Vol. 432 No. 3
5 Mr. Yates asked the Minister for Finance the cost for 1993 and 1994 of the outcome of his meeting with public service unions on Friday, 4 June 1993: and the level, prior to any annual pay increase being awarded, of the public sector pay bill will be at in 1994, including the percentage increase over this year.
7 Mr. Cox asked the Minister for Finance the estimated cost implications of his recent understanding with the public service unions which includes, inter alia, the appointment of an arbitrator and provisions for local bargaining; the extra amount this is likely to cost in the budget year 1993 over and above the estimate already provided for; and the full year cost implications of this understanding for 1994.
I propose to take Questions Nos. 5 and 7 together.
Copies of the understanding reached on 4 June 1993 between the Government and the Irish Congress of Trade Unions on the implementation of the pay commitments in the Programme for Economic and Social Progress (PESP) in the public service have been placed in the Dáil Library. The understanding reaffirms, inter alia, the Government's intention to honour commitments as yet outstanding which were made in the Government's package on public service pay of 17 January 1992.
Deputies will recall that the package of 17 January 1992 had the effect of deferring implementation of general round pay increases under the Programme for Economic and Social Progress in 1992 and 1993. In relation to 1993, the package provided for the imposition of a ceiling of £6.50 per week on the general round increase of 3.75 per cent which was paid on 1 January 1993 and its removal with effect from 1 December 1993. The understanding reaffirms the commitment to remove the ceiling on 1 December 1993. The estimated cost in 1993 is £7 million and provision has been included in the Estimates for the Public Services for 1993. The carryover cost in 1994 is estimated at £68 million.
The understanding also provides for the implementation of the commitment in the package of 17 January 1992 to recoup the losses arising from the application in 1992 and 1993 of the ceilings of £5 per week and £6.50 per week respectively. The cost is estimated at £118 million in 1994.
None of the foregoing costs is new. Essentially they derive from commitments previously made, as outlined in the package of 17 January 1992.
Implementation of the commitments, together with an estimated £30 million for payment of salary increments are estimated to increase the Exchequer pay and pensions bill for 1994 by £216 million or 5 per cent.
The understanding, as it applies to public service pay, also provides for the orderly processing of claims under clause 3, local bargaining, of the Programme for Economic and Social Progress, the appointment of a person to act as chairman of the public service arbitration board until 31 March 1994 and a commitment to complete negotiations on a new system of public service pay determination and industrial relations machinery by 31 October next.
In relation to claims for increases under clause 3, local bargaining/ restructuring, the Government remains committed to realistic and meaningful discussions. I welcome the willingness of the congress to give restructuring discussions affecting claims from pivotal groups a reasonable opportunity to come to fruition with a view to reaching agreement not later than 31 October next. After that date, if agreement has not been reached, the groups concerned will be free to pursue claims to arbitration.
The position of the Government, as set out in my Budget Statement, continues to be that any settlements or adjustments under clause 3, must not add to payroll costs in 1993 and must not prejudice the 1994 situation. I am pleased that the congress has noted the Government's position in this respect while stating that they could not, however, commit themselves in advance to the outcome of any negotiations. Congress has also acknowledged the right of the Government and of employers generally to seek measures to offset costs arising under clause 3 and have accepted that payroll neutral settlements and adjustments are not ruled out under that clause.
Public service employers will be obliged to adhere to the Government's position in their negotiations. Given the overall position, as outlined, I am not making any provision for additional costs in 1993 and 1994 beyond those already mentioned earlier in relation to the cost of removing the ceilings which were applied to general increases under the Programme for Economic and Social Progress.
I am particularly pleased at the commitment by the congress to conclude discussions on future arrangements for determining pay and the industrial relations machinery by 31 October next.
I am pleased the Minister referred to the Budget Statement of 25 February, 1993. Does he recall saying that there was an air of unreality in the expectation of trade unions and he would not ask taxpayers to pay for further increases in public sector pay? In view of those statements how can he now justify his U-turn on those statements in respect of what was agreed on 4 June? Will the Minister clarify the position in regard to the 3 per cent local pay bargaining clause and give a categoric commitment that there will not be a further increase in public sector pay given that the combined effect of the Programme for National Recovery and the Programme for Economic and Social Progress was that public sector pay has now increased at the rate of 2.5 times inflation over that period?
Deputy Yates will be aware that the figures announced in the Estimates in February, before the budget, and those in the budget are the same.
For 1994?
For 1993. I did not bring in the 1994 budget this year. The figures announced in the Book of Estimates for 1993 and the plans for 1994 of the carry over are precisely what is contained in the agreement of 17 January 1992. To answer the first question, there are no figures.
In relation to the second question, the position under the Programme for National Recovery was that the public service unions and the public unions generally accepted a 2.5 per cent non-index related pay increase when growth rates in the economy were double that figure and inflation was approximately that figure. Therefore, the State did very well. The State did not do as well under the Programme for Economic and Social Progress because growth rates were less and pay levels were more but were not based on the fixed rates of pay. Agreements were made in 1987 and in 1988 to roll over arbitration awards that were negotiated in 1986 and to pay those in 1991 and 1992. We are paying those awards in 1992 and 1993.
I understand from the Minister's response that before any local bargaining takes place with any pay implication for the next year or, indeed, possibly this year, and before any further round takes place next year, the public sector pay bill will rise next year by 5 per cent before anything else is given. Does the Minister have any sense of a boundary on this State's ability to pay for constant rises above and beyond the rate of inflation? Can he explain how what he has done in recent weeks in the name of the so-called understanding does not fly in the face of the logic of his budget, with particular reference to the following remark: "I am not making any provision in this budget for more improvements in pay or conditions". An arbitrator has been appointed. We know what the effect of aribtrators has been; the idea that the arbitrator is the best arbitrage of the public interest is frankly ludicrous based on the history of that office.
There is a commitment under the Programme for Economic and Social Progress that an arbitrator will remain in place until the end of the Programme for Economic and Social Progress. The only reason there is no arbitrator is that the previous holder of the office was appointed to the Judiciary, thereby leaving the post vacant so there is no change so far as the position is concerned. To reiterate what Deputy Cox already knows, the figures for pay in 1993 are already included in the Book of Estimates under all categories and headings. This is as a result of the agreement of 17 January 1992 when the Government gave an undertaking that the outstanding commitments which they could not pay in 1992 would be deferred to 1993 and that the remaining agreements from arbitration cases which have been in existence since 1986 would be paid and not later than 1994. I am confirming that the pay bill in 1994, based on the present as it stands now, will show a 5 per cent increase.
Without any further increase next year?
Perhaps we can have brief questions from the Deputies concerned, Deputies Yates and Cox. I want very much to deal with the three remaining questions. We must be fair about these matters.
Is the Minister prepared to acknowledge that there is a trade off between pay increases and jobs in so far as more public sector pay means more taxation and more pressure on the public finances, all of which impacts on competitiveness? Would he agree also that it is imperative he holds a strong line in 1994 in relation to a new round? Would he agree also that the best way to proceed in relation to real increases in incomes is by way of tax reductions and that his highest priority will be, therefore, the abolition of the 1 per cent income levy before he becomes involved in further pay increases?
I accept Deputy Yates' point because as I have stated many times over the past number of years, it is desirable that pay increases be kept at low levels by way of helping job creation. In effect, since 1988 the pay limits under the Programme for National Recovery and the Programme for Economic and Social Progress range from 2.5 per cent — for three years — to between 3 per cent and 3.25 per cent for the other three years which is in no way excessive.
If the specials are included.
The difficulty is that special claims presented to the arbitration process in 1986 were deferred because of the financial crises of successive Governments right up until 1992. They must be paid but the Deputy can take it that for 1994 and thereafter it is the Government's intention to keep pay levels as low as possible.
Would the Minister not accept that in the process of bargaining on any new pay round, which no doubt the Government and the unions will be engaged in during the coming months, it sets an appalling headline if he attempts to be the great facilitator and goes back on what he said in the budget, offers additional conditions and succour to the public sector unions and signals clearly that when it comes to this type of policy area he is not a man for holding the line but is a man of straw who is a pushover for the unions? He will wreck the public finances of this State and damage job prospects if he does not tackle fundamentally the public pay issue.
Deputy Cox's party was in Government when these agreements were made. In fact I was put under considerable pressure by his colleagues to make an agreement in 1992 in case they would have to face a national strike.
The Minister did not answer the question. He failed to hold the line.
The idea of doctors, nurses and teachers protesting on the streets caused Deputy Cox's party to run a mile.
Last week someone cried "wolf" and the Minister rolled over and died.
This agreement is the Deputy's agreement. He actually negotiated it to stay in power for an other three years.
Let us conserve the precious time of priority questions. I must insist——
Will the Minister answer the question? Did he have the ability to hold the line? Is it like the amnesty, Minister?
Deputy Cox, please desist. We are dealing with priority questions and time is precious. We have three more questions to deal with. Question No. 6, please.
Is the Minister a sheep or a wolf?
