Saturday 19 October 2019

Government under fire for €1.3bn overspend on health and bonus

Failures: Director of the PBO Annette Connolly. Photo: Arthur Carron
Failures: Director of the PBO Annette Connolly. Photo: Arthur Carron

Laura Larkin and Anne Marie Walsh

The Government has come under fire for a €1.3bn overspend in the latest criticism of its handling of the public purse, which has once again been attacked as lacking prudence.

The Dáil's budget watchdog has hit out at additional budgets being used for the health service, the Christmas bonus for welfare recipients and some public sector pensions that were not covered in Budget 2018.

Additional money has been requested by 16 departments, but it is not clear what - if any - improvements will be made on the back of it. In the case of health, there are no additional targets linked with the injection of €655m.

Next year will see an increase in spending under Budget 2019 and this, coupled with the risk of more supplementary budgets being sought next year, has led the Parliamentary Budget Office (PBO) to warn that it "is clear voted expenditure is growing at a faster rate than economic growth. Unless accompanied by sustainable increases in tax revenue this is not a prudent approach".

It comes after the Irish Fiscal Advisory Council (IFAC) also issued a scathing assessment of Budget 2019.

Director of the PBO Annette Connolly said failures of departments to meet savings targets and higher than planned spending is "obscuring what is being spent on today's public service".

Neill McDonald, of the ISME, said there is a real concern that "the Government's fiscal stance is based on the most optimistic of assumptions, and makes no provision for any macro-economic headwinds".

Meanwhile, economist Colm McCarthy claimed the Government "shrugged" because tax revenue this year was better than initially expected due to corporation tax.

He said: "As Seamus Coffey (of the IFAC) pointed out a few days ago, this is just matching an uncontrolled increase in spending with an unanticipated influx of tax revenue that may keep coming in. But who knows?"

The PBO has highlight a number of areas for concern, including the use of supplementary budgets to cover the cost of some public sector pensions. The Department of Education has explicitly stated it needs extra money to cover pensions. A row over how the pensions cost should be forecast between the department and the Department of Public Expenditure and Reform (DPER) has led again to extra money being required to cover pension costs. The department has said following collaboration it is not expected that there will be a need for a supplementary estimate to cover pensions next week.

The restoration of the Christmas bonus for social welfare systems also needs to be covered in part by an additional cash injection. Restoring the bonus will cost some €246m and an additional €139m is being sought by the Department of Social Protection. In recent years, savings related to a drop in the Live Register has been used to cover the cost of the bonus and it is now clear that additional resources need to be devoted to cover the bonus in the original budget for the department, according to the PBO.

The management of the health budget has also come under scrutiny in the report, with suggestions the planned level of funding was not going to be sufficient and did not take into account the need for extra staff.

Irish Independent

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