Blowing the recovery?


Sir, – Three apparently unrelated pieces in recent issues of The Irish Times tell quite the tale when taken together.

Minister for Finance Paschal Donohoe promises that, in framing Budget 2020, he will not ignore the Fiscal Advisory Council which this week described the Government’s medium-term spending plans as not credible (News, June 11th).

One can only hope that this will not be the most recent example of the Minister saying the right thing and doing the opposite. While availing of every microphone to profess prudence and caution, Mr Donohoe has over the past few years blown a huge windfall in unbudgeted corporation tax receipts on current expenditures which will not easily be reversed when the downturn comes, as it will.

In your commercial property section (June 11th), Ronald Quinlan reports that the public sector is a key driver of the Dublin office market. He quotes research from Savills Ireland to the effect that the removal of the embargo on public-sector recruitment in 2015 has propelled the numbers employed in Dublin in public administration and defence to 6.1 per cent above their pre-crisis peak in 2008 and more than 50 per cent above their cyclical low in 2012. That sector is, the research tells us, Dublin’s fastest-growing sector of employment, with 4,900 jobs created in the past year – an annual increase of 14.7 per cent .

At least one Minister and up to three of them will grace any announcement of the creation of 20 or more private-sector jobs. One might think that the “creation” of 4,900 jobs in one year in just one sector of our public sector might have attracted a little fanfare. If it did, I missed it. Allow me, as a taxpayer, to offer only two cheers.

Also on Tuesday, you reported on proposed changes to the Fair Deal nursing home scheme. The scheme requires those availing of State-funded care to contribute towards the cost of their care up to 80 per cent of their income and up to 7.5 per cent each year of the value of their assets. In the case of the family home, the latter contribution is capped at three years and the intention is to extend that cap to a family farm and a small business.

Let us leave to another day the interesting question as to why anyone availing of taxpayer-funded care should have a cap placed on the contribution which they are asked to make from their assets towards the cost of that care. The precise effect of that cap is to transfer value from the hard-pressed taxpayer to the beneficiaries of the estate of the person in care. What jumped out of the piece is the extraordinary revelation that public homes in the Fair Deal Scheme are paid 66 per cent more than privately owned care facilities.

Of course, it may be the case that the care offered in public facilities is 66 per cent better than that offered in their private counterparts. The reality is, I fear, more prosaic – labour costs are the single-largest expenditure in any such facility and have to be covered in the rates agreed with the HSE.

Mr Donohoe, as well as being Minister for Finance, is Minister for Public Expenditure and Reform. He has shown himself to be adept at the public expenditure part of the latter brief. I suppose a little public-sector reform would be out of the question? – Yours, etc,


Rathmines, Dublin 6.