Hard choices and a considerable management challenge in delivering public services face the Government. That is the central message from the latest review of Ireland by the Organisation for Economic Co-operation and Development. The Paris-based researchers have presented a number of proposals for new levies which will be highly controversial, such as water charges, third-level fees and local property taxes.
Whatever the merit of each proposal, the central message is that the days of easy choices - when strong growth led to buoyant Exchequer revenues - are over. Managing in more difficult times will require better setting of priorities, more rigorous management of spending programmes and the examination of new revenue sources, while not abandoning the incentives offered by relatively low levels of income and corporate taxes.
The OECD researchers have no unique insight into the Irish economy. Their forecast that growth will remain at reasonable levels this year, before a pick-up next year, is based on hopes for an international recovery which may or may not prove correct.
The real value of the report is in the comparative perspectives it provides, as the OECD assesses developments and policy here in the light of what it sees elsewhere. For example, the organisation draws on its international experience when it states that significant improvements are needed in public expenditure management systems in the Republic. Among the most important, it believes, would be the adoption of a "top-down" budgeting system, where money is allocated in respect of overall priorities, replacing the current reliance on the annual haggling where each department looks for a little extra.
The report gives a mixed review of recent efforts at improving public-sector management. In this context it underlines the importance of developing the link between public sector pay increases and the modernisation of the public service, promised as part of the benchmarking process in the new partnership agreement. As the report points out, the cost of benchmarking will severely limit room for other policy measures in the 2004 Budget, making it imperative that the payments are only made in return for increased productivity.
The report has other recommendations which merit discussions, many relating to the introduction of competition in key areas of the public and private sector. However if the Government is to take one message from the report, it is the need to focus on value for money in the provision of services.
It is not short of advice on how to do this - three reports on the health service, for example. The time has come for the Government to come forward with thought-out strategies and get on with implementing them. The manner in which it has been conducting the third-level fees debate does not inspire confidence. The next test will be its plans to reform the health service.