Financial Emergency Measures in the Public Interest (Amendment) Bill 2011: Committee and Remaining Stages

Sections 1 and 2 agreed to.
SECTION 3

Amendments Nos. 1 to 5, inclusive, are related and may be discussed together.

I move amendment No. 1:

In page 4, line 7, before the word "Section" to insert the following subsection:

"3.—(1) Section 1 of the Financial Emergency Measures in the Public Interest Act 2009 is amended by the insertion of the following definition after the definition of "Civil Service":

" ‘Contractor' means a person whose personal services are independently hired on a contract for services basis;".".

I wish to raise this substantive issue although I covered some of the points on Second Stage. The Minister referred to the crudeness of a cap. Where I disagree with the Minister is that the cap should be for the chief executive of the ESB, while the pay of the Bord na gCon chief executive should be proportionately lower. The cap was not intended to make all the semi-State companies equal but rather there was a maximum figure for the person on the highest salary.

I am happy with the measures in the Bill regarding the Judiciary and members of the Government. My amendments seek to broaden the measures in the Bill. There is a general perception that chief executives of semi-State companies now earn below €250,000. However, this only applies to future office-holders. I acknowledge those who have accepted a 15% reduction in salary and I believe seven people are still at a higher rate. The voluntary waiver by individual public servants is no way to run the country. My amendment would see this waiver becoming statutory, which would copper-fasten the matter for the future.

My amendments also include others than the usual list of semi-State companies. I have included the Irish Bank Resolution Corporation, formerly Anglo Irish Bank, an organisation wholly owned by the State. It may have some form of a commercial mandate but it is not a semi-State body and it is not very commercial.

Allied Irish Bank has a new chief executive. Allied Irish Bank and Bank of Ireland attended a meeting of the Joint Committee on Finance and Public Expenditure in the summer. There was a world of difference between the presentations by the chief executives and chairpersons of the two banks to the committee. The Bank of Ireland wants to reduce the State shareholding from 42% down to 15% and it is going about its banking business in the private sector. However, Allied Irish Bank was required to consult with the Minister for Finance, as its main shareholder, on any difficult question. It became clear to me that AIB was an organisation subservient to the Department of Finance. It cannot set its own policy nor can it make unilateral decisions on significant issues because the Minister for Finance is its main shareholder. I cannot understand why a Secretary General of the Department of Finance earns €200,000 while the chief executive of a subsidiary organisation reporting to him earns much more. I do not think AIB has a complicated job to do compared with a bank in the private sector because it is now a State body. This is why I have included it in my amendment.

I also include the National Treasury Management Agency. I have been a member of the Committee of Public Accounts in the past and questions about salaries were not answered. We have some figures to do with the salaries of the former and current chief executive but it is clear that many people in the NTMA earn salaries much higher than €200,000. This agency is answerable to the Minister for Finance and I do not agree that underlings should earn more than their boss because he ultimately carries the can, both politically and financially. There was a time when the NTMA was dealing with bond issues and the financing of the State but this work is now completed. We were told these people were dealing with the most intricate, high finance matters but some of them must now be twiddling their thumbs because that business is finished.

I compliment the Taoiseach and the Ministers for taking reduction in their pay by legislation and I support those measures. However, I do not support a head of a university being paid more than the Taoiseach. This is the situation in the case of several universities and third-level institutions. Third-level research may in cases be co-funded by others, as in the case of the Irish soccer manager's salary where a benefactor is paying some of his salary. I do not fully agree with this practice because it distorts the situation. All such salaries should be benchmarked to the Taoiseach's salary.

Some medical consultants earn more than the suggested figure. They have escaped the net despite all the measures for capping pay in the public service. There is no good reason for this. Perhaps the Minister for Health, Deputy Reilly, must have a hold on his Cabinet colleagues and he has been able to exclude his people. Perhaps we will hear an explanation some day.

I refer to Secretaries General of Departments and others who have agreed to a voluntary waiver of part of their salaries. Those voluntary reductions — for which I give them credit — amount to a reduction of 30% of income. We all adjust our lifestyles to our income level. I acknowledge the significant reduction in salary to which they have agreed voluntarily. My question is whether the pension calculations for those current incumbents are based on the lower net figure as a result of the voluntary waiver. I believe they are calculated on the higher figure which defeats the purpose.

The Secretaries General should be treated as being in the same category as the Taoiseach, the Ministers and the Judiciary as regards pensions. The Minister took action in this regard today because the issue of these pensions is what infuriates the public. Pay is one issue and pensions are another. I support the measures announced by the Minister today while others may say it is too little. Every step is helpful and I will not be churlish. The Minister is to be congratulated. However, the same principle should apply in the case of Secretaries General. They should not be earning a salary of €200,000 a year while their pension contributions are calculated on a figure of €280,000 a year.

I hope the Minister will accept my amendments. He may introduce his own amendments when the Bill goes before the Seanad before returning to the Dáil next week. I am not satisfied with the manner in which the amendments are being treated but given that speaking time is limited, I will give other Deputies an opportunity to contribute.

I thank the Deputy for his considered and extensive amendment which seeks to expand the provisions of legislation introduced by his party in government, the first financial emergency measures in the public interest legislation of 2009, to encompass a range of individuals and services to which they cannot and currently should not apply. The amendment would amend the structure so that instead of justifiable reductions in payment, for example, to health professionals imposed following a regular review, a ceiling on payments unrelated to the extensive medical care provided by health professionals would apply.

The primary amendments tabled by the Deputy are amendments Nos. 3 to 5, inclusive, as amendments Nos. 1 and 2 are consequential to amendment No. 3. Amendment No. 1 would include a definition of the word "contractor" in the original Financial Emergency Measures in the Public Interest Act. While the Deputy did not refer to this issue, the purpose of the amendment is to extend the definition of the term "contractors for service", that is, people who provide services such as ICT, data and so forth on an ongoing basis to the State. The Deputy seeks to impose an arbitrary cap on the sums paid to contractors in one accounting year of €200,000 and €250,000, respectively, by anybody concerned. The cap does not take account of the amount of work done, which can be covered by commercial contracts of service, or the value of the work being provided.

On the commercial semi-State bodies listed in the Schedule, let us take as an example CIE. The Broadmeadow Estuary bridge was repaired at a cost of €4 million and reopening that important service for commuters was regarded as an imperative. If we had informed the company in the CIE group charged with doing this work that all procurement activities would be subject to an arbitrary limit of €250,000 per contractor per accounting year, the work would never have been completed. It would not have been practical to disaggregate the work to ensure no one received more than €250,000.

Commercial procurement activities in most, if not all, bodies listed would at times exceed any arbitrary listed figure. While the issue raised by the Deputy needs to be addressed, we must do so through a different approach, namely, procurement. I do not have time to discuss this issue in detail this evening but may have time to address it tomorrow on Committee Stage. I am interested in hearing the Deputy's views on breaking up contracts to make procurement more efficient. Dealing with the matter by way of an amendment to financial emergency measures in the public interest legislation is not the correct approach.

This legislation is extraordinarily special because it hangs together on the basis that it acknowledges the financial crisis in which the country finds itself. As the previous Minister took great care to recognise, we cannot expand its scope in all directions. He knew he was taking extraordinary measures by reducing the pay and pensions of individuals, as I am doing again tonight. I am conscious of case law and clear legal opinions on what constitutes a pension. Pensions are preserved property rights for which people have paid with a legitimate expectation of receiving them. One must, therefore, have a very compelling reason to reduce them. The argument is that there is an overwhelming necessity in the national interest to do so on the basis of this legislation. If this argument fails, the constitutional safeguard for property will hold sway. In truth, we must be very careful about how we try to expand the provisions of the Bill. If some of the propositions in the first five amendments were accepted, I have no doubt they would collapse the entire edifice of the financial emergency measures in the public interest legislation we have put together, which is absolutely essential for the financial well-being of the State.

I do not wish to take up the time of the House by referring to all the points in my speaking notes as I am conscious Deputies wish to contribute. I wish to address specific issues but will not speak in detail. In general terms, I will not accept the amendments. The legislation was crafted to take those elements of pay that I had provided for in the pensions Bill which legislates for reductions to office holders and so forth and deal with the consequences of the overwhelming decision of the people in the referendum to seek to bring the Judiciary into the norms of pay reductions. I have indicated that I intend to submit a further amendment in the other House to address the specific issue of a tiny group of people having extraordinary pensions.

A number of current and former Fianna Fáil Party Deputies acknowledge the way in which these matters have developed in the past couple of decades. Responding to Deputies opposite on a previous occasion, I indicated that I was not aware of what is known as the TELAC process which has apparently been doing the rounds here since 1987. Under this process, Secretaries General could secure extraordinarily generous severance payments at the end of their seven year term. We have ended this process but cannot do so retrospectively.

Deputy Fleming is correct on the issue of contractual rights. We have examined this matter carefully and I share the Deputy's view on the need to try to address these matters. While we cannot dislodge people who were appointed on certain terms, we have asked them to accept certain changes voluntarily and all of them have done so. The pensions of incumbents will be calculated on the pre-cut basis. After February, however, the reduced salary will impact in the calculation of lump sums and pensions.

I do not intend to broaden the provisions in the manner provided for in the amendments and I believe the Deputy, in his heart of hearts, knows that is the position. We need to make progress on reforming all of these issues. The first step is to introduce a ceiling to ensure this issue does not arise again and individuals will be dealt with differently in future. For this reason, we have the basic, ground-breaking comprehensive legislation on pensions. Subsequently, we need to dig away, if one likes, at and put right the most egregious unacceptable norms that have bedded down in the past couple of decades.

I will contribute now as this will be my only opportunity to do so. I am frustrated that the arguments on the amendments I have tabled will not be aired. I do not know if more time can be made available.

We must act in accordance with the order of the House.

That may be the case but this is a ludicrous and indefensible way to do business.

As the Deputy will appreciate, I must adhere to the Order of the House.

While I appreciate the position of the Ceann Comhairle in respect of this matter, I do not appreciate the decision that has been taken.

The House is debating amendments Nos. 1 to 5, inclusive.

This is the Financial Emergency Measures in the Public Interest (Amendment) Bill. The net issues are that the Bill has been introduced as an emergency measure and the priority is the public interest. The Bill does not meet either criterion. While I understand Deputy Fleming's rationale for moving his amendments — he made a reasoned and well argued case — given that the pay level at which his proposed measure is pitched is too high, Sinn Féin will not be in a position to support them. Notwithstanding that, I appreciate the gist of his argument.

The purpose of my amendments is to address pay levels. The Minister and Taoiseach earn too much.

If the Deputy wishes to discuss her amendments, I will dispose of this group of amendments.

There is not a snowball's chance in Hades that we will reach my amendments.

In that case, I am obliged to pull the Deputy up because we must discuss the amendments before the House.

We are in a crazy position.

Technical reasons are always given to explain why people at the top cannot be brought into the net. On the other hand, it is always possible to bring those at the bottom into the net. I do not understand this and I do not accept that if there is a will, a way cannot be found. The Government is arguing that it has the will to do this, but it is technically difficult to find a way. It does not seem to be technically difficult to hit the people at the very bottom. I disagree with the level at which the Fianna Fáil Party is pitching this. There is a certain irony in its belated conversion to reducing the salaries of people at the top of the public service. The basic principle underpinning what it is saying — that we should consider imposing caps on the earnings of anybody who is paid with public money, including people across the public service — is absolutely correct. It is disappointing that the Minister is putting technical obstacles in the way of this proposal. My response to all that has been said about retrospective legislation is that such legislation has been introduced in the UK.

The UK does not have a constitution.

We can change our Constitution. The lesson to be extrapolated from the recent referendum on judicial pay is that people want the salaries of top earners who are paid with public money to be reduced. The Minister knows that is the case. It is why he proposed the referendum. The people did not concern themselves with the detail. They accepted the principle that the salaries of people at the top of the public service who are paid excessively should be reduced. That is why they voted in favour of the proposal. The people would have no problem voting in favour of a constitutional amendment that would open the way for similar reductions to be imposed on officials in semi-State companies and people who previously served in the public sector. The Minister knows that people would back him if he had a serious intent to amend the Constitution in that regard. The problem is that the will is not there. I appeal to the Labour Party, in particular, to recognise the sense of injustice that is felt by people. He should show some measure of willingness to extend——

We cannot have a Second Stage speech now.

I am speaking on the proposal to extend this principle across all sectors of the public service.

On what amendment is the Deputy speaking?

I am trying to establish the principle that the pay of everyone who is paid with public money should be capped.

I do not disagree with much of what the Deputy has said, which is unusual. It is not my normal position. The principle I have brought to the job I have been given is that there needs to be a semblance of fairness. I am not speaking in terms of saving an enormous amount of money. The number of people at the top is small. The quantum of money is not enormous. When some people are seen to be given an extraordinary payment from the public purse when others are struggling to survive, it is more than aggravating. I accept that it is damaging to the sense of solidarity. The Deputy and I can debate the consequences of how far he would like to go in this regard. Salaries of €500,000, €600,000 or €800,000 were the norm in some sectors until quite recently. All of that has changed. Since we came into office, nobody in the Civil Service has been paid more than €200,000. That is a big change in a number of months.

I agree entirely with Deputy Seán Fleming's suggestion that we should establish a hierarchy of commercial semi-States. If one sets one's ceiling at €200,000, either one's base will be very low or one will have a very squashed scale. The pay levels of the chief executives were evaluated independently as part of the Hay process. I took what Hay determined in 2007 to be the appropriate level of pay for each of them. I applied all the FEMPI impacts on them and I took another 10% off them on top of that. That is how I determined the pay levels in semi-States. As I recall it, just one official — the chief executive officer of the ESB — was receiving over €250,000. To put it bluntly, people were screaming at me that such a level of pay would not attract somebody of the calibre required to run an organisation as complicated as the ESB. If we accepted the argument of Deputies on the other side of the House that there should be a blanket ceiling of €100,000, we would kill social medicine. We would have private medicine only. With the exception of a few altruistic people from Deputy Higgins's school, all of our heart specialists, cancer specialists and child specialists would go into the private sector. The vast majority of them would not work for €100,000. They would choose to treat those who could afford to pay.

In such circumstances, the solution would be to train working class kids with talent and make specialists of them.

We will start training working class kids now.

Why should we have to depend on the children of the rich?

What will we do tomorrow while we are training them?

Tomorrow and tomorrow and tomorrow.

Not all doctors are that greedy.

I am saying that is——

I ask the Minister to stick to the five amendments that are before the House, rather than debating these matters across the floor.

Okay. I have set out the reality. The Deputies know that in their hearts. I have mentioned previously that Deputy Higgins and I soldiered together on these battles many moons ago. I know where his ideology is anchored. It is not anchored in the reality of today. That is my personal judgment on it. I know he is sincere in what he believes. In my judgment, social provision would be destroyed if the approach he is advocating were adopted right now. There is an understanding that senior administrators, such as high ranking gardaí, including chief superintendents, or the heads of public bodies, need remuneration that is sufficient to attract people into the public service. However, it should not be egregiously large, as it was in recent times. We need to value public service and public servants. Wage levels should be analogous to what might be paid in the private sector. I believe passionately that we should not destroy public service as an option for talented and able people. We should not use the real hurt of people who are struggling to survive as a battering ram to denigrate the notion of public service. We should not think we can slash and burn, or squeeze further, without that having consequences. These matters——

This is an emergency situation.

The emergency should not be used to destroy the public service.

We have made an extraordinary series of groundbreaking changes in the eight months since we took office. We abolished the Top Level Appointments Committee terms and we introduced the €200,000 pay ceiling.

Does the Minister think that if the Taoiseach is not paid €200,000, he will flee the jurisdiction to become an opera singer in Milan?

On a point of order——

——I know the Minister does not intend to continue to talk until 10.30 p.m., but we would love to be able to put one of the 21 amendments to a vote.

I am sitting down. I am yielding.

Amendment put.
The Committee divided: Tá, 36; Níl, 77.

  • Boyd Barrett, Richard.
  • Calleary, Dara.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Crowe, Seán.
  • Daly, Clare.
  • Doherty, Pearse.
  • Dooley, Timmy.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fleming, Sean.
  • Fleming, Tom.
  • Halligan, John.
  • Healy, Seamus.
  • Healy-Rae, Michael.
  • Higgins, Joe.
  • Kelleher, Billy.
  • Kitt, Michael P..
  • Mac Lochlainn, Pádraig.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McLellan, Sandra.
  • Murphy, Catherine.
  • Ó Caoláin, Caoimhghín.
  • Ó Cuív, Éamon
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O’Brien, Jonathan.
  • O’Sullivan, Maureen.
  • Pringle, Thomas.
  • Ross, Shane.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Wallace, Mick.

Níl

  • Bannon, James.
  • Broughan, Thomas P.
  • Bruton, Richard.
  • Butler, Ray.
  • Buttimer, Jerry.
  • Byrne, Eric.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Coonan, Noel.
  • Corcoran Kennedy, Marcella.
  • Costello, Joe.
  • Coveney, Simon.
  • Creed, Michael.
  • Deasy, John.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • Farrell, Alan.
  • Feighan, Frank.
  • Flanagan, Terence.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Heydon, Martin.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keaveney, Colm.
  • Kehoe, Paul.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lynch, Ciarán.
  • Lynch, Kathleen.
  • Lyons, John.
  • McCarthy, Michael.
  • McEntee, Shane.
  • McFadden, Nicky.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Maloney, Eamonn.
  • Mathews, Peter.
  • Mitchell, Olivia.
  • Mitchell O’Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Nash, Gerald.
  • Naughten, Denis.
  • Neville, Dan.
  • Nulty, Patrick.
  • Ó Ríordáin, Aodhán.
  • O’Donnell, Kieran.
  • O’Donovan, Patrick.
  • O’Dowd, Fergus.
  • O’Mahony, John.
  • O’Reilly, Joe.
  • Phelan, John Paul.
  • Ryan, Brendan.
  • Shatter, Alan.
  • Sherlock, Sean.
  • Stagg, Emmet.
  • Stanton, David.
  • Tuffy, Joanna.
  • Wall, Jack.
  • Walsh, Brian.
  • White, Alex.
Tellers: Tá, Deputies Aengus Ó Snodaigh and Seán Ó Fearghaíl; Níl, Deputies Emmet Stagg and Paul Kehoe.
Amendment declared lost.

I am now required to put the following question in accordance with an order of the Dáil of this day: "That each of the sections undisposed of is hereby agreed to and the Title is hereby agreed to in committee, that the Bill is accordingly reported to the House without amendment, that Report Stage is hereby completed and that the Bill is hereby passed."

Question put.
The Dáil divided: Tá, 89; Níl, 24.

  • Bannon, James.
  • Broughan, Thomas P.
  • Bruton, Richard.
  • Butler, Ray.
  • Buttimer, Jerry.
  • Byrne, Eric.
  • Calleary, Dara.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Coonan, Noel.
  • Corcoran Kennedy, Marcella.
  • Costello, Joe.
  • Coveney, Simon.
  • Cowen, Barry.
  • Creed, Michael.
  • Deasy, John.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Dooley, Timmy.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • Farrell, Alan.
  • Feighan, Frank.
  • Flanagan, Terence.
  • Fleming, Sean.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Healy-Rae, Michael.
  • Heydon, Martin.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keaveney, Colm.
  • Kehoe, Paul.
  • Kelleher, Billy.
  • Kenny, Seán.
  • Kitt, Michael P.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lynch, Ciarán.
  • Lynch, Kathleen.
  • Lyons, John.
  • McCarthy, Michael.
  • McEntee, Shane.
  • McFadden, Nicky.
  • McHugh, Joe.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Maloney, Eamonn.
  • Mathews, Peter.
  • Mitchell, Olivia.
  • Mitchell O’Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Nash, Gerald.
  • Naughten, Denis.
  • Neville, Dan.
  • Nulty, Patrick.
  • Ó Cuív, Éamon
  • Ó Fearghaíl, Seán.
  • Ó Ríordáin, Aodhán.
  • O’Donnell, Kieran.
  • O’Donovan, Patrick.
  • O’Dowd, Fergus.
  • O’Mahony, John.
  • O’Reilly, Joe.
  • Phelan, John Paul.
  • Ross, Shane.
  • Ryan, Brendan.
  • Shatter, Alan.
  • Sherlock, Sean.
  • Stagg, Emmet.
  • Stanton, David.
  • Tuffy, Joanna.
  • Wall, Jack.
  • Walsh, Brian.
  • White, Alex.

Níl

  • Boyd Barrett, Richard.
  • Colreavy, Michael.
  • Crowe, Seán.
  • Daly, Clare.
  • Doherty, Pearse.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fleming, Tom.
  • Halligan, John.
  • Healy, Seamus.
  • Higgins, Joe.
  • Mac Lochlainn, Pádraig.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McLellan, Sandra.
  • Murphy, Catherine.
  • Ó Caoláin, Caoimhghín.
  • Ó Snodaigh, Aengus.
  • O’Brien, Jonathan.
  • O’Sullivan, Maureen.
  • Pringle, Thomas.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Catherine Murphy.
Question declared carried.
The Dáil adjourned at 10.50 p.m. until 10.30 a.m on Wednesday, 30 November 2011.