From top: Michael Noonan presents Budget 2016; Michael Taft

Overall high spending may not tell us much about the efficiency of a public service, but low spending can tell us a lot about why our public services compare so poorly with other countries.

Michael Taft writes:

Budget day and everyone will be looking for the favourite detail (tax cut, pension increase) while the Government attempts to mould the good news angle.

And throughout all this the media will be forced, through time and news cycle constraints, to report headline numbers and instant commentary. Deeper analysis will come later and by then we will all have moved on.

One of my favourite budget details is the general level of expenditure on public services, or government consumption.In the past government ministers have expressed the aspiration to have first class public services – everything from health to education to police and fire services and all the rest.

However, we are so under-funded compared to other countries, it is hard to see how this will be achieved anytime soon.

We trail behind the mean averages of EU-15 countries and our two peer groups: Northern and Central European economies, or NCEE (this excludes the poorer Mediterranean countries) and other small open economies (Other SOE – Austria, Belgium, Denmark, Finland and Sweden).

To show how far behind we are, this is how much we would have to increase spending on public services:

To reach the EU-15 average: €4.9 billion

To reach the average of Northern and Central European economies: €9.1 billion

To reach the average of other small open economies: €11.4 billion

A €9 billion increase just to reach average of Northern and Central European economies – that is a big, big number. Even with a government determined to provide the range and quality of public services enjoyed in countries on the continent, it would take a long time to realise that.

So what should we expect today?

We will get a lot of piecemeal announcements (x amount for health, y amount for education and so forth) and a few ‘sweeties’. But you will have to go towards the bottom of the budgetary outlook document, past pages of tables and numbers, to find the expenditure on public services.

But here’s one bottom line: spending on public services would have to increase by €450 million just to keep pace with inflation. Even if spending exceeds that, it may only be enough to keep pace with inflation plus demographic pressures (rising elderly and school-going population).

It will be tight – with tax cuts, increases in social protection (both in rates and increased pensioner numbers) and investment to be financed out of the same relatively small pot.

There is the legitimate complaint that spending levels is no guarantee of quality. Inefficient spending can waste a lot of outlay.

For instance, the Netherlands has experienced a substantial long-term increase in health expenditure due to the extra costs from privatising their health insurance system. This was the model that our last Government sought and failed to introduce, thankfully.

In Ireland, there is a lot of data to suggest we spend more on health than most other EU countries even though we benefit from a much lower elderly demographic (this will change over the next decade).

We spend one percent more than the average of Northern and Central European economies; we should be spending less – though the claim that we over-spend is sometimes greatly exaggerated.

Are there inefficiencies in the health system? Yes. Is it due to the high level of private profit in our public health system?

Our spending on hospital services is low but spending on outpatient services is very high – this might suggest perverse private incentives. Is it because of our geographical density which requires more spending on physical structures and staff than more highly dense countries? Is it due to weak management structures? We need a more sophisticated evidence-based debate on this issue.

One thing is certain – overall high spending may not tell us much about the efficiency of a public service, but low spending can tell us a lot about why our public services compare so poorly with other countries.

While we shouldn’t expect any big increases in public services today given the fiscal constraints and the demand on other expenditure, we should expect that the Government will announce that it intends to close the gap with the European average over the next 5/7/10 years; that is determined to provide the same quality and range of public services that our fellow European citizens enjoy.

Or is that expecting too much?

Michael Taft is Research Officer with Unite the Union. His column appears here every Tuesday. He is author of the political economy blog, Unite’s Notes on the Front. Follow Michael on Twitter: @notesonthefront