EDITORIAL : THE INDENDENT, IRELAND

        

 

Noble health plans doomed by sceptics

IT goes without saying that the Irish public service will have to do more with less. The national recovery plan intends cutting government spending by an unprecedented €8bn by 2014. Nothing in our past history -- not even the 1980s -- remotely compares.

Health Minister James Reilly is therefore trying to do the right thing when he says he will eliminate waiting lists in the health service over the next three years, despite facing a cut of €700m in health spending this year alone.

We also agree with Dr Reilly when he says he is convinced there are better ways of doing things in the health service. Unfortunately, efforts by his predecessors to find these better ways came to nothing.

A stark illustration comes from 2002. That was the year the National Treatment Purchase Fund (NTPF), now the object of Dr Reilly's attentions, was launched. It was an attempt to reduce waiting lists in the health service by paying to have patients treated privately, either here or abroad.

The health service had been unable to eradicate the waiting lists. Yet that year, the health budget increased by 15pc. It has still failed to eradicate them, despite five further years of double-digit increases and the treatments provided by the NTPF.

There will therefore be a good deal of scepticism about whether the expected reduction in the €85m budget for the NTPF, and the transfer of the money to the new Special Delivery Unit in the Department of Health, is the best way to do more with less.

Experience in Northern Ireland adds to that scepticism. A similar scheme was established there in 2005 and waiting lists fell sharply. But it was backed by the creation of a version of the NTPF. Private purchases were largely discontinued last year and waiting lists have rocketed. They are now proportionately longer than those in the Republic.

If Dr Reilly is able to do what he says, he will deserve all out praise and gratitude. One would feel more comfortable, though, if the Department of Health had been able to build up the necessary expertise without an increase in its budget, and the NTPF continued with its work until it had done so.

We must heed lesson on variable rate borrowing

THE Fianna Fail-led governments of 1997-2010 will live in infamy for their failure to deal with the consequences of joining the single currency. But one of their worst pieces of neglect has largely gone unremarked on -- the failure to do anything about the danger posed by variable interest rates.

That danger has now become a reality for thousands, as the banks increase rates to reduce spiralling losses. Even the lucky holders of "tracker" mortgages, where the interest rate varies only with changes in the basic rate charged by the ECB, have already been hit and more hikes will inevitably follow.

The weight of changing mortgage rates on the economy was a problem before the euro but the single currency greatly exacerbated it. Cheaper money turned a growing economy into a bubble; now dearer money is a stranglehold on any recovery.

Banning variable mortgages for first-time buyers, as suggested by a housing economist yesterday, is a good idea in theory. But it would present enormous difficulties in practice. One of them may partly explain the lack of action from Bertie Ahern's governments. Most of the time, fixed mortgages would be more expensive than variable ones. Buyers, therefore, would have less to spend on the house.

We are not talking about the toxic products sold by the banks where mortgages were fixed for a few years at artificially low rates. Genuine fixed mortgages should be for at least 10 years. They would not be particularly popular.

A second difficulty is that the crisis means it may now be impossible for Irish banks to raise the finance for long-term fixed mortgages. The best chance to reduce the threat posed by variable rates has been missed. Nevertheless, the Government should seriously consider how best to ensure that the resumption of activity in the housing market does not leave another generation of buyers exposed to the interest rate cycle.