IN THE GOOD old days of the Celtic Tiger, when government spending grew 33 per cent faster than the economy, we were used to budget day giveaways. The likes of the 2001 budget saw massive increases in spending, and in particular the government of the day was prone to introducing long term spending programmes with no particular care given to how they would be paid for in future.
Universal medical cards for the over 70s regardless of means, the ever increasing rates of child benefit and extension of various welfare state giveaways for everything from televisions to travel all featured. During the period when secondary schools were sending notes home to parents about ensuring that kids balanced their studies with part time work because jobs were so easy to come by, we had endless welfare for a small cohort of individuals who just wouldn’t go out and work.
Doubtlessly, there are people who have received benefits that are essential to their wellbeing in this catch-all net. The main benefit of these social programmes, however, is vote winning. Politicians dish out some gravy to as many constituents as possible in order to win votes. The negative side effect of this is that the gravy has to be thinned out to feed so many, and those with acute need are not getting what they require as a consequence.
Medical card cuts
Though government spinsters will deny it, the cutbacks to ‘discretionary’ medical cards is intrinsically linked to the increased cost of providing free GP visits for children aged five and under. They are increasing spending by an estimated €40 million (which, in Department of Health budgeting, means it’ll cost €80m) to fund this programme while next year will see €113m cut from medical cards.
Some of that €113m cutback will come from people who have a card but could afford to go without. But there are too many tales of paraplegic kids or cancer sufferers getting their cards taken off them, genuine hard cases, for it to be realistic to think that the ever efficient government bureaucracy is being careful and skilled in how they go about chopping fat from the budget.
Everyone likes to get something back from the taxman. There are many hard-pressed families who will benefit from free GP care and might view it as just recompense for all the contributions they’ve to make to the running of the state.
Unfortunately that is not how a sustainable welfare safety net works. We all suffer Pay Related Social Insurance to cover off many welfare needs, and the wording is important: insurance. The welfare safety net is supposed to catch us when we fall, and turning it into something that most of the population is entitled to is creating an outlay that we cannot afford and that robs the truly hard cases of the resources they need.
There are more people collecting a cheque from welfare in one form or another today than there are people working and paying income taxes and PRSI. It is very simple logic: you cannot travel far with a cart that has more people sitting on it than there are pulling it.
The welfare safety net
Universal benefits tend to spiral out of control over time. They’re difficult to roll back once introduced and they are tied to demographic forces of nature outside of budgetary control. An entitlement introduced today for under-6s might be estimated to cost €40m, but what will it cost in 15 years do we know? Could be more, could be less. That depends on things right down to the level of how many kids people can have if they get out of their negative equity two bed apartment and into a bigger house between now and then, for example.
The welfare safety net should be an insurance scheme, where those in most difficulty receive help – and we are not left in a situation where, as in the post-2008 austerity budgets we’ve been watching, politically important but dubiously beneficial payments protected at cost to other groups who truly are in need. Carers, the disabled and young people for example have received huge cutbacks, but the suggestion that medical cards for over 70s ought to be means tested prompted a flurry of protest and the measure was rolled back.
That’s not to pick on the over 70s. Rather, I’m picking on people of all ages who earn enough that universal benefits are an addition to their discretionary income rather than an essential payment without which life cannot function normally.
We can still offer free GP visits for people who are hard up without even having an on/off means test. In addition to issuing a card, when people need to bring their kids to a GP but don’t have a visit card they could fill out a quick means test form there and then, get the visit for free and have Revenue and Welfare assess the test after the fact. If the person qualifies, so be it; and that qualification could relate to their circumstances that very week rather than generally over a year. Bills fall due, kids get sick in waves and so on, so circumstances play a lot in assessing whether or not someone can afford a GP visit.
If the person doesn’t qualify, or only partially qualifies, that money could be clawed back over time in welfare payments or tax paid. It would be a sort of a loan from the government to help them get what they need.
There’s plenty of other things government could do to make healthcare more affordable, such as controlling costs in the Department of Health itself. That aside, we should look to move to a system where we provide people with help based on their needs rather than their attractiveness to a political class eyeing up the 2014 Local and European elections.
We should have also learned from the Celtic Tiger years of budgets that giveaways simply lead to runaway spending, and eventually that will lead to more pain and economic trouble than it’s worth.
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.