Tuesday, November 3, 2015

Resources available for public service: how does Ireland compare

An article in The Irish Times today has a surprising opening line:

The share of our income that goes on Government services such as welfare, health and education is very low by European standards.

Surprising because here is the conclusion I came to when looking at public spending on health, education and social welfare excluding old age social protection.

EU Spending

Using a hybrid measure of national income for Ireland (between GDP and GNP) Ireland is the fourth highest spender in the EU on health, education and welfare excluding old age social protection.  It is not what we spend that matters (we spend plenty) it is how we spend that matters.

We can do lots of acrobatics to see why Ireland is below average in the EU when it comes to public spending but one reason stands above all others: spending on old-age social protection.

Old Age Social Protection Expenditure 2

In most countries this is the largest single area of government spending.  There are two reasons why Ireland is at the bottom in this category: firstly, as a proportion of the population, we have fewer older people than every other country in the EU, and, secondly our public pension benefits are flat-rated.

The mean expenditure on old-age social protection for the other 27 countries in the EU is 9.4 per cent of GDP.  That is more than double the Irish level.  If Ireland was at this level in 2013 it would have meant spending an extra €9.5 billion on old age social protection.  To reach the level of spending of the countries at the top (14 per cent of GDP ) would require spending almost €18 billion more.

If other countries have better public services than us (what evidence is there that they do?) it can’t be because they devote more of their national income to them than we do.  Other countries do have far more comprehensive systems of public pensions than we do but in those systems those who make the most contributions receive the most benefits.

Below are some tables that look at the breakdown of spending in health, education and social welfare.  No national income adjustment is made so all the data is by GDP. No commentary is provided. Click to enlarge.

EU28 Health Spending

EU28 Education Spending

EU28 Social Protection Spending

For health and education we have a alternative breakdown by type of spending rather than area. Again click to enlarge.

EU28 Health Spending 2

EU28 Education Spending 2

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