The Public Spending Challenge

While I agree that we should disproportionally cut projects with a low return, we are not in the habit of collecting data on the impact of public spending, so we do not know which projects are good and which less so.

Phillip,

Your walking around the boxing ring here!

If public spending is to be cut, how should this be:

A: Trim around the edges cutting whatever possible protecting jobs.

B: Wage reductions for staff

C: if these occur is there a likelihood that there will be people who will be unable to do their job lack of funds to perform it, (other than wage cost).
Now, if this happens then this job is redundant.
Will it be permanently redundant?
Then, should this job be ended?

We have been talking about A and B. We need ,at least, to be talking about C! We havent been.
For example, there are probably alot of job losses coming in the banking sector as soon as banks are out of the state nest.
IMHO, there hasnt been too much about the in the media.

A is already happening!
B will have a few tantrums!
C will be a fight!

Al

Philip,

The problem with selecting programmes to cut is that in every department, espcially the big-spending ones, there are people overseeing ‘pet projects’ who will do their damn’dest to make sure they are preserved, even if they have little beyond prestige value. Also, as Karl Whelan pointed out in his Magill lecture, old programmes were not cut to make way for new programmes during the boom years, they appear to have all just been piled upon one another and allowed to carry on merrily. And as pointed out above by Richard we ‘re not in the habit of evaluating the impact of public spending so it’s hard to know what delivers a benefit and what’s largely cosmetic in its effects.

Given the reaction to the McCarthy report – special pleading among competing claimants – it’s apparent there’s still no public consensus that the threat we face is so large there will have to be sacrifices of the rights and entitlements of some groups in order to preserve the whole. Pity those who have to make the decisions!

I think that to make wise cuts, you need to be in possession of all the facts – and part of that is having a good understanding of what the consequences are of your actions and decisions. Otherwise, wholesale cuts are not much better than ‘shock therapy’.

@Al

And ‘Yes, Minister’ said that politicians may sometimes feel obliged to take the wrong decision -: “It may be wrong economically, industrially, wrong by any standards. Except one. It is a curious fact that something which is wrong from every other point of view may be right politically. If a policy ‘gets the votes’ then it can be argued that that policy is what the people want. And, in a democracy, how can a thing be wrong if it is what the people wil vote for?”

Philip Lane is right about how it should be done; how it will be done is another day’s work.

I think the suggestion by John McHale to reinvigorate social partnership has a lot of merit, though I didn’t see in his article, or Philips above, any real outline of a deal that could achieve cuts in a way that is broadly socially acceptable. At the moment the atmosphere seems to be gtting colder and colder. Could a social partnership deal by reached with the following outline:

> Current public sector pay levels, and the basic levels of social welfare, are protected at their current level. This would not preclude the government from reducing specific benefits such as set out in the McCarthy report (e.g. Fas/SW double payment, or particular allowances for Gardai).
> There would be no further increases in either public sector pay or social welfare until the Government deficit is down to 3% GDP.

This approach has a number of advantages:

1. Foregoing future pay increases may be a much easier Union concession than reducing current levels. In fact, unions can point to continued ‘grade’ increases meaning that public services pay will continue to rise, albeit very modestly;
2. It internalises the benefit of improving public sector efficiency and reducing costs amongst unions/public sector workers;
3. It introduces a much greater degree of stability and predictability to family finances, which might help reduce our current excessive savings rate.
4. It is a strong signal to theordinary taxpayer, and international markets, as to the seriousness with which the 3% target is taken. It also does this without taking too much money from the economy up front, a worry of John.

The single most important thing that can make these cuts happen without too much strife is leadership; and the best example of leadership is leadership by example. It’s so lacking in our Government at present that they couldn’t even bring themselves around to cutting there own salaries just to bring them in line with other European States.

We all recognise that it is probable that NAMA will become a millstone around the this society for many years to come, and we all recognise that the skill and expertise needed to get out of a mess is a lot greater that that which got us into it in the first place!

“If the blind lead the blind, both shall fall in the ditch”.

Time for a general election!

Cut away! We need more doctors, nurses and teachers in Australia! The weather is better, the pay is as good and the dollar goes as far as the euro does in Ireland. Keep the civil servants and gardai. You need them more than we do.
Of course that means Ireland will have to train more doctors, nurses and teachers, but we will be forever grateful to you all!
Is this going to mean that we will get the benefit of all your innovation initiatives as well? Public money to pay for private profit, again? Thanks!

Hitler provided strong leadership. Except that whenever he took the military decisions they lost battles, men and equipment. The best wars are fought with spies and paid agents, preferably at the very top. So cost effective! I’m just amazed that the taxpayer is going to stand for all this loss of services …..