Thank goodness we don’t have a real army to pay for.
The health spend is very odd. It’s difficult to see what great value or service we are getting for it. I can only assume it was designed by an older person (thinking along the lines of what care they might need in their latter years) and implemented by a trades union!
Personally, I don’t think we spend enough on education in Ireland and will laugh at the irony if they cut education spending in December after listening to all the drivel over the past two years about how we need to grow into a knowledge economy, that’s where future jobs will come from, etc.
I would agree with you that we don’t need to spend more than a country like Belgium on public order and safety.
This is all well and good Ronan, but as I see it, a key issue that we have in Ireland is not the recognition that we overspend in certain areas – health is a key example, and I really don’t understand how we are spending so much on housing developments either, since most of that was supposed to be private expenditure…but that we do not get effective value for money. Whether that is paid for privately or publicly, this remains the case.
Most comments regarding public services and the spend on them are bald cutting exercises. Colm McCarthy’s Bord Snip reports are a case in point. No one has suggested that we need to look at the efficiency of our systems. Just grab scissors to the budget. If we sorted out the inefficiencies, we would get the cost/standard gains we need.
Hi Treasa,
If you were to give Ireland 10 years grace, I think it would be possible to not have to do an accounting exercise of snipping and instead steadily rebalance public services on an economic footing, of social benefits relative to costs and therefore efficiency. However, we are in a fire-fighting situation and have a public service where each individual part has no idea of the relative scale of value it creates for society. Therefore, we have to use relatively crude rules of thumb to deliver the savings by 2015, at which point I think we should certainly build up our public services around each organisation knowing the value it creates relative to the cost it incurs.
The question is what rule of thumb do you use for efficiency gains in the short-run. The one used so far is: can’t you do more or less the same using 20% less. Here I opt for a slightly different tack, that Ireland’s public services offer broadly similar public benefits to their European counterparts and therefore we should be looking to spend similar amounts of money on them as our EU brethren.
@Joseph
I think that at least part of the high health spend can probably be explained by a reckless decision at the time of the switchover to the HSE to essentially incur the costs of the old Health Boards system as well as the new HSE system until everyone in the old Health Boards is retired. I’m pretty sure we can’t afford that now, though.
Thanks to one and all for the comments,
Ronan.
Donal O'Brolchain
,
Well done Ronan.
Two things strike me
1) Comparing data based on one year, to what extent is that “skewed” by the state of development of say things like infrastructure eg. up-to-date water services, electricity grids (regardless of generation facilities, urban transport services. Has there been a degree of catch-up with underinvestment in the past?
2)Are the definitions the same in each country? Two examples
Health. I am very struck by the HSE’s responsibility for much of the social services eg. the HSE involvement in the recent Roscommon family and other similar cases. Personally, I would have thought that Health should be confined to things of a medical nature and children’s welfare be dealt with under Social Protection.
Housing. To what extent are water services included in this, as opposed to say Environment.
@Treasa,
I agree with you about value for money being the key issue – even now. Some “economic analysis” (present company excluded, of course) strikes me as little more than cost accounting, with an “all public expenditure” is wasteful by definition.
Stealth subsidies, grants and perferments to private companies almost certainly account for a large portion of the overspend. It is galling that we spend so much more on health than other EU countries and yet have a far worse service than they do. Corruption, maladministration, insane give-aways for private companies, private hospitals: the whole thing is a monument to Mary Harney’s blind, ruthless, ideological folly.
Hi Miriam,
I don’t think I’m likely to convince you but for what it’s worth, assuming Mary Harney’s “blind, ruthless, ideological folly” was a pro-market one, then we would expect to see less money being spent on healthcare, not more. You might not like Ms. Harney but she’s hardly pro-maladministration. In fact, as outlined below, if she had her way, the layers of bureaucracy that were preserved in the changeover from Health Boards to HSE would probably not have survived. But we are left with them and they are not a testament to some sort of ultra-market ideology, they are a testament to a government that didn’t particularly fancy taking on the “insiders” (healthcare workers) at the expense of “outsiders” (the general public).
R
[…] links: Where should Ireland cut its public spending? – Ronan Lyons When Irish margins are biting – FT […]
gerard clarke
,
One factor who have not taken into account is that in Ireland, the HSE includes functions that in other jurisdictions properly fall under the realm of social protection. A specific example is long term care (both elderly and young). In the UK this is not funded by the NHS.
THe HSE budget also includes a direct €100m subsidy to private investors in the form of the NTPF who get a double dip in the form of tax reliefs in relation to their investment.
Other significant anomalies exist- for example there are 3,000 (vs. 2,400 Consultant medical staff) ICT employees in the HSE yet alomost every ITC development has to be outsourced to the private sector.
Id like to make a point about the public spending on healthcare… We as a nation prefer not to visit doctors and buy medicine (with the exception of over the counter products), The primary reason is cost. We tend to take the line that saving the €70 visit to the doctors and the perscription he/she serves us might outweigh the need for treatment. I think taking this line, we also avoid going to the hospitals too, so i think if you or indeed i had figures for the amount of patients taking up residence and care in hospitals in comparison to your European peers, I would assume Ireland would have significantly less numbers.
This can be seen too if you are to look at the dentist trade in Ireland, its shockingly expensive, and i for one have been holding off a visit to save the linings of my pocket. In the news only recently they talk about Irish people travelling to Serbia, Hungary, Poland etc for treatment. Because its cheaper to fly and get treated than it is to walk to the local dentist. Frightening really the fee’s we are expected to pay.
Lets get back to the hospitals, I know a person who works in a hospital, and Im told that the doctors are wined and dined so to speak (just like the politicians, regulators, bankers in their case) by Pharmacutical companies, so that the same doctors and consultants will buy “their” product.
Compare this to Australia where by law a pharmacist, nurse, doctor MUST inform you that you can have this medication or the cheaper brand which is the exact same, but 1/4 (or so) the price.. If we adopted such a legal policy, i think we would save our health care system plenty..
Caroline
,
It annoys me how much money the HSE wastes. Managers lack people management skills. There seems to be an apathy with Staff. Very demoralised.
My idea to save the HSE money is to pay those employees who work, and dicipline / fire those that dont! Do not pay employees out sick, or on maternity leave – let them claim social welfare.
At the moment, staff on Mat Leave get full pay, less Maternity Benefit. Staff on sick leave, get 84 days, to six months full pay, less Illness Benefit. There are employees who take their full sick leave entitlement each year, then miraculously recover before they are due to go of pay.
John McDowell
,
All corporations have procurement and its governance at the top of its agenda to transform and gain bottom line contributions necessary to reduce costs. Not once have I heard about a public sector spend review and reform during this whole debacle.
The public procurement body in Ireland needs as much reform as the political system and those that have been at the helm guiding us to the iceberg and dipping their snouts into the trough should be replaced immediately. Obviously with the govt that involves a democratic process however in the case of tax payer money and its management this is not the case. A new procurement structure must be created with a strong governance and accountability immediately to assist in cost reduction and improvement of services (yes they can be done together – the private sector do it all the time !)This will benefit tax payers in 2 ways 1. Reinvestment of money saved to front line services and 2. Less (but not absent) reliance on redundancies to achieve cost reductions required.
Unfortunately Ireland has not recognised the importance of procurement at a strategic level, whilst the rest of the world has. Ireland seems to have a heavy reliance on finance depts to do that job and you only have to look at the fundamental errors made by the govt finance dept to realise what a mistake this is. Unfortunately this is pervavsive in Ireland and must change.
BARRY
,
Thank you for a simple overall picture of where we stand
Shane ,
Great piece Ronan, thanks
Joseph ,
Thank goodness we don’t have a real army to pay for.
The health spend is very odd. It’s difficult to see what great value or service we are getting for it. I can only assume it was designed by an older person (thinking along the lines of what care they might need in their latter years) and implemented by a trades union!
Personally, I don’t think we spend enough on education in Ireland and will laugh at the irony if they cut education spending in December after listening to all the drivel over the past two years about how we need to grow into a knowledge economy, that’s where future jobs will come from, etc.
I would agree with you that we don’t need to spend more than a country like Belgium on public order and safety.
Treasa ,
This is all well and good Ronan, but as I see it, a key issue that we have in Ireland is not the recognition that we overspend in certain areas – health is a key example, and I really don’t understand how we are spending so much on housing developments either, since most of that was supposed to be private expenditure…but that we do not get effective value for money. Whether that is paid for privately or publicly, this remains the case.
Most comments regarding public services and the spend on them are bald cutting exercises. Colm McCarthy’s Bord Snip reports are a case in point. No one has suggested that we need to look at the efficiency of our systems. Just grab scissors to the budget. If we sorted out the inefficiencies, we would get the cost/standard gains we need.
It’s all very disheartening.
Ronan Lyons ,
Hi Treasa,
If you were to give Ireland 10 years grace, I think it would be possible to not have to do an accounting exercise of snipping and instead steadily rebalance public services on an economic footing, of social benefits relative to costs and therefore efficiency. However, we are in a fire-fighting situation and have a public service where each individual part has no idea of the relative scale of value it creates for society. Therefore, we have to use relatively crude rules of thumb to deliver the savings by 2015, at which point I think we should certainly build up our public services around each organisation knowing the value it creates relative to the cost it incurs.
The question is what rule of thumb do you use for efficiency gains in the short-run. The one used so far is: can’t you do more or less the same using 20% less. Here I opt for a slightly different tack, that Ireland’s public services offer broadly similar public benefits to their European counterparts and therefore we should be looking to spend similar amounts of money on them as our EU brethren.
@Joseph
I think that at least part of the high health spend can probably be explained by a reckless decision at the time of the switchover to the HSE to essentially incur the costs of the old Health Boards system as well as the new HSE system until everyone in the old Health Boards is retired. I’m pretty sure we can’t afford that now, though.
Thanks to one and all for the comments,
Ronan.
Donal O'Brolchain ,
Well done Ronan.
Two things strike me
1) Comparing data based on one year, to what extent is that “skewed” by the state of development of say things like infrastructure eg. up-to-date water services, electricity grids (regardless of generation facilities, urban transport services. Has there been a degree of catch-up with underinvestment in the past?
2)Are the definitions the same in each country? Two examples
Health. I am very struck by the HSE’s responsibility for much of the social services eg. the HSE involvement in the recent Roscommon family and other similar cases. Personally, I would have thought that Health should be confined to things of a medical nature and children’s welfare be dealt with under Social Protection.
Housing. To what extent are water services included in this, as opposed to say Environment.
@Treasa,
I agree with you about value for money being the key issue – even now. Some “economic analysis” (present company excluded, of course) strikes me as little more than cost accounting, with an “all public expenditure” is wasteful by definition.
Miriam Cotton ,
Stealth subsidies, grants and perferments to private companies almost certainly account for a large portion of the overspend. It is galling that we spend so much more on health than other EU countries and yet have a far worse service than they do. Corruption, maladministration, insane give-aways for private companies, private hospitals: the whole thing is a monument to Mary Harney’s blind, ruthless, ideological folly.
Ronan Lyons ,
Hi Miriam,
I don’t think I’m likely to convince you but for what it’s worth, assuming Mary Harney’s “blind, ruthless, ideological folly” was a pro-market one, then we would expect to see less money being spent on healthcare, not more. You might not like Ms. Harney but she’s hardly pro-maladministration. In fact, as outlined below, if she had her way, the layers of bureaucracy that were preserved in the changeover from Health Boards to HSE would probably not have survived. But we are left with them and they are not a testament to some sort of ultra-market ideology, they are a testament to a government that didn’t particularly fancy taking on the “insiders” (healthcare workers) at the expense of “outsiders” (the general public).
R
FT Alphaville » The Rock of O’Sisyphus is getting mighty heavy [updated] ,
[…] links: Where should Ireland cut its public spending? – Ronan Lyons When Irish margins are biting – FT […]
gerard clarke ,
One factor who have not taken into account is that in Ireland, the HSE includes functions that in other jurisdictions properly fall under the realm of social protection. A specific example is long term care (both elderly and young). In the UK this is not funded by the NHS.
THe HSE budget also includes a direct €100m subsidy to private investors in the form of the NTPF who get a double dip in the form of tax reliefs in relation to their investment.
Other significant anomalies exist- for example there are 3,000 (vs. 2,400 Consultant medical staff) ICT employees in the HSE yet alomost every ITC development has to be outsourced to the private sector.
Conor ,
nice article, and food for thought..
Id like to make a point about the public spending on healthcare… We as a nation prefer not to visit doctors and buy medicine (with the exception of over the counter products), The primary reason is cost. We tend to take the line that saving the €70 visit to the doctors and the perscription he/she serves us might outweigh the need for treatment. I think taking this line, we also avoid going to the hospitals too, so i think if you or indeed i had figures for the amount of patients taking up residence and care in hospitals in comparison to your European peers, I would assume Ireland would have significantly less numbers.
This can be seen too if you are to look at the dentist trade in Ireland, its shockingly expensive, and i for one have been holding off a visit to save the linings of my pocket. In the news only recently they talk about Irish people travelling to Serbia, Hungary, Poland etc for treatment. Because its cheaper to fly and get treated than it is to walk to the local dentist. Frightening really the fee’s we are expected to pay.
Lets get back to the hospitals, I know a person who works in a hospital, and Im told that the doctors are wined and dined so to speak (just like the politicians, regulators, bankers in their case) by Pharmacutical companies, so that the same doctors and consultants will buy “their” product.
Compare this to Australia where by law a pharmacist, nurse, doctor MUST inform you that you can have this medication or the cheaper brand which is the exact same, but 1/4 (or so) the price.. If we adopted such a legal policy, i think we would save our health care system plenty..
Caroline ,
It annoys me how much money the HSE wastes. Managers lack people management skills. There seems to be an apathy with Staff. Very demoralised.
My idea to save the HSE money is to pay those employees who work, and dicipline / fire those that dont! Do not pay employees out sick, or on maternity leave – let them claim social welfare.
At the moment, staff on Mat Leave get full pay, less Maternity Benefit. Staff on sick leave, get 84 days, to six months full pay, less Illness Benefit. There are employees who take their full sick leave entitlement each year, then miraculously recover before they are due to go of pay.
John McDowell ,
All corporations have procurement and its governance at the top of its agenda to transform and gain bottom line contributions necessary to reduce costs. Not once have I heard about a public sector spend review and reform during this whole debacle.
The public procurement body in Ireland needs as much reform as the political system and those that have been at the helm guiding us to the iceberg and dipping their snouts into the trough should be replaced immediately. Obviously with the govt that involves a democratic process however in the case of tax payer money and its management this is not the case. A new procurement structure must be created with a strong governance and accountability immediately to assist in cost reduction and improvement of services (yes they can be done together – the private sector do it all the time !)This will benefit tax payers in 2 ways 1. Reinvestment of money saved to front line services and 2. Less (but not absent) reliance on redundancies to achieve cost reductions required.
Unfortunately Ireland has not recognised the importance of procurement at a strategic level, whilst the rest of the world has. Ireland seems to have a heavy reliance on finance depts to do that job and you only have to look at the fundamental errors made by the govt finance dept to realise what a mistake this is. Unfortunately this is pervavsive in Ireland and must change.
BARRY ,
Thank you for a simple overall picture of where we stand