Hands off: Colm McCarthy outside government buildings after the report was published

IT finally arrived. After weeks of speculation, the findings of the Special Group on Public Service Numbers and Expenditure Programmes – better known as An Bord Snip Nua – are in the public domain. With proposed savings of €5.3bn, it is the clearest sign yet that the public spending splurge of the past decade is over. Now we have to pay the price for those unsustainable excesses of the Celtic Tiger era.

The extent of the proposals is shocking – no area of government spending is left untouched. But of course these are only recommendations. It is up to the government to decide over the coming months how many of nearly 300 suggestions will be adopted as policy.

The union movement has tried to argue that the report is in the realm of fantasy, that the findings will never be implemented. But the cold economic facts may dictate otherwise.

Finance minister Brian Lenihan has signalled that the government must deliver €4bn in savings or new revenues in the upcoming estimates/budgetary process. In the following two years, it will need to raise another €4bn and €3.5bn respectively from cutbacks or new taxes. The consequences of failure, in terms of our ability to raise money on the international markets, are too awful to contemplate.

That dictates that while there may be some wiggle room for the government in implementing An Bord Snip Nua's recommendations, it will have little choice but to adopt a sizeable majority of them. But which ones? Which elements of the report will be embraced, which will be rejected out of hand and which will be the subject of furious debate at cabinet? Here we look at the options.

Sweet 16: The near-certainties for the Snip

1 Staff reductions of 17,358
If the government doesn't deliver on this over the next couple of years, its credibility (or what's left of it) will be finished. The target is modest, particularly in view of the 45,600 increase in public sector numbers since 2001, and given Colm McCarthy's point that most of these reductions can be achieved by people retiring. Even the public sector unions are unlikely to get too stressed at this proposal.

2the abolition of the department of community, rural and gaeltacht affairs
Craggy Island, as it is known among civil servants, is a very obvious casualty of the report. It would be impossible for the government to ignore such a stark verdict on its usefulness. The question is, with what will the government replace it and the also-at-risk department of arts, sports and tourism?

3agency consolidation and abolition
Not surprisingly, the explosion of quangos, regulators and agencies in the past 10 years came under examination by McCarthy's team. In enterprise and job creation, McCarthy spoke of a huge overlap of functions and the potential for "grant shopping" across agencies. A new, souped-up Enterprise Ireland will encompass many of the old bodies. Similarly, the 870 organisations that deliver local services will be centralised and amalgamated. And the likes of Bord Iascaigh Mhara, Bord Bia, Sports Campus Ireland, the Digital Hub, the Dormant Accounts Fund Board, the Western Development Commission, the National University of Ireland and the Law Reform Commission will cease to exist as stand-alone organisations.

4cuts in department of agriculture numbers and offices
Given the high ratio of Department of Agriculture civil servants to farmers, the proposed reduction in numbers of over 1,000 will happen. The 150 department and Teagasc locations are also regarded as unsustainable, although getting them down to 35 will be a huge political challenge.

5cuts to the tourism budget
The marketing budget is generally the first thing to go in tough times so, rightly or wrongly, the proposed €27m cut in Fáilte Ireland and the Tourism Marketing Fund looks likely to be realised.

6a reduction in the horse and greyhound fund
Largesse of €67m to fund prize money for individual races might have been okay in times of plenty, but not at times of a huge budget deficit. The proposed €16.4m cut looks a no-brainer.

7army personnel cuts and rationalisation of barracks
A reduction of 500 in army numbers over two to three years is hardly draconian. Army families will protest at any further rationalisation of barracks but, in a country this size, 24 barracks is clearly inefficient.

8a €100m cut in the teachers' substitution and supervision budget
The teachers' unions will kick and scream, but cuts in the €189m spent on replacing teachers absent on sick leave look inevitable. The government may also
turn its attention to the €115m extra paid to teachers to provide supervision cover for break times and provide some substitute cover for absent colleagues, although changes here will be fiercely resisted.

9language teaching numbers to fall to 500 McCarthy's logic is that, with immigration falling and with many immigrants having now been in the country for some time, the language teaching numbers must reflect that. It's hard to argue with him on this point.

10increased pupil-teacher ratios
This will be another problem issue with the teaching unions but the state of the public finances means that the ratio will be allowed to edge up. With the lack of resources, there simply won't be a choice. The world won't end when it happens either.

11rationalisation of embassies and consulates

The number of places across the globe with an Irish flag and a ready supply of Ferrero Rocher will be reduced along the lines recommended by An Bord Snip Nua and the political fall-out (at home anyway) will be zero.

12a higher A&E charge of €125
This charge has been steadily increasing in recent years anyway as the government encourages people to go their GPs first. McCarthy says the €125 reflects the true economic charge of providing the service in A&E. The proposed 20% increase in the charge for private facilities in public hospitals may also become a reality.

13cuts in child benefit
Child benefit will be reduced in the next budget. Finance minister Brian Lenihan has already made that clear. The only question is, will it be done via the 20% straight cut advocated by McCarthy, by means-testing or by taxation? Don't be surprised if it's a combination of a straight cut and taxation or means-testing.

14subsidies for regional air services The logic of spending €15m a year subsidising environmentally-unfriendly regional air services in such a tiny country (with limited time savings from flying) was questionable even in a boom. In the worst recession in nearly a century, it looks utterly unsustainable.

15closure of rail lines
The three rail services identified in the report – Limerick Junction to Rosslare, Limerick to Ballybrophy and Manulla Junction to Ballina – look doomed, given their tiny passenger numbers. CIE would have cut them years ago but for government fears over a local backlash. Some form of alternative bus service will be provided instead.

16the western rail corridor
It didn't need An Bord Snip Nua to recommend that there should be no further development of the Western Rail Corridor: the very low population density along the route means that, at a time when the state is borrowing €400m a week, it is not justifiable.

13: unlucky for some or a snip too far?

1 public sector pension reform
We've already had the pension levy, much to the chagrin of the public sector unions, but that didn't affect those already in receipt of a public sector pension. McCarthy says that bearing in mind such pensioners have earnings-linked pensions, "there is a case for the government to consider how best to secure an appropriate contribution from this sector of society". But does the government have the desire or the bottle to risk the wrath of the pensioners? A reform of the current system in which some groups of public servants – High Court judges and gardaí being the most striking examples – can avail of full pensions after limited years of service looks inevitable, however.

2increasing the age at which people qualify for pensions in both state occupational and social welfare schemes
McCarthy put it in characteristic blunt fashion on Thursday, stating that "if people used to snuff it at 70 and they've now decided to snuff it at 80, 85 or 90, then something's got to give". There will be an increase in the qualifying age at some point, but it may not happen yet.

3the merging of the children's ombudsman into the office of the ombudsman
There is a strong case for rationalising the various ombudsman offices and staffing levels certainly appear high but, in the wake of the Ryan report, the government may be reluctant to remove the children's ombudsman's independent status, given the inevitable backlash. Furthermore, with the children's ombudsman having an annual budget of €2.3m, the potential for major savings may be limited.

4cuts in farm support schemes
McCarthy had some sensible but pretty tough recommendations on the Rural Environmental Protection Scheme, the suckler cow and the TB and brucellosis eradication schemes. Suggesting, for example, that there should be a value-for-money review of the effectiveness of REPS in protecting water courses, and its impact on the economy, looks like common sense. But the proposed cutbacks in these schemes will be fiercely resisted by the IFA, which still has a lot of clout. Some form of compromise looks likely.

5the privatisation of coillte
An Bord Snip Nua wants the state forestry company's operations to be reviewed "with a view to realising the optimal return through rationalisation, asset disposal and, possibly, privatisation". Privatisation, however, is rarely straightforward. Expect the government to long-finger this one.

6the rationalisation of local authorities
Reducing the number of local authorities from 34 to 22 makes sense, in view of the size of the country. McCarthy makes the point that the population of some local authorities areas is barely the size of a single suburb of Dublin. And why, for example, is Tipperary divided in two? The proposal to abolish regional authorities and pointless town councils is also highly logical. However, just watch the huge local opposition to these measures. The government may decide that the limited short-term savings are not worth the political grief.

7€5 prescription charge for medical card holders
Such a charge applies in Britain; it offers the chance to raise €70m and the charge is modest. But such a move will invoke huge opposition and, given the fall-out from the move to end pensioners' automatic right to medical cards, the government may be reluctant to go there. But in view of the need to raise additional revenue in the health sector, there's probably a 60-40 chance that it will happen.

8ending double welfare payments
In principle, the concept of people getting two separate forms of welfare payment is bad, but in practice it may not be so straightforward. Schemes where double payments are involved include the carer's allowance, illness benefit, jobseeker's benefit and community employment schemes. Previous governments have found that trying to change such schemes can be political dynamite.

9rationalisation of garda stations
Having 703 garda stations – an average of 27 per county – is almost indefensible. But watch the local lobbies mobilise if the government attempts to come close to implementing McCarthy's recommendation about halving that number. Hell hath no fury like a local community scorned. Will the government have the stomach for such a battle? Compromise seems the most likely outcome.

10a €50m-plus cut in garda pay and allowances

Some of the allowances that gardaí can claim are certainly questionable, but in the wake of the pension levy, attempts to cut what is effectively take-home pay will go down like a lead balloon with members of the force. As with the rationalisation of the garda stations, it is debatable whether or not whether the government will want to go down this road.

11mergers of smaller rural schools Just like reducing the number of garda stations, the theory of this is fine, but it will be fiercely resisted at local level, and with a potential saving of only €25m, the government may decide it is too much hassle. It might happen on a drip-drip basis, however.

12lower prices to be paid by the hse to gps and pharmacists

One of the real criticisms of the current government has been its failure over the past decade to rein in excessive fees paid to professional groups for services. In that context, An Bord Snip Nua's recommendation that the "HSE should phase out existing contracts with GPs and pharmacists as quickly as possible and achieve a price acceptable and affordable in the changed budgetary situation" is very welcome. But the events of the recent past would not inspire confidence that it will actually happen. This will be a big test for the government and the HSE.

13proper benchmarking of public
sector incomes

McCarthy argues that there is a case for instituting a new benchmarking process to address the pay of public servants with a remit to look at international pay rates and – shock of all shocks – with a mandate to recommend reductions where the facts warrant them. Recent reports showing a large difference between the earnings of public and private sector workers strengthen the case for this. Public sector unions dispute the findings of these reports but the counter view is that, if they are so confident about their argument, they shouldn't have any problem submitting to a new benchmarking process. Some ministers privately believe the issue of public sector pay may yet have to be revisited, particularly if the review body on higher remuneration recommends serious pay cuts for top civil servants and judges. But it would be fiercely resisted by the unions and the government will be reluctant to antagonise public sector workers, who have already deserted Fianna Fáil in their droves, any further. Ultimately, however, the financial crisis may dictate that there is no alternative.

snip-wrecked: the magnificent 7 untouchables

1 cutting social welfare rates by 5% McCarthy set out a very cogent argument as to how, when the 3% increase in last October's budget and the near-2% deflation rate (excluding falls in mortgage interest rates) are factored in, a 5% cut would simply bring social welfare recipients back to the level of this time last year. But the political reality is that the government might struggle to survive implementing such a pay cut given the inevitable furore it would cause. Don't rule out a 2% or 3% cut after a softening-up process, but 5% looks a step too far.

2 Cutting income guidelines for the medical card to the basic social
welfare rate

The huge cost of the medical card (it has doubled since 2004 to over €2.1bn) cannot be ignored. And the figure of 1.3 million people on medical cards does look high. However, An Bord Snip Nua's recommendation that income guidelines for the medical card be revised to the basic rate of social welfare looks unlikely to be implemented in full. There is logic in the suggestion that HSE discretion be removed and replaced with a "set of clearly defined factors based on medical needs" and there will have to be changes to the scheme, but it won't be as radical as the report recommends.

3increased school transport charges of €500

McCarthy is not wrong when he says that school transport was originally brought in when car ownership was far lower, but there are still solid environmental reasons for encouraging bus use among school-goers. That said, the more-than-tripling in the cost of the service in the past 10 years is extremely puzzling as the number of pupils carried has fallen by around 7%. An Bord Snip Nua wants a charge of €500 a year (about half the economic cost) per pupil for use of the school bus, subject to standard means-tested exemptions. The amount charged will continue to edge upwards from the current rate of €300, but it is unlikely to reach €500 and the proposed saving of €25m that would bring. The proposal to means-test special needs school transport (typically taxi-based) is likely to be far too contentious for the government.

4a cut of 2,000 special needs

There is clearly truth in the report's argument that in some case special needs assistants have been retained by schools even after the requirement no longer exists. And there will probably be scope for efficiencies in greater sharing of resources and better time management, but it is very hard to see the government deciding to reduce the number of assistants from 10,500 to 8,500, even if that would still be higher than the numbers in place in 2006.

5 the sale of bus eireann expressway
McCarthy has never been a fan of what he regards as unnecessary state involvement in providing services, and there is no doubt that the intercity bus services are profitable and could easily prosper as a privatised company. But the government in practical terms is unlikely to take up his invitation to "explore further" the option of selling Bus Eireann Expressway. With all it will have on its plate, the government is not likely to go stirring up trouble that doesn't exist.

6 increasing the costs of the 'fair deal' scheme for nursing home care

An Bord Snip Nua suggests increasing the percentage of care costs contributed from an individual from the subsequent sale of their residence to a maximum of 22.5%, bringing in an extra €50m to the exchequer. However, given how politically sensitive this area is, and the fact that it would involve a change to a scheme that isn't even operational yet, this looks like a no-go area.

7 a means test for home care packages
This would be a chance for the government effectively to rerun last year's massive controversy over medical cards for pensioners – don't think so.