Where your money REALLY went

AT A wedding earlier this year, I got chatting to a Dublin mum about the cost of education. She casually mentioned how her local school is asking parents to come in and clean the classrooms. Apparently, she is not the only one. Reports are coming in of cash-strapped schools around the country resorting to all sorts of measures to make ends meet, including parent cleaners.

Another father reported: ‘My son’s class was told to bring in hand sanitiser and washcloths as there was no soap available for the year in the boys’ toilet.’

His comment was contained in Barnardos’ annual survey of backto-school costs, which are now up to €745. One of the biggest hits parents take is the ‘voluntary’ contribution to help schools pay the shortfall in running costs that is causing all the trouble.

If they don’t pay up, they might find their children deprived of lockers or given notes to bring home, as if Mum and Dad were bold boys and girls who needed a good ticking off.

All this hassle and disruption is bad for our children’s education but it’s not the fault of schools. They are simply not getting enough money from the State.

Free education is a constitutional right, yet Government stumps up just 54% of school running costs, a recent report revealed.

The grant per pupil was slashed in 2015 to €170 per year. That’s 97 cent per day.

It finally received an increase in yesterday’s Budget but this was a derisory 5% – less than five cent per pupil.

One frustrated school manager previously said it wouldn’t pay for a Snickers bar. It still won’t, and parents up and down the country will still be hounded to meet the shameful shortfall in funding our schools.

Yet Education Minister Richard Bruton has boasted: ‘We are now spending more on education than ever before.’

SPENDING on education will hit €11billion a year after another €500million boost. Over three years, the increase has topped an unprecedented €1.5billion, so where is all that money going? The same place it goes in every democracy: to whoever applies the most pressure on the Government.

Of this year’s €10.3billion education budget, 72% goes on pay and pensions and only 20% on running schools. The same pattern is repeated across the public service, where much available extra money goes on pay under fierce pressure from unions.

The Government plans to spend €1.2billion over the next three years to increase public sector pay by between 6.2% and 10%. Public sector pay is an important issue. It accounts for 37% of all our spending and almost bankrupted the nation not so long ago.

Whether we can afford such pay increases, or whether they are fair compared to private sector pay, is an important debate we need to

have. It should in no way be interpreted, as it often is, as an attack on all public sector workers, for whom I have the greatest respect (much reinforced recently by spending two days in a labour ward with the wonderful midwives and doctors in the Rotunda Hospital). I know fantastic teachers and am grateful to gardaí for what they have to put up with.

Yet public sector unions also do a brilliant job – in pursuing pay claims. And it’s important for people to know why all the extra money pouring into State coffers from a buoyant economy is going, if it’s not going into their pockets.

In 2008, the Troika spotted public sector workers were paid way more than their brethren in other countries and those the private sector here. State workers earned €48,376 on average, compared to €33,073 in the private sector.

It was unfair – and it was ruining us. In 2009, the State collected €43billion but spent €58billion. Almost half what came in went on public sector pay and pensions.

Politicians and public sector unions cooked up a deal where new entrants were paid less than existing staff. This was seen as the most humane way to introduce badly needed pay reform without provoking strikes that would cause chaos.

New entrants were paid less but that’s what they agreed to accept when they applied for the job. The idea was that over time, overall pay in the public sector would gradually reduce without harsh pay cuts. Allowances were also to be addressed by Brendan Howlin in a new role as minister for public expenditure and reform.

The Public Service Pay Commission, which is headed by a former union official but is generally fair, recently produced a report showing that retention and recruitment in the public sector was not as problematic as the unions would have us believe.

However, it did recommend an increase in certain allowances to ensure we retain key staff.

That’s fair enough. But there are over 1,000 allowances across the public sector for things such as stamping letters, buying footwear and underwear(!), maintaining bicycles (not necessarily used for work) and replacing toner in photocopiers. Some Government departments pay an allowance to staff for having children.

The masters of the dark arts of these labyrinthine allowances are the gardaí, who have over 100 of them. In a move worthy of Flann O’Brien’s mind-bending masterpiece, The Third Policemen, they even have bicycle allowances, and allowances to compensate for not getting allowances any more – when working abroad or when they no longer get a uniform allowance.

In the end, the €1.5billion allowances bill remained largely intact and any cuts mainly affected new entrants, and soon will be reversed.

Next came the public relations battle. In this campaign, pay hidden in a multiplicity of allowances was a huge advantage. Who has the time to wade through them all to find out if a pay claim is valid or not? Voters won’t.

YOUNG gardaí, we were told, couldn’t manage on starting pay of just €23,000. Fair enough, but just one allowance, for unsocial hours, can add between 25% and 30% to earnings. The real starting pay level is more than the €28,000 an average graduate gets. That isn’t that bad for someone in their early 20s trained for a year in Templemore, who, unlike those the private sector, will see pay inexorably rise.

The public sector pay PR campaign then focused on emotive words such as ‘restoration’ and ‘equality’. It didn’t mention that we were being asked to ‘restore’ public pay to levels that bankrupted the country, and nor did they acknowledge the unequal treatment of private sector workers, paid 25% less than their public sector counterparts.

Indeed, public servants thrive on finely tuned inequality through the system of increments. This sees the pay of a new entrant teacher go from €34,485 in year one to €35,259 in year two and so on, up to €63,196 in year 25, plus allowances of up to €40,000. You don’t hear too many teachers complaining about that.

After putting up token resistance, the politicians eventually caved in to public pay demands.

This is what happens. On one side of the table are people understandably fighting tooth and nail for their own pay. On the other are politicians doling out other peoples’ money. There is usually only one winner.

The economic picture looks rosy enough for now but that could quickly change, as it did in the late Noughties. The cost of houses, shares and debt are all once again at tipping point. Global debt, both public and private, is now at an alltime high of $182trillion, almost 60% higher than it was in 2007. And the next US recession is officially pencilled in for 2020 by banking giant Morgan Stanley.

Irish house prices are at near boom levels and have started to stall, and even fall, in some places. Meanwhile, inflation, oil prices and interest rates are rising while Brexit is heading towards us like a runaway train.

Ireland has the third biggest debt burden in the world per person, €185billion, on which we pay interest of nearly €11billion a year.

Every cent in extra pay will be funded by extra borrowings. That €3,000 a year extra we’ve agreed to pay a public servant doesn’t end there. We may have to pay it, plus further exponential increases, for 50 years. He or she effectively cannot be fired or have their pay cut (unless the country is bankrupt, and even then only minimally).

Excessive pay commitments, which seemed reasonable at the time they were made, have ruined public finances around the world. In the US, for example, the state and local pensions hole is now $5trillion. California, home to Google and Apple, is now a basket case, periodically unable to meet its wage bills.

MANY cities are going bust because they have to fork out half their tax income in pay and pensions. They underwent the same process that we experienced here with politicians eventually getting worn down by pressure from unions and caving in to their demands.

And we’re not far behind now, with pay gobbling up 37% of our income – and rising.

The pay gap between public sector and private sector pay has closed but it is still extremely high.

Our total bill for public pay will soon surpass what helped trigger our bankruptcy, as the actual number of public servants returns to 2008 levels. Ten years on from the financial crisis it is, as a wag once quipped, deja vu all over again.

Having abjectly lost the fight, the Government is now in cahoots with the public sector. The Government does not want to highlight this issue as it will expose how much it agreed to fork out.

Press releases from ministers will highlight how much they spend on items other than pay.

And with little money left to spend or give away, Budget Day has proven to have been an even bigger charade than usual.

Finance Minister Paschal Donohoe goes through the annual rigmarole of pretending to dispense tax cuts and lavish funding on public services. He created an illusion of largesse and pulled a few rabbits out of his hat, but after meeting the cost of public sector pay increases, there is little to go around. Welfare increases went up by slightly more than inflation – but tax cuts were an illusion.

Instead, he tries to fool us with phantom tax cuts and spending increases that are gobbled up by inflation and tax hikes elsewhere.

Meanwhile, stealth taxes such as ‘voluntary’ contributions will continue make up the abject shortfall in spending on public services.

Next year, we will wonder why we are no better off and have to put up with sub-standard services.

But at least now you know who to blame when you’re asked to clean and provide soap for your local school.