it's next to impossible to adequately predict the level of service required.

But there are few who regard the HSE and Department of Health's estimate for 2014 as realistic. The suggestion that the €113m worth of savings from the medical card review was plucked out of the air has been allowed to grow legs.

The perception is hardly assisted by HSE chief executive Tony O'Brien telling the Oireachtas Health Committee the level of cuts could be higher than the figures suggest.

Additional cutbacks will be required to fund extra services demanded by the system on an annual basis.

But Reilly's approach to Budget 2014 reiterated the view he is not cut out for the job.

His estimate was left until last, when the rest of the jigsaw was already put together.

The final 10 days of Budget 2014 preparations were dominated by tortuous efforts to put a health budget together.

Just five days before the Budget was finalised, Dr Reilly was still talking about needing a bailout package of an extra €1bn – an approach regarded with increasing bemusement by those on Public Spending Minister Brendan Howlin's side of the table.

Reilly's officials say he wasn't demanding €1bn, just setting out what it would cost to cover the underlying deficit, demographic pressures, Programme for Government commitments, spending on optional extra services and critical service pressures.

"What we did do was set out the cost of the provision of the service next year. We thought it was important people [in the Department of Public Expenditure] understood what it did cost. It wasn't trying to be flaky. It wasn't trying to be smart. What we were trying to convey to the system was there was no more waste left," a senior source said.

But the wishlist tactic did little for confidence levels in the minister.

The fallout from the Budget has heightened tensions within the Coalition.

Fine Gael sources claim Labour Party figures were boasting privately around the time of the Budget of "screwing Reilly".

Labour sources point out Reilly got the largest level of reduction in his cuts target for 2013 from his dealings with Howlin.

"You tell me where is the political stitch-up. It doesn't make sense to me," a source said.

"He (Howlin) has carried no brickbats to the Department of Health and HSE. He has been patient and courteous in the extreme. He understands Dr Reilly has a difficult job to do."

Fine Gael figures say the savings have to be worked out between the respective departments.

"Look at the correction that has fallen on James's shoulders. Everyone has a stake in this," a source said.

But those on the Labour side say Reilly, the Department of Health and the HSE just have to manage their budget.

"Their job is simple. It is to manage their services within the resources available. No one is getting as much as they would like," a source close to the minister said.

"The people responsible for delivering each department's budget is the department itself."

Reilly says he has "no intention" of acceding to the latest call for him to resign.

Fianna Fail leader Micheal Martin called on Reilly to resign or be sacked because of his handling of the health services.

Reilly validly pointed out it's "a bit rich" of Martin to call for his resignation given his own record as a former Health Minister.

However, Martin's accusations gain traction due to the continually negative narrative about the Department of Health, HSE and the Health Minister.

Within the senior ranks of Government, there are concerns any progress being made by Reilly on reforms to the service is being lost in the noise about the setbacks.

Reilly's continued status as Health Minister is bolstered by his position as Fine Gael deputy leader.

Although relatively new to politics, he backed the right horse in the leadership heave in June 2010.

If Taoiseach Enda Kenny were to drop the Health Minister, it would be seen as an admission of failure and bad judgment.

Irish Independent

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