What to expect on health and housing issues from next government in power

The next government, whoever forms it, will not tackle healthcare — but the outlook for housing is better, writes Dan O’Brien

IT was always likely that housing and health would be big issues in the election campaign. That is how it turned out, and then some. The next government, whoever forms it, will have to make changes in how it addresses these issues, and be seen to be doing things differently. Visible changes, whether they make an impact or not, will feature heavily in the programme for government.

Before discussing those two issues, consider three big facts about government spending which may not be widely known, but which are relevant to the discussion of health and housing.

1) Amounts: Each year the State spends almost €20,000 for every man, woman and child living in the country. That money goes on health, housing, welfare benefits, schools, roads, public sector pay, local government, and everything else the State pays for. That €20,000 per person gives a lot of scope to any government to direct resources to where they are most effective.

2) Priorities: Only a tenth of government spending is invested. The rest goes on current spending. The current/capital split in Ireland is more weighted towards the former than most other EU countries, but it is shifting back towards investment. During the last boom, investment spending as a share of all government spending was among the highest in Europe. This suggests that the political system is capable of prioritising the longer term over the shorter term, in this regard at least.

3) Vested interests: In Northern Ireland and Britain, weekly earnings in the public and private sectors are almost identical, differing by a couple of percentage points at any given time. That has been the case of many years. In the Republic, things are very different. As of the third quarter of 2019, weekly private sector earnings averaged €721. The average in the public sector was €255 more, or 35pc higher. The Republic’s huge public sector pay premium is the best single piece of evidence to demonstrate the unwillingness of successive governments to face down powerful interest groups. Hardy perennials

“The two biggest blots on the early (Sean) Lemass years were health and housing.” This, from historian Joe Lee’s magnum opus on 20th Century Ireland, shows how these issues are hardy political perennials which have defied solutions too often down the decades. They will, nonetheless, be top priorities for the parties and politicians who will form the next government.

Let’s start with health, not least because it will become even more central to politics if the coronavirus becomes the Spanish flu of the 21st Century.

Last November, the OECD published a profile of the Irish health system. It contained many useful comparisons with other countries in that club of rich and middle-income countries.

One of its findings need highlighting from the get go. “Mortality from preventable and treatable causes in Ireland is lower than the EU average, signalling that public health policies and health care interventions are generally effective.” This is important because the system and those who work in it are subject to excessive negativity. It is not a ‘third world’ system, as is sometimes claimed, and it does a lot of good.

Another important finding is that government spending per person on health is at the higher end of the range internationally, and these figures are not adjusted for Ireland’s younger population. If they were, health spending would be even higher. Claims that the problems with the service are because of a lack of resources don’t stack up.

A study published just last week highlighted, in detail, the central problem in Ireland’s public health system: that more money does not lead to better outcomes. The report by Patrick Malone of UCD’s Geary Institute found that total spending on acute hospital services rose by 27pc in the four years to 2019, while the total number of staff in acute hospital services increased by 14.5pc.

So inputs clearly increased. What about outputs? The total number of inpatient discharges increased by only 3pc between 2015 and 2019, while the national waiting lists for acute hospital services rose by 47pc.

Additional resources are not generating the improvements that they should be. There is no good reason for this. Inputs and outputs can be brought closer into line. But doing so would involve reform of the use of inputs. Reform would discommode those who work in the system.

Political parties know that the public does not appear to connect facing down healthcare workers with a better service — industrial action by nurses last year was met with widespread public support. They also know that if medical procedures are cancelled because of industrial action, public anger will be directed mostly at them.

Any government wanting to introduce reform would have to target areas of change and make a strong and clear case in advance for their plans. It would need a strategy for whatever industrial action was to take place and it would need to hold its nerve over what might be a protracted period.

As the next government is likely to be weak and composed of many different parties and independents, even agreeing significant efficiency-focused reforms is unlikely. Throwing more money at the system is much more likely. Whenever the next election rolls around, expect health to be one of the big issues yet again.

What about housing? The next government will have an easier time of it on this issue than the current administration. That is because the worst of the housing problem is now clearly over.

The number of people in emergency accommodation surged to 10,000 in the years up to mid-2018. Things have since stabilised. The most recent homeless figures for the end of last year show that the number of people were being put up in hotels and B&Bs fell below the 10,000 threshold. It should continue to fall.

The other major problem regarding housing is for the households who rent from private landlords. Rents soared once the economy turned around in 2013.

But over the past year and more things have changed. All measures of rent inflation are showing an easing of increases. Although rents are high, they are no longer getting more unaffordable as pay growth has moved into line with rent growth. The situation as regards house prices is considerably better. Nationally, prices have stabilised, and they have done at a level one fifth below the peak of 2007. With pay rising, homes are gradually becoming more affordable.

Can all this continue? During the election campaign, the political parties were asked where the workers will come from to build the extra houses they all promised. While scepticism is always warranted when politicians make promises at election time, there is good reason to believe that their housing commitments can be achieved.

Past experience shows that Ireland’s extraordinarily open labour market can draw in the workers it needs. In the years up to 2007, employment in construction soared year after year, reaching almost a quarter of a million people. Today, 150,000 are at work in the sector. If the sector increased employment rapidly in a low unemployment environment a little over a decade ago, it can do so again.

With the supply of new homes rising and the track record of being able to attract a lot more people into the sector, housing supply will expand further in the coming years (barring a shock to the economy).

Despite this, housing problems will continue to make news. To show that it is doing things differently from the current government, expect the next government to roll out a series of eye-catching measures of the next 12 months. If it can survive for more than a year and the next election is held in mid 2021 or beyond, expect housing to be less of an issue than it has been in the campaign just ended.

‘Rents soared once the economy turned around in 2013’