Professor John McHale:

If I were to say what the health budget should be, I would be going beyond the role of the Irish Fiscal Advisory Council. We recently published an analytical note on the problems of overruns and cost control in the health sector. We really look at it from a more structural sort of perspective. On the one hand, there seems to be a sort of pattern of unrealistic forecasts for health. This is combined with what we refer to as a soft budget constraint in health. All of this essentially means the health managers who are told "this is your budget and you cannot overrun on it" realise that if they overrun their budgets, they will be bailed out, essentially. That has an effect on the incentive structure. That can feed back and lead into the setting of even more demanding targets, which in turn causes the soft budget constraint phenomenon to become even more pronounced. They feed on each other. Structural reform of expenditure management in health is certainly needed if the problems mentioned by the Deputy, which have been persistent over recent years, are to be overcome.