The Dirty Dozen Sunday, July 19, 2009 By Richard Curran The Bord Snip report didn’t pull any punches in coming up with a possible €5 billion in public sector savings.
Even if many of the measures contained in the report are not implemented, the inclusion of so many specific examples of apparently unnecessary spending shines a spotlight on all parts of the public sector.
The big challenge for the government is to determine which recommendations it can live with politically. Some of them, individually, would save more than €500 million; others, less than €1million.
But the vast majority of the measures will be controversial, even if the savings involved are relatively modest. Dozens of them would be met with extremely strong resistance from lobby groups, trade unions, opposition parties or - as happened with the medical card - citizens themselves. Many would draw the ire of government back bench TDs, too.
Here are a dozen of the proposed cuts that would either provide the biggest savings, or are potentially the most controversial or troublesome for government.
1
THE MEASURE:
cutting social welfare payments by 5 per cent
THE SAVING:
€850 million
THE PROBLEM: this would be a hugely controversial measure. It would bring in about a sixth of the total savings targeted in the report. It would be strongly resisted by opposition political parties, such as Sinn Féin and possibly the Labour Party. It would also be resisted by backbench government TDs.
Were it introduced in full, the government would be criticised for forcing the poorest in society to bear the brunt of rectifying the collapse in the exchequer finances. It would only be seen as acceptable if it were part of a wider group of measures which also targeted the higher-paid.
In reality, the cut would reduce the buying power of those on social welfare payments to summer 2008 levels, given that payments rose by 3 per cent last October and the cost of living has fallen by around 2.5 per cent. It would hit those who have recently lost their jobs especially hard, as they are likely to have higher levels of personal debt.
It’s tempting for the government to get one-sixth of the savings in one fell swoop, but hard to see it being implemented in full.
2
THE MEASURE:
reduce and standardise child benefit rate
THE SAVING:
€513 million
THE PROBLEM: the difficulty with reducing child benefit rates is that it affects everyone, regardless of income. The government is more likely to look at the possibility of taxing child benefit or means testing it.
This would ensure higher earners were hit hardest, based on the argument that many families in receipt of the €166 per month benefit don’t really need the money. Means-testing is expensive, so an alternative (such as taxing it) is more likely.
The €513 million saving is based on having a monthly payment of €166 for all children in the family (currently it is €203 for the third and subsequent children), and reducing the rate to €136 per month. The measure would be deeply unpopular, although many middle-class voters have already been softened up to the idea that this payment is going to change in some way.
3
THE MEASURE:
reduce educational
staffing levels by 6,930
THE SAVING:
part of a €746 million education saving
THE PROBLEM: the report has recommended cutbacks in the number of special needs assistants and resource teachers in schools. It argued that, when these are taken into account, the real pupil/teacher ratio is actually just 12.6 to 1, and not the 28 to 1 cited by teachers’ unions. The measure would cause consternation among teachers unions’ and parents’ groups. It is not clear how the Green Party would view it, given that education spending is high on its agenda.
This is one of the most politically toxic measures in the report. It is very difficult to see how the government could get it over the line, but it may look at bringing in a watereddown version of what is in the report.
4
THE MEASURE:
Cut Health Service Executive staff and end bonuses
THE SAVING:
€391 million
THE PROBLEM: this would be another very controversial measure that would be opposed by the trade unions involved. The report recommended reducing HSE administration staff numbers by 6,000.
When combined with a few other snips, like taking 148 staffers out of administration at the Department of Health, this would save around €400 million.
Opposition parties are broadly in agreement about the need for further reform in the administration of the health service, but are unlikely openly to back 6,000 job cuts. However, none of the recommended staff reductions is compulsory.
They are based on a combination of factors, including natural attrition, early retirements and a form of paid leave. Achieving these numbers in the HSE would require massive flexibility and redeployment agreements to be reached with the unions. This one won’t be happening any time soon.
5
THE MEASURE:
invite tenders by open competition for the General Medical Services scheme
THE SAVING:
€370 million
THE PROBLEM: this is based on the idea that GPs and pharmacists would put in bids to administer the state GMS scheme.
Currently, the rate of pay to GPs and pharmacies for handling medical card patients is fixed. This measure assumes the state could get it for around 15 per cent less if it negotiated with individual GPs and pharmacies. Such a move would be heavily resisted by the powerful lobby groups representing doctors and pharmacies. It would also be difficult to run the tender process.
Controversial, but it would not cost votes in the same way that other measures would.
6
THE MEASURE:
revise income guidelines for medical card eligibility
THE SAVING:
€100 million
THE PROBLEM: this move would see some people lose their full medical card as the threshold for eligibility shifted. Like social welfare cuts, it would be seen as hitting lower earners, and would meet strong resistance, particularly from opposition parties and Fianna Fáil.
Could only be introduced if it were offset by other cuts affecting higher earners.
7
THE MEASURE:
Reduce number of local authorities from 34 to 22
THE SAVING:
part of measures that would see the exchequer contribution to local government fall by €100 million
THE PROBLEM: Fianna Fáil party members and county councillors would be just as upset about this measure as anybody else. Many people have said we have too much local government, but actually taking away 12 local authorities would be difficult to achieve, not least because we have just had local authority elections.
The report also recommends that the exchequer reduce its contribution to the local government fund by €100 million. This would prove difficult at a time when some local authorities are already under financial pressure. The fall-off in construction activity has hit their finances hard, and Fianna Fáil’s grassroots could pose a stumbling block to this measure.
8
THE MEASURE:
introduce domestic water charges
THE SAVING:
not strictly a saving, but a possible revenue source
THE PROBLEM: many homes in rural areas with local water schemes already pay for their water. However, in general, water is free in large urban areas, where it is provided by the state. The report wants to see the 34 local water authorities reduced to one national authority. It also recommends a flat-fee water charge be introduced, until water metering can be introduced as a means of conserving water and bringing in additional revenue.
Following the controversy over the introduction of bin charges a few years ago, this move would be deeply unpopular. However, the Green Party is in favour of metering to ensure that people pay as they use. Any kind of charge would be very unpopular with the public, but it would be unlikely to meet organised political resistance. It could prove costly in terms of votes, however.
9
THE MEASURE:
reduce Garda allowances
THE SAVING:
€50 million
THE PROBLEM: the gardaí are a very strong force when it comes to trying to reduce what they have. The report does not deal with pay cuts in the public sector, but this is one of a handful of examples where it recommended cuts in allowances. The overall Garda paybill is around €940million per year, of which €643 million is regular pay, €217 million is allowances and €80 million is overtime. Some of the allowances paid to gardaí are pensionable; others are not.
There are 57 allowances in total including rent allowance (€58 million) and premium payments (€9 million).These are paid to gardaí on leave who would ordinarily be entitled to claim unsocial hours allowance if they were not on leave. Some €50million in cuts would be deeply unpopular among gardaí, who might argue that any cuts to pensionable allowances were effectively additional enforced pay cuts.
10
THE MEASURE: close half the Garda stations and merge small primary schools
THE SAVING:
€1 million for the Garda stations and €25 million for the schools
THE PROBLEM: There are 703 Garda stations around the country. The report recommends a rationalisation of this network without affecting Garda numbers. However, closure of a Garda station in a small town is always controversial, even if Garda numbers are not cut.
This would be unpopular in rural parts of the country, and likely to be very unpopular within the Fianna Fáil party.
The political flak might not be worth it, to save a mere €1 million. Merging and amalgamating small rural schools will also be met with massive opposition on the ground, and politicians will find themselves under pressure to save their local schools.
There are 3,200 primary schools in the state, and the report is proposing amalgamating schools with fewer than 50 pupils with other schools, saving €18million in salary costs. Further mergers of the 851 schools in the 50-100 pupil category would save another €9 million. The report recommended that €25 million in savings should be targeted in this area over three to four years.
11
THE MEASURE:
reduce state subvention to fee-paying schools
THE SAVING:
€25 million
THE PROBLEM: the state currently pays around €100 million per year towards the salaries of teachers in fee-paying schools. The schools collect a further €119 million from fees.
The report has recommended reducing the state payment by €25 million and estimated that it would lead to a 21 per cent increase in the fees charges by those schools, assuming they passed it on in full.
Seen as a middle-class preserve, fee-paying schools might not muster the most organised political resistance to such a move.
However, it would be highly unpopular with parents, many of whom are already struggling to pay fees at these schools as their incomes fall. It is one of a few measures in the report that would be passed on directly to consumers and hit them in their pockets.
12
THE MEASURE:
introduce operational efficiences at CIE
THE SAVING:
€55 million
THE PROBLEM: most people would agree that CIE companies could be more efficient, but achieving those efficiencies is a different matter.
If the efficiencies were to affect public transport services, there might be a political cost in the areas affected. But the bigger danger could come from the industrial relations strife likely to be caused by generating €55 million in savings.
Any work practice changes at CIE are hard-fought, and strikes would be extremely unpopular
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