PERHAPS EMBOLDENED BY the fact that he’s on his way out the door to Europe, Minister Brian Hayes told us an awkward truth during the week: in order to properly defend the 250 or so flashpoints in the State that are major flood risks, ‘tens of billions’ of euros will be needed for construction. The government has apportioned €250 million to building flood defences over the coming years.
The Taoiseach has said that the cost of providing adequate flood defences for Cork city alone is somewhere between €50 and €100 million. Clearly, the urgent need for spending and the money allocated don’t come close to matching up.
Even though we’ve gone through a major fiscal adjustment in our government spending, this wound is entirely self-inflicted. The government has focused relentlessly on cutting capital expenditure on infrastructure so that it doesn’t have to go after any political special interests, leaving no money for essential projects.
Much of government spending is broken down into current and capital headings. Current spending is what it takes to keep the doors open: Anything from salaries and pensions for public servants to social welfare payments or the annual government paperclip budget. Capital spending is what it takes to put the door up on its hinges in the first place – new roads, school buildings, flood defences – and the maintenance to keep them going.
Capital expenditure is often among the most productive part of government spending, white elephant projects aside. There’s no arguing with the benefits to society and the economy of a good road network, new schools and (to keep a theme running) flood defences.
From peak, government has reduced its current spending by 8 per cent. It has reduced capital spending by 62 per cent. For every €100 of voted expenditure, €93.72 will go on current spending and €6.28 will go to the capital budget. In gross terms, capital spending last year was budgeted at €3.43 billion versus €51.14bn for current spending.
Capital spending has fallen so far, near to 1980s levels, that it is now barely covering depreciation of existing assets. A government report on capital spending, “Infrastructure and Capital Investment 2012-2016” points out that 85 per cent of all capital spending currently envisioned is for essential maintenance of existing assets.
At this point, the government is eating up most of its capital spending to replace broken windows and fill potholes. It is sending small amounts of token money to build a few new schools and the like but, given how deep the budget has been, cut these new assets will get funding at the expense of maintaining existing ones.
The reason for the massive focus on cutting back capital spending is simple political expediency. Put simplistically, unions go on strike when you freeze increments and voters get antsy when you start means testing child benefit. People don’t value infrastructure that isn’t yet built as much as they do money that’s already in their pockets.
If and when that missing infrastructure causes a major flood, cue political crocodile tears and a token couple of million thrown to people who can’t get insurance, can’t sell, can’t carry on a normal life.
I come from a school of thinking that says the first job of government is to do what’s right for the country, and get themselves re-elected second. The fact is that there is money for capital spending to defend our most vulnerable cities from the vagaries of Mother Nature. The trouble is that government wants to toss it down the drain to keep a few seats in Leinster House.
The estimated compounded cost of increments in the public service over the next five years will be about €3.75bn, or in other words a sixth year worth of capital spending at current levels. The ESRI economist Professor John Fitzgerald reckons that overstaffing at Irish Water, done to appease unions and avoid layoffs of extra staff now surplus to requirement, will cost up to €2bn over the next decade. That atop the €180m we’re spending to open the Super Quango in the first place.
The Minister for Public Sector Expenditure and Reform, Brendan Howlin, told us recently that the HSE is overstaffed by at least 1,500 administrators who aren’t needed. The Department of Finance reckons that by means testing or taxing child benefit, it could save up to €400m per year by reducing the amount paid to people with other incomes.
There are thousands of individual examples of waste and inefficiency in government spending that have not been addressed. It’s easy to flick a pen and say “we’ve cut another billion off capital spending” and avoid having to touch any of the sensitive issues I’ve mentioned, let alone whatever else is lurking around the place.
We’re not investing enough into new infrastructure in Ireland. Many of our children are expected to learn in nearly uninhabitable buildings, at a time when we’re adding about 10,000 more kids at primary level every year. Many of our roads are, as one famous hand made sign put it so eloquently, in shite. Floods are inundating some of our largest towns and cities so regularly you could set your calendar by them.
Without proper investment into flood defence infrastructure, we might as well abandon these places to nature. I don’t think that’s acceptable. We have the technology and we do have the money. What we lack is the political backbone and will to do anything about it.
Aaron McKenna is a businessman and a columnist for TheJournal.ie. He is also involved in activism in his local area. You can find out more about him at aaronmckenna.com or follow him on Twitter @aaronmckenna. To read more columns by Aaron click here.]
Main photo by @Alanpbarry
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