Financial Emergency Measures in the Public Interest Bill 2013: Second Stage

I move: "That the Bill be now read a Second Time."

The Bill is one of a series of measures the Government is required to take in the public interest. The context is the continued priority given to the stabilisation of the public finances and to meeting the State's obligations with regard to the reduction of its deficit.

At this point, consolidation measures amounting to around €28 billion, or over 17% of Ireland's estimated GDP in 2013, have been implemented since the crisis began. This represents about 85% of the total consolidation required to get our finances back from the morass they were put into, in large part through the decisions made by the last Government.

As I have said elsewhere, the remaining effort may well feel like the hardest part - the last hundred yards are always the most difficult - but the scale of the challenge still faced by this Government and by the people of this country is large. A continuing programme of fiscal consolidation, accompanied by structural reforms, must continue. 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. The Government's policy of restraint and prudent budgeting will have to continue if we are to get our finances into fit shape for future generations.

To meet Ireland's commitment on the deficit, the medium-term fiscal statement published in November last year 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 a further €2 billion in 2015.

The public service pay and pensions bill at 36% of spending must, in the Government's view, make a proportionate contribution to the additional expenditure reduction identified as necessary over the three-year period.

We have identified that proportionate contribution as a further reduction of some €1 billion, or 7%, in the cost of the pay and pensions bill. Otherwise the existing significant burden of adjustment falling on services and social transfers rather than pay would be untenable. In short, if we seek to exclude public service pay and pensions from further consolidation efforts, the burden must be borne elsewhere in public services. I do not believe that is a sustainable proposition.

This Government has always sought to ensure that the measures it takes are proportionate and fair, and that their impact on the most vulnerable in our society is mitigated as far as possible. The measures set out in this legislation, and indeed the terms negotiated with the public service unions and associations and set out in the Haddington Road agreement, are in line with this model. In that way, they are in sharp contrast to the measures taken by the previous Government.

This is the fifth financial emergency measures legislative proposal that has come before the Oireachtas for consideration; three were introduced by the previous Government in 2009 and 2010. Those Acts were introduced unilaterally and made provision for a reduction in the annual remuneration of public servants through a pension related reduction of €1.35 billion and a reduction in remuneration of €1 billion, and in 2010 a reduction to public service pensions in payment above €12,000. The previous measures introduced were of universal application to all public servants. They were brought in unilaterally, in a vain attempt to halt the descent into insolvency of the country created by the disastrous fiscal and economic policies of the last Government.

The approach of the Government today to secure further savings from the public service pay and pensions bill is markedly different from the approach employed by that Government in 2009. First, this Government has ensured that, in the interests of equity, no public servant can stand aside from the necessary contribution. A change to the Constitution was put to the people by way of referendum to permit the pay of the Judiciary to be reduced in line with the reductions applied to all other public servants. The previous pay reductions were applied to the Judiciary in the Financial Emergency Measures in Public Interest Act 2011, FEMPI 4, and this legislation will also apply to the Judiciary, once enacted. In addition, the Government is extending the measures to bodies that the last Government surprisingly decided should not be included in the pay reductions, namely the National Treasury Management Agency, NTMA, and the Railway Procurement Agency, RPA.

Second, and more radically, this Government has freely engaged with its employees and their representatives on the policy challenge facing us. The Government has set out the financial parameters which gave rise to the necessity to secure savings in its pay and pensions bill. Like any company, we opened the books to our employees. The proposals put forward by the Government protected the basic salary rates of low and middle income earners in the public service, while applying progressive reductions to the remuneration of higher paid public servants, unlike the 2009 pay cuts which were applied to all. The Government allowed an extended, some would say protracted, period to its negotiators and to the unions to try to secure an equitable and agreed approach on achieving the savings we set out.

There are those who hold the view that this approach was neither necessary nor appropriate and that the Government should impose a further simple, unilateral reduction to the basic salaries of all public servants, without consultation, discussion or negotiation with those affected. Neither I nor this Government share that view, despite its being put forward over a protracted period over the last two years. I do not believe any responsible employer in any sector of the economy would approach a problem in their company's finances in that fashion. If such an approach was adopted by any employer, Members of this House would be the first to criticise that approach.

Equally, the right to represent employees carries responsibilities, both to their members and their employers. Unions traditionally and correctly fight hard to maintain the terms and conditions of their members, but sensible union leaders also recognise that short-term sacrifice on a negotiated and agreed basis can often play a part in the long-term financial health of their employer. If it retains higher levels of employment and if it keeps the employer in business, it ultimately serves the longer-term interests of their members. There can be no greater goal for public servants than that their employer, the State, returns to its previous level of economic independence and is not beholden to external borrowers. Without it, they will find they are trying to negotiate on their future pay and conditions not with the person in the room, but with people sitting in judgment on Ireland's economic performance from abroad. Those would be very one-sided negotiations.

The approach adopted by the Government is not without difficulty or challenge. It has required an enormous effort on the part of public service employers, unions, representative associations and the industrial relations machinery of the State through the Labour Relations Commission, to reach the point we are at now, with an agreed solution. I hope all public servants will be consulted on the outcome to allow everybody's views to be known. If these proposals are accepted, it will be possible, in the Government's view, to achieve the required savings and secure the necessary reduction in the public service pay and pension bill without having to make additional and deeper basic pay cuts. That can be done in part through major increases in public service productivity. Our approach to this whole challenge was, as far as possible, to get better productivity and minimise the take from people's pockets. We need widespread work practice reform, in co-operation with all public sector staff. The essential elements and protections of the Croke Park agreement will also remain in place. Industrial peace in the public service can be secured at a critical time in our path to economic recovery.

The Bill before us today is an integral part of the architecture of such an agreement. The primary purpose of the Bill is to implement the proposed pay reduction for public servants earning annual salaries in excess of €65,000, and the parallel but lesser reduction in public service pensions over €32,500. Contingency measures that may 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 also provides 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 applied.

For the benefit of Members I will now briefly outline the provisions of the Bill. Section 2 provides for a graduated reduction in the remuneration of public servants earning €65,000 or more. Any amount earned by those higher paid staff up to €80,000 will be subject to a reduction of 5.5%, any amount over €80,000 will be subject to a reduction of 8%, any amount over €150,000 will be reduced by 9% and any amount over €185,000 will be reduced by 10%. All public servants including the Government, the Oireachtas - other than the President whose pay is protected under the Constitution - and the Judiciary will be affected. Those affected by the measure represent some 13% of the public service workforce, those who are paid the most in core salaries and allowances, so 87% of the public service will be unaffected by the core pay cut.

This section also includes a provision to enable a public employer or a Minister of the Government to exercise an existing power to fix terms and conditions so as to result in less favourable remuneration, other than core salary, or in increased hours for the public servants concerned. That existing power may be exercised notwithstanding any terms of any enactment, contract or otherwise. In essence this provision aims to permit public service employers, including Ministers, to make necessary savings if they cannot be achieved by way of collective agreement.

This section does not grant any additional rights to employers to adjust terms and conditions. Basic salaries are excluded. I am of the view that reductions in basic salaries should be done only in the context of primary legislation, and with the consent of the Oireachtas. That is what I am doing in this legislation.

Furthermore, any group that has its terms of employment set by the Oireachtas cannot have them changed by any public sector employer, or by a Minister. That includes officeholders, in particular the Judiciary, whose pay terms are determined, not by a Minister, but by the Oireachtas.

Section 3 sets out technical amendments which provide for the application of all existing ancillary powers of the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 to the new pay reductions, including the prohibition on pay increases and the ability of the Minister to modify the pay reduction as it applies to certain persons, or groups on limited grounds, to the pay reduction provided for in this Bill.

Section 5 provides for amendments to be made to the Financial Emergency Measures in the Public Interest Act 2010 to increase and extend the impact of the public service pension reduction, PSPR, on persons who have retired from the public service and currently attract pensions of €32,500 per annum, or more. Persons in receipt of annual pensions of less than €32,500 will be unaffected by these measures. To reflect the fact that public servants who retired before 29 February 2012 would have had their pension entitlements based on pay rates greater than those who retired after that date, different levels of reduction apply, as detailed in the tables. These reductions will apply from 1 July 2013.

Section 4 is a consequential amendment, to the definition of pensioner. Section 6 consists of technical amendments to ensure that relevant elements of the Financial Emergency Measures in the Public Interest Act 2010, including in respect of aggregation of pensions and calculation of pension, are adjusted for the purposes of the Bill. Sections 7 and 8 provide for a freeze of progression along incremental scales by public servants for a period of three years, commencing on 1 July 2013. Public servants may have the effects of this provision modified on the basis that a collective agreement, which has been registered with the Labour Relations Commission, has been reached. As is standard in these Financial Emergency Measures in the Public Interest Acts, the Minister is, under section 8, granted a power to exempt public servants from the application of the measure on limited and exceptional grounds. This issue was raised during a Topical Issues debate.

Section 9 provides that persons retiring before 31 August 2014, or on a later date that may be ordered by the Minister, will be entitled to have their pensions calculated as if the pay reduction and any increment pause or freeze had not applied to them. This provision is similar to the grace period provision provided for under the Financial Emergency Measures in the Public Interest (No. 2) Act 2009. It is intended to prevent an unmanageable and unaffordable short-term outflow of staff affected by the pay reduction to the detriment of the delivery of public services. There will be a further grace period until August 2014, or before the adjusted pay impacts on pensions.

Section 10 amends the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 to provide that the employees of the Railway Procurement Agency, RPA, and the National Treasury Management Agency will be subject to the measures proposed in this Bill. They were not included in the pay reduction imposed under the Financial Emergency Measures in the Public Interest (No. 2) Act of 2009. However, this Government does not consider that the basis for their exclusion at that time continues to be valid. It should be noted that the RPA is due for merger with the National Roads Authority under the Government's rationalisation programme.

Section 11 amends the Financial Emergency Measures in the Public Interest Act 2009 to provide for a modification of the pension-related deduction that applies to serving public servants. That modification will reduce the pension deduction on all public servants by €125 a year, to commence from 1 January 2014. That €125 is a small payback to everybody who is enduring the pension deduction now. It is important to signal it to Deputies who dealt last year with the overarching Pensions Bill and the new pensions framework because at the time there was an argument that the pension levy should be calculated as part of a person's pension contribution. I am of the view that it is an emergency additional imposition that will be removed when the emergency ceases. I wish to signal that we want to begin that process in this legislation, albeit on a very modest basis.

Section 12 provides for annual review and report to the Oireachtas of the necessity of the measures set out in the Bill. As an administrative efficiency measure, one single review will now encompass the reviews currently necessary under the earlier FEMPI Acts. One reporting will determine whether the financial emergency continues to exist and if there is a case to continue the existing FEMPI legislation. Section 13 states the Short Title of the Act.

The Financial Emergency Measures in the Public Interest Bill 2013 is a relatively short Bill but its impact is considerable. I believe it represents one of the major final steps to the restoration of our economic sovereignty. An essential condition for balanced economic growth is sustainable public finances, something all of us have stated repeatedly. As such, the Government is committed to cutting the deficit and putting the debt ratio on a downward path. We estimate the debt will peak this year at 123% of GDP, which is an extraordinarily high debt by any international comparison. We are making considerable progress, however, and this progress is lowering the cost of borrowing, helping to put the public debt on a declining path and contributing to increased investor confidence in this country.

Every person in this House is aware there remains a considerable gap between what we get in revenue and what we spend. This situation is not sustainable over the longer term. In addition to the requirement to bring our deficit to below 3% of GDP by 2015, in line with the excessive deficit procedure, it makes sense that we bring balance back to the public finances, and stabilise and reduce our debt burden. This is how we will ultimately create growth and jobs on a sustainable basis in the Irish economy.

I am conscious of the argument that the measures we are taking on public expenditure can have a negative short-run impact on economic output. That impact, however, is reckoned to be small and in the short term. Over the medium term there will be a positive impact as the deficit is reduced and debt is put on a declining path. The Government's policy fiscal consolidation, which is as growth-friendly and equitable as we can make it, has shown results in recent years. Having returned to growth in 2011, Ireland achieved a second successive year of economic growth in 2012. Preliminary figures show real GDP increased 0.9% last year. Allied to that, inward investment remains strong, exports from Ireland are now considerably above their pre-crisis level, and bond yields on Government debt have fallen sharply and remain stable at that lower level.

As well as being a key building block to the final restoration of our economic sovereignty, this Bill achieves another key goal. It provides a platform for the well-established industrial relations process in the public service. It will underpin the negotiation of collective agreements, a measure to which I was wedded, through which public servants can secure the benefits they have under the proposals brokered by the Labour Relations Commission, between now and 2016. Those agreements will be critical to our recovery, by providing a degree of certainty for all in regard to the cost and provision of our public services over the next three years, without the disruption that would be caused by industrial action. As I have stated on several occasions, this will be the last ask of public servants.

I wish to pay tribute to all involved in these negotiations, most especially the Labour Relations Commission and the work undertaken by Kieran Mulvey and his team. I also thank my own negotiators - some of whom are in the Chamber - led by Mr. Paul Reid, who did a remarkable, patient and difficult job for the country. In part, what they were negotiating was a reduction in their own wages.

This is a difficult measure and I acknowledge that. However, it is an essential one and therefore I commend the Bill to the House.

Deputy Sean Fleming has 30 minutes.

I wish to speak on the Financial Emergency Measures in the Public Interest Bill 2013. It is important to dwell on the Title of the Bill before we go into the specifics of the legislation and discuss the contents and what is involved.

It is being introduced under the procedure called financial emergency measures in the public interest. I ask the Minister to spell out to us when he believes the financial emergency will come to an end. He concluded his speech by noting that the final section of the Bill provides for the preparation of annual reports for the Oireachtas which will also encompass previous legislation. I welcome that measure and will be tabling an amendment to confirm that we are still in a financial emergency. If the financial emergency no longer obtains, nothing under this legislation should have effect.

The Minister indicated that the NTMA and the RPA have been removed from the Schedule, which lists most of our commercial semi-State bodies. I have tabled an amendment to ensure that annual reviews confirm whether the Schedule remains accurate. By removing two bodies, he has accepted that the Schedules contained in previous Acts require legislation. These bodies are not exempt from the emergency measures that applied heretofore. From one perspective, this is a positive development because these are commercial organisations not directly under the control of the Minister and are required to cover their own costs and make profits. I refer to big organisations like the ESB and An Post. The Minister did not want to micro-manage these organisations, many of which are competing against private sector companies. However, many people working in the public service take a jaundiced view of their compatriots in semi-State companies not being included in the cuts. ESB employees have received a number of pay increases in the past year or more for what people see as public sector work. I am conscious of these opinions in my constituency of Laois-Offaly. I barely need to walk out my own door to meet civil servants and employees of the local authority and the HSE. A significant number of people living in my village work for Iarnród Éireann, ESB or An Post. Debate rages on occasion in the pubs as to why some are getting cuts and others are not. Generally they thought they were all public sector workers. I am not saying they should be brought into the Bill but the review should include an assessment of whether the Schedule is still appropriate in its current form. The Minister is introducing two amendments for good reason. Perhaps we should also consider the banks that are in State ownership. I do not see a difference between the ESB and a financial institution that is in full State ownership and provides a service, albeit poor. I am not coming down one way or another but the case needs to be considered. Perhaps an argument could be made for including all organisations that receive the majority of their funding from the Exchequer.

We have a number of problems with the Bill. Our first problem is the use of the guillotine because we think rushed legislation is bad legislation. This Bill does not need to be guillotined. We also oppose the inclusion of reductions for pensioners who were not party to any negotiations. A decision was made unilaterally even though the Minister spoke at length about the need to negotiate and opposed previous Governments' decisions to introduce pay cuts unilaterally. That is precisely what he is doing to public service pensioners, after excluding them from the talks.

The Minister stated that he wants to reach a deficit target of 3% by 2015. Will the financial emergency end if we reach that target or will it extend beyond that date? If, by good fortune, we meet that target earlier than 2015 will this legislation fall or no longer be necessary? The Minister spoke about a required consolidation of €3.5 billion in 2013 and additional savings and revenue raising measures of €3.1 billion for 2014 and €2 billion in 2015. However, he lost the battle on the most important aspect of these figures, namely, the breakdown of the adjustment, or consolidation as he likes to call it, between taxation measures and expenditure cuts. Most of the adjustment has been achieved through cuts to current expenditure. The Minister might cut capital expenditure but I might then increase capital taxation to balance the equation. Very little has been raised in additional capital taxes. The amount has been much less than 50% of the required consolidation, which results in cuts to those who rely most on the State's services. People hoped the Labour Party in government would stand more firmly against further cuts without additional measures to increase revenue. When we begin to deal with Estimates and the budget for next year, I hope we will see a 50:50 balance between expenditure cuts and increased taxes. The Minister referred to the amounts without referring to the split, which is equally important.

This is a short and easily understood Bill which sets out to reduce the remuneration of certain public servants on higher rates of pay in excess of €65,000 and suspend incremental progression for three years for all public servants unless they are covered by a collective agreement that modifies the terms of the incremental suspension and which has been registered with the Labour Relations Commission. It also gives the Minister powers to set terms and conditions of employment for public servants so as to reduce the remuneration or increase the working time of those public servants. My major difficulty with the Bill is that it also provides for a reduction in pensions payable in respect of certain persons who are currently in receipt of public service or occupational pension schemes or pension agreements. That issue has not yet been discussed and the individuals concerned have been excluded from the process.

Why are we now discussing this Bill? We started a couple of years ago with the Croke Park agreement, in respect of which we are still awaiting for the third annual implementation report for 2012. I recognise that the Minister's officials have been busy but it is important that people are made aware of the progress that has been made so they can know the starting position of what was to be the Croke Park II agreement until it was rightly rejected by public sector employees. We told the Minister that the new agreement was unfair. We did not tell people how they should vote on it but we made it clear that aspects of it were unfair and disproportionate. Cuts were inflicted on people earning less than €65,000, mainly through the reduction of the Sunday premium for those who look after our health and security at weekends. A key issue that arose from discussions with individuals working in the public service was that it was not family friendly in terms of the additional working hours required.

Many parents value time at home with their children. They are very concerned about the quality of child care and always want to get home as early as possible to look after their children. Many public servants believed the additional working hours built into the Croke Park II were worse than a pay cut. My party told the Government within hours of the agreement being published that people would vote against it for that reason.

The Minister has since produced the Haddington Road agreement, whose publication at lunchtime last Thursday dovetailed with the introduction of this legislation. The new agreement breaks the mould because, for the first time, it is not a collective agreement across the public service. The Government's decision to have a series of bilateral agreements for different sectors will have knock-on effects. Separate agreements have been drawn up for the Irish Prison Service, the Defence Forces, an Garda Síochána, the Civil Service and non-commercial semi-State bodies, craft groups and the education, local authority and health sectors, respectively. The agreement also includes an appendix dealing with traditional hours for certain grades, depending on which agreement covers their work. As a result, eight different agreements need to be agreed between line Ministers representing the Government and the trade unions in the relevant sectors. We do not have an overall collective agreement by the public service committee of the Irish Congress of Trade Unions. From that point of view, I am sure the other party in government is pleased that ICTU's public service committee has been effectively stood down as part of the Haddington Road agreement.

I would not rule out a collective agreement yet. It is still possible that we will achieve one.

It may be possible but the Government's approach has been to deal with the issue on a piecemeal basis.

As the legislation proceeds, I hope to elicit further information on the savings it is proposed to make under the Haddington Road agreement. Last Thursday, during Oral Questions, the Minister indicated he would provide figures on projected savings. The new agreement adjusts the previous Croke Park II agreement. For example, the latter proposed to save €65 million by reducing Sunday premium payments. This target will not be achieved because the Government agreed to make significant changes and concessions. This was a correct decision as it was unfair to target front-line workers.

I would like the Minister to provide costings for some of the other areas of savings. The Government has an overall target of achieving savings of €1 billion by 2015. Will the Minister spell out the savings that will be achieved under the Haddington Road agreement and the additional savings it is proposed to achieve through other measures? Some of the most significant savings to be made by 2015 will be achieved through a targeted redundancy programme. Reference has been made to reducing headcount subject to Government action. The trade unions have not signed up to any such measures. Notwithstanding the Minister's statement about ensuring all measures are achieved through co-operation and agreement, the Government proposes to make unilateral decisions to reduce public sector numbers from 290,000 to 282,500 by next year. From 2015 when public servants receive their lump sums and start to receive their pensions, the public sector pay bill will logically reduce. What will be the precise savings generated by this measure?

The early retirement scheme introduced in 2012 should also deliver some further savings in 2013 and 2014. Will the Minister indicate what savings will be achieved through retirements in the normal course, as occur in all organisations? The Government has set a date of August of next year by which it hopes to encourage public servants to retire. What savings will be generated from the recruitment embargo in place in many parts of the public service? I am aware that teachers and health staff above nursing grade, including doctors and consultants, are exempt from the recruitment embargo. It is important that we find out what savings will be generated by the Haddington Road agreement as well as from other measures being taken by the Government. I expect that combined these savings should add up to the €1 billion target. It would be useful to find out what savings will be generated and from where.

As I indicated, the inclusion in the Haddington Road agreement of measures on public service pensions is a major issue. The matter was also included in the Croke Park II agreement. Paragraph 2.27 of the new agreement states:

Separately, to this Agreement, the Parties note that the Government intends to align the reductions in public service pensions in payment with the reductions applied to serving staff. The Parties note that this measure will apply to pensions in payment greater than €32,500 only.

It is clear from this reading that this measure will be implemented separately from the agreement. What savings will be achieved from the proposed cuts in public service pensions?

I do not propose to repeat the Minister's speech, the gist of which was that he would not do as my party did in government when we made unilateral changes to public service pay, income and remuneration without consultation with the relevant bodies. He is doing precisely that in respect of public service pensions. The decision to exclude public service pensioners from the talks on the Croke Park II agreement caused great anger. Representatives of public service pensioners requested meetings with the Minister and his officials but were refused. They also wanted to be involved in negotiations on the Haddington Road agreement because they knew it would make reference to public service pensions. In response to a number of questions I tabled on this matter in recent weeks, the Minister indicated arrangements would be made for his officials to meet representatives of the Retired Civil and Public Servants Association or its constituent bodies. Now that the agreement has been published and emergency legislation is ready to be forced through the Dáil, the Minister has indicated he will speak to the representatives of public service pensioners. I do not know what he will discuss with them as he has done the dirt on them without first speaking to them.

I met them at length yesterday and my officials met them last Friday. Perhaps the Deputy will ask them.

My point is that the Minister met them after the legislation was published. Public service pensioners were not included in any discussion before the Haddington Road agreement and the legislation were published on Thursday last. The meetings took place after publication. Moreover, the list of Committee Stage amendments does not feature any amendments from the Minister. If no changes are to be made to the legislation, clearly the views of public service pensioners are considered irrelevant. Opposition spokespersons have drawn up amendments to address the issue of public service pensioners and while they may differ in content, all of them reflect the same general principles.

I specifically wrote to Mr. Kieran Mulvey before his proposals were published requesting that he refuse to include any reference in the proposed new agreement on public sector pay to matters that did not form part of the negotiations. While Mr. Mulvey has done a fine job in reaching nine individual agreements with different sectors, it was not necessary for him to provide cover - to whom I do not know - by including a reference to public service pensions. He should have taken the view that it is the Government's prerogative to legislate for cuts in public service pensions. He did not include a reference to targeted redundancies in the agreement on the basis that this matter will be the subject of a Government decision. Public service pensions and redundancy schemes were not negotiated as part of the Haddington Road agreement. I presume the reference to public service pensions was included at the request of one or two people to make it easier to sell the agreement to different people. Public service pensioners were used as pawns and they feel aggrieved as a result.

I and several party colleagues met a number of representatives of public service pensioners who expressed the view that they had been unfairly treated as a result of being excluded from the negotiation process. Meeting them at this stage is a case of too little, too late. I am surprised by the number of people who contacted me about this issue over the weekend, not so much in my role as my party spokesperson but as a constituency Deputy. One normally recognises a structured e-mail because one receives exactly the same e-mail from 20 or 30 people. However, the many telephone calls and messages I received from people over the weekend were clearly spontaneous as they related to individual circumstances. They were not inspired by any national organisation because public service pensioners do not have a strong national organisation.

These are the views of individual public service pensioners.

The Minister stated that the single public service pension scheme was introduced last year. The aim of this scheme is, by and large, to reduce the cost of public service pensions for new recruits into the future. When it was brought forward, there was a clear understanding that current public servants would not be affected. There is, however, one provision in the relevant legislation which gives the Minister power to adjust public service pensions in payment to 1% of inflation. This provision has not yet been implemented but-----

It allows the Minister to adjust payments in the context of the consumer price index, CPI. That was the only course I could take. However, there is no intention to reduce.

I accept that there is no intention to reduce and that the provision is designed to limit the increase in line with the CPI. It would, therefore, be an adjustment to pensions. The Acting Chairman would probably go a little further than the Minister did in the legislation to which I refer. I see that she has tabled an amendment which is specifically designed to cut pensions in payment for existing pensioners if there are further cuts in public sector pay. I understand the difficulty the Minister had in holding the line on this matter. I accept that it is not appropriate for me to comment on this matter at-----

I wish to point out that the intention behind my amendment is just the opposite of what the Deputy stated.

We will have ample opportunity to discuss the matter on Committee Stage. As I have already stated, however, and in the context of the existing legislation, it was not really the Minister's intention to hit public service pensioners whose pensions are in payment. All he was doing was limiting the increase in line with the CPI. However, he has now had a complete change of heart.

If the CPI was in vogue now-----

There would be reductions.

-----there would be an increase.

I understand that.

Whereas now they are frozen.

The position with the Bill before the House is that public service pensions will be hit.

A number of amendments relating to this matter have been tabled for Committee Stage. The gist of those in my name is that everyone who is in receipt of an amount of less than €65,000 or €60,000 should be included. Those are the figures in the legislation in respect of the incomes of people at work. Just because one is not at work does not mean one can live on half the amount on which one was living up to one's retirement. I am of the view that the reduction in income should be at a certain level across the board. There should be no cut for those earning below €60,000 to €65,000 - the figures contained in the legislation - and I have tabled amendments to that effect. Whether those amendments will be ruled as being in order is a separate issue.

I am aware that other Deputies will have a great deal to say in respect of the proposed reduction in remuneration for public servants earning more than €65,000. However, in the amendments I have tabled for Committee Stage I have proposed that those earning in excess of €200,000 should have their incomes reduced by 20%. The legislation already contains a proposal to the effect that the incomes of those who are in receipt of €180,000 plus will be subject to a reduction of 10%. The Taoiseach's salary is currently in the region of €200,000 and as a result of the proposed cuts, it will drop to €185,000 or perhaps a little less. I am of the view that anyone who is in receipt of a salary larger than that of the Taoiseach should have it reduced by 20%. There are those who state that no one should be paid more than the amount to which I refer and it has often been stated that half of the people who earn these high salaries are hospital consultants. A cut of 20% in the portion of someone's salary that is over €200,000 would not amount to a great deal. If a person - for example, a surgeon - is in receipt of €250,000, the 20% cut would be applied to the €50,000. This would mean a cut of €10,000 gross and only €5,000 net. Given that the incomes of such individuals will already be the subject of a 10% reduction under the terms of the legislation, they would only be obliged to absorb an additional pay net pay cut of €2,500 in order to bring them up to 20%.

The Deputy seated just down from me would probably state that the amount to which I refer is not half enough. She might be right in that regard. In any event, it is my view that there should be an additional cut for those who are on more than €200,000 and I have tabled an amendment in this regard. I am aware that there is a conflict between the various amendments relating to this matter because Deputies have suggested different ranges of figures and different levels of reductions. There are, perhaps, those who might state that no one should be paid more than €200,000. However, all of us on this side of the Chamber are of the view that there is a point at which people who are in receipt of higher salaries should be obliged to absorb significant cuts. I have taken the Taoiseach's salary as the benchmark in this regard. Anyone who is earning more than the Taoiseach should be obliged to take a steeper pay cut than him. Most people would agree that this is both fair and reasonable.

A thorny issue is going to arise with regard to the agreement being binding on individual sectors, particularly in the context of how the trade unions vote. A constitutional issue arises here. As a member of the Labour Party and a former trade unionist - he may still be a member of a trade union - the Minister will be aware that people's right to join trade unions is enshrined in the Constitution of Ireland, Bunreacht na hÉireann. The courts have deemed that people also have an equal right not to join trade unions. There are public servants who choose to exercise their constitutional right not to be members of trade unions. I am of the view that the Minister is making an assumption with regard to how these people should be impacted upon by any agreements in their sectors. He almost seems to be implying that if a sector votes "No", then non-union personnel will also be deemed to have voted in this way. This is despite the fact that they would not have a vote in respect of matters of this nature, which is an important consideration.

Another difficulty I have relates to the guillotine that will be applied in respect of the legislation. The trade unions have not yet balloted their members but the Bill will be passed by the House tomorrow night. This is a grave discourtesy to people. I would have understood if the Minister had published the legislation, put it through Second Stage and then informed the trade union movement, "This is what is coming down the track the week after you ballot your members, one way or the other. At least you know where we stand". For it to be passed by the Oireachtas before voting on the new agreement even commences, is informing the unions that the Minister does not care whether they vote "Yes" or "No" or whether members tear up their ballot papers and do not vote at all. What he is saying is that it does not matter, the legislation is going to be passed and the views and decisions of trade union members are of no consequence. I do not understand why the Minister is proceeding in this way. He is paying a major discourtesy to these people. He previously stated that he would not rush legislation through the House in the absence of consultation. He has introduced this legislation following a period of consultation but in the absence of agreement. If the Haddington Road agreement is or is not accepted, that will be of no consequence because the Minister has decided that the legislation should be passed in any event.

The different sectoral agreements to which I refer may have knock-on effects in the context of staff mobility across the public service in the future. In addition, the legislation is very weak on public sector reform. The Minister will state that it contains a number of measures in this regard but I am of the view that they are watered down in nature. They say little about ensuring reform and improving delivery of public services. The new Haddington Road agreement has largely been treated by the Government as a cost-saving exercise. In that context, it has missed out on the opportunity to improve public service delivery.

It is key that we should monitor how what is being done here will impact on citizens. We must also monitor whether the delivery of front-line services improves. The main challenge will be to ensure that such services are protected and that the public will not suffer as a result of those services being impaired by attempts to make savings, other than those relating to payroll. Key areas to monitor will be those relating to hospital waiting lists, queues in accident and emergency departments, special needs facilities in schools, the time taken to process social welfare applications and appeals - no one in the House can be unaware of the fundamental difficulties which already exist in this regard - the ongoing and lengthening delays in respect of Garda vetting and the delivery of local authority services. There must be a greater facility for staff transfers from the HSE to, for example, the Department of Social Protection or the Department of Foreign Affairs and Trade. The Passport Office is currently under pressure, which is understandable, and a backlog is building up again. Staff could also be transferred to the State Laboratory and the Private Residential Tenancies Board. Many of the entities to which I refer are understaffed at present. As part of a mobility scheme, however, staff could be moved into them.

The lack of a formal assessment process is hampering staff redeployment. International studies show that investing in key areas of the public service such as, for example, that relating to the collection of revenue, can improve the delivery of services. We have witnessed this in the context of the amount of money that is going to be levied from the local property tax, responsibility for the collection of which was given to the Revenue rather than to the Local Government Management Services Board or local authorities. One of the latter - I do not know which - were responsible for collecting last year's household charge. It was much better that Revenue was given power in this area.

There is an increasing need to appoint specialists to certain areas of the public service. I refer, for example, to statisticians, IT specialists, environmental specialists, solicitors and barristers. It would be better to employ the latter full-time rather than pay them on an hourly or a daily rate, as is currently the case with the Office of the Chief State Solicitor and similar bodies.

My party has supported measures that were introduced in the past. However, as a result of the provision in respect of pensioners - who were not consulted in respect of or who were not allowed to be involved in the discussions relating to either the Croke Park II or Haddington Road agreements - and in view of the unfair treatment being meted out to them, I will be opposing the legislation.

The Minister has moved with indecent haste to introduce this legislation. I was interested in his comments, in that he described it as part of "the Government's policy of restraint and prudent budget". There was a complimentary glow to that depiction. The agreement has just been published, some union leaderships have taken a judgment on it and not a single union member has been balloted on its provisions. The legislation could have waited, but the Minister's objective in pushing it through is to strong-arm public sector workers, the very workers for whom he is responsible. I consider this to be a pre-emptive strike against them. The contingency measures to which he referred are blunt threats - sign up or else. Shaping up to one's workforce with such bravado is unnecessary, unhelpful and bad practice.

The Minister stated that he had taken the radical decision to engage freely with employees and their representatives on the policy challenge facing us. Is it not extraordinary that a Labour Party Minister would consider a process of collective bargaining and consultation radical? It is not radical - it is necessary.

Following the rejection of Croke Park II, a new negotiation process was initiated. Mr. Kieran Mulvey of the Labour Relations Commission was tasked to take the lead and union leaderships engaged fully in the discussions despite the unduly constrained framework set by the Government. There was no need to bully the leaders to the table - they went openly. In the course of the discussions, however, the Minister intervened time and again, barracking from the sidelines with his contingency plans. This caused me to wonder when he stated this evening that, while some people believed that the Government should act unilaterally and reduce the pay of all public servants without consultation, discussion or negotiation, neither he nor the Government shared that view. This is precisely the view that he articulated throughout the process - pass the agreement or else. Now the message is to agree the Haddington Road deal or else. The big threats and big sticks are still out.

This legislation has already been presented to union members and has been widely reported and commented on in the media. Trade union members and public servants are fully aware of the Minister's intent in the event of rejection of the Haddington Road deal. The Government's approach throughout this sorry episode, from Croke Park to Haddington Road, demonstrates nothing short of contempt for public sector workers. Let us remember that this Government and its predecessor cut the public sector workforce by 10%. There is a commitment to reduce it by a further 10,000 workers. As at 2008, staffing figures in the public sector were slightly below the OECD average. In a comparison with eight countries, including Britain, Canada and the Netherlands, Ireland had the third lowest figure for general government employment per 1,000 population, as I am sure the Minister knows.

Last December, he told the Dáil that there were 565,000 more medical card holders, 50,000 more students in schools, close to 30,000 more third level students and 80,000 more State pensioners. Carer's allowance applications are taking six months to process and children seeking speech and therapy supports are on waiting lists of at least one year. Today, 292 people are lying on hospital trolleys and 14% of the working population continues to rely on social protection supports and services to make ends meet.

Despite this upwards trend or spike in public service need, significantly fewer public sector employees are dealing with the increased demand. They are working harder and for longer, with less pay and within a system that is inadequately resourced. This is unsustainable.

Railroading the legislation through the Dáil is little more than throwing political shapes. As the employer of the largest workforce in the State, it is wrong of the Minister to behave in this way.

This legislation and the Haddington Road agreement contain provisions to cut public sector pensions. As the Minister pointed out, the majority of public sector pensions in payment are to the value of €30,000 per year or less and, therefore, will be unaffected. Pensioner representative organisations, such as the Garda Síochána Retired Members Association, GSRMA, and the Senior Citizens' Parliament, have raised concerns with the lack of consultation with public sector pensioners during negotiations. Although the Minister and officials met the Alliance of Retired Public Servants, it was too little, too late. He has committed to lessening the burden of the public service pension reduction, with the initial focus on former workers who are in receipt of low-income pensions, at the earliest date that economic progress permits. This sounds like good news, but low-income pensioners, like their low-income public sector worker counterparts, could be forgiven for not taking much comfort from these words. The first Croke Park deal contained a similar commitment for low-paid workers that has yet to materialise thanks to our own troika of Fianna Fáil, Fine Gael and Labour and their agreed economic strategy of the past five years.

I hope that the Minister lives up to his commitment to continue to engage with the Alliance of Retired Public Servants and that he extends this necessary, minimal courtesy to other representative organisations. However, his dogged refusal to address the small number of gold-plated pensions still being paid out to former taoisigh, Ministers and officeholders is a matter of immense frustration. Paying out pensions to the tune of €150,000 is unacceptable in good times as well as bad. Refusing to take on these payments within the reform agenda makes a mockery of every public claim to change.

When the Minister makes excuses for not cutting excessive pensions, he cites the Attorney General's advice. We have yet to see that advice. It may not be the norm for such advice to be published, but a Minister dedicated to increased public scrutiny of Government decisions would have no reason not to make such advice public. Regardless, the property rights argument does not stand. The public service pension reduction is a levy on public sector pensions and has been in place for a number of years. Therefore, the precedent for the Government to cut public sector pensions has been set. The Government has also placed a levy on private pensions, reaffirming its ability to target pensions. Indeed, the IBRC Act, which was also rushed through the House, included a provision requiring "permanent or temporary interference with the rights, including property rights, of persons", debunking the Government's position that property rights are sacrosanct. I am unsure as to what could be fairer than ending the practice of significant pension pay-outs to political insiders during a time of ongoing economic and social crisis.

If the Government is comfortable with threatening to freeze indefinitely the increments of clerical officers, 75% of whom are women and are on starting salaries of €22,000 per year, and to cut their pay further while increasing their working week if they do not sign up to its latest round of cuts, surely reducing substantially the outrageous gold-plated pensions paid out to predominantly male former politicians is not beyond its reach. Sinn Féin has often proposed a large levy, essentially a clawback levy, on public pensions in excess of €100,000. A reforming, radical and fair government would introduce such a measure.

Reference has already been made to yesterday's media report that the Irish Federation of University Teachers, IFUT, is commissioning legal advice to examine the FEMPI legislation’s provision to allow the Government to cut the pay of public sector workers without agreement. The IFUT's general secretary said yesterday that he believed there are constitutional implications for the legislation on the basis that it is the first time that the treatment of employees will be dictated by their membership or non-membership of a union, rather than the work they do and the grade they hold. I do not know whether the Minister sought advice from the Attorney General on the matter but, if he did, I urge that he would make the information public. If not, I would like to know whether he intends to do so.

The Minister's increasingly cynical use of the legislative process is deeply worrying. I previously raised concerns with him on the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Bill, which have clearly fallen on deaf ears. The Minister, Deputy Howlin, scheduled the Oireachtas inquiries Bill for Second Stage debate in the Dáil before the final legislation was even published. Despite the contentious nature of the Bill, and the Minister's abject failure to publicly engage with citizens on the Oireachtas inquiries referendum he appears to have learnt nothing from the experience. He has again given Members just two working days to consider and submit Committee Stage amendments to the Bill – just less than eight working days since the legislation was first published. By any standards that is unacceptable. It certainly makes something of a mockery of the Minister's claim to reforming zeal. In addition, there is the long-awaited whistleblower's Bill. In light of the ongoing controversy surrounding the Minister for Justice and Equality, the Minister, Deputy Howlin, might have been better off prioritising that legislation rather than forcing through the FEMPI legislation.

On behalf of Sinn Féin I will table a number of amendments to the Bill. The gist of our approach is that we want excessive pay at the top reined in. We do not want it done gently or delicately, we want it done clearly and definitively. If that does not happen, as I have said repeatedly to the Minister then he cannot make any claim to fairness. He cannot dangle threats over low and middle-income workers while protecting those at the very top. There is no good reason for not imposing substantial cuts to the pay of the Taoiseach and Ministers, over and above what is envisaged in the current arrangement. Neither is there a reason not to re-examine the pay of hospital consultants, bar a lack of political will. There is certainly no good reason why the gold-plated pensions in payment to many of the great and good of this island cannot be tackled.

Sinn Féin does not support cutting the pay of low and middle-income public sector workers, whether in the form of cuts to core pay, allowances, twilight payments or additional hours of work, which in real terms amount to a cut in pay for such workers. We will not support that. Any argument based on equity or people carrying their fair share of the burden to dress up attacks on those categories of workers is simply wrong. We do not support the Government's position that €300 million in 2013 and an additional €1 billion by 2015 must be cut from the public sector pay and pensions bill. I have set out the position on how savings could be found in the pay and pensions bill. If the moneys are so desperately needed, other measures could be taken and the Government knows that well. It cannot go back again to public sector workers.

I listened carefully to the Minister's insightful but worrying comment. He said, "measures we are taking on public expenditure can have a negative short-run impact on economic output". He then went on to extol what he saw as the great achievements of the Administration. At no point did he sound out the reality of a domestic economy that is in crisis. Either the Minister is oblivious to the fact, which I doubt, or he simply edited out the reality from his script. He said the cuts he would introduce might have a negative short-run impact. That will not be much comfort to the workers in receipt of the cuts. Taking people's spending power out of the domestic economy and putting money instead into the black hole of bad bank debt, for instance, is not a good strategy. There has been a consistent strategy of austerity for private sector workers, but also for those within the public sector, who are on modest wages - many of whom are in negative equity and who struggle with all of the same dilemmas and pressures as private sector workers. Taking money out of their pocket makes absolutely no sense. The deep worry, which extends beyond public sector workers, is that we can see from the Minister's script this evening that he is definitely wedded to a strategy of cutbacks for the lower echelons of society, the ordinary five eights - the average man or woman - yet he will persistently defend those at the very top. That is unacceptable and verges on the obnoxious. The union leadership will take their view on the agreement, now called the Haddington Road agreement. In most cases members will be balloted. It is the prerogative of every worker to take his or her decision on the matter. I cannot imagine any public sector worker taking any comfort from the fact that the Minister has taken to himself in this pre-emptive way the power to cut the wages of those workers if he does not get the answer he likes. The Minister, Deputy Howlin, has form in that regard.

I look forward to Committee Stage on which he will table amendments. Perhaps the miraculous will happen and the Minister might see the light. He might listen to some of the good sense and the reality behind some of the amendments we are moving. However, I suspect that will not be the case. The manner in which the legislation has been rushed through the Dáil to be in the Seanad by Thursday is disgraceful and sends a negative message to public sector workers. It also sends a very negative message to elected Members of the Oireachtas.

I call Deputy Joe Higgins. I believe he is sharing time with eight colleagues. Each speaker will have three and one third minutes each.

Yes. I wish to share time with Deputies Finian McGrath, Richard Boyd Barrett, Wallace, Clare Daly, Joan Collins, Luke 'Ming' Flanagan, Seamus Healy and Shane Ross.

I thank Deputy Higgins for doing my job. Is that agreed? Agreed.

The Financial Emergency Measures in the Public Interest Bill 2013 is a falsely named piece of legislation through and through. The public interest suggests the well-being of a majority in society and society in general. A regime of cuts to the income of low and middle-income workers and a worsening of their conditions is not in the public interest or in the interest of society. It damages society and increases the stress and difficulties of the workers concerned and it takes €1 billion out of the domestic economy over the next three years, further intensifying the downward spiral of this austerity-blighted domestic economy. This Bill is in the interests of the financial markets - the bondholders, the bankers and the troika who act in the interests of the financial capitalists of Europe.

It also is in the interests of the bailing out of the financial market system on the backs of working-class people.

The Financial Emergency Measures in the Public Interest Bill is a disgraceful blackmail measure to browbeat workers into accepting significant attacks on their incomes and conditions. The registration for the property tax, the home tax in reality, closed today, providing for another income cut also accompanied by threats and menaces. For many workers, the property tax amounts to a week's income. The public sector workers should take on both the property tax and these proposed cuts to their wages and conditions - hatched appropriately in this agreement in a place called Beggars Bush - beggaring the low and middle-income workers concerned. They should take on the property tax and mount a massive campaign of opposition, mobilisation and industrial action to halt this insane austerity and to force a change in Government policy towards investment, job creation and regeneration of the economy instead.

It was ironic to hear the Minister for Public Expenditure and Reform criticise his Fianna Fáil predecessor and, he charged, for introducing similar measures unilaterally. While that is correct, have Members forgotten that over the past few months, the same Minister has been bullying and badgering the public sector workers concerned on a weekly basis? They have been told they have absolutely no choice or they would face worse. He has threatened them that unless they vote for the amputation of their right arms, the Government will cut them off anyway. This has been the tone of the Government and it is a disgraceful position for a Labour Party Minister to adopt. I reject this legislation and urge workers in the public sector, to be supported by private-sector workers, to reject it out of hand and to fight for an alternative.

First, I thank the Acting Chairman for the opportunity to speak on this new legislation, the Financial Emergency Measures in the Public Interest Bill 2013. The Bill is an attack on all public servants and one should not beat around the bush, it will cause further hardship to all public servants and their families. In addition, it will suck out more money and spending from the local economy and will damage further the potential to create and develop jobs and local employment in the small and medium-sized enterprise, SME, sector. Neither the Minister nor the Government appear to get it. Ireland's jobless figures are still among the highest in the European Union. Moreover, its long-term unemployment figures also are among the highest in the EU, despite recent initiatives such as changes in the welfare system and the provision of more training opportunities for people looking for work. Approximately 62% of Ireland's unemployed people have been without a job for a year or more. This is far in excess of the EU average of 45% and these people make up 9% of the total Irish population. I raise this point because it is relevant in this debate. Under other definitions, these statistics could be even more dramatic as the European Union's approach to measuring long-term unemployment is generous when compared with that of the United States Bureau of Labor Statistics, which defines it as being 27 weeks or longer without a job. Unemployment statistics also do not take account of those who emigrate in search of work. I raise this issue in the context of cutting the wages of public servants who did not cause this crisis. I also mention this in the context of the banking crisis and more importantly, of the debt crisis that is dragging this country down.

Paragraphs 1.1 and 1.2 of the Bill's explanatory memorandum outline measures that will see a reduction in the remuneration of certain public servants on higher rates of pay in excess of €65,000 per annum, which in the present day is not a huge amount of money. The Bill provides for the reduction of the amount of the payment of pension or other benefits, other than lump sums, payable to or in respect of certain persons who are or were in the public service under an occupational pension scheme or pension arrangement or in receipt of pensions greater than €32,500. The Bill also provides for certain contingency measures for savings to pay the bill, which include provision for suspension of incremental progression for three years for all public servants, unless they are covered by a collective agreement that modifies the terms of the incremental suspension and which has been registered with the Labour Relations Commission. This Bill is disgraceful legislation and I will be voting against it. I will stand by our public servants, who do not deserve this injustice and this legislation is not in the public interest.

In addition, I must also point out the issue concerning senior citizens and the effect on pensions of the Bill. The fact there are to be reductions in pension payments, while stated at paragraph 2.27 of the Haddington Road agreement, is inserted in that agreement in a manner that could be construed as in fact forming part of the agreement. However, closer examination reveals it is merely noted in the agreement. The introduction of this Bill without consultation with pensioners or their representative groups is a further matter of serious concern to the citizens and pensioners of the State. Many of the aforementioned groups are very angered and it is important that people should look at the details of this legislation, which is the reason I will be voting against it.

Given that this Bill forms part of the Government's stated objective of reducing the public sector pay and pensions bill by an additional €1 billion by 2015, I will draw on some research carried out by the Nevin Economic Research Institute, which questions the validity of the subjective. Tom Healy and Rory O'Farrell of the institute have calculated that the actual savings to the Government of a €1 billion cut to the public sector payroll is likely to be no more than €250 million. They also have found this measure will cost between 5,000 and 10,000 jobs, approximately half of which will be in the public sector. According to Tom Healy, this is because most of the savings on the Government spending side are lost either directly through income tax, universal social contribution and other State deductions or through falling retail sale taxes and loss of jobs in the private sector.

I was interested to hear the earlier contribution of the Minister, Deputy Howlin, and was somewhat taken aback by his comment that he regards the Government's fiscal consolidation policy to be growth-friendly and as equitable as possible and that it has shown results in recent years. This is quite a claim, given the domestic economy is on its knees and four to five businesses are going out of business each day. Furthermore, the deprivation rate, which measures those experiencing two or more types of deprivation, more than doubled from a low of 11.8% in 2007 to 24.5% in 2011. On average, 38% of all households spend more than their disposable incomes and households with the lowest incomes are most likely to have expenditure that exceeds their income. Almost two thirds or 63% of those in the lowest income category have higher expenditure than income. The autism unit in Scoil Mhuire, Wexford had a 57% success rate for full-time integration of children from the autism spectrum disorder, ASD, unit into mainstream classes. Since the imposition of the cuts two years ago in which six positions were axed, this success rate has been reduced to zero. The Minister should tell me what part of this is growth-friendly and equitable because I cannot discern it.

In an article published in The Irish Times a fortnight ago, Tom Healy commented on the Government's austerity agenda. He stated:

If “savings” actually equal “cuts” then Ireland might be running a government surplus. Instead, after €28 billion of fiscal “effort” the underlying government deficit (excluding bank bailouts and bank levies paid to government) has fallen from 11.5 per cent to just 8.6 per cent in four years. There has been a huge degree of pain for relatively little gain.

Mr. Healy argued that the alternative to this approach is to minimise further harm by focusing the fiscal consolidation on job creation, income distribution and maintenance of priority public services, all of which have been undermined as a result of five consecutive years of austerity budgets.

Debate adjourned.