Wednesday 25 April 2018

If the State squanders so much cash, where's the sense in giving it more?

The latest audit of waste by government departments is a stinging indictment of the notion that Nanny Knows Best, writes Eilis O'Hanlon

New Labour party leader Jeremy Corbyn
New Labour party leader Jeremy Corbyn

Eilis O'Hanlon

Welcome back, BFG. Not the Big Friendly Giant this time, but Big Feckless Government, as advocated by those convinced that the best solution to a country's economic and social ills is always to grab more of everyone else's money and then let the State spend it as it best sees fit.

From the newly-merged Anti- Austerity Alliance/People Before Profit/Whatever You're Having Yourself party, to the UK's new Labour leader Jeremy Corbyn, collectivism is back in fashion, and no problem is deemed so intractable that it cannot be solved by chucking more public money at it.

As the country heads into an election at which left-wing parties are pledging to squeeze every last cent out of those they arbitrarily decide are "rich", it's worth wondering what the State would do with all this lovely extra lolly if the comrades ever got their hands on it.

An auspicious time then for the publication of the latest report from the Comptroller and Auditor General's office, which details how much of the money already being collected is wasted, including millions poured down the drain on an eircode system that might never be up and running as envisaged.

There is bound to be some excess when government spending, as detailed in Comptroller and Auditor General Seamus McCarthy's report, already amounts to a terrifying €46bn in 2014; and that's before the "Spend, Spend, Spend" crowd gets into power. But what's shocking about the report is how so much of the waste would be avoidable if government followed the basic cautionary measures which most businesses take for granted. There are pages and pages of examples of money being lost through carelessness, incompetence, inefficiency.

Small amounts. Large amounts. Unknown amounts because mistakes haven't been, or simply can't be, checked. An example of the latter is social welfare, where the audit admits: "The extent of fraud and error in schemes that have never been surveyed, and which account for a further €2.5bn of expenditure, is not known."

Not knowing shouldn't be an option when the Government is entrusted with huge amounts of other people's money. A classic example of how this happens is outlined in Section 9 of the C&AG report, titled 'Development of Prison Accommodation in Dublin'.

Back in 2004, it was decided by the then government that a new prison was needed on a greenfield site in north county Dublin to solve the problem of overcrowding in Mountjoy. Land was purchased in Thornton for €30m, and the plan was that the whole project would cost €150m. By 2006 the projected cost had risen to €525m. By 2008, it was nearer to €700m.

The project was abandoned soon after because of the economic downturn, and the C&AG's estimate for the amount of money lost on the abortive scheme, as of May this year, including legal and technical fees, off-site work, access road development, maintenance and repairs, is some €50m.

Quite a hefty price tag for a site which is currently being used for gardening schemes by around a hundred prisoners from Mountjoy.

It's also a sum unlikely to ever be recovered, because, despite the land still owned by the Department of Justice being valued in the Government's books at the same level it was back in 2004, the market value right now is only €2.4m. The reason given for the discrepancy is that the Government's figure is "more in the nature of a place-holder budget line in the context of the overall capital envelope for 2004." Say what?

One cannot help wondering if language this impenetrable is what allows these money-squandering exercises to go unnoticed for so long, on the grounds that no one knows what each other is saying.

Though don't despair. A working group is currently reviewing the project, albeit that "there are no formal terms of reference for the group". Of course there aren't.

Why would there be?

Then there are those other idiocies, where the Department of Education turned out to be paying for more school meals in particular schools than there were pupils in the school to eat them. That would seem to be a matter of simple arithmetic, counting the number of pupils in each school and setting it against the number of free school meals being claimed, but no doubts the proponents of Big Feckless Government would have a soundbite to explain that, too.

The Irish Small and Medium Enterprises Association (ISME) - who have taken an understandable interest in this report, not least because many of their members would be expected to bear the brunt of any future money grab by an aggressively redistributivist government - think this would make a great TV series and have even suggested a snappy title: The Great Irish Rake Off. The basic idea is that "the dozens, if not hundreds" of civil servants responsible for this scandalous misuse of public funds should be doorstepped and confronted, as those in private-sector industry frequently are by crusading journalists, and asked to justify their actions and inaction.

Of course it won't happen, because of an ingrained mentality which decrees that money wasted by the public sector somehow isn't real money, so it doesn't matter if some degree of it goes AWOL.

ISME is wrong on one count. Responding to the C&AG's audit, it dubs Ireland the "island of squander and scandal", and it's a tempting narrative to people disillusioned by years of economic downturn to imagine that the country is uniquely awful when it comes to such matters. The truth is that Irish public servants are no more incompetent or untrustworthy than those of any other nation, and, when it comes to corruption, we're cleaner than most.

This is simply a by-product of how Big Government works - or, rather, doesn't. Costs spiral. Budgets overshoot. Money gets frittered away. There is endless red tape to negotiate. Another example, as detailed in the audit, concerns the purchase of so-called "hi-tech" drugs, which is subject to a system so cumbersome that it makes one of Stalin's Five-Year Plans look like a model of enterprising efficiency.

The profligacy is further exacerbated by a lack of basic stocktaking by the HSE, which means it literally has no idea how much of a particular drug it has to hand.

What sort of credible business doesn't do stocktaking?

When things go this wrong in the private sector, as ISME points out, there are consequences. Changes are made to the corporate culture. People get fired. In opposition, the now Taoiseach threatened to do just that: "I'll sack the wasters of taxpapers' money". Instead, excuses are made, which in turn lay the groundwork for future errors.

The wonder is that, with so much prevailing cynicism about politicians, any voter would dream of handing them even more power. If the State is this useless at respecting the huge sums of money it already gets, why would it miraculously become better at spending even larger amounts of it?

Sunday Independent

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