Irish cuts are hurting: Public Finance

Posted on August 3, 2009 · Posted in Public Finance

 

Public spending cuts of 8.5%, involving “initial reductions” of 17,300 jobs, have been proposed to the Irish Government to help get its public finances under control. The measures are proposed by economist Colm McCarthy at the request of finance minister Brian Lenihan, who called for a national debate on them.

 

McCarthy’s proposed cuts amount to €5.3bn, compared to €4bn indicated by Lenihan as necessary for 2010. Irish public finances would be in deficit by 10.75% of GDP after the cuts, against the EU’s 3% deficit limit.

 

The largest savings are of €1.85bn for social and family affairs and €1.23bn for the health and children ministry. The Family Support Agency would close and some benefits entitlements ended. Hospital and care home charges would increase and more use made of generic drugs.

 

One department – Community, Rural & Gaeltacht Affairs – would be abolished, with the activities of another – Arts, Sport & Tourism – subject to extensive savings and potentially transferred to other departments. The Office of the Minister for Integration would close. National and local economic development agencies would be merged into the existing Enterprise Ireland.

 

Mergers and rationalisation would take place across a range of other functions, including regulators, ombudsmen and employment advice. Town councils and regional authorities would be abolished and the remaining 34 city and county councils rationalised to 22 single-tier councils. The local government auditor would be merged with the main public sector auditor.

 

Savings of €25m are earmarked from the amalgamation of small primary schools. All non-commercial public bodies would surrender surplus property for disposal.

 

McCarthy supports previous proposals to raise the minimum pension age for public sector workers including the Gardai (police) and teachers and increase staff pension contributions. The Garda pay bill would be cut by €50m. There are also proposals to cut foreign aid, close embassies and reduce the involvement of defence forces in overseas missions.