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

Question again proposed: "That the Bill be now read a Second Time."

When speaking last night, I stated that the position on increments is inequitable and untidy. The Government must decide for the future whether there will be an increment system or a flat rate system and then it must stick consistently to one system or the other. As I stated, a person on the bottom rung of the ladder and moving up is at a disadvantage compared with somebody at the top of the scale who got the full increment and for whom this measure will not have any effect.

Regarding pensions, whether it is in the tax code, in pensions or in any other code, in my experience people like there to be a transparent, equitable and understandable system. I noticed in negotiations over the years, for example, in the taxation of social welfare benefits, that where there are all sorts of systems operating for different recipients, it is difficult for the citizen to understand. Over recent years, we have arrived at a position in the case of public service pensions where it depends on when one went out on pension as to what pension one will get, and staff with the same service could wind up with different pensions depending on the date on which they left the public service. When the Minister is summing up, perhaps he would confirm whether it is correct to state that the Bill adds to rather than solves this problem.

Until now it was reasonably simple in that for an ordinary public servant with 40 years of service, there would be a half-salary as pension. Everybody could work it out as if a person had 20 years of service, the pension would amount to a quarter of the final salary. It was transparent, simple and understandable. As I stated last night, my party deviated from this process as we did not reduce pensions in line with salaries. I am not convinced, in the long term, that it was the right decision. I had hoped that we could reconnect pensions to salary with a simple formulation.

The explanatory memorandum and the legislation do not indicate if this will happen so perhaps when the Minister of State replies, he could put my mind at rest and tell me that when the Bill comes into force, all pensions will amount to 50% of final salary, taking in normal calculation of pensionable income. If the Bill is not doing this, we will be adding to all the anomalies. My concern is that with all the side deals, instead of this Bill being the intended reform, it will have anything but that effect. With all the different deals done in recent weeks to get Croke Park II turned into the Haddington Road agreement, the Government will only be adding to the anomalies and complexity of the system. The short-term benefits of this are far outweighed by long-term disadvantages.

There has been some talk about Haddington Road being in Dublin 4 but I ask the Minister of State to check if that road goes beyond the traffic lights as this should be the Beggars Bush agreement. I suggest the Minister of State checks whether the agreement was made on Haddington Road or if, for some reason, there was a reluctance to have a pay agreement connected to a place called Beggars Bush. Perhaps he could clarify that in his summation.

I expect the Deputy would know more about Dublin 4 and Dublin 6.

Dublin 4 perhaps but not Dublin 6. The Croke Park agreement was quite effective, when management worked it well, in bringing about necessary reform in the public service. I believe in protecting low-paid workers and paying people correctly. As I stated earlier, the differential between high and low paid is too wide, not only in Irish society but across the Western world. There are finite resources and over-rewarding the top end is unfair, whether that is with public servants, people in the private sector, star sports people, etc. Ultimately, the ordinary punter will be paying the very high salary.

I also believe in good practice. My experience of public servants is that they have been very open to new technology and good work practices, although a small coterie of people in the public service over the years have objected to every change in practice, even if it would lighten the work burden. This has been damaging to the interests of public servants as some of this small coterie have been quite powerful in public service unions. The idea of the Croke Park agreement was to eliminate such issues. Many people would say that getting answers and decisions from the system has become a painful operation. When we consider the system, an inability to get simple answers to simple questions fast in certain sections is unjustifiable. It is the job of management to work with employees and most ordinary public servants would much prefer to work in an atmosphere where a job is getting done and they are not getting grief from the public. This needs a radical change in work practices.

I should bring it to the Deputy's attention that I must call on the Minister of State to reply. He will have 15 minutes to do so and the debate will conclude at 1.30 p.m.

The final irony is that there is a provision in the Ombudsman Act that if a person does not get a reply to a query within a reasonable period, a complaint can be made to the Ombudsman, but this disease of interminable delays in getting answers now seems to have affected even the Ombudsman. I hope making the public service a better place in which to work will be central to what we are doing. We must work with public servants and ensure that good work practices will dominate, with those who are obstructing progress and a better workplace told that according to the terms of the Croke Park agreement such obstruction will no longer be acceptable.

In the first instance I thank all colleagues who contributed to the debate. We appreciate the points made. I also put on record my thanks and that of the Government to the extraordinary work of the Labour Relations Commission, Mr. Mulvey and his team for the work in the past five or six months. I also thank our own officials for their extraordinary input on behalf of the Department and the Government in bringing this matter to a conclusion.

This country has gone through an enormous adjustment process somewhere in the region of €25 billion, achieved by way of tax increases and expenditure cuts since the beginning of the crisis. We are 85% of the way there and the Minister, Deputy Howlin, has repeatedly stated on behalf of the Government that it is not unreasonable in circumstances where approximately 38% of all Government expenditure relates to public sector pay and pensions that between now and 2015 a third of the adjustment should come by way of proposed new efficiencies in order to get the country back to a manageable deficit. That is where we obtained the €1 billion figure for an annualised saving by 2015. That is not an unreasonable position for the Government as an employer to take in circumstances where the deficit figure is still as difficult as it is.

It is also right and proper that there has been extraordinary buy-in by the public servants of this country. They have been caught in an extraordinary storm which at one level saw take-home pay diminish in recent years because of this crisis but at another level the demand for services - in the likes of education, health and elsewhere - has exponentially increased. Much more work is being done by a smaller group of people because we have reduced numbers in the public service from a maximum of 320,000 to just under 290,000 today. This "perfect storm" in which Ireland has been caught is the context. If we can achieve our aim with a managed process - albeit a new agreement where the Government effectively comes into a collective arrangement with each separate union or group of unions - that is all the better.

There was an allegation in the debate that the Minister, Deputy Howlin, is in some ways bullying unions by having this legislation in place. It is far from it. We gave a commitment as a Government that whatever agreement was achieved would apply from July of this year to July 2016.

This is the three year period about which we speak. The only way in which these changes must be made is through the financial emergency measures in the public interest legislation which was introduced by the previous Administration as a necessary emergency measure to deal with the financial crisis. There is no bullying in having the legislation running parallel to the 1 July deadline for when these changes must happen and the negotiations. We refute and reject this.

Deputy Fleming and others raised the issue of the reducing headcount and there was criticism of the ongoing fall in numbers and of the burden this is placing on the remaining staff. I recognise it places extraordinary pressure on the remaining staff but we must do things differently. A great benefit of the Haddington Road agreement is the change in the average number of hours people work. Approximately 18 million additional hours will be obtained by the agreement which, if added up, are worth approximately 10,000 full-time equivalents. If people can work longer in a circumstance of managing the adjustments, we will be able to do much more with the existing service. This is an example of the new efficiencies which will flow from the agreement.

I refute Deputy McDonald's claim that an increase in working hours is the same as a pay cut. On the contrary, it is only through the negotiated increase in working hours for the majority of public servants, to 37 or 39 hours as appropriate, that we are able to avoid wider and deeper pay cuts for public servants. The boost in productivity which the additional hours will bring to our public services will be good for everyone in the country. The additional 18 million hours on an annualised basis obtained by the agreement are an example of what we can do by way of an agreement.

On a side note, I was startled to hear Deputy Finian McGrath claim that €65,000 is not a large salary in Ireland today. On the contrary, it amounts to twice the average industrial wage in Ireland. It is a fair level at which to apply pay reductions starting at 5.5% and increasing progressively but proportionately to 10% at the highest levels of pay in the public service. In contrast, Deputy Ó Cuív was dismissive of the amount of the pay cut at this level. I find this difficult to accept from a member of a Government in which the then Taoiseach was paid a salary of €310,000.

It was cut by 40% in our time.

It is true it was cut, but these cuts have continued in a progressive and proportionate way. It is right and proper that those who have most are burdened most in the adjustments. The measures in the Bill mean the Taoiseach's salary will go from €185,000 to €167,000. We have gone from a salary under Fianna Fáil of €310,000 to a salary of €167,000 in a short number of years. This is what I call leadership.

A number of Deputies raised the issue of the lack of consultation with public service pensioner groups about the introduction of revised public service pension reduction, PSPR, measures. It is worth pointing out when the first PSPR was introduced on 1 January 2011 there was absolutely no consultation with any pensioner groups and the measure was introduced unilaterally. On this occasion the Minister, Deputy Howlin, has introduced a further PSPR measure which will impact on less than a quarter of public service pensioners and the Minister and officials have met the Alliance of Retired Public Servants. He felt it was very important to show them the courtesy of meeting them to listen to their very genuine concerns and explain to them why, in the interests of equity, it was necessary that a further contribution would be sought from higher paid pensioners. As the Minister explained to them, it gives the Government no pleasure to have to take these measures, and we would all genuinely wish economic circumstances were otherwise, but the reality is the Government must take steps to ensure the economic survival of the State and this impacts throughout society. The additional reductions of between 2% and 5% could not be regarded as excessive, particularly at the lower bands.

On the question of representation, the Minister indicated to the Alliance of Retired Public Servants there would be advantages for public service pensioners and the Government to having a formalised structure, such as the alliance, for ongoing engagement on public service pension matters. I know Mr. Mulvey alluded to this in his remarks over the weekend. Effectively, they were not part of the process because they are not employees of the State; they are pensioners under existing conditions.

On a point of clarification, there was some confusion that the new PSPR rates applying to pensions of €32,500 would also be applied to spouses' pensions at €16,000. This is not correct. The only spouses' pensions that will be affected by these measures will be those spouses' pensions which are themselves over the €32,500 threshold. Retired public servants on a pension of €32,500 will have no reduction. The additional contribution or reduction, call it what one will, only kicks in at €32,500 and is progressive from 2% to 5%.

The issue of targeting gold-plated pensions for very senior former officeholders and public servants was also raised. However, in introducing emergency legislation the Government must ensure the measures introduced are proportionate and reasonable if they are to be deemed constitutional if challenged. I am satisfied the very progressive reductions being sought from higher pensioners meet these legal criteria.

Deputy Fleming also asked for the Government's estimate of when the financial emergency would end. I cannot, unfortunately, guarantee that the crisis will end on a particular day or in a particular month. However, I can guarantee Members of the House and public servants who are being asked for another sacrifice that the Government and the officials in the Department are working hard to bring this day about as soon as possible.

None of us is jumping down the streets with the introduction of this legislation because of the effect it will have, but the fact we have come to a measure of agreement with organised labour in the Irish public sector is an extraordinary contribution by the public service unions of the country and to where the country is right now. These public servants have made an enormous contribution to the rehabilitation of Ireland and we are nearly there. This final piece of the jigsaw, difficult as it is in terms of putting the legislation through Parliament, will not only ensure the viability of the State but, more importantly, the viability and sustainability of public servants themselves and it is in their long-term interest. It is not in the interest of public servants to have an enormous difference between tax and expenditure because we will not be able to afford to pay the pensions they legitimately expect from their working lives. This is about the sustainability of the State, but it is also about the sustainability of public service pay and pensions. I commend the Bill to the House.

Question put:
The Dáil divided: Tá, 78; Níl, 37.

  • Barry, Tom.
  • Breen, Pat.
  • Butler, Ray.
  • Buttimer, Jerry.
  • Byrne, Eric.
  • Carey, Joe.
  • Coffey, Paudie.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Coonan, Noel.
  • Corcoran Kennedy, Marcella.
  • Creed, Michael.
  • Daly, Jim.
  • Deasy, John.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Dowds, Robert.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Ferris, Anne.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Flanagan, Terence.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Brian.
  • Hogan, Phil.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kehoe, Paul.
  • Kelly, Alan.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lyons, John.
  • McCarthy, Michael.
  • McEntee, Helen.
  • McGinley, Dinny.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Mathews, Peter.
  • Mitchell, Olivia.
  • Mitchell O'Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Nash, Gerald.
  • Naughten, Denis.
  • Neville, Dan.
  • Nolan, Derek.
  • Noonan, Michael.
  • Ó Ríordáin, Aodhán.
  • O'Donnell, Kieran.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Sullivan, Jan.
  • Penrose, Willie.
  • Quinn, Ruairí.
  • Rabbitte, Pat.
  • Reilly, James.
  • Ryan, Brendan.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Timmins, Billy.
  • Tuffy, Joanna.
  • Twomey, Liam.
  • Wall, Jack.
  • Walsh, Brian.

Níl

  • Broughan, Thomas P.
  • Browne, John.
  • Calleary, Dara.
  • Collins, Joan.
  • Colreavy, Michael.
  • Doherty, Pearse.
  • Donnelly, Stephen S.
  • Ferris, Martin.
  • Flanagan, Luke 'Ming'.
  • Fleming, Sean.
  • Fleming, Tom.
  • Grealish, Noel.
  • Healy, Seamus.
  • Higgins, Joe.
  • Kitt, Michael P.
  • McConalogue, Charlie.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McLellan, Sandra.
  • Martin, Micheál.
  • Moynihan, Michael.
  • Ó Caoláin, Caoimhghín.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O'Brien, Jonathan.
  • O'Dea, Willie.
  • O'Sullivan, Maureen.
  • Pringle, Thomas.
  • Ross, Shane.
  • Shortall, Róisín.
  • Smith, Brendan.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Troy, Robert.
Tellers: Tá, Deputies Paul Kehoe and Emmet Stagg; Níl, Deputies Seán Ó Fearghaíl and Aengus Ó Snodaigh.
Question declared carried.
Sitting suspended at 1.42 p.m. and resumed at 2.30 p.m.