The report of Colm McCarthy’s An Bord Snip Nua is out this afternoon. Amid a flurry of crashing websites, extended RTE shows and tweeted short urls, my man inside the Oireachtas sent on a copy. The breadth of cuts was impressive, if language like that can be used, and the total recommended cuts of €5.3bn is certainly a good start in a three-year programme of reform.
However one thing I wanted to know straight away was whether every department was stumping up, or whether some were getting off relatively painlessly. Gross expenditure by the government in 2009 was scheduled to be €64bn, that’s an increase of almost €2bn on the 2008 figure. So if everything An Board Snip recommended were implemented by government, that would leave spending just €3.6bn lower than in 2008.
But the Dept of Social & Family Affairs (DSFA) actually skews that figure substantially. Although Board Snip is recommending €1.85bn in cuts for that department, that would still leave DSFA spending €1.7bn higher in 2010 than in 2008, the only Department whose spending looks set to increase no matter what, due to the scale of our unemployment challenge. Leaving that Department out, where is our €5.3bn in budgeted and recommended cuts coming from? And which departments are paying the heaviest price?
The chart below shows each government department’s size in euro terms in the 2008 Budget, the beige line. As you can see, Health is easily the biggest gross spender of cash, with Education in second place. The Departments of Transport, Environment, Justice, Agriculture and Enterprise form the next tier, with gross spending in 2008 of €2bn-€3bn. The red line shows the percentage contribution each department (outside DSFA) is making to the cuts budgeted in April and recommended in July. Health pays its way, but Education is making a smaller contribution than the Dept of the Environment, Heritage and Local Government, which is only a third of its size. In fact, Education’s large size means that most other Departments over-contribute relative to their size to compensate.
One quick other way of looking at this is to compare those two percentages. A ratio of 1.0 indicates that a Department has had cuts in line with its size at the peak in 2008. This is shown in the graph below, along with that Department’s gross expenditure in 2008. What jumps out straight away is that almost all departments are “over-contributing” by this measure. This is because the two largest Departments either just about pay their way (Health) or pay far less than their way (Education). Departments such as Arts, Sports & Tourism and Community, Rural & Gaeltacht Affairs, whose combined budgets in 2008 were less than the increase in Health expenditure between 2007 and 2008, have contributed well above their size.
Now, just because some Departments are paying much more than others doesn’t of course make it wrong. But we need to know that we are making these choices. The Departments of Health and Education may be paying the most in absolute terms, but relative to their budget sizes, they are paying among the least. The corollary of this is that those Departments facing up to 40% of their budgets being cut will presumably have to shut down programmes that are delivering a social good to the taxpayer.
(Note: I’ll be posting in more detail on the Bord Snip Nua report on Monday, comparing it to expectations and recommendations such as my starter for €6bn. This initial analysis will hopefully partially sate or indeed whet the appetite on the day itself!)