Among the many stark realities to be tackled in the budget is that staff levels in the State sector are up 30 per cent since 2000
TOMORROW THE Cabinet holds its now traditional Sunday pre-budget meeting. For 10 years or more, high tax revenues meant these occasions were relatively relaxed, but the mood tomorrow is likely to be more sombre. The exercise of political power is ultimately about choosing how to allocate limited resources to meet unlimited, competing demands. While others have the luxury of merely talking around budgetary options, Ministers must make the unpalatable decisions.
We can only speculate as to the precise proposals to be considered at the Cabinet table but, on the income side, the key decision will probably be whether to hold the tax bands at their current level (and thereby effectively increase income tax), whether to return the top tax rate to 42 per cent and by how much tax on the "old reliables" like alcohol and tobacco should be increased. The Government should also consider whether some carbon taxes could be introduced and, more controversially, whether child benefit should be taxed.
Most of the discussion at Cabinet is likely to focus on the expenditure side of the balance sheet. Ministers must decide which capital projects in the National Development Plan should be implemented. They must also decide whether to take a "payment holiday" from contributions to the National Pension Fund and, if so, for how long.
The Cabinet's biggest decisions, however, will be how and where to cut the public sector pay bill. Some 40 cent of every euro of current Government spending goes on public sector wages or pensions. This bill will increase further in the next two years following the 6 per cent pay hike for the public sector under the new social partnership agreement. Curtailing public expenditure to the extent that the budgetary situation now requires must therefore involve significant staff reductions in the public and civil service.
Speculation this week as to whether the Minister for Finance's suggestion of a public service was a personal view had an air of contrived controversy. During Tuesday's Private Members debate, Lenihan did no more than he did in interviews in July: he signalled that a redundancy programme will be rolled out for administrative staff in the Health Service Executive (HSE) and that it could be rolled out across the wider public service. In reply to a Dáil question from Pat Rabbitte on Thursday, Lenihan confirmed that his department had received a framework for the HSE redundancy programme and the extension of such a proposal to other areas was being examined.
Much of the reason why such a redundancy programme is necessary was revealed in the answers to written Dáil questions to the Minister for Finance by Labour's Joan Burton this week.
She asked for a breakdown of the numbers of full-time staff in the civil and public service from 2000 to date. The detailed table furnished in the Minister's reply revealed that the number of people working in the public service generally increased by an astonishing 30 per cent in the last eight years.
Staff numbers in both our health service and our education system increased by 39 per cent. There are almost 32,000 more people working in the health services than in 2000 and 26,000 more people are working in education. Increased numbers were necessary to service a growing population and to improve both healthcare and educational attainment.
However, there must be room to reduce those numbers without impacting on services and there must be some services, even in these sectors, which we simply have to accept the public purse can no longer afford to provide.
Staff numbers in non-commercial State agencies grew by 23 per cent in the last eight years. Establishing a new State agency or expanding the remit of an existing agency had become the solution to every need or perceived need for greater policy priority or increased regulation. We are now paying the price in wages and pensions for this proliferation of agencies. The amalgamation of some agencies and the return of staff to mother departments may achieve efficiencies, but some of the staff involved will have to be offered the redundancy option.
One of the most striking revelations in the detail furnished by the Minister was that the numbers working in local authorities increased by more than one-fifth in the last eight years. It is not at all clear how this came about in an era when local authorities are outsourcing traditional labour-intensive functions like road maintenance and waste collection.
There is an urgent need for a detailed audit of the functions performed by local authorities and the numbers of personnel deployed to carry them out.
The stark reality is that the size of our Government sector increased by almost one-third in the last decade. Even if we were not in a recession, the current size of the public service would not be sustainable. The mechanisms by which a redundancy scheme would be rolled out needs further exploration and, of course, would involve negotiations with the relevant unions. But politicians and union leaders are fooling themselves if they think we can resolve the current difficulties in public finances without a dramatic reduction in public service staff numbers.