Arthur Beesley: Ireland recovering but underlying issues remain

The economy may be on the mend but health and education are still suffering

Dear patient, your progress since leaving the intensive care saloon a little more than one year ago continues to provide encouragement.

Only the other day, the crowd in the International Monetary Fund said your economy has started “to fire on all cylinders”. The cliché is regrettable but the assessment is not. Indeed, the Economic and Social Research Institute people say the acceleration in growth is such that the economy may yet overheat in two years. It was so long since we heard that expression that we could hardly recall the spelling.

After painful years in the doldrums, these examinations and others seem to confirm that your recovery has now begun in earnest. Given the magnitude of the challenge faced by Ireland in 2008, this marks a welcome improvement.

Yet concerns linger. Delve into current reports and it appears many of your old tics and addictions remain unresolved. Having weathered the gravest of existential threats to your very statehood, they carry on still.

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In the IMF critique, for example, attention is drawn to your health and education services. The fund’s observations are salutary, particularly in the light of sweeping political claims that “austerity” – ie code for grinding cutbacks – has driven these services to the point of breakdown.

No one could argue that your healthcare and schooling are in a state of perfection. They are far from it. According to the IMF, however, money per se is not the problem. The problem is in the way the money is spent. “Despite its relatively young population, Ireland’s health spending (on a real per capita purchasing power parity-adjusted basis) exceeded the OECD average by 12 per cent in 2012 while life expectancy is little above the OECD average,” says the IMF.

“Cost-efficiency in healthcare should be further improved by building on existing initiatives: high use of costly acute care should be reduced through expanded primary care and further pharmaceutical savings should be sought.”

This is a mantra repeated many times over since the IMF’s arrival in Ireland – and it seems still like good advice, no matter how difficult it proves in the application or uncomfortable for the medical professions.

Education expenditure

The very same is true of the fund’s observations on education, which demonstrate that spending is not quite at developing world levels. “Ireland had the third-greatest annual expenditure per student in OECD countries by public educational institutions in 2011, some 14 per cent above the OECD average on a purchasing power parity-adjusted basis. Higher education funding reforms are needed to control growth in public spending while protecting low-income students, by better targeting college fee subsidies.”

Easy to say, exceedingly difficult to do in the political sense, but rather obvious at the same time.

While a similar case can be made in respect of the long-awaited overhaul of the legal professions, it is not actually mentioned in the latest IMF report. Maybe they have finally given up on this one. The initiative, designed with the noble objective of curtailing excessive legal costs, met with a wall of resistance at the level of the relevant professional bodies. The promised overhaul is still promised, of course, but there is little evidence of a rush.

A further weakness highlighted by the IMF is universalism, another old favourite. The fund says child benefit should be means-tested, and generous medical cover for over-70s too. It does not cite the free bus pass but the principle is the same, as it is with the plan for free GP cards for all children under six.

What is wrong with assessments based on needs and means? At a time of fiscal constraint, it does not make sense for the highly indebted State to take upon itself to provide services free of charge to people who can well afford them.

The crash created scope for fundamental corrective reforms in numerous areas, but some gaping opportunities were simply not seized. Whether it is actually within your capacity to do so is debatable, although the point can made that the very struggle for survival meant that political priorities had to adopted.

That was then. In this time of growth – as debate turns to the recovery dividend – it is as well to point out that some of present confidence has its roots in temporary forces. Ultra-low borrowing costs can go up as well as down. So too can the price of oil and the euro’s value against the dollar. It is when favourable trends turn unfavourable that corrective reforms come into their own – or not.