Vol. 804 No. 3
1. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the changes he is considering to his position on public sector pay and conditions as outlined in the Croke Park II draft agreement; and if he will make a statement on the matter. [24892/13]
2. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if his Department officials have completed their preparation on legislative measures to reduce the public sector pay and pensions bill; and when he intends to publish this legislation. [24804/13]
I propose to take Questions Nos. 1 and 2 together.
This afternoon, I published the proposed Financial Emergency Measures in the Public Interest Bill 2013 and the Bill is scheduled to come before the Oireachtas on Tuesday. The primary purpose of the proposed legislation is to implement the proposed pay reduction for public servants earning annual salaries of €65,000 or more and the parallel reduction in public service pensions over €32,500. Contingency measures to be deployed to secure reductions in the public service pay and pensions bill are also included, including provision for a universal freeze on pay increments. The legislation will also provide a facility for unions and representative associations to conclude collective agreements with their public service employers, which will avoid the need for those contingency measures to be used.
Amended proposals for collective agreements were brokered by the Labour Relations Commission in discussions between the parties on terms and conditions of public servants, which concluded on Monday morning last. I pay tribute to all those involved in the discussions, particularly the officers of the Labour Relations Commission, led by the chief executive Kieran Mulvey, the unions and their representatives, representative associations and public service employers, for their expertise and engagement on what was a very difficult agenda for all concerned.
The Government recognises the savings sought from the public service pay and pensions bill are extremely difficult and challenging for all public servants. The Government is conscious of the significant contributions made to the recovery of the State by public servants. They are a necessary further contribution to the fiscal consolidation process required to restore our economic sovereignty and bring our current expenditure deficit under control. It has also always been the ambition of mine, and the Government, to have an agreement on achieving the savings with our employees and their unions. If these proposals are accepted, achieving the required savings and major increases in public service productivity to secure the necessary reduction in the public service pay and pension bill will be possible. The essential elements and protections of the Croke Park agreement will remain in place. Industrial peace in the public service can be secured at a critical time on our path to economic sovereignty.
The questions we had tabled for today related to the pay talks and have been gazumped by the Financial Emergency Measures in the Public Interest Bill which was published at 1 p.m. That is the essence of what we are now discussing.
My question asked about the changes in the legislation that were not in the rejected Croke Park II deal. The Minister said that was the best deal in town. I presume the Minister was sincere when he said that but he has moved on to a new deal. Is this a better deal and was the last deal not the best deal in town? Perhaps the Minister can explain why he has had a change in that regard.
The Minister pays tribute to those involved in negotiations. Can he talk to me about the involvement of retired public servants in the agreement process? My understanding is that they were not involved in the first process. The same paragraph is in the new agreement as was rejected earlier. The special legislation has major sections dealing with the reduction of pay of retired public servants who were not part of the deal. I cannot understand how the Minister is thanking people for their co-operation when he ensured they were not part of the process. Nevertheless, he is coming to take pay from the pensioners by way of emergency legislation. The Minister should explain the involvement they had.
The Minister talks about co-operation and agreement from public servants. We are all in favour of agreement and savings. The Minister has been quoting to me what Fianna Fáil said about the need for savings. Our position has not changed. Can the Minister explain to the public why he wants an agreement with the unions when he is ramming through legislation on Wednesday night giving legal effect to the agreement that is being signed off today? What is the purpose of wanting public service employees to vote for an agreement that will already have been rammed through the Oireachtas?
A number of questions were asked. The first is the difference between the Haddington Road agreement and the Croke Park II agreement. I do not know if the Deputy has had a chance to read the Haddington Road agreement but he can see the differences. In the minute I have to respond, I do not propose to go through every section. He can cross-reference the two agreements.
The substantive change is that a number of unions, which did not engage in the first round of discussions, did engage and tabled suggestions. I made it clear the objective for us was to maintain the productivity elements of the deal and to achieve the targeted savings in pay and pensions. I was open to a variety of ways of doing it. More imaginative ways of doing it were tabled and costed. I can go through them in detail, probably next week, on Committee Stage. The two elements dovetail.
With regard to retired public servants, they were not directly represented at pay talks because that is not normally done. Officials from my Department will meet the association this week. It was felt that those who retired with pensions over €32,500, half of the pay cut ceiling, should take some reduction in pay. It is a reduction from 2% for those immediately over €32,500, rising to 5% at the top. We have had long discussions about people who have left the public service with very high pension pots. I am trying to make some reduction in a proportionate way. We will have a chance to tease it out in some detail next week.
The final question was what the point was. I hope we will have an agreement but I cannot assume that we will. A balloting and validation process is required. Some unions will do it through their executives and some will do it by balloting. I cannot presume that so I need a backstop. People will sign up to the agreement and they can sign out of some of the measures in the financial emergency measures in the public interest legislation.
The Minister has published legislation on cutting pay and pensions, increment freezes and increased hours. I have not had a chance to read the legislation in detail. It seems the Minister has a deal. What is amazing is the tactics. The Minister has the legislation and has a majority in the House to push it through. Workers were asked to engage in an exercise of voting for it but the only positive aspect to come out is the more imaginative proposals suggested by unions not involved at the first stage. That is welcome and it shows their tactics were correct in holding the line and not accepting Croke Park II. They were right to wait for Croke Park III. We will wind up with some workers not accepting the deal. What will happen when one of two nurses unions, SIPTU or the INMO, does not accept it? What will happen in the case? How will it pan out in the workplace and how does the Government see it working out? I see a huge amount of division.
As part of this overall package, 30,000 have left the public sector, which is one tenth of the public sector staff. It is also planned to remove 10,000 more by 2015. That will be a total of 40,000. By OECD standards that will be a very small public sector. There are already huge gaps in it. How does the Minister envisage that working?
There were a number of questions. As I said, a number of unions engaged in full measure in the Labour Relations Commission after the ballot. That was their choice. I could not force anybody to engage. We could have probably got to the same point had everybody engaged over time, but I was willing to give the space and the time to get the best deal possible. I do not wish to be involved in any of this. Nobody in the Government wishes to be involved in cutting anybody's wages. I wish I was in a position to give increases. However, we must address the deficit. We are borrowing €1 billion per month and in the horizon of the further adjustments we must make, public pay will have to play a proportionate part in that. That is what is on the table now.
On the question of the status of people who vote against it, those unions that engage and accept the Labour Relations Commission proposals will have those proposals implemented. That will be the end of it. Those who reject them will not have the comfort of an agreement and the financial emergency measures in the public interest, FEMPI, legislation will apply to them.
I thank the Minister for his earlier contribution. He confirmed two things this afternoon. He has signed the deal and published legislation, but he does not have the costing of that with him today. He said he will try to have it on Committee Stage for a detailed discussion. If he has it with him-----
The costing of what?
The costing of the savings under the agreement. The Minister said he will give it to us next week, but if he has it today he should provide it.
I said I will give the detail of the measures next week. The Deputy is asking me to counterpoint the Haddington Road agreement to the other deal.
No, my question is very clear. I asked the Minister about the savings that will be achieved this year in public sector pay and he said he will give that next week.
I did not. I will clarify that. I am sorry if I misled the Deputy.
I want those figures today. Second, the Minister confirmed with regard to the FEMPI legislation that there were no discussions with the pensioners. Third, if the deal is not approved, will the Minister confirm if he will bring forward more legislation or is this the end of it? How much of the savings will be made through the agreement and how much will be made outside the agreement by way of cuts on public sector retirees and the targeted redundancy programme that is not part of this deal?
Let me be very clear. I answered the questions and I do not wish to have any confusion about a matter of this importance, nor do I want any excitement to lead to such confusion. I was asked what were the changes between the Croke Park and Haddington Road agreements and I said I would go through that in detail with the Deputy next week. Will we achieve the targets in savings? Yes. There will be €300 million this year and €1 billion by 2015. For that reason it will not be necessary to amend the published Estimates, because those figures are in the Estimates. I hope that is clear.
With regard to the engagement with pensioners, the report last week showed that pensioners are the single group that has been least impacted to date. That is a good thing. However, it is reasonable that people on pensions of more than €32,500, and that is a small number of people, would make a proportionate contribution to the deal, which is 2% at that rate, when one is asking people who are working to take a further cut. At the top end of the scale, I am asking those who are on pensions of over €100,000 to make a 28% contribution. I do not believe there will be a clamour against that on the other side of the House.
The Minister did not answer my question regarding the reduction in the number of workers, which is the other side of what is happening in the public sector. County Laois has a large number of public servants. A total of 40,000 will be gone from the public service by 2015.
There is a reduction in the numbers and that was set out in the programme for Government.
There is a further 10,000 now.
We are doing things differently and providing services differently. We are providing shared services. In human resources management, for example, we are moving from a variety of centres of provision to a single centre of provision in PeoplePoint. We will do the same in payroll. A variety of payroll centres across the public service will be centralised into three. We will modernise the efficiency of the State. We are doing it already. As every business in the country and the world is doing, we will provide services directly and more efficiently to the people. More than 300 services are now provided online. I doubt that the Deputy would think of going to a travel agent instead of buying an Aer Lingus ticket online anymore. People use those facilities and we must provide public services that are attuned to the needs of a modern citizenry and that are affordable and sustainable into the future.
3. Deputy Joe Higgins asked the Minister for Public Expenditure and Reform his Department's intended schedule for the sale of State-owned assets. [24938/13]
4. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform if he will list the State companies that are being currently considered for sale; if this list has been altered since it was originally drawn up; if he will provide a timetable for completion of the process; and if he will make a statement on the matter. [24893/13]
I propose to take Questions Nos. 3 and 4 together.
The House will be aware from my announcement in February of last year of the overall shape and scale of the State asset disposal programme that is being pursued. In brief, the disposal programme that the Government has agreed consists of the sale of Bord Gáis Éireann’s energy business, but not including BGE’s gas transmission or distribution systems or the two gas interconnectors, which will remain in State ownership; the sale of some of ESB’s non-strategic power generation capacity, that is, its two power stations not located in Ireland; disposal of the State’s remaining shareholding in Aer Lingus, when market conditions are favourable in circumstances that accord with Government transport policy and at an acceptable price to the Government; and, after further consideration, and having ruled out the sale of Coillte’s land holdings, the Government has also determined that a concession for the harvesting rights to Coillte forests would be proposed for sale.
I am pleased to report that significant progress has been made to date. BGE formally launched the sale process for its energy business on 3 May and I expect that the sale will be concluded by the end of this year. The ESB is also about to commence the sale of some of its non-strategic power generation assets, as announced last October. I expect that the sale of two of ESB’s overseas assets, at Marchwood in the UK and Amorbieta in Spain, will be completed before the end of this year. In regard to Aer Lingus, the European Commission’s recently completed investigation of Ryanair’s bid for the company has been a complicating factor in the disposal of the State’s stake. The UK’s Competition Commission has now also reopened its investigation into Ryanair’s holding in its rival. Until this and possible appeals processes are exhausted, it is unlikely that optimal conditions will exist for a sale of the Government’s remaining shareholding.
In regard to Coillte, on foot of the Government’s decision last year that a concession for the harvesting rights to the company’s forests be considered for sale, an interdepartmental steering group was established, comprising representatives from my Department, the Department of Agriculture, Food and the Marine and NewERA, to progress the proposed transaction. A number of detailed financial, technical and other specialist reports were prepared for Coillte in late 2012 by external specialist consultancy bodies, in full consultation with the board of Coillte and its executive management, and these have also been considered by the steering group. The steering group has now reported to the Minister for Agriculture, Food and the Marine and myself, and we intend to bring proposals on this matter to the Government shortly.
I call Deputy Seán Fleming.
Deputy Higgins tabled Question No. 3.
My apologies. I call Deputy Higgins.
I thought we had got a new recruit from an unlikely quarter, a Cheann Comhairle.
The sale of any key infrastructure to transnational corporations on foot of the diktats of the troika to bail out bondholders and bankers is shameful. However, I will concentrate on Coillte and the proposed sale of forestry harvesting rights.
The Minister stated he has got the report. Will he share with us what the report states? Does he acknowledge that leaks, perhaps from the Government or his Department, are now pointing to the fact that the sale of Coillte's harvesting rights, which would be immoral, would not make the economic sense that may have been envisaged? Does he acknowledge there is deep-seated opposition among ordinary people to the sale? It would create great uncertainty among downstream operators in the wood industry. A cost to the State of perhaps €1.3 billion, as estimated by the IMPACT trade union study, would arise. Access to recreational and outdoor facilities could be jeopardised. For those reasons, will the Minister agree that the sale of the harvesting rights should not proceed? Will he share with us what he proposes to do? His colleagues in the Labour Party have indicated the sale should not go ahead, and they feel the pressure. The Minister should let us know now; he should not hold off for another week or two.
I understand the Deputy's views on these matters. What was considered was the sale of harvesting rights of trees that were growing commercially. The announcements were made in 2011 and people talked about a firesale and a rush. There is neither a rush nor a firesale. Very careful due diligence applies in respect of all these matters. The final report, drawing together all the advices received, has been submitted to me and the Minister for Agriculture, Food and the Marine and it will be presented to the Government shortly. I must be forgiven for allowing the Government time to consider the report and make a decision thereon before I share it with the House. As soon as the Government has made a decision, which will not take long, I will bring the conclusion to the House.
With regard to Question No. 4, the Minister referred to expressions of interest in respect of Bord Gáis. Could he give us a ballpark figure of the fees to be paid to consultants as part of the process? Somewhat perversely, the Minister seemed to indicate Ryanair's situation is actually preventing the sale of the 25% stake in Aer Lingus because of the various competition issues that arise. Is the Minister implying that the complication would not arise if Ryanair withdrew and that the Government could then proceed?
With regard to Coillte, the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, stated the mooted privatisation of Coillte looks more unlikely everyday. Does the Minister for Public Expenditure and Reform share his views? The Minister stated the ESB is selling off some power-generation facilities in the United Kingdom and Spain. Will it be selling off any in Ireland in the coming year?
There were four separate questions. With regard to the cost of consultants, the process is obviously ongoing but I will give the Deputy a full costing when the matter has concluded and we have bills from the people assisting us in these matters.
Ryanair constitutes a complication but the primary issue is one of ensuring competition. I stated no decision will be made that is contrary to good transport policy. This means building on our tourism sector and ensuring businesses will have access to the State. These matters are all being considered by the Minister for Transport, Tourism and Sport.
About an hour after the Minister for Communications Energy and Natural Resources, Deputy Rabbitte, said what Deputy Fleming quoted, I was asked about Coillte at a press conference after the troika evaluation. I responded that the Minister's evaluation is seldom off the mark.
With regard to the ESB, there will be no sale of any power-generating capacity in the Republic or the island of Ireland.
In the Minister's discussions with the troika on the sale of State assets, did the sale of Coillte feature? What was the outcome of the exchange? What is the attitude of the troika? If the Minister will not tell us what the report on Coillte states before it is presented to the Government, could he state whether his thinking has moved on over recent months in response to the very strong and persuasive arguments made on why the sale of Coillte's harvesting rights would be a very bad idea and damaging to our national forestry and proper policies on job creation and recreational facilities, etc.?
The Minister said the Minister for Communications, Energy and Natural Resources stated the sale is unlikely to happen and that he is seldom off the mark. Was the Minister for Public Expenditure and Reform confirming that the sale will not go ahead?
I am confirming nothing because the Government has not made a decision on this matter yet. I have already indicated that to the House. I will revert to the House as soon as the Government has made a decision.
The Deputy asked whether my approach has changed. I have a pragmatic approach to solving the economic problems of this country and to determining what we can do to generate jobs. The first task I undertook with the troika was to change its understanding of what was to be done with the proceeds of State asset sales, which was to retire a little bit of debt. My determination and that of the Government as a whole was to use resources obtained from the sale of State assets to create jobs and reinvest in our economy. We have been very successful in that agreement. I want the proceeds of State assets to reinvest in current job creation. When we know the amount of money we will have later this year, we will be able to make plans on how to utilise it to create jobs in the economy.
With regard to Coillte, one must consider whether we will get the right price; the value; the costs that might arise; the impact on jobs, including those of the suppliers who depend on Coillte currently; and the environmental and recreational considerations. All these factors have been analysed very carefully and the analysis will be brought to the Government very soon.
With hindsight, the Minister will agree that he did not make his statement on Bord Gáis correctly. I asked him how much will be paid to consultants. For a Minister for Public Expenditure and Reform to state he will have to wait until the bills come in at the end of the process is insufficient. He must have a budget. I suggest that he have a budget and a ceiling. He should know these at this stage.
It appears as if the Aer Lingus development will not really happen this year, nor will the Dublin Port transaction.
That was never to be the case.
Coillte seems to be substantially off the agenda or heading off the agenda. With regard to the ESB, there is to be no sale of energy-generating facilities in Ireland. Given that the Minister wanted to use up to 50% of the proceeds for job creation, how much less will he have for job-creation initiatives as a result of rowing back on his original plans? The estimate suggests there is quite a rowing back on the Minister's original plans, thereby leaving less money for job creation.
It is hard to please the Deputy. He is not satisfied if we are selling and if we are not selling. He might make up his mind which side of the fence is actually on.
I take a pragmatic view like the Minister.
That is not pragmatic. Let me be very clear: I want to maximise the amount of money we will get for job creation. I am very confident that we will have a very significant sum available from the State assets I have indicated will be sold this year. Within the ESB family, the two power stations I talked about, namely, those in the United Kingdom and Spain, are significant. There is significant interest from the BGE energy-generating capacity. An added benefit will be the creation of more competition in the energy sector. God knows, that is required. The false competition created by the former Government – by having one State company artificially compete with another by not allowing the first to decrease prices – could not work to the benefit of the consumer.
With regard to the cost of consultants, we have tendered and I will give the Deputy full details when the process is complete.
5. Deputy Seamus Healy asked the Minister for Public Expenditure and Reform his views on the report by the Nevin Economic Research Institute which claims that a cut of €1 billion in the public sector payroll will result in a saving of only €250 million euro to the Exchequer and will also result in the loss of 10,000 jobs including 5,000 in the private sector. [25013/13]
Consolidation measures amounting to around €28 billion, or over 17% of estimated 2013 GDP, have been implemented since the crisis began. This represents about 85% of the total consolidation required and highlights the scale of the challenge faced by the Government on taking office.
The policy response requires a continuous, ambitious programme of fiscal consolidation, accompanied by structural reforms, to improve the fiscal position of the State, allied with measures necessary to ameliorate the impact on those who are most vulnerable in society. The fiscal parameters, while improving, do not provide any significant latitude to the current programme necessary to meet the general Government deficit target of less than 3% by 2015.
To meet Ireland’s commitment to a deficit of less than 3% by 2015, the medium term fiscal statement published in November 2012 indicated that, in addition to the overall consolidation of €3.5 billion required for 2013, an additional €3.1 billion in savings and revenue raising measures must be identified for 2014 and €2 billion in 2015. If the public service pay and pensions bill, at 36% of spending, is to make a proportionate contribution to the necessary additional expenditure reduction currently identified as necessary over the next three years based on current economic forecasts, it will require a reduction of some €1 billion in the cost of pay and pensions.
Otherwise the existing significant burden of adjustment falling on services and social transfers, rather than pay, would be untenable. The report referred to by the Deputy focuses on only one element of the consolidation measures required to put our public finances on a sustainable path. While acknowledging that it is difficult to model all of the impacts of the proposed adjustments, it models a form of pay bill reduction that is not proposed by the Government. The report also does not review or consider alternative strategies, particularly in the context of the wider economy.
Model simulations conducted using the ESRI’s HERMES model suggest that a €1 billion reduction in the public service pay bill would reduce the level of economic activity by some 0.25 to 0.5 of a percentage point in the short-run. The exact impact would, of course, depend on how the reduction was achieved. This impact on the economy must be balanced against the need to ensure that the fiscal deficit is reduced so that the debt to GDP ratio assumes a downward path from next year onwards. Continuing to meet our fiscal targets can generate positive confidence and investment and can have a favourable impact on our economic performance.
It is now clear that Government policy, including the public sector pay cuts, is causing long term social damage and involves huge degrees of pain with relatively little gain. In fact, it is counter-productive. The Nevin Economic Research Institute professional review has shown that cuts of €1 billion would have a net gain to the Exchequer of €250 million. That is because there would be a reduced income tax and universal social charge take, reduced retail sales tax, VAT and excise duty, increased social welfare payments and, crucially, anything up to 10,000 job losses, 5,000 of would be in the private sector.
This is a view which is generally supported by other economists. This week Professor Ray Kinsella of the UCD postgraduate school of business studies also said this sort of adjustment is tantamount to self harm. I suggest to the Minister that it is now clear that these proposals should be withdrawn and Government policy should be to stimulate and grow the economy to ensure the social damage which has already been done is reversed and real jobs are created.
I listened to the analysis and rhetoric, but the truth is a very simple matter.
It is not rhetoric. It is a professional view.
Does the Deputy want to hear an answer or does he want to keep talking? He does not want to hear the answer because he has made his mind up. Does he want to hear a different view?
We came into government and were faced with an economic meltdown. We could not pay beyond five months for services - that is how much money was in the kitty - unless we got an external funder to give us money. The only people who gave us money was the troika, and they gave it with conditions. The idea that one can stop austerity, as if one can walk away and money will flutter down from the sky, is not accurate. We need to work towards a balanced budget. Our income as a State fell by 30% because the previous Government built an artificial model where income was predicated on construction and outgoings were expanded exponentially for the years it was in office. That had to be brought into balance. Anybody who examines the fiscal situation understands that.
Of course there are implications for taking money out of the economy. That is why we have done things in such a measured way. We first extended the consolidation period to get to 3% by a year, from 2014 to 2015. We have hit the targets. The Deputy is quite wrong to say there are no obvious benefits. We have stabilised the economy and are one of the few economies in Europe to grow. The ESRI indicated that the economy will grow this year and next. We are the most attractive country in Europe for inward investment and are creating jobs. All of this is extremely difficult and I wish to God we were not forced to have to do it, but there is no simple alternative which allows us simply to continue paying because we will run out of money in very short order. Nobody will give us money at an affordable rate.
There is a commitment under clause 16 of Croke Park I to restore pay cuts starting with low paid workers. The Government has reneged on that. Today the Government published virulent and outrageous anti trade union legislation, which does not even provide for the commitments given under Croke Park II to restore the cuts. How can any public sector worker accept that these restorations will take place or that they will be the last ask for public servants? It has not been in the past and is not provided for in legislation.
Let me be clear. The only pay cuts that are provided for in the FEMPI legislation which was published today are for those earning over €65,000. I do not know where the Deputy stands on high pay and whether he thinks those who can afford it should make a proportionate contribution to the recovery of the nation. The Deputy is against everything and for nothing.
That is outrageous. I have supported-----
Please, I want to listen to the answer.
On the restoration of pay cuts, I have deliberately structured the Bill I published today as a Financial Emergency Measures in the Public Interest Bill. By definition, it is anchored in the financial crisis. If one examines its latter sections, one will find I have amended it to include an annual report to the House on the continued existence of the financial emergency conditions. It is part of an emergency set of measures to bring us through the crisis. I hope pay levels will be restored over time, but it will take a long time, in order that we can have sustainable, affordable and efficient public services and taxation in the State in the future.
