Dáil Éireann debate -
Wednesday, 21 Oct 1998

Vol. 495 No. 5

Written Answers. - Public Sector Pay.

Joe Higgins

Question:

121 Mr. Higgins (Dublin West) asked the Minister for Finance if the 1997 outturn for public sector pay in the Revised Estimates for the Public Services 1998 include employer's PRSI, gross wages, salaries and pensions, including income tax, employees' PRSI, health levy, employment and training levy and superannuation contributions by public sector employees. [20706/98]

Joe Higgins

Question:

122 Mr. Higgins (Dublin West) asked the Minister for Finance his views on whether there is an element of double counting in that gross pensions and superannuation contributions are included as a cost part of gross pay; and his further views on whether it would be more correct from a statistical point of view to add the figure of net pensions, gross pensions less superannuation contributions, to gross pay and employer's PRSI contributions. [20707/98]

Joe Higgins

Question:

123 Mr. Higgins (Dublin West) asked the Minister for Finance the original figure and the adjusted figure, in the calculations for the outturn in public sector pay in 1997, on the basis of using net pensions rather than gross pensions. [20708/98]

Joe Higgins

Question:

124 Mr. Higgins (Dublin West) asked the Minister for Finance if, in terms of opportunity cost to the private sector, the correct burden of public sector pay is gross pay and gross pensions minus employee's PRSI, employee's income tax, health levy, income and training and superannuation contributions and not the figure quoted in the media as provided in the Revised Estimates for Public Services 1998; and if he will provide the figure for the opportunity cost of the outturn in public sector pay for 1997 on this basis. [20709/98]

Minister for Finance (Mr. McCreevy)

I propose to take questions Nos. 121, 122, 123 and 124 together.

The figure for public service pay and pensions that appears in the Estimates (the ‘Exchequer Pay and Pensions Bill') represents the cost to the Exchequer of the pay and pensions of civil servants, teachers, gardaí and the Defence Forces as well as the amounts which are included for pay and pensions in grants to health boards and other health agencies (such as voluntary hospitals), universities and other third level colleges and noncommercial State-sponsored bodies. It does not include the pay or pension costs of the staff of local authorities.

The Estimates figure covers pay and pension payments before deductions in respect of income tax, employee PRSI contributions, health contributions, and employment and training levies. It includes the cost of employer PRSI contributions and takes account of certain appropriations-in-aid which come directly into departmental Votes and which relate to pay and pensions, such as superannuation contributions by civil servants, teachers, gardaí and members of the Defence

Forces. Other payments received by Departments and employing organisations relating to the secondment of staff or in payment for services provided, and certain receipts from the European Social Fund are also included as appropriations-in-aid and off-set against the gross cost of pay and pensions.

I do not accept that there is an element of double counting as a result of the treatment of pensions contributions in the Estimates. As already indicated, employee superannuation contributions by civil servants, teachers, gardaí and members of the Defence Forces which are taken directly into the relevant Votes as appropriations-in-aid are netted off expenditure on pensions in those sectors. In the case of the health service, pension contribution receipts are not shown in the Vote, but are taken into account in calculating the grant required for pay and pension payments in the health Vote. Accordingly, the 1997 outturn for public service pay and pensions shown in the Revised Estimates for the Public Services 1998 represents, in the case of pension expenditure, the net cost to the Exchequer after allowing for employee superannuation contributions.

While it is reasonable for the Government as employer to off-set the gross cost of pay and pensions expenditure by receipts in respect of employee superannuation contributions, it would not be appropriate to express the costs involved net of income tax and other statutory deductions. Unlike pension contributions, these deductions do not come in as a receipt to the public service employer concerned. I would also point out that certain elements of all public expenditure (pay, non-pay and capital) tend to generate revenue for the Exchequer by way of direct and indirect taxation. This revenue is not shown in the Estimates but is taken into account in the overall budgetary arithmetic as part of overall tax receipts. Moreover, I believe that a comparison of public service and private sector employment costs should be on the basis of the full cost before taxation, PRSI and levies are deducted — any other approach would favour Government expenditure over private sector expenditure.

I am not in a position to provide the Deputy with details of the receipts from income tax, employee PRSI contributions and statutory levies paid by those public servants covered by the Exchequer Pay and Pensions Bill. Details of such payments by this group are not recorded separately by the Revenue Commissioners or the Department of Social, Community and Family Affairs, and a generalised global figure cannot be calculated because the amount paid depends not just on the level of salary or pension but also on individual circumstances.