I welcome Mr. Fitzpatrick, the chairman of the implementation body. I invite him to make his opening statement.
Public Service Agreement 2010-14: Discussion with Implementation Body
Mr. P. J. Fitzpatrick
I thank the committee for inviting members of the implementation body. We said on the last occasion that we would be happy to return when we had completed the second review of the public service agreement.
I welcome the opportunity to brief the committee again on the ongoing implementation of the agreement and, in particular, the second report. I am joined by the secretary to the implementation body, Mr. Colin Menton. As I mentioned on the last occasion, I am here as the independent chairman of the body; I am not representing management or trade unions or their agendas. I will seek to provide the committee with a fair, impartial and objective assessment of progress made or deal with other issues the Chairman or members wish to discuss with me. I will provide the committee with a short overview of the second annual review report and then deal as best I can with questions or other issues the Chairman or members wish to raise.
On a point of clarification, there is sometimes confusion about this, although I realise that is not the case here, but it is not the role of the implementation body to make decisions on reforms or the structures that need to be put in place to deliver them or on the size and scope of the public service. That is the role of the Government and management in the various Departments and the hundreds of organisations throughout the public service. The agreement can and must enable decisions that have been made by the Government or management to be implemented with the co-operation of staff and their representatives in a climate of industrial peace and full co-operation. I continue to be encouraged by the support and commitment of my management and union colleagues on the body. They have been unstinting in their determination to make the agreement work, often when there are difficult issues for them to confront.
As members will know, under the agreement, the implementation body is required to carry out an annual review for the Minister and the Government which must quantify the sustainable savings achieved and the progress being made in each sector in implementing the change and reform agenda. The review was completed in April and May this year and the report was presented to the Minister and the Government and published in June. We plan to carry out the next review in line with the calendar year; therefore, it will be for the 9 month period ending in December, as that will make it easier to make comparisons with Budget Statement outcomes and so on.
We made a number of key findings. We have concluded that the agreement continues to be a very effective enabler for the implementation of the reforms and changes provided for in the agreement and the more recent Government public service reform plan which was reported on separately a few weeks ago. A key role of the agreement when it was drawn up was to enable a sustained and large reduction in the size of the public service. We noted that a very substantial reduction in numbers, some 11,500, had taken place during the review period. That significant reduction presented particular challenges for both management and staff during the period which, in the view of the implementation body, were responded to effectively. The committee will recall that when we appeared before it previously there was concern about the retirement of some 8,000 staff in the first two months of 2012. In particular, the redeployment provisions of the agreement, its other major feature, have been critical in enabling public service organisations to maintain and develop services with significantly fewer staff. We are satisfied from all of the evidence we have seen in the second year of the agreement that management, staff and trade unions are co-operating with the reductions in numbers and the redeployment provisions, some of which are not often that easy because personnel can be and have been redeployed up to 45 km away.
The agreement continues to be successful in ensuring the large reduction in numbers and the necessary and fundamental reform that flows from it have been and continue to be achieved in a climate of industrial peace, notwithstanding the magnitude of the task of maintaining services with almost 30,000 fewer staff than in 2008. That is not to imply for one minute that it is all plain sailing. Issues do and will always arise when one is implementing major changes and, if they did not, there would be something wrong with the ambitions set in terms of change. As I said on the last occasion, one of the benefits of the agreement and its dispute resolution provisions is that they ensure when disagreements arise, they are dealt with speedily and in a timebound way - there is a six week period for consultation and a four week period for the LRC-Labour Court process.
It is also important to note that the outcome of the Labour Court process or arbitration in the case of the Civil Service is binding on both sides. There is no opt-out if issues are referred to a third party. That, in its own way, creates an incentive for management and trade unions to reach agreement in face to face negotiations. For example, I chair the Garda sectoral group because its members are not and cannot be part of the ICTU. I also chair the Defence Forces sectoral group. The new Garda rosters which were introduced in April and represent a massive change across the country were the first change made in 50 years. The change was successfully negotiated without reference to a third party; there was no involvement in terms of mediation or arbitration. My involvement as chairman was minimal; management and unions did the work. Other changes such as the introduction for the first time of a performance management system in the Garda; the transferring of compensation injury claims from the courts to the State Claims Agency, which involved a saving of approximately 40% in legal and medical fees; co-operating in outsourcing in the operation of speed cameras; and civilianisation, which has been implemented at passport control at airports and in other areas have all been agreed to in face to face negotiations and not once did anything have to be referred to a third party. There is an incentive for management and unions to negotiate, but there are some issues that end up being referred to a third party because management and unions cannot resolve them and the benefit is that the outcome is quick and binding. In other words, there is no hiding place in obstructing change under the agreement.
Turning to pay and non-pay savings, we found that the agreement facilitated the delivery of further significant savings. The Exchequer pay bill has been reduced by almost 18% between 2009 and 2012, net of the pension related deduction. We found that in the second year pay bill savings amounting to €650 million were facilitated by the agreement. We also recognised that the Government had announced that it was going to fill some front-line posts. We checked with the Department of Public Expenditure and Reform what the limit might be and it advised that there might be recruitment to fill up to 3,000 front-line posts. We then allowed for this. In other words, the figure of €650 million was reduced to €521 million to allow for the fact that there might be recruitment. We did not want to publish figures that might by year end be overstated by the equivalent of 3,000 staff. As of now, that provision of 3,000 has not been utilised; there are about 2,000 fewer under the ceilings set. I do not know what the figure will be by the end of the year. There will certainly have been an increase in terms of the number of teachers in September in the education sector. The figure we reported and the one we have used is €521 million which is probably on the conservative side; it may well be different when we have the end of year figures. We also found that the agreement continued to leverage non-pay savings. Savings equivalent to €406 million on an annualised basis were reported to us.
In summary, in the first two years the agreement has delivered €810 million in sustainable pay savings and €678 million in sustainable non-pay savings, giving a total of €1.5 billion. The target is that by 2015 the Exchequer pay bill will have been reduced by €3.8 billion, or €3.3 billion net of expected increases in public service pension costs. We were asked on the last occasion to consider not doing this by including more than a footnote in the second report.
We have done that. We have set out in the report the year-on-year increase in pension costs. They do not necessarily arise from the agreement but as a result of the numbers retiring or leaving the public service for whatever reason. We included that and we have a table in the body of the report showing the year-on-year increase. The pension costs are €3.8 billion gross with an additional pension cost of approximately €500 million by 2015 from 2009. The reason we took 2009 as the base is because that is when the public service pay bill peaked, when the last phase of the previous pay agreement kicked in. We have given many examples in the report. I will not go through them all. There are many examples of new roster arrangements that match peak demand to services. I mentioned the Garda. There are new rosters in the prisons. We have extended working days and new rosters in laboratories, radiography departments and many nursing units. Discussions have taken place at the LRC with consultants on extended working days and weekend working. There are also new rosters for non-consultant hospital doctors. There has been much development around more efficient and more cost-effective rostering.
I mentioned redeployment. Again, another 200 secondary teachers and 950 primary teachers have been redeployed. Before the agreement there was no redeployment of second level teachers at all. Significant costs have been avoided because teachers are being replaced. There is no moratorium on the recruitment of teachers. A significant cost is avoided with the redeployment of 950 primary and 200 secondary teachers. We are not claiming that as a saving. We are simply making the point that if the redeployment provision did not exist then more teachers would have had to be recruited. A total of 4,500 people were redeployed or reassigned throughout the health service during the year. Hundreds of administrative staff in the Civil Service and State agencies have been redeployed, some to other Departments to meet increased demand, such as the Department of Social Protection, others where agencies have numbers that are in excess of their authorised numbers and they have to reduce their numbers so staff are being redeployed. There is a range of such movements.
Quite a bit of reconfiguration is going on. We have a lot of examples in the report about areas such as mental health, child care, services for the elderly and health. The closure of the Army barracks and the collapse of three brigades into two in the Defence Forces has resulted in a significant reconfiguration that has impacted on thousands of Defence Forces members. There has also been much reconfiguration of local offices in the Departments of Social Protection and Agriculture, Food and the Marine, Teagasc offices and the courts.
Work practice changes have been progressed. Terms and conditions have been standardised such as annual leave, sick leave and pension arrangements. The committee is probably aware of the recent Labour Court ruling on working hours in the local government sector. VECs are to follow. Streamlined, centralised and shared services have been progressed in many sectors. We have given examples of those. In education, the single student grant, for example, replaces four separate grants previously administered by 66 different agencies. One body, the Dublin VEC, administers the scheme and online facilities are available for people to use. It has simplified the maze students and parents had to go through previously.
The centralisation of the medical card processing system has taken place. A national procurement model has been adopted in the health service. More national procurement frameworks have been put in place by the National Procurement Service. The HR shared services of the Civil Service is significant. Members might have heard about it. We are talking about savings in the order of €12 million per annum and a reduction in staff numbers of approximately 149 following the development of a shared services centre.
When we were before the committee last year there was discussion about evidence relating to productivity and how it was faring with reduced numbers. This time we sought to include information on activity levels. I will not go through it in detail but members will see from the report that in virtually every sector demand has increased, which is what one would expect in a recession in any event. I refer to demand for social welfare services, health services, employment and services generally. That is evident in the Prison Service and in Revenue. We have given examples and I am happy to elaborate on them but I will not go through them in detail. There are many good examples in the report.
On the pace and ambition of change, notwithstanding the progress that has been reported, the body is of the view that the pace and ambition must be systemic and fully address the fiscal challenges that lie ahead, which are still significant. There is no doubt that the establishment of a dedicated Department of Public Expenditure and Reform, and the reform and delivery unit within it, together with the external recruitment of staff with the skills to drive shared services, procurement and contract management has been of huge benefit to the implementation body. There is a complementarity in that much of the change agenda under the Croke Park agreement and the reform agenda are separate, but there are overlaps as both require the buy-in of staff and unions and co-operation. We, as an implementation body, have found the establishment of a dedicated Department to be very helpful and to be of huge assistance to us. However, as we say in the report, the Department alone cannot drive the reforms for the entire public sector. We are talking about well over 20 Departments and hundreds of agencies. Managing change in one organisation is a huge challenge. Managing change in hundreds of organisations simultaneously is doubly so. The Department does need the support and active engagement of top management in all sectors. We have repeatedly emphasised the critical role of management across the public service in terms of devising ambitious plans for change and leading that change.
Our view is that the sustainability of the agreement will be measured against its ability to accelerate the pace of change and its potential for extracting further Exchequer savings, both pay and non-pay. Clearly, a priority issue for the agreement would be to support the achievement of the Government’s 2015 target for public service numbers of 37,000 or reducing the overall number to 282,000. It is a challenging target but we believe it can be done. The recent collective agreement between public service management and the public service unions on voluntary redundancy terms is an important development, if it is required. Further and more fundamental reform will be necessary to ensure that services are maintained to the greatest extent possible as numbers continue to reduce. We made it clear in our June report that a range of priority change initiatives still need to be urgently progressed. Further roster changes, in particular for nurses and consultants, are required. Skill mix in the health service is an area that requires attention, as is benchmarking under its support staff programme
We have seen the example with shared services when the business case was produced for HR shared services and the scope for savings. There are many other areas where there is scope for savings across the entire public service. We have been driving this forward and some sectors have taken it up and are moving on it more quickly than others. In any sector where there is a large number of bodies doing pretty much the same work, there is no reason that they should all have their own HR departments, payroll and pension sections. We have seen a good example with the Civil Service shared service model which has been driven by Paul Reid and his people. Work has started on it and we have seen the business case savings on that which are significant.
Performance management is still a big issue, and it must be driven right across the public service. The recent review of the performance management system certainly does give it more teeth. It addresses some of the issues we discussed here on the last occasion about the power of managers to discipline the public service and the fact that they do have the same power as managers elsewhere. There are positive aspects to the performance management system. It has developed a system for those who are doing a good job. There are, of course, thousands doing a good job so I would not like to give the impression that there are not many people doing a good job. The revision of the sick leave scheme is a positive aspect as well.
We need to see further changes to work practices, particularly where there are outdated working arrangements, extended working hours, and there ought to be efforts to ensure the availability of resources to front-line services by making full use of the redeployment provisions of the agreement. We need to see continuing co-operation on the rationalisation of structures, organisations and offices. Any agency rationalisations or amalgamations that have been progressed so far have enjoyed full co-operation, including in respect of the redeployment arrangements that are very often necessary to enable those rationalisations or amalgamations to happen. We give some examples in the report.
More effective inter-agency co-operation must be considered. One considerable area that the Department of Justice and Equality is examining is co-operation between the courts, Garda and prison service, particularly with reference to the utilisation of fewer prison officers and gardaí.
Let me return to a point I have mentioned here before and at many fora, that is, the need for more online services. These are critical. They involve providing a better service to the customer or user and reducing the work for the staff in organisations. There is still much potential in this area. Much progress has been and is being made. However, there can be no let-up in this area.
In summary, it is clear that the agreement continues to deliver, but there are challenges ahead. Industrial peace has been maintained. When I last appeared before the committee, we continued to insist that action plans for savings and reform be sufficiently ambitious, both in their scope and timeframes for delivery. We have just completed a series of meetings with the top management of other sectors, although we must still meet representatives in the defence area. We emphasised once more the importance of accelerating change through reviewing action plans. We all know the budget challenges will not be any easier and that they will be significantly more difficult. We were frank in our report in saying it is not sufficient for management to rely on the reforms delivered to date, however significant or welcome they might be. We recognise there is further change required in light of the continuing difficult circumstances confronting the economy.
The agreement continues to provide a very effective framework. I have seen nothing frustrated or stopped by the unions or staff. Where there are disputes or issues that cannot be resolved genuinely, there are fora to achieve this quickly. That is what is happening where disputes arise.
I assure the members that the body will continue to do what it can to increase the momentum around the agreement. We will also be working to ensure that all sectors play their part. I thank the Chairman for the opportunity to brief the committee on recent developments. I will be happy to deal with any questions they have on implementation. I know they will be taking up the progress report with various sectors and Accounting Officers. As I said at our last meeting, this is mutually beneficial. I thank the Chairman and members.
I thank Mr. Fitzpatrick. While the implementation body is not accountable to the Committee of Public Accounts, the information it gives us is of great assistance to us as we do our work with the various Departments and agencies. I thank the delegates for attending.
I welcome Mr. Fitzpatrick and Mr. Menton. The terms of reference of the implementation group cover driving the implementation of the agreement, yet the targets for reform are set by the Government and implemented by management. How does the body drive the implementation of the agreement? I am trying to figure out the role of the body. There is certainly a dispute resolution mechanism, which is extremely valuable in achieving quick resolutions. Could the witnesses elaborate on the implementation of the agreement?
Mr. P. J. Fitzpatrick
We have four management and four trade union representatives on the body. Therefore, it is a very useful forum. We have similar arrangements in place for each of the big sectors, which total eight. We recognised at the beginning that if we were to become a dispute-resolution body, we would just get bogged down in industrial relations issues, and the focus would not be on the change agenda at all. We met the Labour Court and Labour Relations Commission and everyone was very clear that the dispute resolution procedures that would be used would be their well-tried, well-trusted ones. They work very well. I compliment both the Labour Court and the LRC on the manner and the speed with which they have handled the Croke Park referrals to them.
We have an interpretation role. If issues arise over the interpretation of issues in the agreement, they can be submitted to us. There have not been very many of them. Our main role is to try to ensure that whatever obstacles arise are unblocked We meet sector management regularly to try to make progress. We are not working on this full-time. We are non-executives and all those concerned have full-time jobs. However, we meet regularly and meet sector management. We do, therefore, have a role in driving and reviewing the action plans, challenging the action plans we get, sending them back, as we have often done, and ensuring we face up to new expenditure challenges. The budget, for example, always brings new challenges that are not provided for in the Croke Park agreement. The detailed steps that were to be taken are set out in a series of appendices at the back of the agreement. Virtually all of them have been taken. The agreement has moved on, therefore.
The big ticket item was reducing the number of staff and facilitating the Government to do so. It also involved ensuring the redeployment arrangements worked to support that process. This is still a significant feature. Many of the points in the individual sector plans have been addressed. The agreement has moved on and every budget brings a set of new challenges. Take the area of defence, for example. The Army barracks closures were handled under the Croke Park agreement. At the moment, the Department of Defence, with the staff associations, is managing the collapsing of the three brigades into two. This is not easy because it involves much movement and retraining of people. Our role, which is challenging, is to drive progress and report to the Government on that.
Mr. Fitzpatrick stated he sometimes sends back action plans. I assume management sends an action plan to its sector and the implementation body sends it back stating it is not ambitious enough.
Mr. P. J. Fitzpatrick
That is right.
In the discussion with the Minister, the ability of the public service to manage was raised. Many people have been promoted through the ranks without necessarily having been given management training or without their having management skills. In Mr. Fitzpatrick's work, does he find there are sufficient management skills and ability to implement change? Does this present an obstacle?
Mr. P. J. Fitzpatrick
I have no doubt there is a challenge in that regard. There are a couple of points I would make on it. First, it is a long time since the recession preceding the current one. I believe I made the point on the last occasion that many private sector mangers face the same issue as those in the public sector. There are many people in management roles who never managed in a recession and who never had to look people in the eye with bad news. This is not just a public sector phenomenon. This is the first time many managers have managed in a recession, and it is not easy.
Managing change requires skills, so there is no doubt that training is required. This is covered in the reform plan of the new Department and it is being pursued by some other Departments.
A management development programme is required and change management skills certainly are required, some of which can be taken in from outside but people need to be developed within the service as well, as a combination is required.
However, we are coming to the end of the agreement at the end of next year. Mr. Fitzpatrick suggests these skills are needed and must be put in place but if we are approaching the end of the agreement and the skills are not in place, it gives rise to the possibility that three years have passed in which the maximum amount of change possible has not been achieved.
Mr. P. J. Fitzpatrick
It has been just two and a half years now but in fairness, some areas have put in place training programmes and some sectors have been quite proactive. I was recently invited to attend the launch of a human resources strategy in Teagasc, which had a superb training programme. That was more than a year and a half ago. Another issue is external recruitment, which is also assisting in areas in which particular skills are required, such as shared services, for example, or areas like contract management, procurement or information and communications technology. In any organisation undergoing major change, training and development is always an ongoing issue.
Part of the implementation body's remit is to drive implementation and review progress. However, a lot of the stuff we get lists incredible achievements. I am quite a supporter of the Croke Park agreement and what it aims to achieve but while savings and so on are listed, progress is not measured in lists but in targets. One measures progress by having a target and assessing how well one achieved it. However, we do not appear to have that type of measurement. How does Mr. Fitzpatrick define progress in respect of the body's terms of reference?
Mr. P. J. Fitzpatrick
First, as I stated earlier, the appendices to the agreement contained lists of things to be done for each sector. Obviously, we have been tracking progress against those lists and in most sectors, virtually all of those are done. The other big one on which we were able to track progress is the reduction in numbers and in reducing the pay bill. When the agreement was drawn up, that was the big issue. At that point, the target was a reduction of 25,000 by 2014 under the then Government's four-year recovery plan. It subsequently became a reduction of 37,000 by 2015 under the new programme for Government. Consequently, we track the numbers on a quarterly basis. On the other reforms, such as shared services or the more organisational reforms, we track the action plans. Before carrying out our review, we must get progress reports from all the sectors on what progress they are making against the action plans. At the same time, we seek new action plans for the following year.
If someone is falling behind on progress, what happens? What is the consequence of not fulfilling one's action plan?
Mr. P. J. Fitzpatrick
Certainly, we will challenge them. We will and have challenged them very strongly. Obviously, this is a big agenda and a tough one and I assure the Deputy we have tough meetings with the managements. This happens every year with some sectors.
The public sector encompasses a huge array of services, divisions, Departments and so on. Mr. Fitzpatrick should classify which sectors or Departments give the most co-operation and the least co-operation to the body. He should indicate what those sectors are and where the problems arise.
Mr. P. J. Fitzpatrick
First, on the reduction in numbers, there has been full co-operation across the board although people do not really have a choice in this regard. On redeployment, there has been full co-operation and full engagement with the agreement. As for the areas around which we would like to see greater urgency, we have identified shared services, for example, as the big one. In sectors such as local government and education, which are ready-made for shared services, there is no reason for loads of organisations to be doing the same work. In this regard, members may have seen the recent review but the local government sector has now put in place a dedicated office and has identified 29 projects for shared service potential, which range from major projects like payroll and pensions and human resources down to items such as waste permits, for example, which have been centralised in a single county for all the counties in Ireland. I would say the big one is education, where there is much scope for shared services, in that there are a lot of third level colleges doing pretty much the same work. While some work has been done in that there is some joint procurement and so on, there is big-ticket stuff there. I note the new reform unit in the Department is driving this with the different sectors. However, if the Deputy asked me about the area for the biggest savings that needs more acceleration, this is one big area. The other one is online services. Very often, people wait for a big expensive system to put in online services but this is not always required. For example, when the second house tax was introduced, the local government sector had that up and running within weeks. Very often, it does not cost a fortune to put in place online services. Sometimes, people think it needs a major IT system when it actually involves quite a modest investment. The new single student grant facility was implemented very quickly.
Mr. Fitzpatrick has identified the third level sector as one in which there could be greater scope. I assume there have been meetings between the implementation group and the third level sector to push that agenda, which obviously has not happened. What is the main sticking point and why is there a drag in the third level education sector?
Mr. P. J. Fitzpatrick
I am not saying it has not happened. My point is we would like to see it happen quicker.
What does Mr. Fitzpatrick mean by "happen quicker"?
Mr. P. J. Fitzpatrick
We certainly meet the education sector. There is a sectoral group within the education sector and in fairness to the third level sector, it has people participating in that. I am not saying there is not progress but I am simply saying we would like to see more speed in that regard.
While I am aware Mr. Fitzpatrick is an independent chairman, why has such speed not been achieved to date in the education sector?
Mr. P. J. Fitzpatrick
These are big projects and putting in place shared services is not-----
Mr. Fitzpatrick has listed local government, which also is a major sector, as having 29 projects and which is moving swiftly in this regard.
Mr. P. J. Fitzpatrick
Yes.
What is the difference? What is happening in education that is not happening in local government?
Mr. P. J. Fitzpatrick
I believe the local government sector has now put in place a dedicated project office to do it and this probably is what needs to happen in some other sectors as well.
Okay.
Mr. P. J. Fitzpatrick
To do these things, one needs dedicated resources and this can be seen with the new Department. When the dedicated resources are put in place, things begin to happen. The human resources shared service has moved very rapidly. I reiterate that shared services are major projects that do not take place overnight. However, they are worth it.
As a final question, essentially the Croke Park agreement is an industrial relations agreement between the Government and the unions for industrial peace in exchange for no pay cuts and co-operation. As such, it only works for as long as both sides are of the same mind. What is Mr. Fitzpatrick's view of the appetite for or the continued acceptance of the agreement on both sides in the public sector? I refer to the appetite to continue to work it and beyond that, the appetite perhaps for an extension or re-negotiation of a new contract in the future.
Mr. P. J. Fitzpatrick
While I will leave the latter point to the employers and trade unions, from where I sit the level of engagement and co-operation by the trade unions and the management is excellent. I would be misleading the committee were I to state otherwise. We have four excellent people from the trade union side on the body who really take the agreement very seriously. They resolve the issues that arise on their side. My secretary, who is with me, will confirm that, as chair, I have encountered no difficulty with either side in terms of their desire or ambition. It really has been exemplary and I have dealt with unions for more years than I care to remember. However, another important point to remember is that by and large, trade unions do not go out to cause trouble. Very often they get blamed for something they have never been asked to do. One must be careful in this regard. In my experience, and I dealt with unions in a number of different positions, when they understand what is sought and the reason for it, they are highly practical and this has been my experience in respect of the Croke Park agreement. In addition, members will have heard some of the people on the body speak before Oireachtas committees and in the media.
They are under no illusions. They know the scale of the problems confronting the State. They are upfront about that.
I thank Mr. Fitzpatrick and Mr. Menton.
I welcome Mr. Fitzpatrick to the committee. I have a few general questions. The implementation body is to be in place from 2010 to 2014. The one question I cannot get answered by anyone is on what date it finishes in 2014.
Mr. P. J. Fitzpatrick
I am not sure I can tell Deputy Connaughton either. All I can tell him is that the agreement was concluded initially in March 2010. Clarification was sought and the Labour Relations Commission was involved again. That process ended in June 2010. I was asked to chair it in July 2010. There is no date in the agreement. There is nothing in the agreement that states what date.
Was Mr. Fitzpatrick told when his job will finish?
Mr. P. J. Fitzpatrick
No. Obviously, the agreement will only survive for as long as it continues to deliver and as long as there is co-operation with it. I am around industrial relations long enough to know that things can be fine today and something can happen tomorrow out of the blue. Let us be under no illusion that industrial peace can never be taken for granted. It is never a given. It has to be worked at and preserved. As regards when the agreement might end, I would have thought probably the end of next year or early 2014. It is really a matter for the parties.
The point I have been trying to make is that-----
Mr. P. J. Fitzpatrick
There is no actual date.
-----if it is considered to be working and there was to be a renegotiation of it, we would want to know what the finish line would be before those negotiations would start.
Mr. P. J. Fitzpatrick
I am not a party to the agreement. If you like, I am a creation of the agreement. That issue is really a matter for the employer and the trade unions to address. I am not trying to be unhelpful but it is really outside my scope.
We must wait and see.
Mr. P. J. Fitzpatrick
Yes.
I understand the body is meeting the Taoiseach and the relevant Ministers today and that all Departments were to come back to Mr. Fitzpatrick, I would imagine by today, with other potential savings they can make. Have all Departments come back to Mr. Fitzpatrick?
Mr. P. J. Fitzpatrick
They were not to come back to us. The Secretary General of the Department of Public Expenditure and Reform wrote to all Secretaries General asking them to come back to him. I understand that has gone to the Minister and the Taoiseach and they are meeting the implementation body this afternoon to discuss that. We do not yet know. We have not yet been briefed on what has come back.
Is it that the Department will decide whether each individual Department has come up with enough change and enough savings and it will be Mr. Fitzpatrick's job to enforce it?
Mr. P. J. Fitzpatrick
It is certainly the job of the agreement to facilitate implementation but we do not yet know what is in those. We would expect that, in due course, whatever has come back will be reflected in revised action plans under the Croke Park agreement in any event. As of today, I do not yet know what has come back. There is a meeting this afternoon.
Can we expect an announcement soon after that as to what each Department is expected to carry out?
Mr. P. J. Fitzpatrick
We will only know that after we meet the Taoiseach and the Minister this evening.
Last February, quite a number of staff left the public sector. Can Mr. Fitzgerald tell us how many after that date were rehired and how many of them are currently still in those positions?
Mr. P. J. Fitzpatrick
I do not know the number who were rehired. In relative terms, it was not huge. Some areas had more than others. On that particular issue, we have explicitly said in the report that our view is in line with the official policy that it should be the exception rather than the norm.
As the implementation body, would Mr. Fitzpatrick not expect to have those figures as he was controlling the staff who were leaving the public sector? I accept there were certain emergency cases, such as teachers in education who had an examination year class. For instance, I know of one example where a person who left in February last got a job back in the examination centre in the Department of Education and Skills. I do not consider that exceptional or very important. The Department had months to plan for that, and yet that individual got back into that job. One should consider the level of unemployment in the country. Does anyone have the set number of figures as to how many staff were rehired?
Mr. P. J. Fitzpatrick
We certainly do not have the detailed figures on the numbers. The numbers are determined by the Department of Public Expenditure and Reform. Each Department is given a ceiling that it is instructed not to exceed in employing the numbers. On the management of those numbers, our job is to facilitate the reduction in the numbers. We do not micro-manage the day-to-day management of the numbers. We know because we get the returns at the implementation body. Returns are done from all Departments and all agencies to the Department of Public Expenditure and Reform on the numbers. I think they are done every quarter. That is the only way we can track whether the numbers are likely to meet the targets in the programme for Government required to enable the State to meet the budget. This agreement cannot operate in isolation from the budget. It is key to ensuring Departments and agencies are able to manage with less money in pay and non-pay terms.
I would imagine, considering he chairs the implementation body for this agreement, that Mr. Fitzpatrick should have been afforded those numbers and how that was working within the different sectors.
Mr. P. J. Fitzpatrick
Not necessarily. It is not our job to micro-manage. We certainly expressed a view in the report, which was strongly in line with the official view, that the rehiring of staff who had retired should be the exception rather than the norm. With teachers, that was very understandable. Where teachers were teaching classes that were doing examinations, of course, there could not have been disruption. The fact that announcement was made very quickly and very early, way back when talk about the February departures began, did a lot to allay parents' fears that students might be left high and dry and killed off a lot of fear and worry on the part of parents of children doing examinations. That was perfectly understandable. Other than that, our view is that it should be very exceptional rather than the norm for the very reasons Deputy Connaughton stated, that is, the numbers who are unemployed.
Who is used to verify that the savings have been made? Is it simply the implementation body or is there an external body brought in, and what is the story with that?
Mr. P. J. Fitzpatrick
I will take the issue of pay first and deal with the two matters separately. When the implementation body was set up first, we decided very deliberately on the issue of pay bill savings that we would use the figures of the Department of Public Expenditure and Reform. Those are the figures that are provided to the troika and, as far as we are concerned, those are the only official figures. Otherwise, we could have had a situation where we would get sectors giving us one set of figures, the Department's figures would be different, and the figures would be all over the place. For that reason, we decided very deliberately from the outset that we were going to use only those figures, and those are the figures we have used on pay.
The non-pay figures are sent to us with the review by the Secretaries General from each Department. We have to accept those because, obviously, we cannot go out and check each one of them. However, last year we did engage accountants to verify - I would not call it a full audit - the four sets of savings that had been reported to us, and this year we had a different set of accountants who verified four projects. In all eight of those projects they verified that the savings that had been reported or had been achieved were being achieved or would be achieved, were based on accurate information and that they were satisfied that where there were forward judgments, the assumptions underpinning them were sound. To begin to audit everything would become so expensive that it would-----
What was the cost of that audit?
Mr. P. J. Fitzpatrick
The audit this year cost about €31,000.
Has that to be done twice a year or once a year on only four?
Mr. P. J. Fitzpatrick
No. We select the number of projects before we do the review. We published that this year with the review. It is a separate report. This one was done by Grant Thornton. Last year it was done by MKO accountants. It is not an audit in the conventional sense. It is more of a verification. I say that because I would not like to mislead anyone, but it is a verification. In any event, Departments' and agencies' budgets have been reduced and they have to do a lot of this stuff to cope with their reduced budgets.
I understand that issues arose for the Department of Agriculture, Food and the Marine in regard to undervaluing. Why did that happen?
Mr. P. J. Fitzpatrick
Either the Department of Finance or the Department of Public Expenditure and Reform have a formula for calculating overhead costs for closing offices and reducing numbers. The first factor was that Department of Agriculture, Food and the Marine did not use that formula. The second factor is that it calculated pay based on mid-point in the salary scales, whereas nearly all the staff were at the maximum point. In the event, however, the savings were understated.
By how much?
Mr. P. J. Fitzpatrick
The formula provided for 40% of total salary cost to value overhead cost. The actual amount of pay savings based on Grant Thornton’s estimate was in the region of €17.5 million, and €26.7 million for the following year, whereas the Department reported €17 million and €22.8 million. The figure is not insignificant but it was understated rather than overstated. It was technical in the sense that 40% is a technical accounting issue but the use of the mid-point of the salary scales was not a technical issue.
Can we be confident that the same error will not happen again?
Mr. P. J. Fitzpatrick
Hopefully, as long as it is not overstated.
An understatement does not make it correct either, however.
Mr. P. J. Fitzpatrick
It does not make it right but we would be more worried if the figures were overstated.
It is not the first time that figures were understated.
Mr. P. J. Fitzpatrick
The other reason for the error is that Departments and agencies do not know when the auditors will come knocking on their doors. Any project reported to us is liable to be selected for audit. People know we do this every year and we have tried to select projects from the major sectors. Departments and agencies are on notice that anything they report to us could end up here.
I welcome Mr. Fitzpatrick and Mr. Menton. It is extraordinary that the Minister could not clarify the mystery of the expiry date in the Chamber yesterday and the witnesses cannot help me on it today. I will approach the problem from a slightly different perspective. Approximately how much time elapsed from the Government's decision to commence negotiations on the agreement until its conclusion? Was it three months, six months or nine months? How long did the process take from start to finish?
Mr. P. J. Fitzpatrick
At that stage I had no involvement.
I am aware of that. It has nothing to do with Mr. Fitzpatrick. I am simply asking whether he has an idea about it. I accept that he may not know.
Mr. P. J. Fitzpatrick
It could be three months or nine months. It depends on management's agenda.
I ask about the agreement rather than how it is being operated.
Mr. P. J. Fitzpatrick
I apologise.
Approximately how long did it take to negotiate?
Mr. P. J. Fitzpatrick
It certainly took six months, if not nine months. We tend to forget that it came in the wake of pay cuts.
That was September 2008.
Mr. P. J. Fitzpatrick
It came at a time when there was considerable sensitivity. For example, staff in the passport office and the Department of Social Protection were on work to rule. The environment was difficult at the time and I suspect it took six or eight months. I am answering off the top of my head because I was not around.
The expiry date seems to be one of the secrets of Fatima. Nobody seems to know about it.
Mr. P. J. Fitzpatrick
Next year is mentioned in some quarters.
Yesterday, the Minister for Public Expenditure and Reform indicated that it is generally understood to be around the end of next year. Are the issues of increments and allowances mentioned in the agreement and what is Mr. Fitzpatrick's opinion on them? Is it proper to deal with them as part of the change package?
Mr. P. J. Fitzpatrick
There is nothing specific in the agreement about increments or allowances. It is a matter for the employer and the trade unions in the first instance. I am wary of discussing the matter at present because I am the independent chair and I do not want to compromise my position with either side in the event that it comes before the implementation body.
It could come before the implementation body.
Mr. P. J. Fitzpatrick
It is largely speculative at this stage, although I understand a circular has issued on certain allowances. The agreement provides for dispute resolution procedures.
I ask Mr. Fitzpatrick to explain the procedures. The public is familiar with the Labour Court. Is a separate mechanism provided for under the agreement or can disputes be fast-tracked through the Labour Court? What happens if a Department wants to introduce a change but the trade union does not agree?
Mr. P. J. Fitzpatrick
That is a good point. The agreement provides for a consultation period of six weeks to avoid procrastination and it is up to both sides to ensure adherence. If the period lapses, it is because nobody is pushing the issue. Other time bound procedures then come into play, including a four week period for the Labour Court and the Labour Relations Commission. If it is under the Croke Park agreement those timelines are applicable and the decision is binding on both sides. If a dispute goes before the Labour Court outside of the agreement, the time limits do not apply.
I have come across cases in which public staff were asked to relocate by managers who argued they were not protected by the Croke Park agreement. What reforms or changes to practices are taking place in the public service outside the remit of the agreement and who decides whether a change is covered by it?
Mr. P. J. Fitzpatrick
Redeployment of staff is certainly covered by the Croke Park agreement. To give an example, disputes in the health sector go before independent adjudicators rather than the Labour Court. The decisions of these adjudicators are binding on both sides. Similar systems have been established in other sectors. The number of issues that are not covered by the agreement is very limited. I am struggling to think of anything.
If a manager wanted to close a branch or office, what would happen?
Mr. P. J. Fitzpatrick
That would be part of the reconfiguration of services and would be covered. It is possible that certain legacy issues arose prior to Croke Park.
Mr. Fitzpatrick referred to disputes that are outside of Croke Park.
Mr. P. J. Fitzpatrick
Very few should be outside of Croke Park.
How many cases have come before the LRC or the Labour Court - two, ten or 300?
Mr. P. J. Fitzpatrick
The number is definitely higher than ten. I do not know the exact number offhand, although it is not as high as we originally expected. When we met the LRC and the Labour Court, there were concerns that they would be overrun with cases and would not have the resources to cope with them. That has not been the case, however. As we saw with the laboratories, there were cases in which individuals faced a serious loss of income.
It was the same for radiographers where people were losing between €10,000 and €15,000 a year. There was one recently with restructured ambulance services. What tends to happen is that there is one issue which has ten elements. Very often seven are agreed to in face to face negotiations and one gets stuck on two or three, which end up going to the LRC. In other words, everything is not referred. We have encouraged them from day one to try to give as much as possible in face to face negotiations. There is a risk for both sides because whatever comes out of it, they have to live with it. Sometimes it may suitable people to live with it-----
Was the halving of sick leave entitlements from 2014 a Labour Court recommendation?
Mr. P. J. Fitzpatrick
An element went before the court at the end.
The opening paragraph on page 9 is confusing. It reads, "Clearly, a priority issue for agreement will be to support the achievement of the Government's 2015 target for public service staff numbers of 282,500". The body is beginning to believe it will have a role in 2015 if it is saying this.
Mr. P. J. Fitzpatrick
No, we are saying the 37,000 reduction has to be achieved by 2015. The agreement is critical to enabling this to happen. That is not all going to happen in 2015; it is happening today and will happen tomorrow.
Will the implementation body be around to see it out?
Mr. P. J. Fitzpatrick
We do not know. The numbers reduction is ahead of target. There is a scheme in place to deal with it eventually if there is a residual figure.
I refer to the targeted redundancy package mentioned by the Minister. Mr. Fitzpatrick states, again on page 9: "However, the recent collective agreement between public service management and the public service unions on voluntary redundancy terms is important". To what does this refer?
Mr. P. J. Fitzpatrick
The voluntary redundancy scheme that is intended to be used in a targeted way, if necessary.
Is this the targeted redundancy agreement referred to by the Minister in the past few days? Is Mr. Fitzpatrick saying there is agreement on it because the trade unions seemed surprised?
Mr. P. J. Fitzpatrick
No, what has been agreed is the terms of a scheme.
With the HSE. Will Mr. Fitzpatrick do the committee a favour? Will he arrange to send to the committee a copy of the agreement that will be the final word on this?
Mr. P. J. Fitzpatrick
I will do that.
We are told the HSE term is three weeks pay for every year of service, plus statutory redundancy of five weeks.
Mr. P. J. Fitzpatrick
It is three weeks pay plus statutory redundancy.
Therefore, the framework is in place, but who goes for it has yet to be decided.
Mr. P. J. Fitzpatrick
Exactly, the decisions about who goes have not been made.
Mr. Fitzpatrick used the term "enabler" a number of times. Should the body not be a driver? An enabler is able to say, "We are here if you want us to help you."
Mr. P. J. Fitzpatrick
What I said was that the agreement was an enabler and the role of the body was to drive the agreement. It is not a passive role
The distinction between the agreement and the body's implementation role is good. Mr. Fitzpatrick stated, "The level of co-operation and engagement between the employers, the Government bodies and trade unions is excellent." This is a good phrase for some, but it is a worrying one for others. He also described the engagement as "exemplary". People outside will interpret this as being too cosy. When I hear of two bodies on different sides of a table describe their relations as "excellent" and exemplary, that creates the perception among the 1.5 million people outside the public service that perhaps the relationship is too cosy and the agreement is not being driven hard enough.
Mr. P. J. Fitzpatrick
I take the point, but that is not what I meant. I was talking first about the four management representatives and four trade union representatives on the body with me and my role in chairing it. They are the ones about whom I was talking. There is no doubt that there are difficult issues, but the only point I am making is that nothing has happened yet that has threatened the agreement on the industrial relations front and given the scale of the reductions and changes, that is significant. I also chair the Garda sectoral body, for example. When the new Garda rosters were introduced, there was not one word in the media. No unions were complaining and the rosters were introduced almost unnoticed under the radar. That would not have happened before. Part of it is a realisation of the times we are in. Trade union officials know how tough and difficult things are, but it is a good example of something big that was introduced virtually unnoticed. It was introduced nationwide on the same day.
I welcome Mr. Fitzpatrick back to the committee and thank him very much for his presentation and the work the body is doing. I will touch on a few areas about which he commented to colleagues and a number of matters in the report. He referred to the rationale used in the change to the Garda rosters. I agree that it was a massive change and have witnessed the huge difference it has made in my community. He said this would not have happened before and the fact that it is happening now is a tribute to the Croke Park agreement. However, it should have happened previously and the normalisation of such change is a move to where we should be and perhaps is not the achievement it is made out to be. The Garda rosters had not changed for 40 years and I acknowledge fully that it is a gigantic change. However, this has not changed since the 1960s and the country has changed beyond all recognition. Perhaps this is not the strongest case that can be made to recognise the change.
Mr. P. J. Fitzpatrick
The reason I mentioned the Garda sector generally was that it was an example where both sides had managed to deal with all of their issues without going to a third party, which was something we were encouraging. The rosters should have changed, but they did not. The reality is that it was a big issue because changing rosters was different from any other change that could be implemented, particularly in any area in which 24-7 cover was required. People's lives are often built around rosters, including their partner's working arrangements and child care arrangements. One, therefore, is not just changing something in their workplace; one is changing their entire domestic life also. That was the big challenge with the Garda rosters. That is why roster changes tend to be more problematic than most other changes because they are intrinsically linked with people's home lives. One tends to find this in the health service and any sector in which people work around the clock. It was a big change in the Garda.
The other thing is that a number of members have commented, as the Deputy has, on the increased visibility of gardaí when they are needed. This has come back to us from several quarters.
It is noticeable, but I made a broad comment.
The benchmark against which we evaluate change needs to be higher than the lack of change that took place in some areas prior to the Croke Park agreement. Having a new roster is a big achievement. However, given that it had not changed in 40 years, I would have sought a higher benchmark than the lack of change. Does that make sense?
Mr. P. J. Fitzpatrick
I know the point the Deputy is making. When I mentioned that particular one it was mainly an illustration of something very complex that was done without third party assistance. That was the message I was trying to get across.
I fully accept that point.
Mr. P. J. Fitzpatrick
On the point the Deputy makes, there was a very interesting article written by Professor Roche an IR specialist in UCD. If the members of the committee were interested we could get a copy for them. It was around that issue of change and the amount of change or otherwise.
I wish to return to an area I mentioned on the previous occasion that Mr. Fitzpatrick was here, which is the idea of devaluation of non-pay savings. I acknowledge that subsequent to Mr. Fitzpatrick's appearance here in March, the implementation body published its June report. I was pleased to see greater itemisation of non-pay-related savings than I had seen to date. Pages 7, 8 and 9 itemised the savings and outlined where the figures came from. Am I correct in saying that the September report-----
Mr. P. J. Fitzpatrick
No, that is a different report.
That was my first question. I wanted to ask if the September report was a sequel to the June report or a separate report altogether.
Mr. P. J. Fitzpatrick
To clarify that, I mentioned earlier the complementarity of the public service reform plan and the Croke Park agreement. I think the report the Deputy is referring to is probably the public service reform progress report, which is issued by the Minister, Deputy Howlin, and his Department in September.
That came out in September.
Mr. P. J. Fitzpatrick
That is separate.
It is different from this.
Mr. P. J. Fitzpatrick
It is totally different in the sense that, of course, one needs the same people co-operating and all the rest, but that is a progress report on the reform plan that the Minister, Deputy Howlin, published back last November.
I am glad we have clarified that matter. However, my point still stands in that I can see progress in the itemisation of non-pay savings because that was a question I put to Mr. Fitzpatrick the last time. I return to the point of verification, a point we discussed. Paragraph 2.6 of the report outlines the four sample validations that were selected for evaluating the non-pay saving element. To the best of my understanding, the second point listed, the implementation of a national single procurement model in the HSE, is the biggest ticket item of the non-pay savings identified across that period. The third-party evaluation of it picked the big-ticket item of the €430 million. This was something of which I was critical in March and it has changed. I wanted to acknowledge that.
Is Mr. Fitzpatrick still satisfied that the evaluation methodology is as broad as it can be for logging these? I will give an example to bring it to life. On Tuesday evening at a meeting, which is now famous for other reasons, we had a discussion with representatives of the HSE. The most interesting part of the meeting came at the very end of it when we had a discussion with Mr. Tony O'Brien about the new consultant contract and the saving of €200 million. His perspective was interesting. He cautioned against saying that the new consultant contract would automatically deliver a saving of €200 million. His point was as follows: the consultants will work for different hours and they will see more people at different hours. While that is the right thing to happen, of itself it will generate an on-cost of which one must be aware as we work through the year. With that in mind, are we adopting the right approach in evaluating the non-pay savings resulting from the Croke Park agreement?
Mr. P. J. Fitzpatrick
We got some very helpful suggestions that last day, which we tried to take on board. We did try to itemise-----
I acknowledge that.
Mr. P. J. Fitzpatrick
We appreciate that. There was also the pensions issue which we were much more transparent about, if one likes. We did not intentionally put in the footnote. What is happening as well is that the reporting to us is improving. This is the second report. The reporting to us is improving all the time as well. On our reporting, obviously we are learning as we go along as well because this was only the second report. We did try to take on board the suggestions that were made here the last day.
Members should not forget that the trade union people on the body would have knowledge of what is going on out there as well. It is not just the management people who have knowledge of what is going on out there on the ground. Certainly from the evaluations that have been carried out we have no evidence whatsoever to suggest that what we are getting is not correct.
On the issue of the consultants, we have not been given any figure yet as to what might materialise from the consultants. So we have got no figure on that yet from the Department.
I wish to make a suggestion in that regard. Up to June the annualised figure for non-pay savings is €407 million - that is in the June report. This area is crucial for the credibility of the entire Croke Park deal. People who are not in the public service will be looking to the value of the other savings and reforms that have been made. We could be telling those people more about our evaluation of those non-wage savings than the three bullet points we have here.
Mr. P. J. Fitzpatrick
We can take that.
I was at pains to acknowledge that the inclusion of the three bullet points and the items that had been picked represents significant progress since the last time we met. However, we need to do more of that.
Mr. P. J. Fitzpatrick
We will take that on board.
I was struck by the progress made with the Labour Relations Commission on standardising the working hours of local authority workers. I believe it went to 34.5 hours - is that so?
Mr. P. J. Fitzpatrick
I think it was 34.
It went from an average of 30 to 31 up to 34 for some local authorities. Is that enough?
Mr. P. J. Fitzpatrick
That is for another day.
I will put it in context. The full industrial relations machinery of the State, including the Labour Relations Commission, was exhausted to get to that point. The working hours increased by approximately 1.5 hours on average. Is that enough to allow us to say to the public that we are making the kind of change in work practice we need in local authorities?
Mr. P. J. Fitzpatrick
In the first instance it is a matter for management in each sector. That is what happened in local government. They actually brought it through the LRC and Labour Court. I think they were looking for 35 hours and got what came out of the court. As I have said, the court decision is binding and that is what the agreement provides for. That is one of the strengths of the agreement. There have been some unpalatable decisions from the court for the trade union side, for example. There certainly have been ones where there was quite significant loss of income.
Where does the streamlining of annual leave stand at the moment?
Mr. P. J. Fitzpatrick
That is agreed and implemented or should be implemented. There is a maximum and a minimum and it is in between them.
When will we be able to register what the savings are behind that?
Mr. P. J. Fitzpatrick
I am not sure there is a cash saving in that regard. It is more about time. For example, if one looks at the Civil Service, I understand principal officers and assistant principals would have lost one day in annual leave. More senior people in local government with high levels of leave lost a lot more. There is no cash saving there as such because the people are still employed. However, any extra hours, regardless of whether they come by way of less annual leave or other means, help to cope with the reduction in numbers. That is where the benefit lies. We had also to address the issue of what is an acceptable level of leave in those discussions. There were seriously high figures in some areas over which nobody could stand.
I will leave it at that. When we meet again, I hope we can see the continued progress to be made on demonstrating to people that the non-wage savings are real and can be stood over.
Mr. P. J. Fitzpatrick
We will work on that.
I thank Mr. Fitzpatrick and Mr. Menton for attending the meeting today. I have about five issues to touch upon so if the Chairman wishes to take a break, I can come in a second time just to be fair to Deputy O'Donnell if he wishes to speak.
The Deputy can indicate as he goes along.
Mr. Fitzpatrick said earlier-----
Before the Deputy begins, he should be aware that there is a time issue here because Mr. Fitzpatrick will be going to another meeting.
I will try to expedite what I wanted to ask. Mr. Fitzpatrick said earlier that nothing inside the agreement has threatened it so far. Can something outside the agreement threaten it?
Mr. P. J. Fitzpatrick
In industrial relations, one never knows what is around the corner. So far, the agreement has coped robustly with whatever has come its way. As I said earlier, big-ticket items have come its way. I gave some examples of people losing real money, apart from pay cuts, as this is on top of that. Of course something could happen. Do I know of anything that is going to happen at the moment? The answer is "No," but that is not to say something could not happen.
Allowances and increments do not come under the agreement.
Mr. P. J. Fitzpatrick
They are not provided for in the agreement.
My reading is that they do not come under the agreement.
Mr. P. J. Fitzpatrick
Yes.
According to Mr. Fitzpatrick's interpretation, allowances and increments are outside the agreement. Could they threaten it if they were put on the table?
Mr. P. J. Fitzpatrick
I will let the trade union representatives speak for themselves on that.
I am simply interested in the interpretation of the break clause.
Mr. P. J. Fitzpatrick
The reality is that anything could threaten the agreement, but whether those issues would is a matter for the trade unions. I could not speculate on that.
People talk about the break clause in paragraph 1.28 on page 10 of the Croke Park agreement. They talk about how the Government might want to initiate it at some stage. The break clause states that "The implementation of this agreement is subject to no currently unforeseen budgetary deterioration." From my reading of that, it looks as though the break clause can only be implemented by the Government side of this agreement. Only the Government can decide that the Croke Park agreement no longer applies.
Mr. P. J. Fitzpatrick
That is probably true in that sense. It really is a matter for the employer and the trade unions. I am not trying to be unhelpful, but it would not be helpful for me to speculate on this because there is much debate around these issues and a circular on some allowances has been issued in the last day or two. How that is dealt with is really a matter for the employer and the trade unions.
I do not want to put Mr. Fitzpatrick in a difficult position. I agree with the fiscal advisory council that everything should be on the table as we discuss the forthcoming budget and the adjustment that has to be made. I think that includes increments and allowances. I am trying to figure out, in respect of an interpretation of the break clause, whether one could use a discussion of increments and allowances as a reason to break the Croke Park agreement on the other side. From my reading of the break clause, one could not. I do not want to put words in Mr. Fitzpatrick's mouth but my-----
Mr. P. J. Fitzpatrick
It would depend on whether someone thought the agreement was being breached.
If increments and allowances do not come under the agreement, they are outside it. A change in something that is outside the agreement could not really breach it, particularly if the agreement can only be breached by the Government side and only because of budgetary deterioration.
Mr. P. J. Fitzpatrick
The agreement is silent. There is nothing in the agreement about the two issues mentioned by the Deputy. It will boil down to the definition of pay.
Is pay defined anywhere in the agreement?
Mr. P. J. Fitzpatrick
I am trying to remember. There is no detailed definition.
Where did that definition come from? If it is not in the agreement, how does it then become defined?
Mr. P. J. Fitzpatrick
It is really a matter for the employer and the trade unions.
To define what pay is?
Mr. P. J. Fitzpatrick
It is really not a matter for the implementation body.
Even though the word "allowances" or "increments" does not appear in the document?
Mr. P. J. Fitzpatrick
The agreement specifically states that there will be no further reduction in the pay rates of serving public servants for the lifetime of the agreement. It states: "This commitment is subject to compliance with the terms of this Agreement." That is all it says.
There is no mention of increments or allowances; it simply mentions pay rates. So if the employer and the unions decided they were going to define core pay, they could decide whether it included allowances and increments.
Mr. P. J. Fitzpatrick
They could, of course, decide to do so. It is a matter for the employer.
If the employer was to decide that it wanted to define pay rates as not including allowances and increments, according to Mr. Fitzpatrick's reading of the break clause, would that give a right to the other side to pull out of the agreement?
Mr. P. J. Fitzpatrick
The break clause is for a particular set of circumstances. One finds this in the private sector as well. What it would boil down to is whether the proposal was regarded by the trade unions as a breach of the agreement.
When I read the break clause, which was written in 2010, it seems to indicate that this agreement stands unless the budgetary situation for the country gets worse.
Mr. P. J. Fitzpatrick
Every previous agreement contained something similar.
I do not see how, from that, if the Government decided to define pay rates as not including allowances and increments, it would be a valid excuse for the unions to pull out of the agreement.
Mr. P. J. Fitzpatrick
That would be a matter for others to defend if they decide that. That is a matter between the unions and the employer.
My next point concerns the June report issued by the implementation body. It mentioned the agreement, the appendices at the end of it and the list of different things to measure. For the next report, might we essentially have the appendices and, after each point in them, an update as to what has happened on that point?
Mr. P. J. Fitzpatrick
With regard to the implementation of the agreement?
We did this in my former place of employment. One would point out what had been implemented, what was coming in two months' time and areas in which there were difficulties so we could go through it and see how much of it had been done. As Deputy Donohoe said, the June report is good and an improvement on the previous one but I think we can go further in terms of the detail we provide.
Mr. P. J. Fitzpatrick
We can certainly do that because there is a list for each sector. However, the agreement has now gone far beyond that in that there are many things that were not on those lists that are being done.
I would include them and let people know that we have done all this in this sector, ticked all these boxes and have done these additional things as well.
Mr. P. J. Fitzpatrick
I can provide a summary of total progress.
It would be really helpful to have that from all sides of the table, including those who are not so favourable towards the agreement and those who are.
Mr. P. J. Fitzpatrick
We can identify the ones that were specifically in the appendices.
My next point concerns the implementation body and its mandate or terms of reference. For whom is the implementation body working?
Mr. P. J. Fitzpatrick
We report to the Minister and the Government.
In whose interest is it acting? Is it the public sector, the public, the unions or the Department?
Mr. P. J. Fitzpatrick
In order to answer that question, the Deputy needs to find out whose interest the agreement serves.
The agreement was designed to enable the Government to reduce the deficit. To that extent, all of this is about enabling the Government to reduce public service spending and narrow the gap between income and expenditure. In that sense, it is in the national interest. Public services are not meant to serve themselves.
Is anyone from outside the public sector represented on the implementation body?
Mr. P. J. Fitzpatrick
No; there are four management representatives and four trade union representatives. I am the independent chairman.
The agreement on work practices, pay and so on is in the national interest, yet the implementation body includes no member from outside the public sector.
Mr. P. J. Fitzpatrick
As I understand it, the rationale was that it was an industrial relations agreement between the Government and the trade unions.
The group's trade union members are acting in the interests of their unions' members.
Mr. P. J. Fitzpatrick
If one considers progress to date, much of it has been in the national interest.
I can only consider the progress made through the eyes of the implementation body. If its members were acting in particular interests that are not necessarily in the national interest, I would not be able to tell from their conclusions or recommendations. For example, we discussed the Government-appointed board members of banks and how they had worked in the interests of shareholders rather than those of the public once they had joined the boards. A trade union representative is a member of the implementation body for a reason. I am not saying it should have no union members, but surely they are only acting in their unions' interests.
Mr. P. J. Fitzpatrick
As the independent chairman, I have observed trade union and management representatives acting to make the agreement work. Many of their members are taking significant pain. For example, I referred to the groups that had lost because of the extended working day arrangements.
I do not doubt the changes made. My point concerns a potential conflict of interest or objective bias. A union representative on the body might decide to work in the national interest, but one cannot get around the fact that he or she has an objective bias, given his or her background. Should the body have a member from outside the public sector?
Mr. P. J. Fitzpatrick
The implementation body is a creation of an agreement negotiated by the employers and the trade unions. It is not for me to determine whether-----
As the independent chairman, would Mr. Fitzpatrick find it more helpful to have external eyes?
Mr. P. J. Fitzpatrick
I am certainly not constrained by any member of the group.
Again-----
Mr. P. J. Fitzpatrick
It is a matter for the parties to decide who should be on the body.
We are straying into an area that Mr. Fitzpatrick cannot discuss further.
Mr. P. J. Fitzpatrick
Yes.
I wish to discuss the methodology for calculating pay and non-pay savings and the overestimation in the Department of Agriculture, Food and the Marine.
Mr. P. J. Fitzpatrick
The underestimation.
Yes. The Department underestimated the savings achieved because it did not agree with the calculation guidelines which were subsequently factored in by Grant Thornton.
Mr. P. J. Fitzpatrick
What happened was-----
The Department believed it needed to use the regulatory impact analysis, RIA, guidelines. Its opinion was that the guidelines that were meant to be used overestimated savings because of the additional figure of 40%.
Mr. P. J. Fitzpatrick
According to Grant Thornton, the Department underestimated the level of savings because it did not allow for the figure of 40% as per the formula used by the Department of Finance. Second, it calculated the salaries at the mid-point of the scale rather than at the maximum. Most people were on the maximum of the scale.
I understand the mid-point issue. I wish to discuss the 40% allocation for non-pay costs. According to the guidelines devised by the public sector, the savings in moving people out of an office are calculated by adding an additional 40% of salary to take account of factors such as-----
Mr. P. J. Fitzpatrick
Overheads.
Yes. While the 40% allocation was in line with Department of Finance guidelines, the Department of Agriculture, Food and the Marine considered it excessive when compared with the actual costs incurred. Are the numbers for savings inflated by as much as 40%? If the Department of Agriculture, Food and the Marine does not agree with the guidelines, why are we using them?
Mr. P. J. Fitzpatrick
The number of cases in which this issue arises is small. It only arises where offices are being closed. Departments and agencies have no choice about following the Department of Finance's guidance. This explains the situation in question.
Is the Department of Agriculture, Food and the Marine stating it does not believe the guidelines as good? Grant Thornton-----
Mr. P. J. Fitzpatrick
I am sorry, but that is a different issue. It is an issue for-----
Grant Thornton's report reads: "We are satisfied that the reasons for undervaluing the declared savings are adequate and understandable". Grant Thornton seems to be stating that, while it agrees with the initial estimates, it was required to increase the estimates in line with the Department of Finance guidelines. We are building our savings when one Department does not believe they are justified and an independent consultant understands that Department's point.
Mr. P. J. Fitzpatrick
The accountants dealing with the verification process identified the figure of 40%.
It was in line with the calculation guidelines because they were told to do so by the Government. The guidelines inflated the savings by 40% according to the people in the Department of Agriculture, Food and the Marine. I cannot understand it. When we discuss-----
Mr. P. J. Fitzpatrick
That is a question of whether the guidelines are right or wrong. It is a different issue.
As the independent chairman, does Mr. Fitzpatrick have an opinion on the guidelines for calculating pay levels?
Mr. P. J. Fitzpatrick
I am not an accountant, but I assume that the guidelines must be complied with, just as is the case with the guidelines for valuing land, etc. Whether the guidelines are right or wrong is an issue for a different debate.
I have spoken to accountants who might be regularly involved in this kind of work. They work for one of the big houses. They stated they would not make calculations in this way. When one reads Appendix 7 of the 2009 guidelines, overheads comprise the total staff cost, plus 40%. "Overheads" can be defined in any number of ways.
Mr. P. J. Fitzpatrick
I am sorry, but this is a question of whether the guidelines are right, not whether Grant Thornton-----
The guidelines were devised by the public sector.
Mr. P. J. Fitzpatrick
They were defined by the Department. We had no involvement. That is an accounting issue.
I know. If someone tells me to reduce my pay and I determine how the reduction is to be calculated, it is not necessarily an objective approach. An independent report from Grant Thornton referred to the Department of Agriculture, Food and the Marine's reasoning for not adhering to the guidelines, namely, that they were excessive, as being adequate and understandable. I wonder whether the €678 million in non-pay savings since the beginning of the agreement is an inflated figure.
Mr. P. J. Fitzpatrick
No. The savings to be made in the situation in question are few. This issue only arose where staff numbers were reduced and offices closed. There were some instances of it in Teagasc and the Department of Agriculture, Food and the Marine.
This is how we are calculating pay levels also. This is the formula used.
Mr. P. J. Fitzpatrick
No, it absolutely is not. I would not like that to be the impression given. I assure the Deputy that it is not factored into general pay.
The 40% of total staff costs is not the figure used in respect of savings made on salaries.
Mr. P. J. Fitzpatrick
It is the actual salaries figure. No percentage is added to the total.
I do not see that. All I have before me is pay, direct salary, total salary and total staff costs.
Mr. P. J. Fitzpatrick
My apologies. To be crystal clear, the figure for total salary savings that we have received from the Department of Public Expenditure and Reform is based on salaries alone. There is no provision for overheads.
I am going by the calculation outlined in the appendix. According to it, staff costs include the figure of 40% for overheads.
Mr. P. J. Fitzpatrick
No, we are discussing separate issues.
Perhaps Mr. Fitzpatrick might clarify the matter for me, as I am unsure.
Mr. P. J. Fitzpatrick
We will clarify it, but I assure the Deputy that we have been meticulous on this. The pay bill savings that we report relate to actual pay levels and have nothing added.
I put it to Mr. Fitzpatrick that the savings initially reported by the Department of Agriculture, Food and the Marine were more accurate than the final figure. There was no underestimation. The Department's valuation was accurate.
It was considered the Department of Finance guidelines bloated the estimation of savings.
Mr. P. J. Fitzpatrick
In the figures used from the Department, the 40% would not be included, even for that limited number of people.
The report states it was.
Mr. P. J. Fitzpatrick
When the project was being evaluated.
Exactly.
Mr. P. J. Fitzpatrick
That did not only involve pay. The total pay and non-pay savings from the closure of offices were taken into account. That is what was being considered. Initially, the Department took into account the rent being paid.
Is this public expenditure?
It is an interesting point.
Mr. P. J. Fitzpatrick
It is more of a technical accounting issue.
The Department under-reported by €10 million on that point.
Mr. P. J. Fitzpatrick
It is important to avoid doubt on the issue. Without fear of contradiction, I can say the pay bill savings we have included in the main report do not include anything except actual pay figures.
Okay.
Mr. P. J. Fitzpatrick
The figures are €650 million and €590 million.
That includes the figures from the Department of Agriculture, Food and the Marine.
Mr. P. J. Fitzpatrick
It includes the figure for salaries from the Department only.
It seems to be included in terms of non-pay costs.
Mr. P. J. Fitzpatrick
No.
For the total non-pay cost figure, we are going back to the Department's figure.
Mr. P. J. Fitzpatrick
My apologies. The Deputy is referring to the non-pay costs.
That is what I am trying to get at. It is the figure for non-pay costs. The Department believes the way it is calculated is excessive.
Mr. P. J. Fitzpatrick
That is the formula being used. As the Chairman said, it is a matter for somebody else.
Perhaps we should change the formula. There is €10 million in the difference. We may be noting great savings, but the Departments may believe them to be over-estimated by 40%, but they are not telling anyone. The savings are not real.
Mr. P. J. Fitzpatrick
That is a matter for------
This is the Committee of Public Accounts. Is there a problem with how we are calculating non-pay costs under the Croke Park agreement and does the Department of Agriculture, Food and the Marine agree with the process? Independent consultants have indicated that they understand why the Department thinks this way. We must look again at how we are calculating savings. It is a very basic process.
Mr. P. J. Fitzpatrick
The only case in which that would arise is where offices were being closed. The only cases involved Teagasc and the Department of Agriculture, Food and the Marine.
The figure is €10 million.
Mr. P. J. Fitzpatrick
I do not dispute that.
It is a significant figure.
Mr. P. J. Fitzpatrick
My main concern is that there not be an impression that the pay bill savings were-----
I am interested in non-pay costs and how they are calculated. There is an interesting discrepancy in the process which has not been addressed but should be.
We can send a transcript of the meeting to the Department of Public Expenditure and Reform and ask officials to comment.
I would like to continue in the area of the Department of Agriculture, Food and the Marine.
Does Deputy Kieran O'Donnell wish to ask a question?
Perhaps I might come back in after he has contributed.
I will not be long. Mr. Fitzpatrick seems to be prudent. In the second progress report on the public service agreement 2010-14 he states the body is of the view that accelerating change needs to occur across all public service bodies in every sector with an increased sense of urgency. I do not believe he has made that statement lightly. Clearly, he has concerns that the rate of change is not fast enough. He probably signed off on the document at the start of June.
How long is Mr. Fitzpatrick's contract? When the Minister was before the committee this morning, he indicated that there might be intransigence within some areas of the public sector at middle management level with respect to the changes required under the Croke Park agreement. My fundamental view is that we do not need to reinvent the wheel, rather we need to get the agreement to work to maximum effect. Are there jams within the system which prevent this from happening? There are great people working in the public sector and I believe in the Croke Park agreement. Nevertheless, it is about getting it to work to maximum capacity.
With regard to redeployment, community welfare officers were transferred from the Department of Health to the Department of Social Protection. I believed at the time that many of these personnel should have been assigned to the fraud detection section of the Department of Social Protection. My understanding is they have not been. Their local knowledge is unrivalled.
Will Mr. Fitzpatrick provide the context in terms of where he sees the agreement working and where there are weaknesses? Where does he see a need for oil to be applied to get the agreement to work to its maximum potential?
Mr. P. J. Fitzpatrick
From memory, the contract is the period from 2010 to 2014. As the Deputy knows, it is not a full-time role. As the contract took in the wording of the agreement, there is no specific date. If the agreement ceases to operate, the contract will cease.
We did not make the comment referred to lightly. It was a considered statement that was subscribed to by management and union personnel. It is a statement on behalf of the nine members of the body. I also agree that there are thousands working very hard and trying to cope with fewer staff. In many cases they are doing a really good job.
The main issues of concern are the big ticket items such as shared services. We can see how much can be saved in the Civil Service, particularly in areas such as education and local government. There is another in which we have sought more information, although I am not arguing that nothing has happened. Nevertheless, we do not have information from the voluntary sector. There is a significant amount spent in the health sector on voluntary hospitals and mental handicap organisations. Smaller voluntary organisations are also funded by the State.
Are they covered by the Croke Park agreement?
Mr. P. J. Fitzpatrick
Most of the staff are on pay rates aligned with the agreement. The bigger bodies are certainly covered by it.
Just because the payroll is consistent with------
Mr. P. J. Fitzpatrick
The people concerned are on public service rates.
Does that mean they are covered by the agreement?
Mr. P. J. Fitzpatrick
Yes, as pay was reduced at the time of the pay cuts; they are covered by the agreement. We know something is happening in some of these areas because we can read or hear about it. We have asked for more information from the sector which accounts for a figure of €4 billion or €5 billion per year. We mention this at the end of the report. It is a big sector.
To be fair, in the health sector in general there has been much progress and the sector has driven many reforms. The budgetary position has, however, become more rather than less challenging and there has been negligible growth. In making the statement we were very conscious that the agreement would be required to deliver more and more in order to enable the Government to meet its budgetary targets. There are big ticket items, particularly shared services, to consider. We have seen some good progress in local government, with project teams and offices driving the process on. The people concerned are working with Mr. Paul Reid in the Department of Public Expenditure and Reform. The education sector is also being pushed in this way. These are the big areas and they have been included from the start. Some are working better than others.
There was-----
Mr. P. J. Fitzpatrick
With regard to community welfare officers, the Department of Social Protection is creating one-stop shops and the plan is for them to deal with matters to do with jobs and benefits. As I understand it, community welfare officers, social welfare staff and FÁS personnel will work within the one-stop shops. I take the point made about local intelligence, which is valid.
I wish to raise a final point. What does Mr. Fitzpatrick consider to be the weaknesses in the Croke Park agreement which, from his perspective, will prevent the agreement delivering to the optimum level?
Mr. P. J. Fitzpatrick
I have said it to the committee previously and I will say it again. I consider the agreement an excellent enabler. There is nothing in it to prevent many things being done and, so far, nothing has been blocked or stopped.
What about the pace?
Mr. P. J. Fitzpatrick
Obviously, the pace is critical and urgent because of the economic situation generally.
Does the witness have concerns about the slow pace?
Mr. P. J. Fitzpatrick
Certainly not. At the last meeting there was a question as to whether it moved at the pace of the slowest mover. That is definitely not true. There are some really good examples, such as the prisons area. There has been really good progress in the prisons. There has been serious change in rosters and shared services going in on campuses, such as Cloverhill, Portlaoise and Limerick.
On a scale of one to ten, with ten being the top progress and one being the lowest progress, where would the witness place the pace of the Croke Park agreement at this stage?
Mr. P. J. Fitzpatrick
I do not know. I would need to think about it. As I said, there are some areas that have surprised everyone and the prisons is certainly one where there has been really good progress. The Garda is another. It has not just been the rosters in the Garda but there has been other serious stuff as well, including performance management. In fairness, the health sector has been driving big change as well. Local government has really mobilised too.
Could the witness give his best judgment on the scale of one to ten?
Mr. P. J. Fitzpatrick
It is very difficult.
Mr. Menton might wish to comment.
Mr. P. J. Fitzpatrick
We use the word "systemic" and everyone is not at the same level. I do not wish to give a figure that penalises the good.
Is the witness satisfied, happy or very happy?
Mr. P. J. Fitzpatrick
We are reasonably satisfied. We are certainly satisfied with the progress. There has been a great deal of co-operation and progress, but the challenges are getting bigger.
The witness would say "satisfied, but could try harder".
Mr. P. J. Fitzpatrick
There is undoubtedly more to be done. The challenge is huge. However, there is also another issue and someone alluded to it earlier. There is a period of opportunity here as well, and it will not last forever.
Define that.
Mr. P. J. Fitzpatrick
It is a period of acceptance. There is an economic climate now which means a new reality for many people who might have been opposed to things in the past. The reality is that things are bad and if the agreement is to survive and pay rates are to be protected, it must deliver.
Reality is the driver.
Mr. P. J. Fitzpatrick
There is a big reality there.
I realise Mr. Fitzpatrick has to leave. I have a quick question relating to the Department of Agriculture, Fisheries and Food. I do not mean to pick on that Department but it is project No. 1 in the Grant Thornton report and I have not got any further, so all my questions are initially about that Department. A sum of €30 million annually in savings are expected, along with a reduction of 400 staff. That €30 million will come from four areas - the number of staff retiring, the number of staff redeployed, the number of retained offices enhanced and the number of offices closed. The saving includes staff redeployed, which means staff coming off the books of the Department and not working there any more. They will come off the balance sheet and we will see a saving of their salary costs. Is that correct?
Mr. P. J. Fitzpatrick
The staff would be redeployed into other areas.
That is a saving in the Department of Agriculture, Fisheries and Food because the staff no longer work for it. It is reflected as a saving for the Department.
Mr. P. J. Fitzpatrick
I need to double check that and refer back to the Deputy.
Are we saying it is a saving in the Department of Agriculture, Fisheries and Food when the person is going to a different Department or a different part of the public sector and being paid a salary there? While it looks like a saving in the Department of Agriculture, Fisheries and Food, it is not an actual saving in the total pay bill. There is a double count taking place.
Mr. P. J. Fitzpatrick
To come back to the pay bill, the pay bill savings that we reported are absolute. I will have to check whether the agriculture project included people who were redeployed elsewhere.
I would like to know if the saving of €30 million means people coming off that Department's pay bill and then popping up somewhere else.
Mr. P. J. Fitzpatrick
I will check that for the Deputy.
Mr. Fitzpatrick does not think the person would pop up somewhere else and it would still be counted as a saving.
Mr. P. J. Fitzpatrick
I can say with certainty that they are not double counted on our pay bill saving. The figures in the pay bill are based on the actual numbers gone.
Does the headline take into account that people will move from a Department and it might be counted as a saving there, but it is not a saving because they have moved?
Mr. P. J. Fitzpatrick
That is not the case in this figure. I need to check the agriculture project as to what way they were treated there. I can absolutely assure the Deputy that they are not in this.
On the total figures, we have that reduction in pay between 2009 and 2012 of approximately €3 billion.
Mr. P. J. Fitzpatrick
It is €3.1 billion.
What will it be by 2015?
Mr. P. J. Fitzpatrick
It will be €3.8 billion gross and €3.3 billion net of pension increases.
Is the €3.1 billion net of pension?
Mr. P. J. Fitzpatrick
We included a particular table on page 4. The table shows the reduction year on year up to 2015. Last year we discussed this and we said we would include a table to show the pension increase year on year, even though there is a myriad of reasons for the pension increases.
The gross figure for each year is given in the top line of the table.
Mr. P. J. Fitzpatrick
Yes.
It appears we are not expecting a significant change between 2012 and 2015.
Mr. P. J. Fitzpatrick
There are 28,000 gone so far and approximately 10,000 more are to go, so the bulk of it has been done. The pay cuts are included there as well because they contributed to the reduction in the pay bill.
Basically, the heavy lifting has been done with the pay bill.
Mr. P. J. Fitzpatrick
That was done. It depends on how much more the Government needs to find but as of now, there are 10,000 to go. Yes, much of the heavy lifting has been done.
What is the 10,000 figure?
Mr. P. J. Fitzpatrick
It is the 10,000 more staff to be taken out.
The bulk of that saving in the pay bill is from reductions in numbers, therefore, not from the introduction of the pension levy.
Mr. P. J. Fitzpatrick
It is from everything. It includes the pay cut, the reduction in numbers and the pension levy. It all feeds in. We tried to set it out in the table. The Deputy will see that it shows the gross pay bill, the pension related deduction, the net pay bill and the pension costs. In summary, it is €3.8 billion gross by 2015 and €3.3 billion net of pension increases.
The first line shows the Exchequer pay bill gross for 2011 and 2012. The figure goes from €15.645 billion to €15.375 billion. What caused that difference? Is it people leaving the public sector?
Mr. P. J. Fitzpatrick
Yes, at that stage it is people leaving. The pay cuts came in earlier.
It is roughly €300 million.
Mr. P. J. Fitzpatrick
That is not a calendar year. That is why we are moving our next report to nine months.
It is difficult to see through the figures.
Mr. P. J. Fitzpatrick
Our report is based on the end of March. In the next report we are moving to a calendar year, which means it will be a nine month report. It will make it easier to-----
In that report could the witness also show where the reductions in the pay bill have come from pension and also from people leaving?
Mr. P. J. Fitzpatrick
Yes.
That way we can have a clear distinction between which is the bigger part of the reduction.
Mr. P. J. Fitzpatrick
We should have that. We know for the last two years that the pay bill has been €850 million for the staff numbers reduction and there would have been a couple of hundred million euro before that as well.
The figure could be €1 billion or even more. I will check that out for the committee.
I thank Mr. Fitzpatrick.
I have a related question on the 2012 figure. Is the lump sum that is paid to public sector workers on retirement included in the figure? For example, 9,000 people retired at the end February. Is the lump sum payment after 40 years service included in the 2012 figures?
Mr. P. J. Fitzpatrick
I will double check the figures, but I think the lump sums are included in table 4, under pensions.
The figures for 2012 are less than the figures for 2011. I see that figure relates to the pension-related deduction. Is Mr. Fitzpatrick referring to the figures underneath that?
Mr. P. J. Fitzpatrick
I am referring to table 4.
The figure has increased from €285 million to €300 million. Is Mr. Fitzpatrick saying that includes the additional pension because it would have covered the full year plus the retirement lump sum?
Mr. P. J. Fitzpatrick
I will double check that Deputy, but as far as I am aware, the lump sum payments are normally included with the pensions.
That is fine.
I thank Mr. Fitzpatrick for coming before the committee and giving of his time. I know he is under a time constraint as he must go to meet the Taoiseach.
I have a different view of the Croke Park agreement but I sat here willing to be convinced about the whole process. I wondered why I had so many reservations about it. The pace of change and reform, which is critical to the survival of the State, is very slow and tedious. By comparison, in the private sector when the market closed down, everything chopped and changed, places closed and people lost their jobs and income. Despite this, in the public sector, we have the Croke Park agreement which has undoubtedly delivered but at a pace that does not compare with the private sector. That is the issue I have with the agreement. The Croke Park agreement also protects the level of pay, which is out of kilter with the private sector. Sometimes increments, which are added on each year, create a massive difference when one compares a low paid employee in the public sector and the private sector. While all those involved in the Croke Park agreement might be quite happy about the progress within the rules they have fashioned, when it is benchmarked against the private sector it leaves a great deal to be desired.
My next remarks are no reflection on Mr. Fitzpatrick, and I appreciate his frank exchange at this meeting. The four senior civil servants, four trade union members and a chair seem to conduct business as usual. Should the implementation body have been expanded to include someone different from the outside who would be able to give a flavour of the comparison between public and private sector operations? Change is being driven by the reduction in budgets. If there is significant reduction in a budget because of the economic collapse, one must shed staff or cut pay. Acceptance is built on the reality that the State cannot do any more. We were setting out to buy peace, where in fact there was no war.
I appreciate that Mr. Fitzpatrick came before the Committee of Public Account and gave us an explanation of the facts and figures. I wish him well in his work.
Mr. P. J. Fitzpatrick
We have stressed the need for urgency and the need to increase the pace of change. With each passing year, the agreement has improved, but that does not take from what has to be done as a matter of urgency. We have emphasised the urgency of the situation.
I thank the Chairman and members for their interest in our work. We appreciate the discussion we have had with members. It has been very useful for us too.
The witnesses withdrew.