Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

An Bord Snip Nua – who is paying most?

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.

Budget 2009 and Bord Snip cuts, compared to Department size
Budget 2009 and Bord Snip cuts, compared to Department size

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.

Which Departments are paying the biggest price?
Which Departments are paying the biggest price?

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!)

  • Irish Election » An Bord Snip: Social and Family Affairs ,

    […] as the focus has basically been on cutting benefits and little else. Ironically, as Ronan Lyons has noted, the DoSFA is “the only Department whose spending looks set to increase no matter what, due to […]

    • Michael O'Shea ,

      It would be nice to see some comparative analysis of:
      (1) Ministers and T.D.’s salaries and expenses compared with those of Finland, a country of similar population and similar, if better founded aspirations,

      (2) a comparison of % increases in basic social welfare payments with benchmarked civil servants incomes over the last 10 years.

      • kevin denny ,

        Interesting exercise but…I think it has the wrong focus. The money that is being spent is the taxpayers not the Departments’ and the analysis here suggests a “some departments are paying more than their share” line. Oh no they ain’t. The spending cuts & re-structuring that goes with it needs to be evaluated on its merits and ONLY on its merits. So I think it is irrelevant, even unhelpful, to say that it is X% of some department’s budget & Y% of somebody else’s. Departments are simply administrative entities that are convenient to have – to a greater or lesser extent. Various functions (such as STI) could be in Enterprise or in Education. The only interesting policy questions are what is done & how much it costs & not whats on the letterhead.
        One valuable contribution of the McCarthy report (which will probably be overlooked in all the hysteria) is to try rationalize the allocation of functions across different entities and indeed the existence of some of these entities- the suggested abolition of the NUI is a prime example.

        • Ronan Lyons ,

          Hi Kevin,
          You’re absolutely right in one sense, department name is not important, it’s the function that the Department is supposed to represent I was focusing on. Something I hope to draw out when I’ve had more time looking at the figures is to what extent we have a different nature of government now compared to say 2006 or 2002.
          The relatively small burden of cuts in Health and Education suggests that we may be turning our government away from regulation and other functions and into a giant service provider. There are lines put through many programmes with a simple “because of the state of the finances” – if these programmes offered nothing anyway, why were they formed in the first place and if they offer something valuable, why are they being cut?
          I think the huge problem with the McCarthy report on reflection is that they were told: Look only at the cost and not at the value – oh, and don’t look at the biggest cost, public sector pay rates!

          • kevin denny ,

            Thats a fair point. Given that nobody knows what the value of most public expenditure programs (& one can’t find these things out in a hurry) what were these guys to do? What would you do? First of all, to a large extent its a numbers game: cutting expenditure on, say, the Gaeltacht won’t save much because not much is spent there. But a lot of small cuts add up so you do what you can. Then you take the big ticket items (social welfare,health etc). This is where the serious money is but there is no point in saying cut welfare payments by 15% so..5% seems reasonable given deflation.
            Interestingly, I saw today that the report cost €38k to produce ( I think that this was the sum total). Extraordinary value for money when you think about how much you have to pay SC’s just to get out of bed.

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