Government’s ‘new politics’ faces tough test in budget decisions

Rising expectations in the recovering economy have made the choices more difficult

“Lobby groups typically mobilise around getting a particular proposal implemented . . . So the focus tends to be on looking for a new cardiac catheterisation unit for Waterford, or for an increase in rent supplement.”

“Lobby groups typically mobilise around getting a particular proposal implemented . . . So the focus tends to be on looking for a new cardiac catheterisation unit for Waterford, or for an increase in rent supplement.”

 

Since the economy began to recover, decisions on the budget seem to have become more difficult rather than easier. Expectations have risen sharply. While there are some additional resources, much of this is already spoken for just to maintain existing services.

Each year the number of pensioners increases by 3.5 per cent, and the number of children of school-going age rises by about 1.5 per cent . Even with low inflation, welfare payments will need to increase to maintain their real value. If public-service wages rise in line with the private sector this will raise the wage bill by about 2.5 per cent a year. Together these factors leave only limited room for improving the level or quality of public services.

As a result, it will be important to choose wisely: €1 million spent on one service means €1 million less to spend on another; prioritisation is essential. Such prioritisation should be driven by real data on the needs of the wider community, not by the pressure of the most effective lobby groups.

Health spending

Resources to increase health spending are not infinite – when money is earmarked for a particular service improvement it is, implicitly, at the expense of possible alternative developments.

These are particularly difficult human, ethical and political choices. However, bringing together medical and economics expertise can help policymakers by illuminating whether investing in early stroke intervention and rehabilitation, for example, could be likely to save more lives than equivalent spending on innovative drugs.

In recent months there have been some public campaigns around extremely expensive new medicines. Once such campaigns start, the taxi meter starts running for the Government as the public pressure undermines the State’s bargaining power with the pharmaceutical companies. Well-intentioned campaigns may add tens of millions or more to the bill for drugs that might have been purchased for less after bargaining.

While departments may be better at scrutinising or prioritising possible alternatives within their own budgets, our system is less well equipped to consider possible alternatives that fall outside a particular department’s remit.

Special-needs assistants

This summer it was announced that the total number of special-needs assistants (SNAs) is to rise to 12,900 – just above the total number of Gardaí at the end of 2015 – but would children with special education needs be better served if some of those additional resources were, instead, invested in extra therapy supports or extra resource teaching hours?

If the question had been posed to Ministers as “How would an extra €28 million a year be best spent on children with special needs or disabilities”, instead of “Do you want to hire 860 more SNAs,” would the Government have come up with a different answer?

It is clear that in recent years capital spending has taken the back seat and public investment is at an exceptionally low level at a time when there are major needs in terms of housing, water, and transport.

If there is to be no income from user charges to fund necessary investment in water and sewage, that means less funds available to address the housing shortage or deliver a modern public transport network. If we underinvest in water and sewage, among other consequences there will be a scarcity of building land: particular choices have real consequences.

Key role

The political system has a key role in determining how much scarce resources should be devoted to investment, and how much should be allocated to each category of investment. Economics and engineering can guide on how these choices are made, but ultimately these are high-level political decisions.

Once the spending on different categories is decided, there are well-established methodologies for prioritising investment within such areas as transport, water services, and flood defences. It is important that individual projects are selected on transparent criteria which draw on these methodologies.

Lobby groups typically mobilise around getting a particular proposal implemented, and less frequently on examining the range of possible solutions to addressing the underlying problem.

So the focus tends to be on looking for a new cardiac catheterisation unit for Waterford, or for an increase in rent supplement. We might get different, and better, answers, if the questions were posed as: “Which intervention would give the best return in improving cardiac care for people from Waterford?” Or: “What would be most effective in preventing and tackling homelessness if you had an extra €30 million a year to spend?”

As we approach the first budget of this Government, our “new politics” needs to show it is capable of sensibly weighing alternative choices, in the public interest, and not just responding to voluble lobby groups.

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