Business Irish

Sunday 21 January 2018

Thinking outside box to make €5bn cuts

Nick Webb highlights 10 less-obvious areas that Brendan Howlin could focus on with his public sector axe

PUBLIC Expenditure Minister Brendan Howlin has called for ideas on how to slash €5bn off the public sector costs.

We all know that top of Mr Howlin's list should be cutting the vast public sector wage bill, shredding quangos and prioritising major infrastructure, but what about the nuts-and-bolts side of government spending?

1 centralise procurement

Stripping large numbers of civil servants of their procurement powers should be one of the first things Mr Howlin does.

The State is the biggest single buyer of goods and services from suppliers and contractors in the country. It doesn't use its muscle to negotiate cheaper deals. The Public Accounts Committee found that government bodies were paying between 2 per cent to 100 per cent more than they needed to for basic goods and services.

Investigations by the Sunday Independent have found some frankly astounding spending policies by state bodies and even government ministries such as the Department of Finance. The Department had been spending tens of thousands on different types of photocopy paper when cheap stuff was available for a third of the price. Not to mention crazy outlays on everything from potted plants to water coolers and fancy saucepans.

There are different computers, phones, cars, photocopiers and all kinds of other goods and services coming from a wriggling mass of suppliers. Why not have a contract with one and negotiate bulk discounts? With 450,000 people employed in the public sector, that means an awful lot of photocopy paper or lightbulbs.

2Embrace new technology

Despite the fact that 96 per cent of all citizens aged between 25 to 35 years are permanently glued to the internet, just 13 per cent of the State's communication with its population is online.

The HSE produces forest-loads of booklets and documents to educate us dimwits, many of which are posted out to people who chuck them straight into the bin. The HSE's office administration costs hit €161m last year. Why on earth does the prison service need to spend €3.6m a year on stamps and phones? The Department of Social Protection spends €19.9m on postage and communications, the gardai another €44m, and the Department of Foreign Affairs another €8.4m. The Revenue's bill is €14m. A Ryanair solution would work well. How about printing off your own car-tax disk or parking permit, TV or dog licence? If it's good enough for security at some of the most threat-conscious airports in the world, it should be good enough for traffic wardens.

3Scrap overseas Aid

There are more than 430,000 people unemployed in Ireland. Factor in the children and partners and something close to a quarter of our citizens are living from meal to meal.

No offence to starving people in Tanzania or Mozambique but a bankrupt state can't afford to be giving a dig-out to other countries. The taxpayers cough up €533m for "international co-operation", which includes grants to poorer countries, plus a whopping €34m in administration costs. Stuff political correctness, we need the cash.

4STREAMLINE TRAVEL COSTS

So we've seen members of the Cabinet travel on coaches and even walk to work and the government jet has barely been used. These are all positive moves but the state travel bill is astronomical.

The bill for travel and subsistence for the gardai is forecast to hit about €18.4m this year, with the Department of Agriculture likely to touch €9m. The courts service bill will add another €2.9m just for travel and subsistence claims. Are all the hotels booked centrally to avail of massive bulk-buying discounts? No chance. What about insisting that government employees stay for free at Nama-owned hotels? And what about using the 25 per cent stake in Aer Lingus to lever a good deal?

5crEATE A CIVIL DEFENCE/MILITIA

The taxpayer will spend €678m on the Defence Forces this year.

Introducing a national service along the lines of France, Switzerland or Germany could create the framework for a new militia or civil guard, which would get rid of the need for a standing army of nearly 13,000 soldiers. It would probably also do wonders for the looming obesity crisis... er, actually it probably wouldn't, given the jumbo size of some of our lardy soldiers.

6START SHARING SERVICES

There should be one vast accountancy and payroll office for the 450,000-odd public sector and civil service workers.

Equally, shared back office services should be embraced. Legal, human resources, accounting, IT and other services could all be centralised rather than being duplicated across every single government department or many of the 2,000 or so state bodies or quangos. The sheer scale of some of these divisions in some public sector organisations is quite mind-boggling.

At one stage, the HSE had 2,000 people working in its human resources department!

7PAY DOLE FRAUD WHISTLE-BLOWERS

The number of benefit tip-offs received by the Department of Social Protection has risen from 621 in 2005 to 12,648 last year. Already 5,829 tip-offs have been made this year.

Given that about 800,000 welfare claims are to be reviewed this year, it's clear that there aren't nearly enough tip-offs coming in. The Department told the Sunday Independent that it didn't pay the whistle-blowers. That should change. Given that the Revenue Commissioners coughs up for information, the Social Welfare should, too.

8SMARTER USE OF FINANCe SERVICES

Paying state bills by cash or cheque should be phased out, with all payments to be made online to reduce paperwork and administration. The almost entirely state-owned banking system should also be better utilised.

All deposits held by government or state bodies should automatically be transferred to higher interest-earning accounts and similar efficiencies should be sought in credit. Soon after the HSE was set up, the NTMA found that it was wasting €20m a year through inefficient banking practices. This is utterly avoidable.

9OUTSOURCE SERVICES

The private sector can take over many jobs traditionally handled by the public sector.

Would it be much worse if G4S took over the running of the €360m-per-year Irish prison service? It costs about €77,000 per year to keep a prisoner in jail in Ireland. Or just more than €20,000 in the USA and €45,910 in Britain.

The State is hardly the poster boy for efficiency. The Central Statistics Office, Met Eireann, the Office of Public Works and large chunks of the Courts Services could all be seamlessly farmed out to the private sector.

Why pay €57m for a Census, too, when much of the information can be drawn together from various government databases?

10LEAN ON SUPPLIERS

If Dunnes Stores was running the Government, Margaret Heffernan would be straight on to the top suppliers to tell them to lump it unless they introduced major price cuts or rebates.

Everything from energy costs to new chairs or IT hardware or legal services should be renegotiated and fees reduced. Almost immediately after coming to power in Britain, David Cameron's government dispatched its "cost-cutting" minister Frances Maude to meet the state's top suppliers, where he told them to reduce their prices and expect smaller profits.

Four key areas of government spending were highlighted in this review: construction, technology, professional services and facilities management. Close to €1.1bn is forecast to be saved from this move. Mr Howlin should get on the blower to Whitehall.

Sunday Indo Business

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