Ceisteanna — Questions (Resumed).

Social Partnership.

Eamon Gilmore

Question:

1 Deputy Eamon Gilmore asked the Taoiseach the progress made to date in the renewed talks with the social partners; if a date has been set for the resumption of the talks; and if he will make a statement on the matter. [15141/09]

Enda Kenny

Question:

2 Deputy Enda Kenny asked the Taoiseach if he will report on the implementation of the social partnership agreement; and if he will make a statement on the matter. [15531/09]

Enda Kenny

Question:

3 Deputy Enda Kenny asked the Taoiseach when he will next meet the social partners; and if he will make a statement on the matter. [15532/09]

Enda Kenny

Question:

4 Deputy Enda Kenny asked the Taoiseach if he will report on progress in the social partnership talks; and if he will make a statement on the matter. [15562/09]

Caoimhghín Ó Caoláin

Question:

5 Deputy Caoimhghín Ó Caoláin asked the Taoiseach the status of the talks with the social partners. [16424/09]

I propose to take Questions Nos. 1 to 5, inclusive, together.

Following my invitation on 24 March, the Government and social partners have had further engagement within the context of the Framework for a Pact for Stabilisation, Social Solidarity and Economic Renewal agreed in January, and the subsequent report of the National Economic and Social Council, NESC, which emphasises the importance of an integrated policy approach which addresses all five dimensions of the current crisis. This engagement has focused on developing a shared understanding of how to respond to the five interlocking sets of problems identified by the NESC — economic, social, banking, public finances and reputational.

Recent discussions with the ICTU and IBEC have focused, in particular, on protecting jobs and assisting those who lose their jobs; responding to the challenges facing the pensions system; support for enterprises facing particular difficulties at present; taxation and expenditure adjustments required to return the public finances to stability; maintaining a sustainable level of social protection; difficulties encountered in meeting mortgage commitments as a result of job losses; the transformation of public services; the concept of a national recovery bond; corporate governance concerns arising from recent developments; and employment rights and industrial relations.

There has also been engagement on issues relating to pay and related matters. The Government and each of the pillars of social partnership have continued these discussions on an intensive basis following the supplementary budget on 7 April. Yesterday the Government considered the progress made, which included an overview on the main areas of difficulty that have emerged. The Government will reflect on these issues further in the coming days and further contact will be made with the social partners following that consideration.

It is clear there is a great deal of common ground between the Government and the social partners and there is a strong case for the continuation of social partnership as part of the distinctive European tradition of social dialogue. I am hopeful the basis will be found for that to continue in our case at this particularly challenging time.

The Government made an agreement with the social partners last September, which could not be implemented. It then had further talks with them in January where they agreed to a €2 billion adjustment in the public finances but the Government walked out and introduced the levy unilaterally, which caused huge anger and resentment among many working people. The Taoiseach then made a third attempt recently to reconvene the social partnership talks, which have collapsed. It looks like he will be the first Taoiseach in 22 years not to conclude a social partnership agreement with the trade unions and employers and this is in circumstances where there seems to be remarkable common ground between the ICTU and IBEC, in particular, on key issues such as the need to sustain employment, about which we heard from Turlough O'Sullivan last Friday. Is it not the case that the Government has collapsed the social partnership process, it is over and however he may try to put it back on life support or try to have further meetings to maintain the fiction that social partnership is continuing, nothing of any real significance will be agreed in the process?

That is not true. The contention we have collapsed talks is totally untrue. I value the social partnership process and I believe it is an essential aspect of governance in a modern democratic society, especially in a small open economy like ours where consistency of approach is helpful for economic and social well-being. It is true we have as yet failed to arrive at a basis for a formal agreement with the social partners. However, we remain committed to the approach and objectives agreed with them in Towards 2016, the ten-year framework agreement that remains in place to which we are all working. We are operating very much within the framework we agreed with the social partners at the end of January and are reflecting in our policies and actions the approach set out in the NESC report on the current crisis.

There is, therefore, a very solid measure of agreement with the social partners but turning that into a formal accord, which can be ratified by the members of the various social partnership pillars, is proving difficult. Far more unites than divides us and the Government will engage with the social partners in an effort to bring finality to the recent talks process over the coming days and weeks. Whatever the outcome of the engagement, I believe dialogue against a background of shared interests and objectives will continue.

There has been a great deal of discussion with the social partners. Complex issues have been discussed and teased out but there are difficulties and problems. There is certain room for manoeuvre for Government but the process has been beneficial and productive. We have not reached a formal accord. We agreed that by the beginning of May both sides would step back and reflect on what way we can move the issues forward. I said I intended formally returning to the talks and giving an outline of what I believe the Government's position would be based on all the discussions. At the end of the day, responsibility for policy remains with Government but the benefit of social partnership and social dialogue is to try to see in what way we can incorporate the perspectives and insights of the social partners in devising policies.

We are at a point where social partnership is all process and no agreement. What are the likely headings of any agreement that might emerge from a resumption of talks? It is clear there will not be an agreement on pay. The agreement made last September is dead.

The public sector pay agreement?

Is the Government implementing the public sector pay agreement?

Of course we are implementing it.

The public sector pay agreement did not provide for any pay increase. I thought the Taoiseach told us that was put off.

Yes, we deferred it.

That is the same thing. There is no point in splitting hairs. The Taoiseach made an agreement last September.

There is a problem with the private sector pay agreement.

The position is that it is not being implemented in the private sector.

That is a problem.

The Taoiseach is not going to implement it in the public sector. The first rounds of it are due next September and October and he has deferred that. There is no point in saying there is a pay agreement; the reality is it does not exist.

Will the Taoiseach seek agreement with the social partners on public sector employment levels? Will there be agreement with the social partners when Mr. McCarthy and an bord snip report? Will there be agreement with the social partners on private sector pensions? The Minister for Social and Family Affairs rushed to the House with legislation last week that does not appear to have been agreed with anybody. Will there be agreement with the social partners on that?

Paying lip service to the theory of social partnership is no substitute for having a social partnership agreement. I do not see the heads of any agreement either from what the Taoiseach has said in response to these questions today or in the reports that have been widely publicised in the media about the outcome of the talks that have been ongoing for the past couple of weeks.

Deputy Gilmore has unfairly characterised the talks that have been taking place in recent weeks and months. That is my answer to his question. He is suggesting it is all process and no substance. It has substance. We are working to a ten-year framework agreement. Much of the effort we have made on the budgetary position arises from the framework agreement, which has content, and getting the agreement of the social partners on the need to reduce the deficit position to 3% over a period of years. The framework agreement of January outlines in detail the areas where we have continued discussion and where we have been working on what we introduced legislatively last week. That was an effort to improve the situation for those pension schemes that are insolvent and are experiencing problems and to try to assist in some way deferred and active people in the pension schemes and pensioners themselves. Further consideration must be given to that area, which is a difficult and complex one, but it is one that has been highlighted as important by the social partners and we are working through those issues with them.

We have brought forward active labour policies and expanded programmes. That has come about as a result of social partnership discussions. We have had insights and perspectives from all pillars of the social partnership process. On the question of to what extent we can now develop those and the need to try to develop them, it was always the case that the budgetary response was a first step in that process. That continues to be discussed between us. I would like to see some measure of agreement on it. It is not fair to say that this is all about a process not substance. In fairness to all the people who are at the talks, the reason all of these discussions are taking place is for the purpose of trying to devise a framework for stability and recovery.

Progress can be reported in some areas and there are some areas on which it has not yet been possible for us to reach agreement for the purpose of trying to devise an accord. That process is continuing. We are at the stage in the process where both sides have had their discussions, offered their insights, shared analyses and considered all the facts. Rather than saying the process has collapsed, it is my intention that the social partnership talks would resume in the coming days and weeks so that the Government can put its views based on all of the discussions we have had. That is the right way to proceed.

I welcome the proposals put forward today by the Construction Industry Council for off-balance sheet financing of infrastructural projects. I regret that they are not nearly as ambitious as the proposals put forward by my party a number of weeks ago. We put forward serious proposals that would lead to the creation of 100,000 jobs in four years in a range of areas that of themselves would be an attraction for investment in the country. What is the nature of the discussion the Taoiseach proposes to have with the Construction Industry Council in respect of off-balance sheet financing for infrastructural projects?

The Taoiseach stated social partnership should be based on the key principles of fairness and equity. I share that view. The unfair and inequitable introduction of the pension levy and the manner of its introduction killed social partnership in February. What did the unions ask for that the Government was not able to deliver, which led to a breakdown of the talks? Does the Taoiseach believe the pay element of social partnership is dead? If that is the case, is an alternative being proposed by Government? Is there another method by which it sees social partnership being able to continue? In that regard, will he comment on reports that the Government is considering a new social partnership format and structure? If so, will that include people who have been left out of the previous one, such as consumers, and will the Oireachtas have any role or responsibility in any proposed new social partnership format? Will the Taoiseach comment on those matters first?

Social dialogue is important at all times, regardless of the status of discussions and whether there are agreements. Institutions are in place such as the National Implementation Body in industrial relations terms, the National Economic and Social Council in terms of common macroeconomic analysis and the steering committee for the Towards 2016 agreement. All of those bodies are important means by which dialogue and an open approach between the Government and the social partners are created. That is necessary in order to ensure that everyone understands where everyone is coming from on various issues as they arise. The idea that we wish to collapse social partnership is totally without foundation. In my view, these areas of activity must continue in any event, regardless of whether we can successfully conclude an accord. We are trying to conclude an accord but there are difficult issues and we are not there as yet. We have agreed to reflect and come back on those points.

On the pension levy question, given the financial situation the country was facing, it was made clear by me at all times that we had until the end of January to see whether we could find agreement on the savings of €2 billion that needed to be identified and obtained. It was not possible to find agreement. I respect that. If people cannot agree to something, they do not give their agreement to it. By the same token, it was designed to avoid a situation where, for example, a pay cut would have an effect on pensioners in a way that the pension levy does not have an effect on them. Therefore, there was an attempt to discriminate in that respect. That involves an imposition, but one was making those choices to avoid a situation where service levels would have been seriously depleted.

Apart from that, there was a level of job security in the public sector that was not available to the same extent in the private sector. The economic cost of pensions available in the public sector is not demanded of those who work in the sector because in the present circumstances if one were to pay the full economic cost of pension provisions it would in the region of 23% of income. That was not something the Government was contemplating, but some contribution had to be made and provision was made for the average 7.5% imposition. In addition, other expenditure savings had to be identified in any event.

On the question on the Construction Industry Council and the pension fund industry, the Minister for Finance set out his position in his Budget Statement. He indicated that discussions have been continuing in this regard to see whether it is possible to identify other sources of funding, given the serious lack of room for manoeuvre, for example, on the public finances, which one could seek to utilise for the wider public good to meet Government priorities. Even allowing for the difficult situation we are in at the moment, we are still spending an enormous amount of capital this year, at 5% of GNP, which is one of the highest ratios in the world. This already supports 100,000 jobs, and the reduction in tender prices means we can do more with less.

The Government is prepared to look at new ways to fund needed capital investment and support more jobs, provided the terms are right and in the taxpayers' favour, that the investment makes economic sense, that value for money is secured and that the private sector shares the appropriate level of risk. I would like to see money invested abroad put to work here, if a sensible and workable proposal emerges.

There have been talks between Department officials and the pensions industry and several other parties to discuss alternative funding proposals, which includes the likely sources of funding and what would be needed to access such funding. Further meetings will take place in the coming weeks as well.

Can the Taoiseach refer to reports that the Government is considering a new structure of social partnership? In what format does the Taoiseach see it? Will a greater number of community sectors be involved? Will the Oireachtas have any role or responsibility? Is it not a weakness in the current system that the Oireachtas has been left out of the framework?

Deputy Gilmore spoke about the issue of bank lending and credit. Fine Gael supported the guarantee scheme and the recapitalisation programme, but it has not worked to the extent that people wanted. The problem appears to be that people in business for 40 years and who have been good customers to their banks see that their reputation now counts for nothing when it comes to overdraft facilities. The real problem is that the local bank managers are now unable to make decisions, and that those who make decisions will not discuss with business people the question of making facilities available. In most cases, none of those decision makers has ever created a job in the first place.

Arising out of the fears of social partnership, what is the Government's approach towards retaining jobs? The first problem of every small firm is how to retain existing jobs. What is the Government's strategy to attempt to hold onto jobs we already have? Will there be some sort of loan guarantee scheme, a subsidy towards the jobs or a reduction of PRSI or whatever, given the exceptional economic circumstances in which we find ourselves?

The unions made the point yesterday that if there is no agreement on social partnership, the Government will be facing a period of industrial unrest. Is the Government cognisant of that? What sort of discussions is it having with the social partners so that the country will not come to a complete standstill. I am sure the Taoiseach is as concerned about this as everybody else. What sort of strategy will the Government adopt towards that possibility, which nobody would like to see happen?

We are not suggesting that there be a different type of social partnership. We are trying to provide agreement on the issues of concern that have been raised by the social partners. In the event of it being impossible to find an agreement, we still need structures of social dialogue in place. There are structures that will continue to be utilised with or without an agreement. We have a ten year framework agreement, Towards 2016, which informs many of the policy options that the Government must consider in any event. The national implementation body, NESC and the steering committee of the ten year framework agreement would continue to be in place regardless. We are working to see if an agreement can be reached, but it is not a question of everything collapsing and there being no dialogue between us. Those avenues for dialogue must continue to be available, as we all try to manage our jobs and responsibilities.

It has been a feature of banking for many years that the local bank manager has had less discretion than traditionally would have been the case ten, 15 or 20 years ago. In the current financial crisis, there has probably been a greater degree of oversight and monitoring from the centre into the branch system. I am as well aware as any other Deputy in the House of the difficulties in which some businesses find themselves due to this crisis. We are in the process of a recapitalisation programme, including EGMs and all the necessary legal steps that must be taken, so that these funds can be made available. They are being made available on the basis of warrants and on the basis of a return to the taxpayer. The suggestion that this is simply bailing out banks unconditionally is not true. There are conditions attached to these recapitalisation programmes.

The Government and public service employers must obtain agreements on redeployment to areas of greatest need. This flexibility in the workplace is needed, given the scarcity of resources available to the Government and the need to utilise those resources to their optimum. Good industrial relations practice would require that these issues need to be addressed. The issues relating to public service numbers, such as early retirement or temporary leave, must all be worked through the normal industrial relations process. There are several issues that are still part of the discussions on which we would like to see some finality.

Only yesterday, the Irish Congress of Trade Unions stated that there is no point in talking to the Government any more about its ten point plan for economic recovery, as the unions seem to have got a stonewall response. Did the Taoiseach state previously that he saw considerable merits in the plan? If this is the case, why has the Government made no progress to date? In spite of the fact that the Taoiseach spoke about much common ground, is there any part of the ICTU proposals he would implement? Will he and the Government ditch the so called public service pension levy, which the ICTU rightly described as crude and unfair and part of a strategy to drive down wages across the economy? Will the Government bring in a scheme where unemployed workers are guaranteed incomes of up to 80% of their salary for two years, conditional on participation in extensive training and up-skilling? Will the Government introduce a three year moratorium on house repossessions?

Has the Taoiseach studied the ICTU plan for €1 billion to be invested in a job retention and job creation strategy? Congress has made proposals similar to those made by my own party, including State support for short time working, so that workers can be kept in employment and trained during slack periods, as well as training guarantees for workers and apprentices. Will the Government take on board any of the proposals contained in that document, or when will it produce a coherent job creation and job retention plan?

I am not in the position to ditch a pension levy that brings in the sort of money it does, given the importance of the changes we have made in the budget. We are not in a position to say that was required in January and not in March. There would be no credibility to that position. I have also said of course that an argument can be made for its introduction. While I recognise it is an imposition, I also recognise that the premium on job security is one that is important in the context of people in other sectors who, unfortunately, are vulnerable to losing their jobs, if they have not already done so.

On the question of active labour market policies, in the late 1980s and 1990s, when this issue previously arose, there was ongoing discussion in regard to the rolling out of active labour policies in response to emerging issues. We tried to design policies and approaches that would support those out of work or seeking upskilling in order to get back into the market by having active labour market policies that were effective, efficient and avoided dead weight issues. In the current context, we must contend with State aid issues when seeking to provide assistance to companies in the marketplace who are competing with others who do not have access to the same support. These are issues we must tease out and work through as best we can. The issues of flexicurity, a term used in this area, and active labour market policies will continue to be examined and rolled out as best we can in the context of what we can do.

I make the point that there are more than 128,000 job and work experience places, not all of which are annualised. As such there is a greater throughput than 128,000 people per year. Many thousands of people come through these schemes, some of which last for ten weeks and others for 20 weeks. A plethora of training schemes is in place for the purpose of assisting people in the training and work experience areas. We expanded the schemes as a result of the social dialogue that had taken place on the last budget. Even allowing for the considerable financial constraints on us and the need to cut expenditure, we expanded the number of places by almost 25,000.

Of course I amau fait with the ten point plan. I have studied it and discussed it at length. With regard to home repossession, through the statutory code of conduct for lenders and the conditions attached to recapitalisation of the main banks, we have gone a substantial way towards providing assurance to those who lose their jobs in terms of the position of their mortgages. We are making substantial resources available through the supplementary welfare allowance system to support the cost of mortgage repayments for those who are unemployed. Thankfully, the reality is that repossession here remains a relatively rare occurrence in comparison with what has happened in other countries. We share the objective of the Irish Congress of Trade Unions to ensure that the position remains that way where people are making a real effort to restructure and meet their mortgage commitments with the support of State services and benefits.

On employment and support for the unemployed, we have taken steps in the budget to provide resources to support companies which are viable but vulnerable and into expanding and widening the range of options available to those who have lost their jobs. We are fully committed to using available resources as creatively and flexibly as possible to support jobs rather than having to meet the needs of those who lose jobs. This is a shared objective that can be advanced. I believe there is further worthwhile discussion and engagement to be had on that vital topic.

I believe that answers the specific questions raised.

Did the issue of child benefit, in terms of the Government's proposal to cut or alter that allowance thus screwing more money out of working and struggling families, arise in the discussions thus far? What has been the response to date of the social partners to the proposals put forward in this regard?

There has been no advance on the position as announced in the budget by the Minister for Finance, namely, that this area is being examined in the context of social welfare and by the Commission on Taxation. Anyone who is sincerely committed to social justice will accept that at a time of scarce resources, the need to target benefits at those most in need is a good principle upon which to try to deal with issues that arise in this or any other area of social support. I would emphasise that there is no substance or foundation to the assertions made during the week that decisions in terms of a flat rate reduction had been taken in this area. Those stories were obviously planted by somebody else.

I have two questions for the Taoiseach arising from the replies he has given us. We have been talking about the social partnership process for more than half an hour, but I am not clear as to whether or when agreement will be reached on pay. Does the Taoiseach envisage, if the talks resume, that agreement on pay will be reached and, if so, what form will it take?

As regards the early retirement scheme announced in the budget, and to which the Taoiseach referred, as I understand it quite a number of employees in various areas of the public service, including gardaí, teachers, nurses and so on are considering that option and are doing so on the basis that they understand — there was a strong hint in this regard from the Minister for Finance — that the pension lump sum will in future be taxed and that if they retire now their lump sums will not be taxed. People who wait to retire under normal arrangements may face having their lump sum taxed. What is the Government's position in this regard? Is it the position that everybody who applies for the early retirement option will be permitted to go? What will this mean for services which are reliant upon experienced people, in particular, the Garda Síochána? If a person is refused permission to retire under the scheme, will his or her lump sum be exempt from tax in the future, if taxation of the lump sum is introduced?

In relation to the first matter, the issue of pay is being discussed by employers, employees and congress in the context of the current discussions. I cannot anticipate whether agreement in that area will be reached. Obviously, the discussions are ongoing.

On the Deputy's other question, I refer him to the Department of Finance circular which outlines the position on these matters. Again, I cannot anticipate any future budgetary decisions to be announced by the Minister for Finance. I refer the Deputy to what he had to say on the matter in the budget statement.

As regards whether people will be permitted to retire based on their willingness to do so, ultimately that is a matter for agreement between local management and the Minister for Finance.

On the last point, these are questions that arise. I am sure the Taoiseach has been asked these questions by constituents. There are people who intend retiring under this arrangement. They are making calculations based on the likelihood of the lump sum being taxed in the future. An issue arises in regard to what will happen to their lump sums if their applications are refused. Let us say, perhaps, a garda sergeant or superintendent applies to retire under this arrangement and it is considered that too many people have applied, will some be permitted to retire and others not? What will happen in respect of the lump sums of those whose applications are refused, if lump sums are taxed in the future? It was quite clear from what the Minister for Finance said on budget day that the lump sum of those who applied to retire now would not be taxed. Some people will make their calculations on that. Will the Taoiseach give an assurance that the lump sum of anyone who applies to retire and is refused will not be taxed?

I cannot give any such assurance when the Government has made no such decision to tax the lump sum.

The Minister for Finance said it on budget day.

The Deputy is seeking to suggest the decision has been made to tax lump sums in the future. No such decision has been made whatsoever. If I may paraphrase the Minister — I do not have the speech in front of me — my recollection is his statement states that it was considered, it was a matter with which he was not proceeding and would revisit again in December in his next budget. As I recall those were the statements made by the Minister for Finance regarding this matter. I am not going to anticipate any decision from him in that respect at this point. I also make the point that there is not as such an entitlement to early retirement. It is a question of whether a person, who may be eligible to apply, in fact obtains the consent of the employer to so be provided with the opportunity. Obviously the tax laws that apply at any given time are the ones that apply on one's retirement. I cannot give any assurances one way or the other in respect of decisions that have not been made. That is a double hypothetical question to which I cannot give an accurate response.

Written Answers follow Adjournment Debate.