Jim Power April 16 th 2011

1. Inclusion Ireland AGM‘Finding Solutions to Providing Disability Services in a Changed Financial Environment’ Jim Power April 16th 2011

2. The Economic Realities • Global recovery still on track after sharp recession • Irish economy has experienced drastic economic collapse • Banking system totally dysfunctional • Some bright spots in economy, but prospects for recovery not good • Difficult adjustment process has a long way to run – will entail considerably more pain

3. The Fiscal Realities • We spend €19 bln more than we raise in taxation • Deficit of €7.1 bln Q1 2011 • Debt servicing costs €4.8 billion in 2010, set to rise dramatically even with targeted adjustment • Public finances not sustainable

4. The Financial & Political Realities • Ireland has few friends after decade of arrogance • Massive fiscal adjustment €30 billion 2008-2015 • Commitment on sovereign & most bank debt • Bank bailout to cost €70 bln – could it go higher? • National debt could rise to €240 bln by 2015 –size of black hole in banking system still uncertain • Arithmetic does not add up • Is debt re-structuring inevitable? • External assistance required to make it work • Future in the hands of outsiders • Corporation tax rate issue is hard to understand

5. The Fiscal Imperatives • Current levels of borrowing not sustainable • Tax base will have to be broadened • Expenditure will have to be cut • Further public sector pay cuts? Not really a viable option • Focus will have to be on numbers • Value for Money will have to drive all expenditure • Focus should be on ‘outputs’ rather than ‘inputs’ • Very challenging fiscal outlook

6. Visions for Disability Sector • ‘A vision of a society where people with disabilities have sufficient support to participate fully in economic and social life and have access to a range of quality supports and services to enhance their quality of life & well-being’ • ‘the creation of a cost-effective, responsive and accountable system to support the full inclusion of all people with disabilities’ • Governance – ‘to provide strategic direction, ensure objectives are achieved, manage risks and use resources responsibly and with accountability’

7. The Facts (1) • €1.6 bln provided by HSE to fund disability services • €1.2 bln through non-profit organisations who deliver 80% of all disability services • 281 such bodies ~ community & residential settings • HSE funding supports 53,326 persons (8,997 in adult residential care, 24,707 adult day services) • 25 >€10m, 75 €1-€10m, 683 grants averaging €100,000 to a range of smaller non-profits • No independent inspection of residential centres

8. The Facts (2) Nov 2004-Jan 2005 42 non-profits examined • No audited financial statements from 12 €100m in HSE funding in 2003) • 6 reconciliations of funding to reported income had been carried out • One received €288m 2000-2004 ~ financial statements for 4 years not presented • No formalised review procedure • Serious deficiencies in documentary evidence Is this good enough?

9. What is required • Service agreements should be in place • HSE should have power to enter non-profit to check delivery ~ independent inspection of standards • Financial reporting norms & key disclosure requirements should be put in place • Funding should be targeted at area of greatest need • Funding should be informed by standard costs • Proper resource allocation model • Efficiency & effectiveness should be the drivers • Quality of services, Value for money for taxpayers & protection from possible liability by an breach of fiduciary duties

10. Issues in Disability Sector • How much money is spent? • Who spends the money? • Are there too many agencies and un-necessary duplication? • Broad & diverse range of services provided • Is cost exacerbated by focus on too many ‘health professionals’? • Expectations of people with disability have changed • Many are living longer – increased costs • Serious fiscal constraints will remain a sad fact of life

11. What should those who pay the bill expect? • Aim should be to deliver more and better for people with disability • Minimise cost of provision – give people what they want in a less expensive way – is a specialised service always necessary? • Greater use of primary care • Eradicate inefficiencies – is consolidation or merger of complementary services an option? • Provide greater freedom of choice & self-determination • Tight governance structures • The HSE provides €1.6 billion (75% to non-profit organisations) – it should be free to check delivery of services in terms of quantity and quality – quality control a basic right

12. Key Conclusions • Very challenging economic background & outlook • Pressure on public finances will remain very acute • Need to get more from less • Focus on outputs rather than inputs • Value for money will have to become the guiding principle • Needs of customer has to be the key priority – not service providers or social partnership addicts • Is current model sustainable?

13. A Final Thought! ‘the most efficient way of spending money is to spend your own and the least efficient way is to spend other people’s’ Milton Friedman

14. Thank You?