Pascal Donohoe has to get real unpopular real soon
Some tough choices are now inevitable
Minister Finance Paschal Donohoe: Brexit might actually help him. Photograph: Dara Mac Donaill / The Irish Times
Brexit will dominate everything in the coming weeks as the UK is brought face-to-face with the choices it has itself ordained.
As the German chancellor Angela Merkel’s lengthy call with the Taoiseach on Thursday suggests, Ireland and the rest of the EU will offer Mrs May what help they can to ratify the withdrawal treaty. Whether this is possible or not is simply unknowable at this stage. It depends – saints preserve us – on the tempers of the Tory party after the Christmas break. Whatever happens, the coming weeks in Westminster will define the year in politics here, too.
But the business of government must and will continue in other respects on Merrion St. And it is clear that whatever happens in the House of Commons there is an emerging challenge which calls on one of the most basic responsibilities of government: controlling the spending of money. Any Government that cannot discipline itself in its budgeting and spending will ultimately fail, sooner or later, and potentially with disastrous consequences. The news of the past month or two suggests that there is cause for concern.
This seems to apply to both capital spending and current spending. In both cases the outstanding examples are in the Department of Health.
The escalating costs of the new national children’s hospital, reported on extensively in the week before Christmas in this newspaper, are a cause for national alarm.
Here’s a recap: in September, the Government said that the cost of the project was expected to be €983 million – just under the working estimate of €1-1.1 billion that had been knocking around official circles for 12 months before that. And while this represented a huge increase on the estimates since the project applied for planning permission – with some fanfare by one L Varadkar, then Minister for Health – in 2016, it was nothing compared with what has happened in the few months since.
On December 18th, following reports in The Irish Times, Mr Varadkar told the Dáil that the cost of building the hospital was now expected to reach €1.433 billion, and conceded that the costs could actually rise further.
Just four days later, on December 22th, The Irish Times revealed that the Cabinet had actually been warned that the total hospital costs were expected to exceed €1.73 billion, and that the bill could escalate by a further €145 million. There is now a general acceptance in Government that there won’t be any change out of €2 billion for the hospital. I know lots of people lose track of their spending at Christmas. But this is astounding.
The extraordinary inflation in the costs of the project raises questions about statements made to the Dáil. But it also presents an immediate issue that requires action from the Government – both to control costs on the project and to find the resources for the existing bills elsewhere in its budgets. To this end, ministers were provided with a list of building projects that may have to be shelved or delayed to pay for the children’s hospital overrun. These included extra hospital beds in Limerick, long-term residential facilities for older people in 11 counties, primary care centres, accommodation for people with disabilities and so on. To bang home the point to the Independent ministers, Finian McGrath’s list of developments at Beaumout Hospital and John Halligan’s famous second cath lab in Waterford were also thrown in. These are the real world consequences of the failure to control the children’s hospital budget. No wonder Rhona Mahony – outgoing Master of Holles St – was so concerned to get shovels in the ground on the new National Maternity Hospital site. Anything that’s not nailed down in the health capital budget is now up for grabs.
The Department of Health is understandably keen that other departments’ capital budgets should also be raided. There is extremely strong – and occasionally profane, I am afraid – opposition to this among other ministers.
Would that overspending in health budgets was confined to capital projects. But as the whopping €660 million supplementary estimate for the health service voted through the Dáil in the weeks before Christmas shows, current budgets in the health service are vastly overshooting as well. To de-jargonise – it cost €660 million more than planned to run hospitals and health services in 2018.
This now happens more or less every year. Whatever you think it’s going to cost, you can add another half a billion or so. This is, frankly, no way to run a railroad. And yet senior figures in Government fully expect the same to happen again this year.
It has been a virtuoso feat of political skill for Minister for Health Simon Harris to avoid public blame for these overruns. His Cabinet colleagues are less forgiving in private. I fear his referendum honeymoon will not last much longer.
But responsibility for the public purse falls principally with Paschal Donohoe, head of the twin departments of finance and public expenditure. Barring uncommon fortitude by Donohoe in the coming weeks and months of a type that not many Irish politicians have demonstrated, I wonder if the removal of a dedicated minister at the head of a department dedicated to monitoring and controlling public spending – a choice made by Leo Varadkar when he ascended to the Taoiseach’s office – may turn out a mistake. It’s harder to control budgets in a time of plenty.
We shall see in the coming weeks. Action is required on careering capital plans and a fight with the nurses on pay is unavoidable. Despite the rosy hue off the public finances courtesy of an avalanche of corporation tax last month, some tough choices are now inevitable.
Unless Donohoe becomes very unpopular very quickly in certain quarters, he will not be doing his job properly. Paradoxically, Brexit might actually help him. But the choices will still have to be made.