I propose to move votes Nos. 6, 16 and 51 together.
Committee on Finance. - Vote 51—Remuneration.
Votes Nos. 16 and 51 may be discussed with vote No. 6, if the Minister so wishes, but must be moved separately after vote No. 6 has been disposed of.
In that case, I will move vote No 51 first, as it is the biggest. I move:
That a supplementary sum not exceeding £850,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1966, for Remuneration of Civil Servants.
Deputies will recall that in my last Budget I made provision to meet claims which, because they were awaiting settlement, could not have been included in the published Book of Estimates. By 3rd November of last year, as I then informed the House, the vast bulk of Civil Service grades had been dealt with on the basis of key decisions given by the Civil Service Arbitration Board bringing pay into line with rates previously in operation outside. The claims remaining to be heard by the Board concerned departmental grades and were based largely on internal relativities with grades which had already had revision. I said then it would be clearly unfair to prevent these small groups from having their claims processed at arbitration, and this has in fact been taking place.
The present Estimate covers payments from 20 different Votes and, in the absence of a global Estimate, it would have been necessary to introduce Supplementary Estimates for each of these Votes. The cost of pay increases on ten other Votes can be met from savings on those Votes. For nine Votes we will require Supplementary Estimates for other reasons. All these Supplementary Estimates will include provision for extra expenditure arising from pay increases. The pay increases are adjustments of the eighth round of pay revisions. In the Civil Service, the grades of clerical officer and Post Office clerk were among the first to effect eighth round settlements in 1961 and obtain maxima of £814 and £783 respectively while rates began to emerge in employment outside the Civil Service.
An example is the revised eighth round settlement for Board na Móna clerical staff, who were awarded a scale of £350 at the bottom rising by annual increments of £50 to a maximum of £1,050 with effect from 1st April, 1963. These scales applied following a Labour Court recommendation. This scale was also applied in other instances. The maximum net of pension deductions was approximately £1,000. Post Office clerks and clerical officers pressed claims for a revision of their eighth round settlement when the higher rates began to emerge in outside employment. The Post Office clerk was the first to be dealt with and, early in 1964, the Civil Service Arbitration Board awarded a maximum of £952 with effect from October, 1963. Later clerical officers effected a conciliation settlement based largely on this arbitration finding which gave their grade a maximum of £1,000 with effect from 1st January, 1964.
The Civil Service is a closely-knit organisation and a revision of the salary rates of one grade inevitably has repercussions on those of the related grades. For example, the maximum of the scale awarded by the Arbitration Board to Post Office clerks was almost equal to the maximum salary then being paid to the grade in charge of them. Clearly, therefore, the pay of the supervisory grade had to be adjusted. Similarly, the revision of clerical officer pay had an immediate effect on that of the supervisory grade of staff officer, which is recruited exclusively from the clerical officer grade. It also had an immediate effect on the grade of executive officer, a substantial proportion of which consists of promoted clerical officers. Following the revision of pay of executive officers, the higher executive officers brought a claim for higher pay before the Arbitration Board which issued its findings on the claim in March, 1965.
It may not be generally realised that each Civil Service grade coming within the scope of the conciliation and arbitration machinery may submit to the Arbitration Board pay claims which it has failed to resolve to its satisfaction at conciliation. Quite a large number of cases, some of them very small in numbers, elected for arbitration with the result that the process of determining the pay of many Civil Service grades has been a very long one. Key claims governing important groups of civil servants have been determined following a series of arbitrations which were all accepted by the Government and used as a yardstick for settlement in other cases. A common feature of most of these claims has been their reliance on comparison with cognate groups outside the Civil Service. It is evident from the findings of the Arbitration Board that this comparison has to a considerable extent been established to the Board's satisfaction.
The finding of the Arbitration Board on the higher executive officer's claim brought that grade's maximum fairly close to the maximum of the next highest grade, that is, assistant principal, the lowest of the General Service grades outside the scope of conciliation and arbitration. From the grade of assistant principal upwards— that is, assistant principal, principal, assistant secretary and secretary— there is no scheme of conciliation and arbitration. Higher executive officers, having been adjusted close to the maximum of the assistant principals, an adjustment was clearly required in the scale of assistant principals which, in turn, necessitated adjustments in higher grades.
In the original eighth round settlement, a decreasing series of percentages had been applied to grades above that of higher executive officer. To avoid undue compression, it was decided to accord on this occasion to these grades the same percentage, that is, 16½ per cent, as had been awarded to higher executive officers by the Arbitration Board. In addition to this revision, a further adjustment was made in the salaries of secretaries and assistant secretaries with effect from 1st April, 1965. It was found necessary to make a special adjustment in their remuneration by reference to that of their equivalents in outside employment and, in particular, in State-sponsored bodies. The circumstances that in these bodies the levels of remuneration were substantially higher than those paid to top-ranking civil servants, despite the heavy responsibilities of these higher civil servants, had resulted in a marked and undesirable deterioration in their relative positions. The adjustment approved was intended to go some distance to correct this distortion.
In Vote No. 6, there is a further sum of £57,500 which is in respect of an excess on the salaries at Subhead A, of which £49,000 relates to status increases awarded to higher grades and £4,000 to additional posts created during the year, plus a provision to cover contingencies. This sum is intended to cover higher officers in the Department of Finance. It is entirely fortuitous that it appears as a separate item from the main Vote, No. 51; this Supplementary Estimate had already been put forward into the machine of the Dáil Office before the larger Vote was ready. In fact, these two Votes are for the same purpose.
There is a further Supplementary Estimate for which I am responsible —Vote No. 16, Law Charges. This is for a sum not exceeding £39,200. It is divided into four subheads. Subhead A is for a supplementary sum of £24,200 required to pay increases awarded to professional and sub-professional staff in the Offices of the Attorney-General, the Chief State Solicitor and the Finance Solicitor; these awards were subsequent to the fixing of the original provision. Subhead D is for a supplementary sum of £6,500 required to offset an increase in the number of criminal trials and an increase in the sum paid to medical witnesses giving evidence in road traffic cases. Subhead E is for a supplementary sum of £6,000. This excess is attributable to the increase that has occurred in the number of criminal trials, including habeas corpus applications. Subhead F comes under the heading of General Law Expenses. It is for a supplementary sum of £6,500 and the expenses under this subhead include expenses of jurymen, payment of costs awarded against the State, gratuities to attendants at Green Street Courthouse for extra duties in connection with the trial of provincial cases at the Central Criminal Court.
The House will remember that in a recent Act—I forget which one—there were greater facilities given for the transfer of a trial from a local venue to the Central Criminal Court. These have been availed of to a considerable extent. There is also a requirement for car hire for local state solicitors, incidental costs incurred on official business, payments for reports of judgments, transcripts of evidence, copies of summonses and certificates of convictions, and also for the pursuit of offenders in the metropolitan area and the conveyance of articles for analysis.
The Supplementary Estimates introduced by the Minister in respect of these wage and salary adjustments will be approved naturally, because we support the system whereby wage and salary adjustments are made on the basis of the Civil Service Arbitration Board awards. Having said that, I think this whole question of wage and salary adjustments in recent times has not had the best possible presentation. While one can understand the circumstances involved in processing and dealing with many of these applications and the fact that a backlog of cases being dealt with has arisen from time to time in respect of the processing of these awards by the Civil Service Arbitration Board, it does appear from recent awards that additional staff ought to be provided to get the work done or that some change should be made in the procedure whereby awards would be dealt with on a more expeditious basis.
As the Minister remarked, the present award completes a number of applications that were before the Board for quite a considerable time and many of these awards dealt with eighth round adjustments. If we are to attract and retain in the Civil Service people of the right calibre it is important nowadays that they should be paid remuneration comparable with that which is available in outside occupations. On the other hand, one is struck by the extent to which one State or semi-State body is used by another as a yardstick to get wage and salary adjustments. That has presented many difficulties and been responsible, to a considerable extent, for the leapfrogging that has taken place in respect of some of these changes in remuneration.
While it is right and proper that these adjustments should be made, the timing of the awards, particularly the status awards, certainly was open to criticism. The timing of these announcements coincided with a period in which exhortations were being made to other sectors of the economy to exercise restraint. It is a fact that a number of these claims were in process of being considered and were in prior to that period, and only meant adjustments being implemented which had been under way previously. However, it is important that a proper presentation should be made. The delays that have occurred might be avoided if some more expenditions procedure were adopted. I should be interested to hear from the Minister whether the proposed tribunal that is considering the question of salaries and wages and remuneration generally will deal with this aspect of the matter.
One other aspect that has not been sufficiently considered is the position of lower-paid workers. One of the criticisms that has been expressed both in respect of State employment and, indeed, in respect of certain categories of workers in semi-State institutions, is that, while there may well be justification for these considerable increases to persons in higher grades, the position of lower-paid workers has not been adequately considered, having regard to the rises in the cost of living over the years and, particularly, the substantial rises in recent years.
There is also the question of retired personnel. The Minister mentions adjustments in respect of the eighth round. As the House is aware, pensions are based on pay at retirement, and there is considerable dissatisfaction, and justifiably so, with the hardship imposed on many pensioners, civil servants, Army or Garda personnel, who retire from State employment just previous to wage and salary adjustments being made. It means they have substantially lower pensions than those people employed in the same position who retire just a few months later.
It can be argued that that was always the case. While that is so, the position nowadays is very different because of the steep drop in the value of money and the fact that pension increases and wage and salary adjustments are made for the purpose of compensating for this drop in the value of money or increase in the cost of living, and in the case of wage and salary adjustments, are made primarily on the change in the consumer price index. There are possibly other factors but in so far as pension increases are concerned they always lag behind, both in the sense that they are not brought into effect immediately and are never adjusted in line with the wage and salary adjustments which take place for those still serving. Consideration must be given, and should be given, in justice, to those who have retired, because of the fact that this deals with the eighth round. We should see that changes of this sort apply retrospectively in respect of those people.
I want to refer to another matter which I think has been the subject of considerable concern, that is, the recent loan negotiated by the Government in Germany and in London. The reasons for this situation reflect, I believe, the criticism which the Government must bear for the general mismanagement of the public finances over the past few years and particularly the serious deterioration in the credit situation in recent months.
This does not actually arise on the Supplementary Estimate.
This is the Vote for the Office of the Minister for Finance and I think there is no limitation on the debate.
It is a Supplementary Estimate.
Yes, but it covers the whole Vote of the Minister for Finance. The position is that a year ago there was unlimited credit and that credit was available for even highly speculative operations. Now there is a shortage of credit for many essential programmes. This first manifested itself in late summer when building societies and bodies of that sort restricted the amount of credit available. When one examines the position, it becomes obvious there has been a very marked change in the increased accommodation which became available during last year. I find that the Government and local authorities got £28 million more between December, 1964, and December, 1965, and during the same period, the private sector got £0.4 million. In other words, all the increased credit was hogged by the Government and by the local authorities.
This situation manifested itself even before that. Up to July last the increase which had become available shows for that 12 month period to July, 27 per cent of it had gone to the State and local authorities compared with 12 per cent to the private sector. For the rest of the year, the situation, which I have mentioned, was even more serious. The position has been reached in which the Government have now to seek, not merely in this country, but abroad, loans on what can only be regarded as very onerous terms. While, in many circumstances, there is justification for external borrowing for sound projects, the position is that the recent loan which was negotiated can only be regarded as being on very onerous terms. One of the reasons given for that situation is the fact that the loan which was being negotiated in America in the autumn did not materialise. As I understand it, the loan was negotiated and then because of what is described as congestion, it was not proceeded with.
We are entitled to know why this loan was not floated at a particular time, what happened in the arrangements which prevented the loan being proceeded with and why the situation was allowed to deteriorate to such an extent that we had to make, first of all, special application to the International Monetary Fund for a loan of £7 million to £8 million and now the loan in London and Germany. The terms of this are substantially higher than any previous loan. It can, of course, be said you have to pay the terms available or you have to pay the rate demanded in order to get the loan. I believe this reflects the failure of the Government to adopt a proper order of priorities in respect of the capital programme and the fact that the situation has now been reached that, not merely have we exhausted all available resources here, including very considerable borrowing from the banks here, but the amount borrowed by the Exchequer during the portion of last year was over 32 per cent higher than for the similar period of the previous year. This all emphasises the fact that the Government and local authorities are taking an undue share of the capital available and that private enterprise, business, farmers and others, are finding it extremely difficult.
I must intervene again in respect of the widening of the debate by the Deputy. In a Supplementary Estimate, the debate is confined to matter specifically set out in the Estimate for which a supplementary sum is required. The Supplementary Estimate is for salaries, wages and allowances, travelling and incidental expenses, Post Office services and An Comhlacht Comhairleach i Leith na Gaeilge. That does not contain any matter of policy in respect of——
With the Supplementary Estimate for Vote 51, we are discussing Vote 6, which includes a sum for the Office of the Minister for Finance.
It is Vote 6 I have read.
It includes a sum for salaries, wages and allowances.
But it does not cover questions of policy.
It is established practice that where a supplementary sum is involved in respect of a particular Vote, no matter what the Department, one is entitled to discuss matters in respect of that Department.
Only the matter which is set out.
What do they want the salaries, wages and allowances for? Is it to play round and round the mulberry bush?
No—the salaries are for the officials of the Department. The Supplementary Estimate is limited to the particular matters in the supplementary Vote.
Yes, but this Supplementary Estimate is for wages and salaries and, under that, I think it is well established——
The loan to which the Deputy has referred would be a matter of policy.
Surely that comes under the general administration of the Department?
I am afraid not.
The Deputy got a lot in all the same.
I suppose there will be further opportunities next week to deal with it. However, I feel that because of the serious situation which has developed, it is a matter which requires to be ventilated and it is for that reason I regard it as coming within the general scope of the administration of the Minister's Department. It may be true to say that the Minister inherited this situation. To that extent, I think it is probably the Government of which he is a member who deserve the severest criticism but the Minister inherited this situation, and the serious problems it has created for many sections in the community is one that has not been sufficiently adverted to. It has caused great difficulties for individual farmers and traders, as well as individual businesses.
In so far as the bulk of this money is incurred as a result of arbitration awards, we do not propose to comment on it at this stage or to oppose it. As Deputy Cosgrave has said, there will be many opportunities during the next few weeks to comment on general Government and financial policy. Even if this were something which was controversial, the Labour Party would be at a slight disadvantage in that they did not get a copy of the Minister's brief, which Deputy Cosgrave seems to have got.
Before Deputy Dillon intervenes, may I say that I did not distribute any brief.
As far as I could see, Deputy Cosgrave had one.
In actual fact, what happened was that Deputy Jones thought I asked if there was a copy available.
That is a matter for the Minister's officials. It is discourteous and it is not the first time it has happened.
I think there was not a copy available for anyone. All I got was a brief note and it was explained that it was not the Minister's statement.
I had a departmental note which I quoted in spots and I ad libbed in other spots.
I think the various Departments as well should recognise it.
I do not know what document Deputy Cosgrave has got into his hands.
I assume Subhead (A) of this Vote is not designed to finance the auditors of the Department of Finance in playing round and round the mulberry bush in Upper Merrion Street; it is to carry out the functions of the Department of Finance, one of which is the management of the public debt. I have spoken in this House repeatedly of my grave concern at the situation which could arise if, through the management of the public debt, we allowed the ultimate sovereign authority of the Oireachtas to be transferred from this House to Zurich, New York, or anywhere else outside Oireachtas Éireann. I think that danger is now upon us. We are now paying, if I am to adopt the method of calculation employed by the present Minister's predecessor, Deputy MacEntee, the equivalent of an interest of over ten per cent on the loan recently raised in Germany and Great Britain.
I am afraid I must intervene again. The salaries, Wages and allowances are for civil servants, not for the Minister.
Somebody must be responsible, surely, for the administration——
In that case one could discuss policy on the salary of any civil servant. Policy matters arise for discussion on the main Vote.
What exactly are we supposed to discuss? Should they get money or should they not seems to limit the scope of our discussion very considerably, bearing in mind that the Department whose Supplementary Estimate we are now discussing is responsible, has the ultimate responsibility, for presenting to us for consideration six Supplementary Estimates which are already in our hand——
Three.
—— on paper but there are more to come, and a Book of Estimates which has an unprecedented figure on the cover. However, I want to recall that the broader issues of finance were under discussion in this House early last year. The Minister concluded his observations with the following paragraph—I refer to what he said on Thursday, 20th May, 1965 —Volume 215, column 1878:
I have dealt in some detail with most of the points raised and I do not wish to delay the House longer. We have in this Budget not only a good social welfare Budget but, from the fact that we have made provision for increased expenditure on agriculture, industry, housing and other forms of productive effort, a good economic development Budget as well and, please God, with the assistance we have been offered from the other side of the House and the co-operation we can expect to get from the country, we can have greater developments, greater progress and perhaps even a better Budget next year.
That Minister was sustained by the advice of the distinguished Civil Service for which we are now voting a substantial amount of money, but unsustained by that precedent advice, I ventured to strike a somewhat different note at column 1333, volume 215. I made my concluding observations in the following terms:
I could elaborate at length on a variety of other aspects of the cost of living, but I elect deliberately, for the purpose of bringing this whole problem into focus, to dwell on this tri-partite dilemma—rising cost of living, rising adverse balance of trade, rising adverse balance of payments. That cannot go on indefinitely. What remedy do the Government propose whereby to correct this deadly evil which, if allowed to continue, will one day have to be faced? The longer we wait to face it the greater menace it will become for the survival of this country, not only in economic freedom but in political freedom too.
Those two forecasts were made eight months ago. I yield to none in my admiration for the beneficiaries under Subhead A of this Supplementary Vote, but I dare to say that my prognostications approximated more closely to the event than those of the Minister, who presumably had the advantage of their advice.
That is a comment on a Vote which does not appear on the Paper.
I am referring to salaries, wages and allowances. Surely I am entitled to state what I said, that the Minister had the advantage of their advice, and that my comment approximated more closely to the truth than what the Minister said with the advantage of all the advice, well paid as it is.
It is a comment on the administration of a Vote which does not appear on this paper.
It is the only comment I desire to make on it. You, a Cheann Comhairle, are the final authority on that. If our discussion are to be limited within that narrow definition of this Vote, nothing remains to be said except that what is due on foot of contracts falls to be paid.
I want the Minister to avail of this opportunity, if he will, to correct, if it is wrong, one astonishing mistake which appeared in yesterday's newspapers. I accept your ruling that this is an Estimate for no other purpose than to discharge an obligation when it comes in course of payment on foot of contracts entered into by way of arbitration. There appeared in yesterday's papers the statement that the astonishing terms accepted by the Minister in respect of the German and London loans were due to the fact that he urgently needed the money to meet charges that would come in course of payment between now and the time when revenue from next year's Budget would begin to flow into the Exchequer.
I know our financial situation is critical in the extreme, but I cannot feel that our financial revenue balance can be of such a character that we must borrow in London and Berlin or Bonn to meet charges that will come in course of payment between now and 31st March. There may have been some misunderstanding of the phraseology employed. It may be inappropriate, but I think it would be advantageous if the Minister would make it clear that we are not so absolutely on the bare boards as that public statement would suggest.
In the light of your intervention, a Cheann Comhairle, I will return to these matters in greater detail when other financial business comes before the House, but, ad interim, I think the Minister ought to explain certain matters and I hope that the indulgence requisite to permit him to do so will be forthcoming from the Chair.
Deputy Cosgrave raised a number of questions that I might deal with first. It is perhaps untimely that the provision for these increases is coming now, many months after the occasion arose for them. As I said, these increases have been mainly due to disparities that arose out of the general eighth round of pay increases. These disparities arose primarily because some of the grades we are now dealing with effected the eighth round pay increases very early on, and other comparable sectors effected more advantageous pay increases later on in the eighth round, and there followed the natural demand for adjustments by these public servants who had effected their pay increases at such an early stage. There followed that the adjustments in the higher grades, that is, the grades higher than the Post Office clerks and the clerical officers, the two grades to which I referred initially.
It is true that because of this there is greater need for expendition in the arbitration proceedings. Within the Civil Service, there are scores of separate staff organisations, each of which is entitled to process separately its claim at conciliation, and if dissatisfied there, at arbitration. As the House is aware, it is not very easy to get arbitrators who are acceptable, and who appear to be independent. I use the words "appear to be independent" deliberately because it is easy to get objective and independent arbitrators, but it is not easy to get both sides to agree to such arbitrators. Therefore, the pool of persons available and acceptable is very limited. In many cases the same arbitrator operates in a number of schemes and, as a result, the arbitration claims have to take their place in his queue and in the general queue as well. However, there are a number of different arbitrators and, objective though they may be, their objectivity in relation to scales on salary applications for kindred or related grades in the Civil Service is not the same, with the result that we have had this leapfrogging in the salary claims and the scales applied in the public service generally.
For this reason the tribunal on pay levels for the recruitment grades was set up and in direct reply to Deputy Cosgrave the tribunal will not, in fact, deal with the difficulty to which I have referred, that is, the delay in hearing arbitration claims. It will report on the relativities it feels ought to apply and it will guide the arbritrators in these conciliation and arbitration schemes in the future; but, over and above that, in order to avoid this disparity in arbitration awards caused by the fact that there are a number of different arbitrators, the Government have now decided to introduce legislation that will have the effect of channelling these arbitration claims under the one roof, so to speak, under an enlarged labour court.
Will this apply to the Civil Service as well as to——
Yes. The intention will be to enlarge the Labour Court itself and to make provision, if necessary, for the appointment of assessors with, very likely, a person common to all claims sitting in so that this disparity which has been emerging will, to the fullest extent in our power, be eliminated. I think that you will have that very desirable effect in the first instance and also, I hope, the effect of there being not too long a queue of those waiting to have their arbitration claims heard.
In connection with the number of arbitration claims, I might say that, since January, 1964, no less than 64 cases have been submitted. As the House is aware, many of these cases can each take a number of days to hear and certainly much longer than that to determine and to have a report presented and an award made. That gives some indication why there has been this long delay in hearing some of these claims, provision for which we are now making.
Deputy Cosgrave mentioned that there has been some comment on the level of salaries of civil servants generally and of higher civil servants in particular. There has been some criticism of the increases that have been granted to higher civil servants. I think we ought to get this into proper perspective. In the first place, and without pretending that this is the first time it has been said—I know it has been said by many members of this House—I think we can justifiably be proud of the quality of our Civil Service not only in its administrative standard but in the standard of its integrity as well.
Hear, hear.
In recent years, a tendency has been developing as a result of which many of the best brains leaving our universities are not attracted to the Civil Service. Special steps have had to be taken recently in order to enable young civil servants with obvious extra ability to acquire university degrees that would be of value to them and to the public service in later years. Up to 20 years ago, I think we could say that the Civil Service was a very attractive occupation for even the best Honours brains leaving our universities but that situation has changed. Apart altogether from the necessity of ensuring that we attract the best talents that we possibly can to our public service, we must also regard the position of outside employments vis-á-vis the service, especially in the top grades.
The highest grade in our Civil Service is the Secretary of a Department and his maximum salary is £4,750 a year. Some few of them earn higher than that, up to £5,200 a year, which is the top salary. If we make comparisons with the salaries enjoyed by civil servants in other countries, and indeed in the Six Counties, one will see that our higher civil servants are by no means overpaid.
The highest salary paid by the Stormont Government is £5,800 which is several hundred pounds higher than the highest salary we pay in our Civil Service and, under a recent revision, equivalent ranks in Britain now receive, at the highest, about £9,200 and the ordinary heads of Departments about £8,600. So, on that basis alone, I think it is only fair to say that our higher civil servants are not by any means overpaid and, in fact, on that comparison, are paid considerably less than their counterparts in rank and ability can command in the Six Counties and certainly much less than they can command in the United Kingdom.
I think we can make a more useful comparison within the State, in that we have persons recruited to the public service in another way, through the State-sponsored bodies. The chief executives and chief administrators of the State-sponsored bodies in most cases can command a considerably higher salary than the heads of Civil Service departments. I do not think it can be claimed that these chief executives or chief administrators have duties more onerous in any way than have the heads of our Civil Service Departments.
If we make a comparison with the business world—and I have taken some trouble to inquire about the rates of salaries of top executives in the business world—I am told that, in large public companies, these rates lie somewhere between £5,000 and £10,000: in some cases they may be above it. I think we can safely take a very conservative average of about £7,000. Therefore, comparing our standard salary of £4,750 with this average of £7,000, again, I think it is demonstrably clear that our higher civil servants are in no way being overpaid.
Deputy Cosgrave asked, in this context, about the rates of pay of lower-paid workers. I think I stated very clearly, in the course of the debate on the Report of the NIEC, that the Government were concerned about the rates of pay of lower-paid workers and advocated for the consideration of the employers' and the workers' organisations that, in any increase that would be implemented in the present year and in the coming months, special regard might be had to the claims of these lower-paid workers so that, with in the percentage increase thought to be feasible and which was put at that time at about three per cent, there might be a tolerance in favour of the lower-paid workers but it was felt that the higher-paid workers might accept a lower percentage increase in order to allow that tolerance in favour of their worse-off colleagues.
The problem of retired persons is one with which one always has sympathy. Indeed, I met them quite recently and heard their claims as to the disparity that had arisen between the pensions they enjoyed and the pensions enjoyed by people who retired from similar grades in later years. It is true that because of the increase in salaries persons retiring later enjoy proportionately higher pensions. An effort was made in recent years to increase the pensions of these retired persons and last year a good effort was made when a percentage increase higher than ever before was granted to them. Like many other things, this is a budgetary matter and I do not think I can discuss it further at this stage.
If I may refer to the loan, even though the Ceann Comhairle ruled it out of order—the Sterling-Deutschemark loan—which was recently negotiated, it is true that the terms are high but the international bond market is very high and interest rates are increasing rapidly in accordance with the law of supply and demand. The terms are in line with those obtaining in the Deutschemark market itself at present. A recent issue by the Federal Government of Germany gave a yield to redemption of 71/4 per cent which is similar to the yield in the Sterling-Deutschemark loan we are seeking. It is important that the first issue in a foreign market by this country should be a success and in order to make it successful we must pay the going rate.
It is true that we have had to resort to foreign borrowing at present because we realise there is only a certain capacity within the country from private and public sources for creating investment for capital development. It has been put at about £70 million to £75 million and that has been our experience, taking one year with another, as regards the capital that we can get from the savings of our people generally. If we are to maintain our progress of economic development at a reasonable rate, we must seek capital from abroad and I think there is nothing wrong in that so long as we can remunerate it and devote the moneys received in that way to productive purposes generally. The loan we are now getting through this Sterling-Deutschemark issue is needed for our public capital programme. I know I am slightly out of order but since the matter was raised before the Ceann Comhairle ruled it out of order. I think I am in order in replying even in this short manner.
Would the Minister care to comment on the newspaper comment to which I directed his attention?
I did not see the newspaper comment but what I have said now is a fair comment on that. This borrowing in the Deutschemark-Sterling loan is needed for the purpose of our capital programme and also of course to ease the pressure to which Deputy Cosgrave referred of public borrowing from the banks. It is true that the public sector took up a very disaproportionate amount from the commercial banks in the past year and it is very desirable to avoid doing that so as to permit private sector development to the fullest possible extent. The borrowing to which I have referred will help to ease that situation.
Vote put and agreed to.