Vol. 747 No. 1
1 Deputy Sean Fleming asked the Minister for Public Expenditure and Reform his views on the hardship that will be caused to the most vulnerable in our communities as a result of the expenditure reductions in the comprehensive spending review; and if he will make a statement on the matter. [35350/11]
2 Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform the impact he believes the budget 2012 expenditure cuts of €2.2 billion will have on the vulnerable, low and middle income families; and the policy measures he will put in place to minimise hardship on citizens. [35356/11]
I propose to take Questions Nos. 1 and 2 together.
The Government is fully alert to the sacrifices people must make and the need to lessen the impact of decisions on the vulnerable as much as possible. The unfortunate reality is that Ireland is facing a budgetary crisis, which we must correct if we are to regain the ability to restore public services in the future. Until we achieve this objective, difficult consolidation measures will be necessary. The Government is determined to bring about this fiscal correction in a fair and proportionate manner, striking a balance between spending and taxation measures. It is in the process of considering all of the options that have been developed and the detailed measures on which we decide will be announced in the first week of December.
In addition, the Government is committed to reforming our entire public service to provide better services to citizens and reduce administrative costs across the system. Today, I launched a public service reform plan, with a range of specific and time bound commitments and a far-reaching programme of rationalising State agencies and quangos. The efficiencies arising in this overall context will mitigate the impact on front line services of the regrettable expenditure reductions we must make.
I welcome the general response from the Minister. I framed the question to elicit information on the impact on the most vulnerable people in our communities of announcements related to the comprehensive review of expenditure which I had hoped the Minister would make today. Instead, he published a document on public sector reform. My main concern with his proposals is the lack of management plan for maintaining front line services, namely, those provided by nurses, firemen, ambulance drivers, emergency medic technicians, gardaí and so forth. The Minister did not announce levels below which employment in these services would not be allowed to drop. If all staff in a key area of a private sector company were leaving, the company would take measures to ensure the key service provided by the area in question was not wiped out. The document published today does not state that the number of nurses, ambulance drivers and so forth will not be allowed to fall below a certain level. Rather than having a crude cut in public sector numbers, public sector reform should be managed. I am surprised the Minister announced public sector numbers would decline by 12,000, which is more than the figure agreed by the previous Government.
I am concerned not only about social welfare rates but also the people who depend on front line services. I welcome the decision taken by the Minister for Education and Skills on examination classes as it will allow teachers to remain in employment. Similar decisions are needed in key areas such as nursing and the ambulance service. The Government should provide a commitment that the number of staff in certain sectors will not fall below a certain level. If, as is possible, 20,000 nurses were to decide to retire by next February, the country would not be able to cope. I want the Government to produce a plan to prevent a scenario in which we do not have key front line staff when the current retirement regime comes to an end.
There is little in what Deputy Fleming said with which I do not fully agree. It is the objective, as far as is practicable, to defend front line services. We need to downsize our public services. While I believe the numbers outlined can be achieved without impacting on the delivery of services, I will not pretend that this will not be a challenge. It will mean we will have to have flexibility from staff within the confines of the Croke Park agreement. Services must be delivered better, more efficiently and in different ways. I have been engaging with public service unions in that regard virtually from the moment of my appointment and believe the objective can be met.
In terms of the specifics, the Deputy referred to education and having a strategy to deal with the numbers of employees who may exit the public service by the end of February. I have been cognisant of this matter from the beginning and I have had discussions with all my colleagues on the issue. Each Department has a strategy to deal with contingencies. For this reason, I asked that the Department be notified at least three months in advance in order that we can make preparations. I hope this will happen. We are very much in the business of managing the exit packages.
On the Deputy's point about having a floor on numbers, I will publish later today the employment control framework for each sector. We will, therefore, know what is the baseline for gardaí, Army personnel, civil servants and so forth across the public service. Perhaps the frameworks can be examined in some detail in the relevant committee.
I apologise for my late arrival.
I will give the Deputy a moment to catch her breath.
I am aware of the Minister's concern about the issue I raised. He made an issue of his decision to require staff to give three months' notice to enable Departments to plan ahead. However, when I tabled a parliamentary question asking whether this notice period formed part of terms of agreement, I discovered staff are not legally obliged to give three months' notice. The Minister engaged in something of a bluff when he gave the impression that staff would be required to give three months' notice to enable him to plan ahead because we now realise there was no basis for claiming staff would do so.
The Minister for Health stated the other day that while the Health Service Executive employs 33% of public sector staff, it accounts for more than 40% of retirements. I am concerned that this trend will continue. I am expressing a concern which the Minister must be aware of, but I do not see anything from him to suggest how he will head it off. I hope the answer is not more agency nurses and paying staff to retire and come back on an agency basis the following Monday morning, as has been known to happen.
The plan for education that the Deputy approves of is exactly that. People will be able to retire but stay in place until the exams. There may be a need for such flexibility in other sectors. I am open to that where it is needed. The objective will to ensure that we protect services as far as possible.
The Deputy fears that there might be a mass exodus from the health service. We have long spoken about the layers of administration in the HSE. I would not shed too many salty tears if many administrators left. I have more of a difficulty if many front line staff left. The idea behind asking for three months' notice is so that we can put a handle on that. The Deputy is dead right, and I said so at the time, that people are not contractually obliged to give notice. However, I have asked people to give us notice. Everybody in the public service has an interest in ensuring that the services they have spent their lives providing continue to be provided. By and large, the indications are that people will give us decent notice to make those contingency plans.
Tá brón orm. I got caught up in the finance committee. It was all fascinating, so I am sorry about that.
I would like to ask about the impact of the expenditure cuts on lower and middle income families. I know the Minister is going to publish the comprehensive spending review. I understand that it is a very detailed document. I wonder about an impact assessment for those on fixed incomes, low incomes and so on. How will the Government measure the impact of the upcoming cutbacks on people's spending power?
I am sure I do not have to rehearse the statistics on things such as unemployment levels. The Society of St. Vincent de Paul has published shocking figures showing the increase in the use of its services, not least in Dublin and Cork. We currently have 161,000 family carers providing support for elderly, the unwell, and people with disabilities. The Government has already cut the fuel allowance and the electricity and gas allowance. The housing association Respond has noted that 14.1% of the population is at risk of poverty, while one in every eight mortgages is in distress. That is a whistle-stop tour of the misery.
The Government's preoccupation with balancing the books is not without reason. We have just had a very interesting conversation at the finance committee with the new fiscal council. That debate about what works best——
The council is looking for €4.4 billion in cuts.
It has dispensed with that. The argument was about expenditure cuts or taxation measures. The evidence is not that measures on the expenditure side are most effective. The Minister might dust down that analysis. What way does he propose to protect low and middle income families? What kind of an impact assessment has his Department carried out?
I do not want to pretend for a minute that the adjustments the Government is required to take are anything we would want to do or anything that can be done in a painless way. There is already an extraordinary degree of pain being endured by the people of Ireland, top to bottom. We want to make the adjustments we have to make to get to the fiscal target of a 3% deficit by 2015 in the orderly way we have set out. There are those who have argued that we should do this in one big bang, regardless of the social consequences. We have negotiated with the funding troika to do this in an orderly way, not a painless way. This means that in order to get to the stage post of an 8.6% deficit next year, we need to make adjustments of €3.8 billion.
The Deputy spoke about the balance between taxation and expenditure cuts. My own party campaigned during the general election on the basis of a 50:50 ratio. Fine Gael campaigned on the basis of a 75:25 ratio. The balance in the medium-term fiscal statement will be in the order of a 60:40 ratio. It is not that people love taxes, but we are very conscious of the impact of cuts on the living standards of ordinary people and on sucking money out of the economy, in terms of allowing a growth strategy as part of our economic strategy. There cannot be just cuts and taxation. There must also be a growth and jobs element and we are trying to preserve that. These are difficult balances to strike.
We will try to do this as fairly as possible. We are worried about the impact across different sectors. An impact on education might impact on the same family or individuals in social welfare or transport. We are trying to get a cross-departmental impact assessment to see minimise the impact on the most vulnerable.
3 Deputy Catherine Murphy asked the Minister for Public Expenditure and Reform the discussions if any he has had with public service sectoral interests in the context of next year’s budget; the impacts if any, that have been advised to them in terms of staff and budget reductions; the planned reductions in 2012 by sector; the way the reductions will be managed to ensure front line services are maintained; and if he will make a statement on the matter. [35353/11]
The Deputy will appreciate that some of the issues raised in her question relate to budgetary matters which will be addressed in December's budget. I do not propose to pre-empt any decisions of the Government on the budget in my reply, nor have I done so in any discussions with public service sectoral interests, and I have met a cross-section of them. However, the programme for Government provides for a reduction of public service employees by between 18,000 and 21,000 by 2014, compared to the total number at the end of 2010 and to reduce that number by a further 4,000 by 2015.
The necessary reduction in public service numbers to meet the sustainable targets set is well under way and the number employed has fallen below 300,000 for the first time since 2006. This process will also benefit from the anticipated number of retirements up to end of February 2012, when the option available to public servants, under the Financial Emergency Measures in the Public Interest (No. 2) Act, 2009, to retire on their pre-existing salaries expires. However, I need hardly emphasise the immense challenge this reduction in numbers provides and will continue to provide for the public service in the coming years, particularly when the pressures on all public services are increasing at a time when the resources available to fund our public services have never been so stretched. In order to protect front line services, the necessary reduction in numbers and resources will require a fundamental change to the way in which the Government and the public services operate. I tried to outline that today and I look forward to explaining it to the committees in more detail later.
To address current challenges and those that will inevitably arise in the coming years, I am confident that our public services and all of us as public servants will be flexible, adaptable and open to change as we go about our public work.
In asking this question, I was trying to visualise how these cuts will be delivered and managed sector by sector. I believe that public service reform was needed long before the crash happened, and I think the Minister would agree with that. One of the things that needs to be achieved is that we get the right people with the right skills in the right locations if we are to have such a major reduction in numbers. If we end up rehiring people on a contract basis or an agency basis, this will defeat the purpose of the reform. We get one chance at this.
I produced a document on this and I will give a copy of it to the Minister later. It is about this very point. There are wide differences in the quality of public services, depending on where people live. We have used this historic model, rather than looking at patterns of growth. The areas that tend to do disproportionately poorly are those that are expanding and have a young demographic. These have the greatest need for public services. The point is made by the examples I have used. I will pass these on to the Minister, for what it is worth. Essentially, I am trying to get a sense of what kind of roadmap we have to make sure we target this kind of inequality of service provision while at the same time protecting front-line services in the context of the changes that are inevitably going to happen.
The Deputy makes a valid point, and I would be delighted to read her proposals in this regard. One of the things I said today is that we do not have a monopoly of ideas on this side of the House. This is a process, and we are open to ideas. When I come to the Committee of Public Accounts and the Joint Committee on Finance, Public Expenditure and Reform, I will make a full presentation on the timelines and the objectives that are being set out and how we are to achieve them, and any new ideas will be very welcome in that context.
Two of the points made by the Deputy are really important. One is the need for an integrated public service, because the current public service has grown like Topsy. I have only had a really good birds-eye view of it from my new position in the last eight months, although I have been involved in public affairs for a long time. One can see this by looking at any area of it. For example, holiday arrangements vary from 22 days to 45 days, with people getting fair days or race days depending on where they are, and hours are operated differently. To have an integrated public service with flexibility of movement within it is my objective, although it will take some time. We are setting the pieces in place from now on, but to change what is in place is much more profound. Ironically, the awfulness of a crisis gives one leverage to do things one probably could not have done in what one might call peacetime. There is a major buy-in from the public service — I hope there will be — to allow the sort of profound changes the Deputy and I would like to see.
The second important point made by the Deputy was about changing the emphasis — putting the focus on the citizen so he or she is in control. For example, in the health service we want to deliver, the money will follow the patient. People will not be arguing for this hospital or that hospital; the patient will decide where he or she wants to be treated, and the good hospitals will flourish while the public themselves will move away from those that are inefficient, have long waiting times or do not deliver high quality treatments. That maxim should be followed in service delivery across all areas of the public service. Access to information is also important. We want better statistics to be available — a sort of reversal of the principle of freedom of information, so that people are not asking for information but we are actually pushing it out. In this way we can provide a good snapshot of services and know where the best services are available. This would not only allow the citizen to access the best services but also shame the ones that are not good.
Do I have time for a supplementary question?
I am sorry; we are over time.
I am too long-winded.
4 Deputy Sean Fleming asked the Minister for Public Expenditure and Reform his views on persons in State and semi-State employment who are earning more than €250,000 per annum; and if he will introduce legislation under the Financial Emergency Measures Acts to eliminate this practice including current recipients. [35351/11]
The Government supports a strong policy of pay restraint within the public sector. This is evidenced by the fact that immediately on assumption of office — on the night of their appointment — the Taoiseach, other members of the Government and a number of other office-holders voluntarily reduced their salary rates. In addition, I immediately began the process of considering whether it would be appropriate to impose general pay ceilings across the public service and in respect of chief executive officer posts in commercial semi-State companies where remuneration is subject to ministerial sanction. This process culminated in the Government's decision of June last to introduce a general pay ceiling of €200,000 for future appointments to higher positions across the public service, and a general pay ceiling of €250,000 for future appointments to CEO posts within commercial State companies.
With regard to those office-holders whose pay rates are established in primary legislation and the Judiciary, and in light of the outcome of the recent referendum on the 29th amendment to the Constitution, new statutory provisions for the remuneration of judges, together with the necessary provisions to give legislative effect to the voluntary pay reductions for the Taoiseach and other office-holders, will be provided through a single dedicated enactment to be published shortly. The Deputy will recall that I made such a provision in the Public Service Pensions (Single Scheme) and Remuneration Bill that we passed. I will now take it out of that Act and present it to the Dáil, I hope, for early enactment as a stand-alone Bill.
Having given detailed consideration to the legal advice provided on potential legal and contractual issues arising from the imposition of an immediate reduction in the salaries of current incumbents whose salaries are in excess of the proposed ceilings, the Government concluded that the ceilings should apply only to new appointments to the relevant positions. In introducing general pay ceilings for new appointees, the Government recognised, however, that in a small number of cases exceptions may be necessary. Any such exceptions are subject to my prior approval as Minister for Public Expenditure and Reform. While no such exceptions have been made to date, the introduction of legislation imposing a statutory pay ceiling of €250,000 would limit the scope of the Government and Ministers to respond quickly to exceptional circumstances involving a role of substantial importance in the public service or a commercial semi-State sector. It is my view — I have considered this from the point of view of equity — that it is not practical to do what the Deputy suggests, although I would be minded to do so.
I am aware that, notwithstanding recent initiatives by the Government, there remains a small number of individuals — 18 — who are in receipt of remuneration in excess of €250,000 and whose remuneration is subject to ministerial sanction. In addition, certain academic consultants at professorial level in the health and education sector are in receipt of remuneration of more than €250,000 per annum. There are no persons in either the Civil Service or local authorities with salaries above €200,000.
I appreciate the last point and I accept there is nobody earning more than €200,000 in the Civil Service or local authorities. The Minister mentioned that 18 people were receiving remuneration of more than €250,000. He might tell us the categories of people and the agencies involved. He went on to mention some academics and medics. Are they in addition to the 18 people mentioned first? He might clarify that.
What prompted my question is the fact — I do not wish to personalise this — that the chief executives of the ESB and the Dublin Airport Authority, along with hospital consultants, were not included in the previous arrangement, and we were told that they would be dealt with at an early stage. That was last July, but there is no sign of this happening. I would add to this the senior people at AIB, which is a completely State-owned company — I would not even call it a commercial semi-State, although it is a semi-State of some description — and those in the National Treasury Management Agency. The Minister has unanimous support in this House to deal with this issue. He would have unanimous support from the people of Ireland also. Let one or two of them go to court if they are so minded; I think the Minister would have the support even of the Judiciary if it came to that. That is why I mentioned legislation in my question. This might have to be done under the Financial Emergency Measures in the Public Interest Act or some similar mechanism to give a legal backing to the measures taken. I would support the Minister if he did all this.
I do not think the Deputy and I have any difference of opinion on this. It is a question of how we do it rather than what we do. Of the 18 individuals I mentioned, one is a Member of the Oireachtas. That confused me when I saw it; it is, of course, the President, who is a House of the Oireachtas in and of himself. I should tell the House that the President has indicated to my Department that he wishes to undertake a voluntary pay reduction, and that has been put in place.
Does that include his pension as a former Minister?
I will answer that separately. I do not want to get into a discussion on the President, but the Deputy can be assured that the highest probity will attach itself to all his actions.
Of the other members of the group of 18 I mentioned, seven are CEOs of commercial semi-State bodies, all of whom have taken a reduction, although their salaries are still over €250,000. The Deputy will recall the process I outlined. I did not want simply to have a flat rate. I took some stick when I said I did not want the CEO of Bord na gCon paid the same as the CEO of the ESB; there should be differences. A process was undertaken by the previous Government called the Hay evaluation, which ranked pay grades in proportionate terms, and I have reduced these accordingly.
Of the rest of the 18, one is the CEO of a non-commercial semi-State body, and the rest are the Chief Justice, the President of the High Court and the Supreme Court judges.
What about the NTMA people?
5 Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if he will reconsider the programme for Government commitment to sell off commercial State assets taking into consideration that neither the IMF nor the EU have demanded the budgetary measure nor does the memorandum of understanding explicitly call for the privatisation of State assets. [35357/11]
The position as understood by the Deputy is not correct. While the programme for Government provides for the sale of non-strategic State assets to part fund investment in key networks of the economy under the NewERA programme, the disposal of State assets is also a requirement under the external funding programme agreed with the European institutions and the International Monetary Fund.
The memorandum of understanding governing the programme commits the Government to consider options for an ambitious programme of asset disposals, based on the programme for Government and the report of the review group on state assets and liabilities. A draft programme of asset disposals must be prepared and submitted to the EU-IMF by end of this year for discussion with the troika in advance of final decisions being taken on the elements to be pursued. A final decision on the programme to be pursued will be made by Government, taking into account the outcome of discussions with the troika on the amount of proceeds to be generated and also on the use to which these proceeds can be put. However, at this point, I have no intention of reconsidering the programme for Government commitment in this area.
That is a great pity. We have debated this matter before and I believe the Minister is making a great mistake and that his thinking is short term. Should the Government proceed in these matters it will amount to a fire sale of valuable strategic assets. I am consistently baffled that the Minister describes the disposal of a 10% share of the ESB as playing with a non-strategic asset.
The Government has been invited to consider options. No obligation has been placed on the Government in the memorandum of understanding. Here is the thing — we met the troika and we put our concerns to them on this specific issue. I put it to them directly, asking whether they were a part of a discussion or a decision making process in respect of the semi-State companies and the ESB in particular. They informed me that they were not party to such a discussion and that it was not for them to advise, instruct or guide the Government on the matter. They told me clearly that the decision was taken by Fine Gael and the Labour Party — by the Government — independently and irrespective of the troika. For the purposes of clarity, will the Minister tell me who was right and who was wrong because I have conflicting versions of events now?
I am unsure what the question is but I will tell the Deputy what happened. The original memorandum of understanding signed by the previous Government in December 2010 contained the following commitment:
Building on the forthcoming report of the Review Group on State Assets and Liabilities...State authorities will consult with the Commission Services on the results of this assessment with a view to setting appropriate targets for the possible privatisation of state-owned assets.
When we met the troika, they demanded a quantum of €5 billion. This was the figure they discussed with us. We refused to accept any quantum because the programme agreed between the two parties in government stated that we would seek to raise from the sale of State assets a sum of up to €2 billion to re-invest in job creation in the next generation of State investments. The Deputy is correct; the troika did not engage with us in terms of what we should sell.
Bluntly, there is enough oversight of what we do already without inviting them to do more. We examined the McCarthy report independently and called on every line Department to give us advices on it and my Department studied these. The settled view of Government was to move away from what was agreed in the programme for Government, that is, to break up the ESB. That was what the Commission had been pushing for us to do for a long time. We are keen to keep the ESB as an integrated entity and instead sell a minority stakeholding.
The Deputy referred to a percentage. We have decided on no percentage yet. We were discussing a quantum of money and it is invidious to start discussing the value of any percentage until we test the market. I have no difficulty with the Deputy criticising me; I could get used to it. However, she should wait until we do something. The Deputy is inclined to criticise before the action. It was suggested that we were not going to get the minimum wage reversed but then we did so. Then it was suggested that we would not be able to reduce the interest rate but then we did so. Let us see the "when" before we discuss fire sales. There will be no fire sales. Our commitment is only to sell State assets when the market conditions are right, when we can get a decent return for the State and when we can get good value.
