Donohoe warns of ‘significant risk’ of health spending

Minister’s comments seen as warning to Simon Harris

 Minister for Finance Paschal Donohoe: his unusually blunt comments will be seen as a warning to Minister for Health Simon Harris to control spending within his sector. Photograph: Niall Carson/PA Wire

Minister for Finance Paschal Donohoe: his unusually blunt comments will be seen as a warning to Minister for Health Simon Harris to control spending within his sector. Photograph: Niall Carson/PA Wire

 

The current rate of health spending, if repeated for the rest of the year, will be a “significant risk” to the management of the public finances, Minister for Finance Paschal Donohoe has said.

Mr Donohoe told the Dáil that increased spending in one area would have to be covered by unspent money elsewhere in Government, or extra tax receipts, to prevent it damaging the State’s balance sheet.

The Dublin Central TD’s unusually blunt comments will be seen as a warning to Minister for Health Simon Harris to control spending within his sector.

The acceleration in health spending is being viewed with alarm across Government, with senior figures said to be losing patience with the repeated pattern of health overruns.

Mr Donohoe made his comments in response to a parliamentary question from Barry Cowen, Fianna Fáil’s spokesman on public expenditure.

Mr Cowen tabled his question after The Irish Times reported last week that the sharp acceleration in health spending in recent weeks was leading to concerns that another supplementary estimate would be needed for the sector this year.

The Irish Fiscal Advisory Council (Ifac) has singled out increases in spending over and above what has already been budgeted for as one of the main factors in the “fast pace” of expenditure growth. Ifac this month said the Government’s medium-term spending plans were “not credible”.

In his response, Mr Donohoe told Mr Cowen that overall gross Government-voted expenditure was “up by 8.2 per cent in year-on-year terms, with a key element of the year-on-year increase being expenditure in the health sector”.

“Gross voted health expenditure at the end of May is €35 million [0.5 per cent] behind profile, however this expenditure of almost €7.1 billion represents a 10 per cent increase on the same period in 2018. This annual rate of expenditure, if it were to continue for the full year, would represent a significant risk in terms of expenditure management.”

Overall fiscal position

He said a key consideration was the impact of any additional expenditure on the overall fiscal position.

“Any increase in expenditure in one sector, unless offset by expenditure underspends elsewhere, either voted or non-voted, or additional revenues, would result in a deterioration in the general Government surplus from a projected 0.2 per cent of GDP this year and 0.4 per cent of GDP next year.”

Mr Cowen said the “clarity” in Mr Donohoe’s reply showed it was “clear that there is a need to curtail health spending for the remainder of the year”.

“The Minister did not, however, explain how spending would be curtailed and, at the same time, Minister Harris is at pains to tell us that there will be no supplementary provided or required this year following last year’s major stopgap.

“So something has to give and it is important that Minister Harris outlines how spending will be curtailed without major cutbacks being put in place.

“We have already heard last week how money has run out of the home help services, waiting lists are getting longer in both outpatient and inpatient lists, there is no respite available for people with disabilities.

“I intend to ask the Ministers how they plan to address this in the coming days in the Dáil.”