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We need to make real cuts -- or the IMF will

Almost two years on from its publication, Colm McCarthy's Bord Snip report lies abandoned and unimplemented.

Its purpose was to "examine current expenditure programmes in each government department and make recommendations for reducing public service numbers so as to ensure a return to sustainable public finances".

While it was a rather crude cost-cutting exercise, McCarthy's report was the best attempt to date at a clinical assessment of how this State is run.

It at least uncovered many absurd and preposterous areas of waste, duplication and inefficiencies across the public and semi-state sector, which, despite being in the fourth year of our economic and financial meltdown, still exist.

The scope for cuts was made clear by McCarthy's report, which identified multi-billion annual savings across government departments including Health, Education, Social Welfare, Transport and Foreign Affairs.

However, it was ultimately defeated by continual capitulation on the part of Brian Cowen's government to union opposition over any meaningful reform.

Now overtaken by the new Government's Comprehensive Spending Review, driven by Brendan Howlin, an Bord Snip is consigned to history, with only a tiny fraction of its recommendations implemented in any form.

Despite brutal cuts of €20.5bn already made in public spending since 2008, we will still need to borrow €12bn this year to fill the gap between tax revenues and spending.

Our need to borrow to keep the lights on has quadrupled our national debt to €156bn in less than three years.

As former Taoiseach John Bruton put it on Friday, "a country that has to borrow €12bn to keep going is not in a great position to demand concessions on its existing debt". He was, of course, referring to the Government's ongoing battle to reduce the cost of the €85bn IMF/EU/ECB bailout.

Given that we are spending €46bn this year and only expecting to take in €34bn in taxes, we have no choice anymore but to tackle the massive inefficiencies in how this State is run.

Without explicitly saying it, Bruton called on his old party colleagues, including Finance Minister Michael Noonan, to use the pending jobs "budget" to make the needed cuts in spending, rather than waiting until December.

"There is a lot to be said for accelerating the 2012 budget process and taking decisions earlier than financial markets and our European partners expect. Ireland urgently needs to surprise the markets with some good news. Imagine the effect of bringing the 2011 deficit in substantially below market expectations," he wrote. He is absolutely correct.

The only viable solution left to our marionette Government is to cut spending once again.

There are further cuts to come (at least €3.5bn in this year's Budget, and a further €3.1bn the following year) and there will, too, be some further tax increases, including property taxes and water charges, once the economy starts to show signs of life.

Perhaps spooked by our new foreign paymasters, the new Government, particularly the likes of Brendan Howlin, Joan Burton and Ruairi Quinn, have been impressive in facing that deficit head on.

The great public fear of a single-party Fine Gael government was that it would slash and burn indiscriminately without protecting those at the bottom. Labour was voted in to protect those most in need, but must now prove its worth by going after those at the top.

What has been most encouraging from Howlin and co is the realisation that the old politics of denial, delay and frustration -- which have been the modus operandi of the unions to date -- are no longer tolerable.

The message is clear: the IMF is in town, and if reform is not forthcoming on our terms, it will force it home on its terms -- which will be far harsher.

The new Government has a real opportunity to rid this country of many of the protected elites that have remained sheltered from the worst of Ireland's recession.

In almost every department and agency across our dysfunctional public service, a deeply embedded system of entitled cronyism and wastage has been allowed to develop and must, once and for all, be done away with if this country is to be reformed.

PUBLIC SECTOR FAT CATS

The Government's credibility will be undermined if it cuts special needs teachers or home carers while failing to rein in the obscene salary and bonus culture at the top of the public sector.

ESB chief Padraig McManus' self-serving call last week that he deserves his €400,000 package or that his successor should be paid as much as Mike Aynsley, the head of Anglo Irish Bank (salary €500,000), shows the level of fantasy that still permeates in some sectors of this country.

Last week, the Sunday Independent revealed that 66 public servants are paid more than Taoiseach Enda Kenny's salary of €200,000 a year, with a large number being paid over €500,000.

While Brendan Howlin spoke of his "shock" at some of the figures being paid, several government ministers have since admitted it's awfully tricky to end that culture of excess.

If they fail to reduce such salaries, then they are as guilty as the previous FF/Green government for allowing them to take hold. Government sources have indicated that the Attorney General Marie Whelan has been asked to see how such a reduction in salaries could be enforced not just on new entrants but also on existing officeholders.

Such a cap on top-level salaries would save the State anywhere between €20m and €25m and would hand a huge moral authority to this Government.

EDUCATION

Teacher unions have for two years rejected the Croke Park deal because they would not countenance a renegotiation of their contracts of employment, or work an extra hour, and yet that re-negotiation was the small price they were asked to pay for a far greater reward.

Even last week, as Education Minister Ruairi Quinn faced the teachers down at the conferences, it seems for some it has yet to sink in that Ireland no longer enjoys the luxury of protracted negotiations over issues that are no longer negotiable.

McCarthy reckoned that more appropriate contracts of employment could save the Government more than €300m a year. Yet to be delivered, such savings must be achieved without the usual quid pro quos offered under Bertie Ahern and Brian Cowen.

The retention of Special Needs Assistants is rightly a burning issue for many concerned parents, and Mr Quinn could, overnight, go a long way to protecting those most in need of State help.

He could immediately end the State subvention of fee-paying schools, which would overnight save €101m a year. At a time of such scarce resources, the State can no longer justify the practice.

He should also not dodge the inevitable and introduce Fine Gael's student loan scheme for those wanting to go to university. Ireland can no longer afford the luxury of not having fees. A proper fees regime would raise €200m-plus a year.

FOREIGN AID/ FOREIGN AFFAIRS

The time has also come to examine our foreign aid programme. It is probably sacrilegious to say this, but Ireland has to end the practice of sending €671m a year overseas when we ourselves are bankrupt.

Cancelling the programme for three years would save almost €2bn, a not insignificant sum of money, and would go a long way to ensuring the poorest and most in need in our society are protected.

Another sheltered sector ripe for reform is our diplomatic corps. Many embassy staff get about 10 weeks' holidays -- if they are deemed to be in 'hardship' postings, including countries like Turkey, parts of Africa and even eastern Europe.

At a time when we need all public servants working hard and productively and, in particular, our diplomats working on enhancing our international reputations, the idea of 10 weeks off is absurd.

SOCIAL WELFARE

Last week Minister Joan Burton's plan to cut the dole for jobless people who refuse to take up work or training offers was a welcome first step in tackling one of the great scandals in modern Ireland -- our out-of-control €21bn welfare system.

Burton's targeting of dole recipients refusing to work is no doubt driven by the conditions set down by the IMF/EU deal, which has pledged to save €750m this year alone in welfare payouts.

Two weeks ago, she also announced a further crackdown on the massive social welfare fraud that has occurred in Ireland in the past decade. She announced that 780,000 claims are to be reviewed, which will include home visits.

"The economic situation is very difficult; we can't afford to tolerate social welfare fraud. It takes money off people like old-age pensioners who need the money," she said. Social welfare fraud costs this State anywhere between €1bn and €3bn a year. Such tough talking from a Labour minister is refreshing and encouraging.

COMMUNICATIONS

The excess enjoyed by the State broadcaster RTE is no longer excusable or tolerable. Its "abuse" of the licence fee has enabled it to retain market dominance in radio and television. Its stranglehold on the €200m licence fee pot must be opened up to others and RTE 2 should be forced to operate solely on a commercial basis.

HEALTH

Minister for Optics James Reilly last Thursday gave the HSE board marching orders, as part of his major power grab of the health system. His job is probably toughest of all -- to put some order on a bloated, dysfunctional and dangerously deficient €14bn health system.

McCarthy identified 6,000 jobs which he reckoned were surplus, only 2,000 of which have gone. Between staff reductions, concentrations on services and more flexible working arrangements, there is still massive scope for about €1bn worth of savings and efficiencies while protecting surgeries and home carers.

JUSTICE

Taoiseach Enda Kenny's plan to hold a referendum to reduce the pay of the judiciary would be a welcome step in forcing pain on Ireland's most protected.

The refusal of many judges to volunteer a reduction in salary, coupled with the chief justice's recent plea to Mr Kenny over the imposition of taxes on their pension pots in excess of €2.5m, reveals the disconnect between them and the wider society.

The above headings are only a few areas that could easily be targeted for savings, in order to protect the most vulnerable and needy in Ireland. With a €12bn deficit this year, there can be no sacred cows. Labour ministers have made a promising start. Let's hope it continues.

Sunday Independent