Primary care row obscures critical issue of budget

INSIDE POLITICS:Decisions that will affect the lives of every citizen for years to come are being taken behind closed doors

THE CAPACITY of the Irish political system to devote enormous energy to relatively minor controversies while the great issues on which the country's future depends are virtually ignored has been illustrated yet again by the latest storm at the Department of Health.

The selection of priority locations for primary care centres is important but it is far more complex than most of the commentary has acknowledged and it has as much to do with a personality clash between Róisín Shortall and James Reilly as anything else.

As revealed in yesterday's Irish Times, neither the priority list produced by Shortall nor the additions by Reilly bore much relation to the initial priority list produced by the officials of the Health Service Executive.

Shortall tripled the weighting initially attached to deprivation in order to get her top 20 and Reilly added another 15 locations to that list. Political lobbying certainly played a part in process and that is something that deserved to be exposed.

However, given the fact that the country is on the verge of one of the most significant budgets in the history of the State, it is quite remarkable that one small aspect of health policy is the subject of such intense debate while critical decisions that will affect the lives of every citizen for years to come are being taken behind closed doors.

In less than two months' time a €3.5 billion package of savings, made up of €2.25 billion in spending cuts and €1.25 billion in tax increases, is due to be unveiled by Minister for Finance Michael Noonan.

There have been ominous signs that the burden will fall disproportionately on the young and less politically powerful while groups such as public servants and pensioners will again have their interests protected, but we won't know for sure until the budget is unveiled on December 5th.

The debacle over failure to reform the allowances system in the public service does not inspire confidence in the Coalition's ability to get to grips with the some of the key issues at the heart of the crisis in the public finances but the very least that is required in advance of the budget is a full and open discussion about all of the available options.

For instance, reform of the current public service pension arrangements should be an urgent priority but it doesn't feature in political debate. The recent International Monetary Fund report on Ireland pointed out that the 53 per cent increase in pensioner numbers between 2008 and 2011 had seen the net public service pension bill jump by 49 per cent during the period. That offset by one-third the savings generated by the early retirement scheme.

"The need to rein in this burden (given population ageing) as well as equity considerations (the average public service pension is double the State pension) warrant a review of the scope for further savings in the pension bill," said the IMF.

One of the problems is that the politicians themselves have the most extraordinary pension provision of all. The State is paying out enormous pensions to former politicians, from retired presidents down, and until this is radically overhauled the Government will have no moral authority to curtail anybody else's entitlements.

The cost of public service pensions is simply one issue that was highlighted by the IMF. The overall public pay bill itself and the range of universal subsides from child benefit to third-level fees and from medical cards for the over-70s to a range of benefits-in-kind for all pensioners were also highlighted by the IMF as luxuries the country could no longer afford.

Having a rational debate on any of these matters is difficult as emotion frequently gets in the way and the vested interests naturally set out to distort the facts in their favour. At the very least, though, politicians should be trying to get the issues aired so that the best and fairest decisions can be arrived at.

This is another area where serious political reform would be a huge help in getting fair and rational decision-making. A strong Dáil budget committee, which had all the facts at its disposal well in advance of final decisions being taken, could make an important contribution to getting public acceptance of necessary cuts and tax increases.

One of the problems besetting the budget process every year is the amount of credence given to unsubstantiated and often false claims that underpin the discussion.

For instance, an objective outside analysis of budgetary policy since the crisis began in 2008 shows that Ireland has avoided a decline in poverty ratios relative to the rest of the European Union, despite a far deeper economic slump here. That conclusion by the IMF, based on research conducted by the Central Statistics Office, rebuts much of the trite commentary about the impact of the crisis but it is essential information for the policymakers shaping the budget.

Another important piece of information when it comes to the budget jigsaw is that Ireland has the most progressive income tax system, including social insurance contributions, in the entire EU.

This again is not something that the average voter would glean from most political debate. The information was contained in a recent assessment by independent think tank PublicPolicy.ie. It pointed out that in 2009 there were 100,000 Irish taxpayers with an income of more than €100,000. The group made up just 4.7 per cent of all taxpayers, accounted for 22.6 per cent of income but paid 45.3 per cent of the income tax that year.

Figures such as these underpin the troika's insistence that the country's future depends on the emphasis being placed on spending cuts rather than further tax increases. The Government's dependence on the goodwill of the troika for its funding requirements should be enough to counteract the natural tendency to raise taxes rather than taking politically difficult decisions that paralysed the Fine Gael-Labour coalition in the 1980s.

Getting broad public acceptance for the budget is the task facing the Coalition and it will need to be far more coherent and disciplined in its approach than it was in the run-up to its first budget a year ago.