Dealing with Ireland's Deficit

Dealing with Ireland's Deficit
28-Nov-09
One of the major problems facing Ireland today is the large shortfall in tax revenues versus expenditures, and how that can be addressed.This document is to clarify our policies in that area, based on the existing strategies laid out, and put some figures on the proposed adjustments. We are largely against taxation increases, since these remove liquidity from the economy, and our aim is to keep job losses and pay reductions to an absolute minimum. This is intended to be a broad outline document, to give a general idea of the direction of the policies.

Initially it is worth noting that approximately €9 billion of the deficit is capital lending, which is an appropriate use of finance, dealt with by many countries in a similar fashion.

Health

First and foremost, we're spending approximately €14 billion a year on the Department of Health and Children, with a population of 4 million, and another billion for the market in health insurance. This gives a spend to population ratio of 3.75, zeroes excluded.

The Dutch model, which is what we are aiming for, since it was rated best quality of service and second best value for money in the world, by comparison are spending approximately €46 billion a year on health with a population of 16 million. This gives a spend to population ratio of 2.875, thus they spend about 75% as much on health as we do, and have far better healthcare. They have insurance premiums of around €30 a week to pay at a minimum (actually €22, but they have a few other charges on top of that).

To maintain current levels of healthcare and all the inefficiency that entails, we'd need to subsidise the insurance premiums (assuming everyone paid bare minimum) by about €8 billion, still a hefty saving, and with streamlining and efficiency measures to bring health to Dutch standards (0.75 cost) we're looking at a total cost to the exchequer of around €4 billion per annum.

Also by going down the privatisation route, we can put the income from the sale of the health systems, very conservatively estimating €12 billion on the basis of profit versus business sales, into upgrading hospital and clinical equipment and processes to provide top quality systems and services, and handling any industrial disputes arising from the transition.

Social Welfare

By reducing social welfare by 20%, and keeping in mind one of our central policies is control the cost of living in Ireland thus leading to little reduction in quality of life for those on welfare, means testing for child benefit, and adjustments of rental allowances which set an artificial floor on rental rates, we will be able to save a further €4 billion.

Quangos
The reduction and consolidation of Quangos, in particular those which replicate one anothers' functions, which accounted for €13 billion in expenditure last year, we can potentially save a further €3 billion.

Streamlining and Efficiency
A general efficiency and productivity drive within the public services should yield further savings, an example of a programme that needed to be removed was the storage of the e-voting machines. There are similar cost centres scattered throughout the state (for example portacabin rentals), and we would aim for savings of €3 billion from dealing with those and others.

Summary
By the measures outlined above, we will have realised savings of approximately €20 billion with very few jobs lost, which if factored in with the €9 billion capital lending cost, gives Ireland the breathing space it needs to move on and build its own economy.