Vol. 376 No. 6
asked the Minister for Finance the total number of persons in the public service who have to date been offered the July, 1987 terms of redundancy; the total number who have accepted these terms as sanctioned by his Department; the estimated cost to date of these 1987 acceptances; the estimated number of redundancy acceptances for 1988 and the estimated costs thereof; and the details of the agreed funding of these measures by the Central Bank.
28.
asked the Minister for Finance if his Department are actively pursuing a co-ordinating role between all Government Departments with regard to the redundancy-redeployment package announced by him in late July 1987; if he has satisfied himself that the intended number of 10,000 redundancies in the public service will be effected in this financial year; and if he will make a statement on the matter.
69.
asked the Minister for Finance if he has satisfied himself that the Government's expenditure targets for public service pay will be met for this year particularly in relation to the uptake on the proposed redundancy-early retirement package announced in the last few months.
With the permission of the Ceann Comhairle, I propose to take Questions Nos. 12, 28 and 69 together.
Based on expenditure returns from Departments, the present indications are that the Exchequer pay and pensions bill, including the exceptional costs arising under the voluntary early retirement scheme, is likely to be somewhat below the budget target.
My Department are actively co-ordinating the application of the voluntary early retirement package and redeployment in the public service.
Deputy Kennedy referred to a target of 10,000 redundancies this year. This is a misinterpretation of my earlier statement that the number on the public sector payroll, including local authorities, would fall by approximately 10,000. As I have previously indicated, this does not imply any specific figure for redundancy or early retirement since the reduction will be achieved by a combination of natural wastage, career breaks, and the scheme of voluntary early retirement. To date, the early retirement package has been offered to about 13,500 public servants. About 900 have accepted and will be leaving during 1987. The redundancy lump sums and related payments due in 1987 will amount to £10 million. I intend to introduce an additional Estimate for this amount in the Dáil this week.
In relation to 1988, the position is that in many areas of the public service the offer of voluntary early retirement will be made in the course of the year. Some public service employers such as health agencies and local authorities have not yet decided on the appropriate level of staffing in 1988, in the light of their 1988 allocations so it is not known how many redundancies they will be seeking. It is therefore not possible at this stage to give a number of redundancy acceptances for 1988. However, within this constraint, it is tentatively estimated that the requirement for lump sum payments in 1988 will be in the region of £80 to £100 million.
As regards the financing of these lumpsum payments I am pleased to report that the board of the Central Bank have now approved of arrangements under which the Bank will make advance payments of surplus income to the Exchequer, so as to assist the Exchequer in meeting the exceptional costs of the redundancy programme.
The arrangements are in accordance with section 63 (7) of the Currency Act, 1927 which provides that the Central Bank may at any time pay into the Exchequer such sums on account of surplus income as may be agreed upon by the Minister for Finance and the Central Bank.
I should explain that in the normal course the Exchequer receives from the Central Bank each year the surplus income earned by the bank in the previous year, less certain appropriations to the reserves of the bank. Under the arrangements now agreed with the bank the Exchequer will receive in 1988, in addition to the normal payment of the surplus income from 1987, an advance payment out of the surplus the Central Bank will earn in 1988. The amount of this advance of surplus income will be sufficient to cover the cost of the lumpsum redundancy payments, most of which will fall in 1988 as I have indicated. The result will be that the exceptional costs of the redundancy programme will be financed by the additional surplus income from the Central Bank, and will not add to either the current budget deficit or the Exchequer borrowing requirement. The additional surplus income from the Central Bank will come into the Exchequer as non-tax revenue in the normal way.
The advance by the Central Bank will be repaid. Repayments will be financed out of the annual savings to the Exchequer from the redundancy programme. Therefore, the exceptional lump-sum payments will not increase the national debt or the cost of servicing it.
The repayments will take the form of four equal annual deductions by the Central Bank from the normal payments of surplus income for the years 1990 to 1993 inclusive. This repayment period was agreed by the bank so as to allow the full impact of the savings to come through to the Exchequer and to ensure that realised savings are adequate to meet repayments to the bank.
The bank has also agreed to finance the £10 million of lump sum payments that are expected to arise this year under the scheme. Similar financing and repayment arrangements to those that I have already outlined, in respect of the 1988 costs of the redundancy lump sum, will apply.
In agreeing to the financing arrangements the Central Bank indicated that they had taken into account the exceptional costs of the redundancy programme and the strenuous efforts being made by the Government to secure a lasting reduction in public expenditure and borrowing. I want to place on record the Government's appreciation of the constructive attitude adopted by the bank in this matter.
We have just had the alarming disclosure today that between £80 million and £1,000 million will be borrowed next year, together with £10 million by way of an advance to cover this year, and that that money must be repaid by 1993. Circular madness has afflicted the Government in that they are firing 900 public servants this year and between 8,000 and 10,000 next year. They will have to pay for all that by way of advances from the Central Bank on normal surpluses which would go into non-tax revenue to keep the day to day administration going. Will the Minister agree that such a strategy would make any respectable Minister for Finance with responsibility for the public service contemplate resignation if he was handling any other public service employment in the State? Will the Minister agree that the whole tattered edifice of laying off 10,000 people needlessly thus dramatically diminishing the quality of the public service, in the areas of environment, education and health, for no good purpose other than giving people lump sum payments from the Central Bank surplus to be repaid by 1993 is wrong?
The Deputy should bring his supplementaries to finality.
I presume that the commercial directors of the Central Bank, who are in the majority, are laughing all the way to their commercial banks having again given the Minister another £100 million by way of loans which must be repaid by 1993 to implement a crazy strategy of public service disemployment.
Deputy Desmond, this is proving to be quite a speech.
I am so appalled that my mind boggles at such stupidity.
I cannot understand the absolute nonsense and charade that I have been listening to for the past three minutes.
It is ridiculous.
The Deputy was in Government for four and a half years——
And we never——
——and they abolished certain agencies and left the staffs sitting in offices with nothing to do——
I never did that.
——and nowhere to go. They did it and they sat at the same Government table.
They left hundreds of people sitting around with nothing to do and they had not the courage to face what has been necessary for quite some time now, a voluntary redundancy early retirment.
That is ridiculous.
Nobody has been fired and nobody will be fired.
What about AFT and the NSSB?
This is a voluntary redundancy scheme. This question is related to voluntary redundancy. People decide voluntarily what they are going to do.
It is——
Deputy Desmond asked a number of questions. Let him listen to the replies.
Let me conclude. The main reason for this arrangement is, as has been pointed out by the Central Bank themselves, to ensure that the Exchequer borrowing requirement or the budget deficit will not be increased as a result of this major development in the public service.
I want to advise the House that I am obliged to proceed with priority questions in a moment. A brief question from Deputy Noonan and a brief question from Deputy McDowell. I am going on then to deal with priority questions. I am obliged to do so.
(Limerick East): Would the Minister agree that the particular redundancy scheme is inordinately expensive, that there are no real savings whatsoever and the savings are notional simply because the lump sum redundancy is off the balance sheet? If you put the total sum together no private company would offer that kind of redundancy scheme to their workers. It is far too expensive. There are no savings for about four years.
All I can say in reply to Deputy Noonan is that I do not know why he is talking about it being so generous. The one complaint has been that it is not generous enough compared with what is being offered right across the private sector which is away above what is being offered here.
(Limerick East): That is far too expensive. The Minister is financing it off the balance sheet.
Would the Minister agree that expenditure on redundancy in ordinary commercial circumstances is either capital or current, that this expenditure by the Government on this package is either capital or current and must in all logic and accounting honesty appear as either a current or capital item, and that no disguising it as a loan and going through all this rigmarole with the Central Bank changes the fact that this money is going to be spent next year and is not going to appear in the public accounts in order to give a better appearance? Does the Minister agree with that?
I do not agree at all with what the Deputy has said. When I first announced this programme in July this year I said clearly how and why it was being done and how it would not impinge on the EBR or the budget deficit.
Is it capital or current?
The Deputy can describe it any way he likes. It is coming in as non-tax revenue and therefore is current.
Order. I must go on to priority questions now.
I regret Deputies here are so disappointed that this scheme is so successful, that they themselves failed to think of anything like it, that it is working so well and that the independent agency of the Central Bank are prepared to back it.
There was no need to even do it.
On a point of order, could I please put a supplementary to my priority question which was included in the questions the Minister has just answered?
Had the Deputy offered earlier, I would have called her.
Unfortunately I could not because a number of Deputies were being answered. I feel as it is priority time and mine is a priority question I should be allowed some latitude.
The Deputy will be aware and the House must now be made aware that I am proceeding to other business at 3.45 p.m. and if some of these priority questions are not reached by then it will be the Deputy's own fault.
I will be brief. I notice that the Minister in his reply referred to 900 acceptances of redundancies. I am not sure whether it includes early retirement, but out of a total of 13,500 who applied there was an objective of 10,000 presumably which was announced in July. I cannot understand why the Minister is claiming that that is successful, but my question related to whether the public service pay bill for this year remains in place as it was announced to be because the Government obviously wanted further redundancies and have not got them. So, is the public service pay bill going to remain as it was intended to be?
The simple answer is "yes". I can give the Deputy the details if she so wishes because that question was asked. As I said in my reply, it would be below the amounts. In the budget for this year it was £2,833 million. It will now be £2,813 million. That is a saving of £20 million which comes about as follows: Civil Service nil, Garda minus £1 million, education——
Sorry, would the Minister call them out slowly? I am aghast.
I was wondering why the Deputy was shouting earlier. Civil Service, zero saving, Garda, £1 million saving, education, £12 million saving, defence, £6 million saving, health zero and others £1 million. In relation to education it is basically an over-estimation.
Priority question No. 68 please.
Deputy O'Rourke will not thank the Minister for that disclosure today.
Deputy Desmond will have to restrain himself.
Deputy Mary O'Rourke will have a canary.
