The dust has now settled after the long-expected Cabinet reshuffle and the new administration will be turning its attention to the many challenges on their desks. No doubt, as expected, the greatest challenges will be faced by our Housing and Health ministers.
Current spending includes ongoing liabilities like salaries and welfare payments, while capital spending is on fixed assets like buildings or roads. Secondly, current spending is unlike capital spending because it is notoriously difficult to cut once it has been allocated. Even during the period of severe cuts in the late 1980s, all of the work was done on the capital side. In 1988, capital spending was cut by an enormous 23%, while current expenditure continued to grow every year.
Note the inexorable rise in spending. Even the deep recession of 2008 produced only a minor blip. Spending in the aftermath of 2008 was essentially flat until 2015. By contrast, it grew from €88bn to €124bn between 2016 and 2021. After inflation, this represents growth of over 30% in just six years. Ministers will rationalise large spending increases on the basis that they can only do anything meaningful in Government, and that the opposition would be even more reckless. Garret FitzGerald made exactly this argument when he sided with Labour over his Finance Minister, Alan Dukes, on the level of the 1983 Budget deficit.