A better way for the Government to balance its books is proposed by Senator Feargal Quinn
Most people accept that public spending is wildly out of control, and that cutting back is essential to our economic survival. But I believe the Government's way of going about this task, as evidenced by the Book of Estimates published last week, shows the same lack of strategic vision, wrong choice of priorities, and management shortcomings that created the problem in the first place.
It's true there is no alternative to cutting back on public spending. But it is absolutely false to claim there is no other way of doing it. There is a better way - a way that's better for the poor and the sick, for the future economic well-being of every citizen, for the generations that will come after us.
This way has four elements. For the vast majority of people it would be relatively painless, certainly far less painful that what the Government now proposes. The ones who would find this pill hardest to swallow are the Government parties themselves - because three of the elements involve reversing much-trumpeted policies, and the fourth requires them to address something they have consistently neglected over their years in office.
The three policies, which now hang like a millstone around our necks, are:
the commitment to pay 1 per cent of GNP into the National Pensions Reserve Fund, regardless of the economic situation in any one year;
the Special Savings Incentive Accounts scheme, which has proved counter-productive in terms of its original aims;
attacking child poverty by increasing massively the benefit paid to every parent, no matter how well-off they are.
We are not talking small change here. Together, those three policies cost the State nearly €2 billion each year. By reversing them, the need for all the cutbacks in the present Book of Estimates would disappear.
The National Pension Reserve Fund is a good idea. It makes sense to put away something to meet needs that may arise 25 years down the road. But while a laudable objective, it should not be pursued at any cost.
What we are doing is cutting back on a more immediate need - to get the country's infrastructure right - for the sake of paying pensions much further down the road. So we are undermining the very development that is the surest way of making sure we can pay our way in the future.
We should not dismantle the National Pensions Reserve Fund, but we should amend the legislation so we can suspend payments into the fund in times of economic difficulty. That way, we would speed the return of the day when we can provide for post-2025 pensions without crippling today's economy in order to do it.
On the Special Savings Incentive Accounts, I was one who argued back in 1999 and 2000 that the government should prevent the economy over-heating, instead of fuelling it by over-generous tax cuts and other inflationary actions. There was a need to cool down the economy then, but that need has long since evaporated. And unfortunately, the means chosen to achieve it have now turned out to be the worst possible.
Instead of taking steam out of an overheating economy, the SSIA scheme siphons off consumer spending we now need to keep the economy afloat. That siphoning-off in itself reduces the Government's tax take - even before counting the massive cost of the 25 per cent bonus on every euro invested, already running at an annual cost to the Exchequer of €500m.
It is a monumental disaster, and in our present circumstances we simply cannot afford to go on with it. Capping further increases in subscriptions, or making early exit easier, are not enough. We need to stop the whole scheme dead in its tracks.
I don't believe it's legally impossible for the Government to do that. In general, I have observed over 10 years as a senator, a government can do pretty much anything it puts its mind to. And when the choice is between haemorrhaging money from the national finances, and providing enough hospital beds and services for our sick and needy, there is no doubt in my mind as to where the moral imperative lies.
The third policy to reverse is that of attacking child poverty in the most expensive and roundabout way possible - by paying to every parent in the country, no matter how well-off they are, massively increased child benefits. The way to address this is not by postponing further increases in the benefit. It is to target the benefit only to those who genuinely need it.
If this means taxing the benefit, so be it. If it needs a means test, so be it. Either is much less costly than the mistaken principle of paying everyone so that relatively few can benefit.
The true craziness of this policy was highlighted when it emerged that thousands of families use the child benefit simply to pay for their investment in the Special Savings Incentive Accounts scheme. Here are two bad policies feeding off each other - with horrendous consequences for the national finances, and for those citizens who should have first call on available resources.
The fourth element in my approach is the need to get better value for what the State spends. The issue is not just how we balance the books.
One lesson from the boom is that our systems for spending public money are not up to the job. Over the past five years we poured mountains of money into a variety of objectives, most of them desirable and long overdue. Now the money has gone, but we haven't had the results.
The Department of Finance lacks a culture of seeking value for money. Instead it has always aimed to restrict spending as much as possible, and let value look after itself. That approach no longer works. It promotes gross mismanagement of our resources.
Before spending, we need to set out precisely what we hope to achieve. After spending, we need to monitor the outcome to see the extent to which our objective has been realised. It's as simple as that - the kind of good housekeeping that any business does as a matter of course. But it's a discipline that is almost totally absent from our public finances.
Feargal Quinn is an independent member of Seanad Éireann and chief executive of Superquinn