Business Irish

Saturday 17 February 2018

Brendan Keenan: Systems failure lies ahead if political will doesn't change

If plans for extra beds go ahead, Ireland will overtake Germany to be the third-most expensive system in the OECD at more than €5,000 per person. Stock image
If plans for extra beds go ahead, Ireland will overtake Germany to be the third-most expensive system in the OECD at more than €5,000 per person. Stock image
Brendan Keenan

Brendan Keenan

The word from the West Wing gets worse by the week, and the Dow Jones index goes above 25,000. Whatever happened to political risk?

Perhaps the answer lies in another statistic from last week - that the value of quantitative managed funds is set to go above $1,000bn. In case you've forgotten what quant management is, here is a quotation from the 'Financial Times'.

"Algorithmic investment approaches, ranging from the simple to high-octane strategies powered by artificial intelligence." There you are now. But is artificial intelligence able to pencil in Trump risk?

Here at home, politics have changed as well and risk is also being ignored. Not so much financial risk, with the Central Bank on guard against that, as the one which always hangs over Irish performance - governance, and the lack of it.

As with the Dow, new financial records are being set. No doubt a few epithets were hurled over the Ibec analysis that we are richer than ever before. It's true enough on the figures but, with better governance, not only would we have got this rich somewhat earlier, an enormous amount of individual anguish would have been avoided.

The anguish did change Irish politics, even if not by as much as might have been expected, given the trauma. No-one now expects single-party government. Even coalitions may be in a minority, as now.

The difference between majority and minority coalitions is that the opposition can bring down only minority governments. Those with a majority have to self-destruct - which, of course, they may well do - but the surprising longevity of the present administration makes one think about how Irish policy is to be framed in the context of this new dispensation and the crisis facing democracy in the wider world.

That crisis may be due as much to irresponsible opposition as irresponsible government. Think of the Barack Obama years. Winston Churchill's father is credited with the saying that the duty of an opposition is to oppose, but he was merely amending the opinion of George Tierney, an 18th-century politician, that the duty is to oppose everything and propose nothing.

The forgotten Mr Tierney may have been closer to modern reality but he might not have foreseen the degree to which opposition parties would propose the impossible. A look at the current Italian election campaign gives a horrifying picture of where this can lead when the leading is done by the likes of Silvio Berlusconi.

He is promising a flat rate income tax of less than 25pc, a doubling of pensions, and a reversal of a recent increase in the retirement age. Other parties want the abolition of university fees and a living wage for the unemployed. A proposal to abolish the TV licence fee had to be abandoned when it was pointed out that it had already been done. Mr Berlusconi's coalition is heading the polls. We should be alarmed rather than amused by such stuff. 'Populism' was the common description of Irish politics long before it came to be seen as a threat to economic stability, foreign policy and environmental protection in western democracy.

The curious case of the 32nd Dáil, with its singular lack of opposing or proposing, gives an accidental hint of how things might change for the better. In it we see a glimmer of the kind of politics needed to halt a further slide towards failure and undo some of the harm already done.

The two great issues are health and pensions. Both systems are unsustainable in their present guise, but the politics of fixing them are horrendous. With pensions, one at least knows that employers and employees will have to save more, the industry will have to charge less and, we will all have to work longer. Everybody will hate it.

With the health service, nobody seems to know what is wrong or how to fix it; or if they do they are not saying. If Health Minister Simon Harris gets all his extra beds, Ireland will overtake Germany to become the third-most expensive system in the OECD, topping €5,000 per person.

The other two are Luxembourg, which doesn't count, and Norway, which is incredibly rich and employs a fifth of its labour force in health and social care.

In OECD terms, there is nothing particularly bad about the Irish health service. It is fairly average, with one exception - its cost. Yet there is no real discussion about why it is so expensive; just demands for more money which are as impractical as a Berlusconi manifesto.

This is about a lot more than winter flu. To make matters worse, Germany has just about the oldest population in the EU and boasts one of the highest levels of hospital beds in the OECD - more than twice the Irish figure.

Ireland's population will age more rapidly than anywhere else in the EU, precisely because it is so young now. Add the inexorable annual increase in the cost of medical treatment and the Irish system is going to fail. The question is not whether but when, and how bad it will get first.

Solutions are to be found in the many reports acquired down the years and plonked on that infamous shelf.

They moulder there because the existing political culture would simply not be able to deal with the consequences of implementing those solutions.

The North provides an unexpected case study. The latest report on its system, chaired by former Basque Country health minister Prof Rafael Bengoa, recommended several hospital closures, with the remaining hospitals to focus on emergency and complex care and the rest provided in dedicated primary care centres.

Sinn Féin leader and health minister Michelle O'Neill agreed that this could mean reducing waiting lists at the expense of patients having to travel further. A short time later she and her party departed the Executive.

It will be no surprise if it stays out until the general election campaign in the Republic is over, during which it, like others, can be expected to promise better, cheaper - oh well, let's say free - healthcare for all.

Unlike Belfast, ministers in Dublin - which by then might include Sinn Féin - have to stick it out, so the default strategy is to keep patching the sinking ship. The result is hospitals getting more money at the expense of primary care in the last five years - the opposite of what is supposed to happen.

Unless the politics change, nothing will; until it is too late.

Government on its own cannot force the mighty vested interests in the health and pension systems to upend their lives to the extent required. Even if it could, it would not survive the electoral consequences of the extra taxation, loss of local facilities, redundancies and reallocation of jobs which would be required.

Without agreement across all the main parties on the scale of the crises looming in the not-so-distant future and the absolute necessity to deal with them, the threat will grow. Unprecedented agreement of this kind would at least make a start in persuading and coercing voters, commercial interests, professional bodies and trade unions that the alternative to pain now is far worse pain to come.

The trend is not our friend. Given recent history, one cannot be optimistic but with so much at stake, pessimism is not an option.

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