Photo credit: Gript
  |   Ben Scallan   |   Comment Ireland

“Massive overruns” in health expenditure despite “poor delivery”

Just because you spend lots of money on something does not necessarily mean you got a better service or product, or that you spent the money wisely.

For example, several years ago, retired boxing champion Floyd “Money” Mayweather decided to invest some of his substantial fortune in a diamond-encrusted watch that cost a ludicrous $18 million dollars. And no, that’s not a typo.

This is not to mention many of his other assorted luxury cars, lavish properties and pieces of expensive jewellery.

So in light of all this, if you asked Floyd “Did you get value for money on those purchases?”, and he responded by giving you a shopping list of all the things he had bought, you’d probably say he had evaded the question. It would seem pretty obvious that spending $18 million quid on a watch, when you can get a perfectly good one for €100, is not great value for an investment. The mere fact that you spent the money doesn’t mean that you spent it in a smart way, or that you got the best deal you could have.

And that is a lesson which the Irish government seems to be learning this week, as the Department of Health is accused of accruing “massive overruns” in health expenditure.

As reported by the Irish Examiner:

“The Department of Health has been accused of tallying massive overruns in health expenditure “against a backdrop of poor delivery on new developments”.

In pre-budget discussions, the Department of Public Expenditure said there would be an effective 20% increase in core health spending with spending overruns only being notified at very late notice.

The department said it had six “key spending concerns”, including the fact it had only been made aware of a major deficit on core spending “in the last month or so.”

In a submission prepared for then public expenditure minister Michael McGrath, officials said the time available to tackle the “gross overruns” in the budget was already running out.

It said these high levels of overspending would put the health budget in a “difficult position” for this year.”

Now, this kind of thing is hardly surprising to anyone who follows politics. After all, wasteful spending is the name of the game with basically all governments.

For evidence of this in our own country, we need look no further than the St. James’ Children’s Hospital, the million euro printer that didn’t fit into the government building, and the rural broadband plan, just to name a few examples.

But it is interesting that just last week, amid the severe crisis in Ireland’s accident and emergency departments, yours truly asked Public Expenditure Minister Paschal Donohoe about his record on health spending.

It’s fair to say that Donohoe, who was Finance Minister for around half a decade, and now serves as Public Expenditure Minister, has had more control over Ireland’s national finances than any other single individual in recent years. Indeed, under his tenure, health spending has grown by many billions of euros per year.

And yet, open any newspaper or media publication today, and you’ll see that many key performance indicators of health, such as waiting lists, overcrowding and trolley figures, are worse than they’ve ever been.

So, we’re spending billions more annually, for results that are unprecedentedly bad. That’s not what most people would call a win, you would have thought.

And so in light of this, I asked if the Minister felt he had received value for money. What I got back was essentially the Floyd Mayweather non-sequitur example from earlier: “We invested in A, B, C, D, E, F, G…”

…as if that had any bearing on whether or not the money was well spent.

And now, not even a week later, we hear from the mainstream news that the Department of Health is experiencing “massive overruns in health expenditure against a backdrop of poor delivery on new developments.” Again, that’s not according to me or Gript – that’s reported by the Irish Examiner.

Listening to Fine Gael politicians, one often gets the sense that they pride themselves on what they believe to be their fiscal prudence. It often seems like they view themselves as the custodian party of the country’s finances, often arguing that their rivals would “wreck the economy” if given the chance (which very well might be true).

But it’s a bit rich to hear that from the same party that does things like, for example, raising the country’s corporate tax rate against the public’s wishes (not to mention their own electoral promises), and then immediately telling us that the same move is going to cost the state billions for years to come.

And bearing in mind that corporation tax is the state’s second biggest source of revenue.

So in other words, they knowingly did something which they promised not to do, which the public hated, and which they knew at the time would hurt the economy.

And this type of thing is not uncommon with the governing parties of this country.

For example, according to figures compiled by Finance Minister Michael McGrath, 35 out of 38 government health and education projects between 2010 and 2019 went over budget, often by millions.

As the Independent reported in 2019:

“The budget overrun in the new National Children’s Hospital is not an isolated incident, new figures show.

A total of 35 out of 38 health and education projects nationwide ran over the agreed price after contracts were signed, figures compiled by Fianna Fáil’s finance spokesperson Michael McGrath show.

These include a 56pc over-run in St Luke’s Hospital, Kilkenny, with the hospital costing more than €7m extra than the agreed costs.”

Again, that’s not according to me – that’s according to the current Finance Minister.

“While the sums involved in the National Children’s Hospital debacle are extraordinary, this data shows the difficulties in managing capital projects do not end there,” he said at the time.

“These figures show a clear pattern of projects costing more than the agreed contract price.”

So how exactly are we supposed to take this government seriously on finances? How are people supposed to accept being taxed to the hilt by individuals who are clearly not good at managing the people’s money?

At this stage one thing is clear: our politicians have a thing or two in common with Floyd Mayweather, and it’s definitely not his fighting ability.

 

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