Bord Snip Likely To Cut Deep
The much anticipated proposals for a ¤5bn reduction in the public purse will be announced this week
Political Editor, Shane Coleman
Cat o' nine tails: The key areas where An Bord Snip Nua's multi-billion euro chopping axe will probably fall
The Public Sector Numbers
Social Welfare Budget
Health
Transport
The Army
The Gardaí
Political system
Fás
Diplomatic Service
THE axe-man cometh. On Tuesday or Wednesday this week, the Special Group on Public Service Numbers and Expenditure Programmes – better known as An Bord Snip Nua – submits its much anticipated report to finance minister Brian Lenihan.
Its recommendations – and they are only recommendations, the final decision lies with the government – are likely to be jaw-dropping in their magnitude.
All told, the proposed cutbacks and savings will amount to around €5bn, representing the most radical overhaul of government spending in a generation, if not ever.
Undoubtedly, there is an element of – as one well-placed government source puts it – "softening up" about the An Bord Snip Nua exercise. Let people know just how bad things might have to be in advance and then when the pain has to be delivered, it won't be quite as bad as people feared.
For that reason don't be surprised to see the report published in full at some point (although perhaps not until after the Lisbon referendum).
Clearly, some of the suggestions in the report will prove just too politically toxic for the government. But ministers are completely aware that they won't have the luxury of black-balling too many of them. The state of the public finances almost certainly means that ministers will have to swallow hard and stomach the majority of the cuts proposed. One senior government figure put the likely ratio at "60-40 – 60% possible, 40% impossible".
Overall that seems about right. Finance minister Brian Lenihan has signalled that the government will need to deliver about €4bn in "adjustments" in the upcoming estimates/ budget process.
But suggestions that around €1.5bn could come from increased taxes look wildly optimistic. Lenihan is on record as saying the scope for increases in personal taxation is pretty much exhausted.
And nobody in government believes that a property tax could (or should) raise anything like the €1bn-plus being speculated upon. That suggests that minimum cutbacks of €3bn will be required and indeed the final figure will be closer to €4bn.
So where is the axe likely to fall? That is the multi-billion euro question. We take a look at nine areas of cutbacks – a cat o' nine tails? – that are likely to feature large in the final report of An Bord Snip Nua.
1. Public Sector Numbers
Colm McCarthy & Co can't make recommendations on reducing wage rates in the public sector, but that doesn't mean it won't be part of the cabinet's considerations come the autumn.
Privately, ministers are bracing themselves for having to make further reductions in public sector pay levels. They got a hammering at the doorstep from public servants during the recent elections over the pension levy.
But there is an acknowledgement at the top levels of government that such is the crisis in the public finances, they may have to revisit pay rates – despite the furore such a move would inevitably cause.
Whatever about pay rates, An Bord Snip Nua is certain to recommend cuts in numbers. Chief among its targets reportedly is the Department of Agriculture, where – including Teagasc - there is 6,000 staff. You don't have to be a top economist to realise that 6,000 civil servants for 100,000 farmers doesn't make a lot of sense.
The same goes for the Department of Health where there are still more than 700 civil servants, despite the fact that the HSE now runs the health service.
There won't be any compulsory redundancies in the civil or wider public service, but expect recommendations on relocating staff to different departments, such as Social Affairs, where staff are stretched to cope in the current climate.
There is no money for a voluntary scheme, so the hope is that overall numbers can be brought down by the early retirement scheme already announced by the government. The take-up on that has been pretty low to date.
But one option being considered is for the government to signal a future taxing of retirement lump sums from a certain future date, in a bid to incentivise those considering taking early retirement to do so straight away.
2. Social Welfare Budget
You can't make an omelette without breaking eggs. And you can't make €4bn in savings without cutting the annual €21bn social welfare budget. The word is that the Department of Social Affairs will have to cough up €1.5bn of the savings for next year. An Bord Snip Nua is unlikely to make a specific recommendation on cutting the basic rate of social welfare (although that doesn't mean the government won't do so in December) but it will focus on certain payments and question whether they are viable or desirable. The IMF questioned the universality principle whereby, for example, every parent/child receives children's allowance regardless of their income. That will end in the upcoming budget. And sources close to cabinet say that, rather than taxing child benefit, there is now a preference for introducing means-testing despite an acceptance that logistically this will be difficult to administer.
3. Health
Another highly sensitive area politically, but again with a budget of €16bn it is impossible to ignore given the size of the overall savings required. The number of staff left in the Department of Health is discussed above, but An Bord Snip Nua has also turned its attention to the €1.3bn spent on drugs and medicines every year.
There is also speculation that the Drugs Task Force will be removed from the Department of Community, Rural and Gaeltacht Affairs and instead become the responsibility of individual local authorities.
4. Transport
Major infrastructure projects are certain to be included in the report of An Bord Snip Nua. In the current climate, there is no chance of the Western Rail Corridor being extended beyond the already signed-off Ennis-Athenry section, but many of these infrastructure projects – including the Dublin metro line – had not been pencilled in for next year anyway.
Cuts in operational costs, however, bring immediate savings and the speculation is that the report will focus on some of the lesser used rail lines which are extremely costly to operate, but have few passengers. They couldn't be cut in times of economic plenty but these are different times.
5. The Army
There was serious unhappiness in army circles at the barracks closures announced in last year's budget, but the expectation is that further cutbacks are on the way. The size of the army – 10,500 – is likely to come under scrutiny, with speculation that numbers could be reduced by as many as 1,000 over time (on a non-compulsory basis), along with further closure of barracks.
6. The Gardaí
Untouchable, given the government's strong emphasis on tackling crime? Not when there is a €20bn hole in the public finances. Garda numbers could be reduced by around 1,000 and there is intense speculation in political circles that there will be a recommendation to cut up to half of rural garda stations – that could prove one suggestion that is too toxic to implement.
7. Political System
An Bord Snip Nua did not specifically look at TDs and senators' expenses, but it has looked at the overall cost of running the Oireachtas and cutbacks in the annual budget are expected.
There is also speculation in political circles that arising out of the report, and negotiations on re-newing the Programme for Government, there could be a re-jigging of government departments. Some sources say that Community, Rural and Gaeltacht Affairs could be broken up with the 'Gaeltacht' section going to Education and 'Rural' going to Agriculture.
Would this mean just 14 government departments or could there be a newly created department – for example one focused on reforming the public service?
8 fás
No surprise here. It would be quite amazing if the body was left untouched given all the controversy surrounding it and the word is that it's on An Bord Snip Nua's hit-list.
According to well-placed sources, other bodies likely to come under the unwanted spotlight include the Irish Film Board and Fáilte Ireland.
9. Diplomatic Service
It won't be well received in the luxurious surroundings of Iveagh House, but it is understood that cuts in the budgets of embassies worldwide is inevitable.
While an Bord Snip Nua would like to see some of the less important embassies shut down completely, political and diplomatic ramifications of this mean that reduced staff numbers will be the more likely option.
June 28, 2009
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I suggest we abolish the Seanad it is only a rest place for popliticians between elections, we dont need it,
neither do we need a Department of Health and the HSE one or the other should go, and a lot of senior people in both should be made redundent, what do the do, make a query to senior staff in either, and your reply will come from a junior who in most cases you have contacted in the first place, and who hasent a clue what they are talking
about, in other words ths managers are not interested and are seldom if ever available. and they juniors cant help so what do we need them for, any lazy person can pass the book.