Government must hone its surgical skills and cut where it hurts least

I WAS upbraided in the street by a fairly senior civil servant last week. He was polite, of course, as all senior civil servants are. But he made it pretty clear he thought I was talking through a certain part of my anatomy when it came to public spending.

He had been reading the last few columns I’ve written here about how the Government spends our money and where it could be cut without inflicting too much pain.

Without wishing to be too unfair, I think the bit that really got under his skin was the reference to how much work is put in to ensuring that civil servants who travel abroad get a better than fair shake.

Especially, perhaps, he and some of his colleagues were irked by the suggestion that expenses could be done away with altogether, and replaced by a system where people are recouped their actual expenditure. For some civil servants, especially the well-travelled ones, this would be the end of civilisation as we know it.

But the bottom line for this man was that I was being too simplistic. “It’s just not as easy as you think,” he said, “to cut things like consultancy budgets and just chop money out of Government departments. And anyway, why this attack on the civil service? You ought to know better than most how invaluable an organ it is.”

I was tempted to tell him that anyone who refers to himself as an organ is only begging for a cut of some sort, but since he was being polite, so was I.

But he was right in a way. It’s not a simple business, managing within smaller means. But it’s not as difficult as some civil servants like to pretend it is either. After all, they’re pretty good at telling the rest of us how we can do it.

Of course the risk you run in making any suggestion of that kind is that people will label you immediately as being anti-public service. Anyone who knows me knows that’s rubbish.

I agree absolutely with what Terry Prone said in this space yesterday. Our public service didn’t cause the downturn and we’re lucky to have a public service in Ireland of such quality and commitment.

But all of us are going to have to endure some pain over the next couple of years if we are to manage our way out of our present difficulty.

I believe passionately that this is a time for leadership and choice, and I’ll come back to that in a minute. In the short term, though, the principal choice available — actually the only choice — is where do we cut? Not whether we should cut, but where and by how much. I know a lot of you, in addition to the civil service, have been reading the last few columns about how our money is spent.

I know that principally because of the letters I’ve received, for which thank you very much.

It’s clear from those letters that a lot of people have actually gone to the trouble of looking at the book of estimates. And it’s pretty clear that people are surprised by the spread of activity revealed by the estimates. Not all the suggestions I’ve received are equally sustainable (putting the entire Oireachtas on a boat and allowing it to float out to sea may not actually solve all our problems) and some weren’t even printable.

But the common thread was this. The Government is spending around €53bn on our behalf this year. That’s just the current day-to-day spending and its purpose is to make life better for all of us. The vast bulk of it goes on healing us when we’re sick, educating our children and looking after us when we are elderly, unemployed, or otherwise need support.

About one-third is spent on the wages and salaries of the people who provide all those services (and the people who manage them and develop policy).

I was going to go down through the rest of the estimates today, suggesting other areas where cuts are possible. But in a sense events have overtaken us. The Government has decided to bring forward the budget to early October, and that can only mean one thing.

They have already decided, at least in principle, on the scale of the cuts they intend to make. The lead story in the latest issue of the Sunday Business Post said departments had already been told there must be a 3% cut across the board.

That may not sound like a lot. Believe me, it’s savage. So much of government spending is fixed that a 3% cut has to go deep into the bone. And if it is equally spread, the hardship that will result, especially for vulnerable people and families, will be immense.

That’s why different choices are necessary — and the point of my last few columns was to try to suggest some of them. There is no point in paying lip-service to the idea of protecting the vulnerable if a blunt instrument is to be applied to the resources necessary for healthcare, education and protection. It would be infinitely better if the Government were instead to put some things on hold — things that can wait until better times.

We’re spending €20bn this year on the national development plan, with an equivalent amount next year. Some of the bigger projects within that plan could be scaled down or spread over a longer timescale (and the €200m provided for continuing decentralisation could be done away with altogether).

That would mean we weren’t completing roads, railways and regional airports quite so fast as planned, although they would all be finished in time. By deferring that expenditure a bit, we could easily save a billion next year.

AND over the last number of years, the Government has been putting money aside for the national pension fund. By the end of 2007, there was more than €21bn in the fund — the equivalent of nearly one-seventh of our national wealth. Each year the Government puts about €1.5bn more into the fund and right now there is no reason to believe they won’t be doing that next year.

For at least the next two years, we should take a holiday from that investment. I’m not suggesting we should abandon it altogether, but ploughing money we don’t have into a rich fund, while at the same time cutting essential services, makes no sense whatever to me.

Let’s reduce the investment to, say, half a billion for each of the next two years. That would immediately release another two billion for essential and immediate purposes.

I know the strait-laced economists won’t agree, but if cuts are necessary there is a fundamental choice to be made. The way our Government makes the choice will help us to characterise them. And the choice is simple.

It’s a choice between the immediate and to some extent expedient needs of the economy, and the equally pressing needs of the people.

It’s a choice between economics and social justice. How the Government gets that balance right will be their real measure.