The Government is facing heavy political criticism and considerable public anger in the wake of the spending estimates for 2003, published yesterday. The coalition partners deserve it all.
First, through gross mismanagement, they allowed spending to run completely out of control over the past couple of years; had they kept a tighter rein, the adjustment required to get spending back on track would have been much less painful. Then, ignoring the worsening financial situation, they made a host of election promises which are now being hastily abandoned, or postponed.
Politically, the strategy of the Government parties has been breathtakingly cynical - promising much during an election campaign, then cutting back sharply in the first year of a new administration. Economically, it has been ham-fisted - adding fuel to the economy's fire during a boom and then cutting back as activity slows.
Having created the mess in the public finances, the Fianna Fáil/Progressive Democrat government is now setting out to fix it. There is simply no alternative but to slow sharply the rate of spending growth. Because total spending is currently increasing at a rate of 15- 20 per cent, there was never going to be an easy way of doing this.
Many of the cutbacks will hit the vulnerable. The better-off can pay for private health insurance, but many lower-income families - who were encouraged to believe that they would qualify for a medical card - will struggle to pay for healthcare, or suffer due to the cutbacks in the drugs refund scheme. The wealthy can afford private education, while many local schools must make do with completely inadequate facilities.
Final judgment on the overall economic stance will have to await the publication of the Budget. Certainly strong action was needed to get spending back in check and this has been taken. However something is amiss when the vast bulk of the current spending increase is going to higher pay for public servants and actual service levels to the public are suffering. And the major cutbacks in capital spending may have a cost in terms of future growth.
Close consideration must now be given to the wider - and central - issue of obtaining value for money from public spending. Spending has soared in recent years, but there has not been a commensurate increase in service levels to the public. Meanwhile, much of the increased Exchequer investment spending has been eaten up by higher inflation and bedevilled by delays.
The first job of this Government was to restore stability to the public finances. A much more fundamental challenge is to overhaul the public administration which delivers services and invests money on behalf of the public. The challenge of delivering services efficiently is now all the greater as resources tighten.