A flumoxxed physician? Finance Minister Brian Lenihan

The search for public spending cut opportunities is reported to be ongoing as the Irish Government has left on annual leave in the week of the Galway Races. Civil servants are drawing up lists of where the axe should fall and across the country, every senior to middle-ranking local authority official worth his or her salt, has provided summer non-jobs for a child or relative. Small beer one may say but add it to about 15 of the 20 Minister of State non-jobs and a multiplicity of other feather bedding programmes, it would be significant. Of course, it would be foolish indeed to expect anyone to propose cuts that would hurt themselves.

When it came to public spending during the boom, the Government took the suggestion of the renowned British  economist John Maynard Keynes in the 1930's, too literally:"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."

There were plenty old bottles filled and the news yesterday that the Live Register had a seasonally adjusted increase of 10,600 to 226,000 and in the year to July, an unadjusted increase of 63,647 (+36.5%), adds to the Government's public spending woes.

The numbers on the Live Register have averaged 203,600 in the first seven months of the year. To achieve its revised target of 210,000 for 2008, the Government would have to contain the numbers on the register to an average of 219,000 for the remaining five months of 2008.

It costs the Government €11 million to finance unemployment benefits for every 1,000 claimants for a full year

"Given these figures, we stand by our assertion last month that the Government forecast of an average of 210,000 will prove too conservative, even accounting for some immigrants leaving Ireland and as a result coming off the Live Register.," Lynsey Clemenger, economist at Ulster Bank said on Wednesday.

In the Sunday Business Post last Sunday, Pat Leahy wrote that in a memo, circulated to government departments, officials were told they must make cutbacks across a range of activities and administrative costs.

Suggestions for savings include:

• use black-and-white instead of colour printing

• publish annual reports online rather than in hard copy

• book the cheapest airfares for official travel

• use civil service staff rather than outside consultancies

• provide filtered water rather than bottled water for staff

• send office notices using email

• switch off lights.

Leahy said that there will be no job cuts in the public service, despite the closure and amalgamation of dozens of agencies and semi-state bodies to be agreed in the coming weeks.

Instead, employees in the agencies affected will be given roles in their parent government departments if they are not needed in the new merged agencies.

Official sources said that no redundancies were anticipated in the planned rationalisation of agencies, which will be outlined by Minister for Finance Brian Lenihan by the end of September. Government departments have already been supplied with a list of draft proposals.

Each government department has been instructed to provide a list of capital projects of more than €10 million in value which could be deferred if a policy decision was taken to do so.

The absorption of staff from defunct quangos coupled with an effective embargo on hiring will mean that essential jobs will remain unfilled or take long periods to get approval while others will have SFA to do.

But what should we expect from the same ministers who had convinced themselves that they had found the formula for a permanent prosperity?

There certainly will not be any significant reform and bet on it, with stirrings of an improved economy in a few years and a general election on the horizon, the band-aid will be stripped away and the spending throttle opened again.