Vol. 941 No. 2
5. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the role he envisages for reform in 2017 and thereafter in the context of the need to ensure the smooth operation of the economy in competitive mode. [10622/17]
This question relates to the extent to which the Minister foresees an ongoing role for reform in the budgetary process and the benefits to accrue.
We are well aware of the importance of a well-functioning public service and how crucial it is to the smooth operation of the economy. Public service reform was a central element of the response to the challenges of recent years and remains an essential part of building for the future. Since the first public service reform plan was published in 2011, a comprehensive programme of reform has been implemented and this continues to be a priority. The benefits of this reform approach are clear. Between 2009 and 2014, the Exchequer pay bill was reduced by over 20% and staff numbers by 10%.
The performance of the public sector has major implications for the management of the State's finances, economic development and employment creation. It is essential that targeted recruitment and investment in public services is done in tandem with further public service reform measures, not least as current and future demographic trends will continue to place demands on public service delivery.
The most recent public service reform plan for 2014 to 2016 put citizens ever more to the centre of what we do in terms of service delivery and transparency, openness and accountability. In addition, reform is continuing to deliver savings across a range of specific areas such as shared services and procurement reform. The use of new digital methods to improve online delivery of services and reduce costs continues to be vital.
If we are to build on this progress in 2017 and beyond, we must consider a new phase of public service reform. I have invited the Oireachtas to have an input into process and build on the progress we made in recent years.
The Deputy's question on budgetary reform is listed as Parliamentary Question No. 8. The question I have just answered relates to his question on public service reform, which I have listed as Parliamentary Question No. 5.
6. Deputy Brian Stanley asked the Minister for Public Expenditure and Reform the progress that has been made by the OPW on securing a site for a new courthouse in Portlaoise. [10490/17]
My question relates to the OPW and the securing of a new site for a badly needed courthouse in Portlaoise. The Courts Service was centralised in various counties over recent years. All court cases in Laois are currently being held in Portlaoise, which has resulted in a very busy building. What progress is being made on the matter?
The Office of Public Works has no direct role in the purchase of sites for the Courts Service. On request, the OPW provides professional advice to other Departments and offices, including the Courts Service. At the request of the Courts Service, the OPW is currently examining potential sites for a new courthouse in Portlaoise. The purchase of a site and provision of accommodation is ultimately a decision for that organisation.
I am aware that the OPW will not carry out the work, but it is involved. It is its job to find a suitable site. The Department of Justice and Equality passed us back to the Department of Public Expenditure and Reform. I originally tabled the question to the Minister for Justice and Equality.
The current courthouse on the main street is totally unsuitable. There are no parking areas and prison vans are parked on each side of Church Street on sitting days. There are no holding cells, which means that prisoners are held in vans on the street for long periods of time. That causes all kinds of problems for the Garda, public and everybody else.
There is a distinct lack of privacy in the building for clients to consult with solicitors or barristers, which means that a lot of communication takes place in crowded hallways. Family law courts are held in the same building and areas as other cases, which means that a person who is seeking access to children or dealing with a family law case is in the same area as hardened criminals. A number of sites have been proposed.
I agree that the Courts Service wants to build a new and modern courthouse with all of the necessary facilities in Portlaoise. It has tried to acquire a site for a number of years. The two potential sites that have been identified are being assessed by the OPW on behalf of the Courts Service. Progress with regard to the development of the court building will depend on funding.
I am glad to hear that some progress is being made. There is a site beside the Midlands Prison which local public representatives have highlighted for years. It is adjacent to the Midlands Prison and Portlaoise Prison, which would mean that prisoners would not have to be brought in convoys to and from the prison for court sittings. Other sites can be identified. There have been violent incidents outside the court building on the main street on sitting days, in addition to the other problems I have outlined.
The site at the Midlands Prison should be considered. The county council has also put forward options to the OPW. The management, staff and councillors at a local level want this matter progressed. I was asked to raise the matter with the Minister of State at the last joint policing committee. There is goodwill locally. I ask that the senior officials in the Department grab the bull by the horns, ensure that the matter is brought to a conclusion and locate a site. We can then ensure that the required capital funding is in place.
The Deputy referred to the county council. The Courts Service has had discussions with Laois County Council about the possibility of acquiring a site in Portlaoise and carrying out a joint venture. We cannot discuss the identity of any site at this stage, but all options are being considered.
7. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform the status of equalising pay for new entrants and existing public sector workers; the steps being taken towards the equalising of pay; and if he will make a statement on the matter. [10594/17]
Many pay issues have been resolved in the past number of weeks beneath the surface, of which doctors are the most recent group in terms of their allowances. The ongoing issue of the new entrants is still up in the air and is the cause of some contention. Is any work under way inside or outside of the public sector pay commission to address or engage with this issue?
The answer to the Deputy's question is "Yes", in terms of the public sector pay commission and its terms of reference. The Deputy referred to new entrants, an issue which was also recognised in the supply and confidence agreement between the Government and Fianna Fáil. It is considering the matter and will issue its observations in the coming months.
On the broader issue and the background to it, the 10% reduction in starting pay for certain new entrants was introduced in January 2011 as part of the national recovery plan to reduce paid by the then Government.
The issue of addressing the difference in incremental salary scales between those public servants who entered public service employment since 2011 and those who entered before that date was addressed with the relevant union interests under the provisions of the Haddington Road agreement. From 1 November 2013, pre-2011 and post-2011 pay scales were merged into a single consolidated scale applicable to each grade. Generally, the third point of the 1 November 2013 pay scale is equivalent to the first point of the pre-2011 scale. All the relevant details are available on my Department's website. I will furnish to the Deputy any details he may want in that regard.
Any further adjustment for any group of public servants, including new entrants, can be examined under the framework of the Lansdowne Road agreement but must be considered in the context of the total cost of the agreement and the total cost of the outstanding FEMPI restoration post-Lansdowne Road, which is €1.4 billion.
Acting within these constraints, the agreement has provided the flexibility to address particular sectoral issues such as the restoration of supervision and substitution payments and those of new entrants to the education sector as well as some of the other matters to which the Deputy referred.
What would the total cost be of - to use the phrase - equalising pay for those post-2011 entrants? It is difficult for people to share the same staff room or for members of An Garda Síochána to share the same beat while on a lower pay scale yet subject to the same demands and risks. There are various challenges in terms of the public service pay bill, but this issue is one of fairness and, in many cases, of camaraderie within the service. This is causing hardship to those on lower pay but it is also causing undue tension in workplaces throughout the country. Has the Minister put a cost on this aspect, which is in addition to the €1.4 billion?
It is important to be clear about one of the reasons for the difference in costs and wages. Under the agreement that we now have, the norm for many of the more recent entrants is that, until they get to a much later part of their career, they will be two salary points behind those who joined pre-2011. This means that the entire cost of equalising pay scales will be significant. At the moment, in the context of discussions that we will have under the auspices of aiming to conclude a replacement to the Lansdowne Road agreement, we are working through what the cost could be. I can give the Deputy an illustrative figure, which relates to the example he raised. For the Department of Education and Skills, the cost per annum in respect of teachers alone would be €70 million. That is just for teachers.
In the context of the talks, will the Minister give us the most up-to-date timescale that he has with regard to the finalisation of Kevin Duffy's work and his anticipated timescale for talks this year on a Lansdowne Road successor to get under way?
The timeframe that has been set and agreed by Mr. Duffy and the Public Pay Commission is that their work will report across the second quarter, which refers to April, May and June. I hope that they meet that timeline. When they publish their report, the Government and representatives of public service employees will then need a period of time to digest the report and comment on it because I anticipate that it will be a significant piece of work. My current target is to be commencing negotiations with trade union representatives well before the summer. I am under no illusion but that these will be difficult negotiations and discussions for both sides. Everyone in the House should be clear about that. The reason they will be difficult refers to the figures I shared with the Deputy a moment ago. The total cost of the FEMPI wage restoration that has not occurred is €1.4 billion per annum. Therefore, all the negotiations that need to take place will be challenging. However, I will approach them in good faith as I know the other interlocutors will too. I remain convinced of the need for a collective agreement and the events of recent months have shown to me even more clearly why such an approach is needed.
8. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which spending remains on target and within budget for 2017, with particular reference to any sectors which might have the potential to lead to an overspend by year's end; if any adjustments are likely to be made in high pressure areas; and if he will make a statement on the matter. [10621/17]
Is Deputy Durkan satisfied that Question No. 8 has, in effect, already been answered by the Minister?
This question refers to the extent to which monitoring takes place with regard to the budget for the current year and the degree to which any identification has been made of possible overspends under various headings and how they might best be handled.
I indicated my answer to this question in reply to an earlier question. To address some of the additional points raised, the expenditure figures for each Department are tracked constantly by my Department. We have now allocated how we expect the expenditure ceilings to be realised per quarter for 2017. We have laid out what the Revised Estimates Volume profile for each Department will be for the year. It is roughly equal for the first, second and third quarters, during which it is expected that there will be between €13 billion and €13.1 billion to be invested and spent. For the final three months of the year, the fourth quarter, we expect the figure to rise to €14.26 billion. It is expected that capital expenditure will increase towards the end of the year which is why the figure increases at that point. The figures are regularly checked and are assessed with all my ministerial and Cabinet colleagues. We have completed the work in laying out how we expect expenditure to materialise across 2017. As always, we are not expecting any Department to overspend in terms of that expenditure ceiling.
I thank the Minister for the comprehensive reply. Has any Department edged closer to the red line than others? Have some Departments been better at keeping in mind their obligations to stay within budget? Given the nature and importance of the Minister's job in the overall budgeting context, to what extent is it possible to ensure that any corrective measures that are required can be made?
All my colleagues are well aware of the need to stay within the figures I have outlined to the Deputy. It is fair to say that certain Departments are under more policy pressure than others. I spend a considerable amount of time working the Minister for Health, Deputy Simon Harris, who has to manage an array of different matters relating to his Department. All of my colleagues are aware of the legal requirement to be inside the figures to which I have referred. This is why I have ongoing contact with most of my colleagues in government to ensure that any issues they raise with me are dealt with inside the framework to which I have already referred.
Of the various elements of the public sector that incurred quite a considerable level of expenditure restrictions and wage cuts during the more severe days of the economic recession, can fairness and equity be applied in return for the sacrifices made by each and all areas in the public sector during that period without placing any other at a disadvantage?
We always do our best to be fair to all the different interests that are raised with us. If we consider the question Deputy Calleary put to me a moment ago, the amount of funding for wages that was removed during the period of crisis from our civil and public servants, at €1.4 billion, is exceptionally large.
The needs being articulated to me on behalf of civil and public servants are that they want this figure to be fully restored and view pay restoration as fair. However, what I need to do is balance their needs against an agenda of fairness in service delivery. We use a single source of money, namely, the revenue we raise through taxes and State borrowings, to pay public service salaries and cover the service and investment needs which Deputy Durkan and other Deputies frequently raise with me. My aim in government is to balance these competing needs.
9. Deputy Mick Wallace asked the Minister for Public Expenditure and Reform if he had discussions with the Minister for Finance with regard to using a proportion of the capital from the sale of a bank's (details supplied) shares for public investment here, as recommended by TASC in its report A Time for Ambition with regard to the promised new capital investment plan; and if he will make a statement on the matter. [10624/17]
The Minister will probably have heard of the TASC report, A Time for Ambition, which addresses the promised new capital investment plan. Has the Minister discussed with the Minister for Finance the possibility of using the proceeds from a potential sale of State shares in Allied Irish Banks to invest in infrastructure, rather than paying down loans?
The Minister for Finance is taking the lead role in respect of the State's shareholding in the banking system. I am aware of the report to which the Deputy refers, which I have read and considered. Notwithstanding the proposal contained in the report, under EU fiscal rules, the proceeds of any such sale may not be used to fund increased expenditure, irrespective of whether such expenditure is classified as current or capital.
The Department of Finance's shareholder management unit has the responsibility to protect the State's investment in the bank in question following its return to profitability, consistent with an approach that supports the sustainable recovery in the economy. While the unit's ultimate role is to return the bank to private ownership, the State will exit its investment in the bank in a measured fashion and in a manner than maximises the return to the taxpayer.
Regarding the accounting treatment of any proceeds from such a transaction, the position is that the sale of such financial assets does not result in a beneficial impact to the general Government balance under EUROSTAT rules. This is because it is classified as a financial transaction, whereby it is essentially the exchange of one form of asset, such as shares, for another kind, such as cash. Consequently, the sale of any shareholding in a bank would not count as general Government revenue and would not create any scope for increased spending on the basis of the proceeds realised. Therefore, there will no increased capacity for spending following any sale of bank shares.
However, while not improving the deficit, cash proceeds arising from the sale of bank shares would result in a reduced requirement for Exchequer borrowing, which ultimately results in lower debt. A lower debt level is not only beneficial in terms of the fiscal sustainability of the State, but would also lead to reduced interest payments in future years.
It is crucial that increases in funding for public investment are based on sustainable economic growth. The Government is well aware of the challenges that arose in the past when one-off amounts of money were used to fund ongoing commitments to the State.
I would prefer if the Government did not sell its share in Allied Irish Banks. It would be great if AIB became a State bank. We heard a great deal in 2011 about establishing a State investment bank when the private banks let us down and we ended up bailing them out because they were useless.
The Minister referred to European Union rules. The European Commission recently stated that Ireland is not spending enough on infrastructure and noted that our investment rate was one of the lowest in Europe. In 2008, we spent 5.2% of gross domestic product, GDP, on investment in infrastructure. By 2016, the investment rate in infrastructure had declined to 1.7% and it is set to reach 2% by 2021, which is far below the European average. Other countries break EU rules when it suits them and the EU has shown flexibility towards France, Italy and Austria in the past 18 months. Given that we need money to invest in infrastructure, especially housing, is there not a case for seeking a special dispensation from the EU to use money such as the proceeds from the sale of State shares in the banks to invest in infrastructure?
The Minister for Finance is making a case with regard to how we can maximise capital expenditure. Under the capital plan, which we discussed earlier, the Government plans to increase capital investment in the years ahead. Capital investment increased this year by more than €300 million or 14% compared to 2016. It is planned to increase it further every year until 2021-2022 when it is expected to exceed 3.5% of national income. My experience of increasing capital investment indicates that it is important to have planning permission and agreement to allow moneys to be spent and this takes time. On the issue of using the proceeds from a potential share disposal to fund additional expenditure, this is not possible under the current rules.
While I realise Rome was not built in a day, it was started and we should start the process here. The Minister argues that it takes time to secure planning permission and get all our ducks in a row but there does not appear to be much in the way of planning in place. Is there a genuine plan to spend serious money?
The building of Rome has started. The national capital framework is being reviewed and public consultation on the framework will commence next week. I aim to conclude the review by the end of the year and we will use it to clarify the position regarding any projects whose planning status is uncertain.
10. Deputy Thomas P. Broughan asked the Minister for Public Expenditure and Reform the outcome of the presentation to the Joint Committee on Arts, Heritage, Regional, Rural and Gaeltacht Affairs on 25 January 2017 regarding the arrangements and costs involved in locating Seanad Éireann in the ceramics room of the National Museum of Ireland; the consultation taking place with staff of the National Museum on the matter; and if he will make a statement on the matter. [3743/17]
I have been raising the wholly inappropriate move of Seanad Éireann to the ceramics room of the National Museum of Ireland since last July, when I was contacted by a number of concerned constituents, including Dr. Mark Clinton of An Taisce. I contacted the Ceann Comhairle, the Taoiseach and Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs on the issue and proposed possible alternative locations, including the Round Room of the Mansion House, Dublin Castle and public buildings in other cities, possibly in Cork or Galway. I also proposed using the large former committee room in Kildare House, where the Committee of Public Accounts, on which both Deputy Durkan and I sat, used to meet. Why is €1.5 million being spent disrupting a great national institution which oversees artefacts from 10,000 years of human habitation on this island for the sake of the Seanad?
I would love to bring the Seanad to Galway. The Deputy asked about a meeting which was to be held on 25 January last. I am advised that the meeting did not take place. An inherent element of the advancement of the work of the Office of Public Works is its active, continuous engagement with the management and staff of the National Museum of Ireland. The Deputy referred to a number of alternative locations. The relocation of the Seanad would require the relocation of staff, including security and audiovisual services.
After a prolonged search it was agreed by everybody that temporary relocation to the ceramics room in the National Museum of Ireland was appropriate. The Office of Public Works has been actively engaged with the management and staff of the museum to assist with the process of its preparation of the detailed plans and tender documents required to advance these works. Any and all of the works proposed will ensure the integrity of the museum will be retained and respected at all times. The outcome of the investigative works that are now being undertaken will inform the detailed design and specifications of the works required and, accordingly, will facilitate the detailed cost estimate.
I take this opportunity to advise the Deputy that a lot of the work being done in the museum will be permanent work of benefit to it into the future. Disabled access is being provided and the fabric of the building is being enhanced and this will be of benefit to the museum into the future when the Seanad relocates to Leinster House. A large element of the cost relates to IT services, mechanical and electrical, and the installation of a lift for disabled access.
Why are we going through all of this? I have had many experiences of the Office of Public Works and often times I have not been impressed with its performance. The Secretary General of the Oireachtas, Mr. Peter Finnegan, detailed in a letter to me last year the reason the move was necessary. As I said, committee room 1, where we met with our officials is on the same campus. Many Members are located in the Agriculture House campus. What is the reason for this move? Is it related to the grandeur of the Seanad Chamber or to the Seanad as an institution? I was among those who supported the proposal to abolish the Seanad and to increase the membership of the Dáil because of the fundamental role we play and because I believe the people are the second House anyway.
Approximately €1.5 million has been spent already. I understand the OPW has dug pits without planning permission. What is proposed is a change of use of the building. Has planning permission been sought for it? The works were supposed to be under way by now and completed in the autumn. This process is a complete mess. This is cloak and dagger stuff about a great national institution. Why did we go down this road?
I understand An Taisce has made a complaint to Dublin City Council about this move. This is not exempted development. Why are we doing this? Why not just relocate the institution to Kildare House where the staff involved are located, the cost of which would be considerably lower?
The decision to relocate to the National Museum of Ireland was made by the Houses of the Oireachtas and not the Office of Public Works. The OPW is only the facilitator of the works. The works currently under way are investigative works which will inform the design in terms of what needs to be done and what permits or consents are needed in that regard. As I said, a large element of the expenditure relates to the audio-visual services required and the installation of a lift, which will be of benefit to the museum into the future.
In regard to the location, every aspect and proposal was examined in detail. The Houses of the Oireachtas agreed that this was the best location to move to.
Deputy Durkan and I were members of the Committee of Public Accounts when a proposal was put forward to fix the floor and roof of the Seanad Chamber. At that stage, the proposal was to move the Seanad to the Natural History Museum where there appeared to be more space and so on.
This seems very disruptive for the institution concerned, which we have all had experience of as children. We all recall visiting it for the first time and how evocative it was in teaching us about who we are and the great history of our people and country. The staff of the museum are being discommoded. I accept the Seanad could not have been relocated to the National Library and so on. A great deal of money is being spent on this project by the Department of Public Expenditure and Reform. As I said, to date €1.5 million has been spent on it. Is the final cost likely to be several million euro? If so, this is a costly escapade and one that is totally unnecessary. I am sure Senators would agree that it is possible to do one's work in any reasonable size space. There are a number of such spaces around this House, including in Kildare House. I do not see why we are going down this road.
Was any thought given to the Seanad relocating to the old parliament building at the Bank of Ireland? I do not wish to be overly grand about this but it would have been a nice correlation.
The House of Lords.
I do not have to hand all of the options considered. The necessity to move has been well documented. If the existing building is left as it is and there is ever a fire in it we will have no building. The requirements of a move have been decided by the Houses of the Oireachtas and not the Office of Public Works. The OPW is meeting those requirements as requested.
The Houses of the Oireachtas was involved at all stages in deciding the new location for the Seanad. No more than other issues that are raised, a decision has been made and we have to get on with the work. That is what the Office of Public Works is doing at this stage.
11. Deputy Mick Wallace asked the Minister for Public Expenditure and Reform if he has read TASC's report: A Time for Ambition, which calls for a significant increase in public investment from 1.84% of GDP to 2.8% per annum with regard to the announcement of a new ten year capital plan; his plans to open a public consultation process with regard to formulating the new plan; and if he will make a statement on the matter. [10623/17]
The Minister said earlier that investment in infrastructure in 2017 would be 14% higher than in the previous year. According to my mathematics if investment currently stands at 1.7% a 14% increase on that will leave us at well under 2% in terms of investment whereas the European average is approximately 2.9%. If we are not going to challenge the EU rules, will we be paying expensively for the money we are going to invest?
I am aware of the report which supports the broad consensus on the need for increased public investment. The current capital plan sets a baseline from which this Government intends to increase investment in critical infrastructure into the future.
As outlined in the 2017 Estimates, gross voted capital expenditure will increase to €4.5 billion in 2017. This represents an increase of almost €400 million in comparison to the 2016 outturn. By 2021, it is envisaged that gross voted capital expenditure will reach €7.3 billion, an increase of over 100% in comparison to its level in 2014. Based on Department of Finance Gross National Product forecasts Ireland's Exchequer public investment will reach 2.7% of GNP by that point.
In addition, as outlined in the capital plan, the wider State sector, including our ports, airports, energy network etc., plans to invest €14.5 billion in capital projects over the period 2016-2021. This amounts to approximately €2.4 billion invested per year and brings total State-backed investment in 2017 to 3.1% of GNP, rising to 3.7% of GNP by 2021, which is the figure I referred to earlier. This will be allocated to identified priorities on the basis of the outcome of the review of the capital plan currently under way.
The first phase will refer to decisions to be made in the context of budget 2018 and the second phase, which will commence before the end of 2017, will assess and report on the framework required for a much longer term analysis of our needs. As I said earlier, public consultation in this regard will begin next week.
We are starting at an incredibly low base so the percentage increases will leave us playing catch-up. The Central Bank has said that Government investment has declined by two-thirds since 2008. One of the ways we have been sourcing money because of EU fiscal rules is the public private partnership, PPP, model. Research in Britain shows that public private partnerships cost, on average, between 13% and 19%. How mad is that when money can be got for 1%? I know that the EU fiscal rules do not allow us to borrow money at 1% and invest it in infrastructure but they should. On what basis can the EU say to a country like Ireland that is playing catch-up in terms of infrastructure investment that it cannot borrow money at 1%? Why will it not allow for flexibility under the fiscal rules so that we can borrow money at 1% to invest in infrastructure? It is a no-brainer and a win-win all around investment in infrastructure whereas paying a PPP between 13% and 19% is not.
After all, the bill must be paid some time. Just because it is stretched over 30 years does not mean it is cheap.
It is my strong awareness that the bill needs to be paid some time that led me to take such care with the use of public private partnerships and undertake to review the role they can play in infrastructure funding. In all of the enthusiasm around the use of PPPs, we must bear in mind that there remains a liability the Exchequer must meet. The fact it is not inputted directly on the State balance sheet does not change the reality that for existing PPPs, we now have bullet payments of hundreds of millions of euro we must meet each year.
Regarding the Deputy's point on the reduction in capital expenditure, that was done during the crash for two reasons. First, we went through a period in which the demand for infrastructure was much lower than had been predicted. There simply was not the need for new buses, trains and new forms of public transport because the existing facilities were not being used in the way we had anticipated. The second reason for the reduction was that we did not wish to impose further cuts on current expenditure in areas such as social welfare. If we had reduced those spending programmes even further during that period, the Deputy would have criticised us for so doing.
I knew that final line was coming 30 seconds ago. The Minister is correct that I would not have advocated further reducing current expenditure. What I am advocating is that we challenge the EU fiscal rules in order to borrow money at 1% for investment in infrastructure. I am delighted to hear the Minister is having reservations about PPPs and I agree wholeheartedly with him on that point. The Think-tank for Action on Social Change, TASC, has argued that using the moneys raised by selling the State's shares in AIB would not break EU fiscal rules. I would not support a proposal to sell those shares but the point is that using that money for investment purposes would not, according to TASC, amount to a breach of the rules. The Minister is saying that when we were in trouble there was reduced demand for this, that and the other. However, there was always demand for things like housing and for the health centres which are only now being built. The demand was there but we were not concentrating on it because, the argument was made, we had other problems. Joseph Stiglitz would have argued that the best way out of the recession at that time, instead of imposing austerity which impacted most on the less well-off in society, was to have put money into the system, investment in infrastructure being one of the best ways of doing that. If we had done so, we would have got out of the recession in a healthier fashion.
The next question is in the name of Deputy Bríd Smith.
Acting Chairman, surely I should have an opportunity to respond?
The time is up, Minister.
I did not use up my time. Issues have been put to me by Deputy Wallace and I should have a chance to respond.
We must move on to the next question.
If the Chair allows Deputy Wallace to go over time in putting his questions, do I not have the right to respond?
No, the rules state there are six minutes for questions and answers. I must insist, Minister, that we move on.
I should be allowed to reply.
I will allow the Minister 15 seconds.
I thank the Acting Chairman. I am glad to hear Deputy Wallace agree with me on a point. Who says the new politics have achieved nothing? The Deputy has acknowledged I am correct in saying that if we had reduced current expenditure even more, he would have criticised us for it. To clarify, however, I did not say I was against PPPs. That seems clear given that we are availing of a large number of them at this time. I simply said we must take great care in regard to their use in the future.
12. Deputy Bríd Smith asked the Minister for Public Expenditure and Reform if, as well as committing to retain the link between the public sector pay and pensions, he will reverse the public sector pension reductions and levies inflicted during the recession; and if he will make a statement on the matter. [10502/17]
I expect I will receive some of the same predictive text from the Minister that Deputy Wallace was subjected to in terms of what I am about to say or what I would or would not say. My question relates to the injustice done to public sector pensioners when their payments were slashed in the years of austerity. Will the Minister confirm there is no threat to break the link between public sector pay and pensions? Will he further indicate how he proposes to adhere to the timescale for reversing the cuts to public sector pensions?
I was not aware I had texted the Deputy.
I was not talking about texting but to the verbal text coming out of my mouth. I expect the Minister will say something predictable about what I said, as he did in regard to Deputy Wallace's contribution.
Both the Minister and the Deputy are wasting time.
Hardly, Acting Chairman. We are having an exchange across the House. I am sure there will be as much predictability in what I am about to say as there was in what the Deputy just said.
The public service pension reduction, PSPR, which was introduced on 1 January 2011, is the only measure that has decreased the value of public service pensions in payment since 2008. PSPR applies as a progressively structured imposition on public service pensions under terms set out in the Financial Emergency Measures in the Public Interest, FEMPI, Act 2010, as amended. As such, it has been and remains an important element of the pay and pension measures under the financial emergency legislation which have been critical to the stabilisation of the public finances.
The PSPR burden on pensioners, which was increased for higher-income pensioners from July 2013 under the Financial Emergency Measures in the Public Interest Act 2013, is now being significantly alleviated under the 2015 Act. This substantial part-reversal of PSPR is proceeding in three stages over the period 2016 to 2018. When complete on 1 January 2018, it will mean most public service pensioners are no longer affected by PSPR. All public service pensions with pre-PSPR values of up to €34,132 will be fully exempt from PSPR from then on, while those pensioners not fully removed from the reach of PSPR will, in the majority of cases, benefit by €1,680 per year. The cost of this very substantial PSPR amelioration under the Financial Emergency Measures in the Public Interest Act 2015 is estimated at some €90 million on a full-year basis from 2018.
In the past, the occupational pensions received by public service pensioners were generally adjusted in line with changes in the wages or salary of the pensioner's grade at retirement. Sometimes referred to as "pay parity", this non-statutory linkage lapsed in 2010 when pensions were left unchanged notwithstanding salary cuts at the beginning of that year affecting all public servants. This pension protection, albeit tempered from 2011 in some cases by the imposition of the PSPR, has worked to the benefit of pensioners, as indeed have the "grace periods" in respect of new-award pensions which accompanied the public service salary cuts in 2010 and 2013.
In light of these developments, the issue of how to adjust the post-award value of public service pensions through appropriate pay or other linkages will be considered by Government in due course.
May I take it from the Minister's reply, without putting words in his mouth, that public sector pensioners should be assured there will be no attempt to destroy the link between public sector pay and pensions and that restoration of pension remuneration will be completed in full by January 2018? The Taoiseach and leader of the Minister's party may well be one of those pensioners in the near future, but he will be one of the lucky ones on more than €100,000 per year. However, some 100,000 public sector pensioners are in receipt of less than €25,000 annually. We must emphasise that reality in order to counter the notion that is abroad that these people are massively privileged. In fact, they have paid into and earned their pensions by right and those pensions are not exactly gold-plated. Will the Minister confirm he is on track to reverse the cuts that were imposed?
The Deputy has attributed much to me that I did not say. What I did say is that future policy in regard to the linkages between public service pensions and pay will be dealt with by the Government in the context of negotiations we will have later this year. It is in recognition of the circumstances faced by the majority of pensioners that we implemented a faster reduction of the levy on pensions than we did in respect of the levy on salaries and wages. That was done in acknowledgment that pensioners do not have the opportunity to make up lost moneys by way of other incomes. I agree with the Deputy that while higher levels of public pensions do attract a degree of public focus and scrutiny, the reality is that large numbers of people who worked in the public service for many decades are in receipt of a pension many layers lower than that.
To clarify, is the Minister still leaving open the possibility of breaking the link between public sector pay and pensions? Is he engaging here in another kite-flying exercise or is he attempting to leave the door open to the possibility of breaking the link as some type of bargaining chip in pay negotiations with the unions in the next phase of the Lansdowne Road agreement talks?
I am engaged in neither kite-flying nor seeking to have a bargaining chip in advance of future negotiations. I have outlined the process for dealing with this issue. In recent years, the link between pensions and pay was broken.
That was done to ensure that pensioners could be treated differently in recognition of their no longer working. The levy on pensions is on track to being reduced at a faster rate than the levy on wages. All other matters relating to future pension and pay policy will be dealt with in the way that I have described.
Is Deputy Broughan happy that Question No. 13 was discussed with Question No. 10?
I will ask a tiny addendum. What is the projected cost and is planning permission for the works needed?
I am advised that the cost will be in excess of €1 million. The exact figure will not be determined until all of the investigative works have been conducted. I am unsure about the issue of planning permission, but I will revert to the Deputy with the answer.
In case I do not get another chance, I will raise a related matter with the Minister. When the obituaries of this Parliament and Government were being written a couple of weeks ago, many journalists mentioned that the budget oversight office had not been established yet. This matter has been raised at recent meetings of the budget committee. The Minister told me that funding was in place to invigilate the Ceramics Room and so on. Will he ensure that the office will be established by this Dáil as soon as possible?
I am unsure as to whether that is a question on ceramics or the public budgeting office. Is the Deputy asking me whether-----
The budget office.
-----we aim to set up that office?
The Minister stated that he had funding in place for the committee to establish the office, which would be like the Comptroller and Auditor General's office, but in reverse. Does he have that funding?
When will it be established?
I answered questions on this earlier, but the Deputy was not present.
We have reached agreement on the level of staffing and the office's head's post will be advertised soon. The body will be set up by the Oireachtas with my support.
14. Deputy Clare Daly asked the Minister for Public Expenditure and Reform if his attention has been drawn to the problems of coastal erosion on the Portrane coastline, that damage to the dunes is endangering local homes and that public money was not availed of to implement protection measures recommended in the Portrane coastal erosion management study; the steps his Department will take to ensure that protection measures are carried out without further delay; and if he will make a statement on the matter. [10505/17]
The Minister of State is aware of this issue. Residents were grateful for his visit to the area in the past week or so. With every passing storm and change in the weather, homes are further threatened. Residents need to see remediation. What can the OPW do to ensure that the works are undertaken?
The management of coastal protection in the area indicated is a matter for Fingal County Council in the first instance. The council must assess the problem and, if it is considered that specific measures and works are required, it is open to the council to apply for funding under the OPW's minor flood mitigation works and coastal protection scheme. Any application received will be assessed under the eligibility criteria, which include a requirement that measures be cost beneficial, and have regard to the overall availability of funding.
Fingal County Council applied for and was approved funding of €57,800 under the scheme in 2012 to carry out a coastal erosion risk management study of the Portrane to Rush area. The funding was drawn down in 2013 following the conclusion of that study.
As I outlined in my reply of 8 December, following the severe storms of 2013 and 2014 and on foot of a submission made by the local authority, total funding of €200,000 was provided by the OPW to Fingal County Council under Government decision S180/20/10/1272 of 11 February 2014 for the repair of damaged coastal protection infrastructure. Part of this funding was for a dunes repair project at Burrow beach, Portrane. This project was not proceeded with by Fingal County Council at the time and the council indicated that it would form part of a separate application under the minor works scheme. I have been advised that my office is not in receipt of any application under the minor flood mitigation works and coastal protection scheme for Portrane.
As the Deputy mentioned, I visited Portrane on 21 February to view the effects of coastal erosion in the area. I met local Deputies and representatives, residents and property owners and was impressed by the level of engagement locally and with council officials in exploring options to address the problem. I am satisfied that Fingal County Council is giving serious and urgent consideration to finding an appropriate and sustainable solution to the problem at Portrane in advance of submitting an application to the OPW for funding. Any application that is received from the council will be considered promptly and in line with the scheme's eligibility criteria.
I do not share the Minister of State's confidence. I have correspondence with me from one of his predecessors, Mr. Brian Hayes, MEP, who similarly visited the region and was told that moneys were available and had been expended on a study. Two or three years later and the weather conditions and erosion have worsened, but Fingal County Council is proposing another study even though the moneys that were available were not drawn down. This is leaving the residents in a vulnerable situation.
The Minister of State's answer is the same one that he gave me in early December, in that the council has not yet applied for anything. At its latest council meeting, it stated that the measures recommended by the previous study, which the OPW had paid for, would not be implemented and it would undertake another study. That is not good enough. A solution must be delivered urgently. What intervention can be made to call the council to account or can it be worked with more closely so that something is done instead of there being another study?
I find this subject interesting. I live five minutes from a place called Bannow Island, where there is considerable coastal erosion. I have contacted Wexford County Council about it a couple of times. The council claims that it cannot get any money to deal with the matter. Since Fingal County Council has money available to it but is not applying for it, would the OPW give it to Wexford County Council instead if I could get that council to apply for it?
I will start by answering that question. If Wexford County Council proposes a scheme, it will be considered as long as it meets the cost benefit criteria.
Regarding Portrane, when I met the residents and other locals, frustration was expressed that no work was being done. I understand that, on the following day or the day after that, Fingal County Council met locals and councillors to set up a liaison group to devise proposals.
Funding is available from the OPW, but local authorities need to make applications that satisfy the criteria. We are discussing minor works schemes. We spent €3 million on them last year. A minor works scheme can cost up to €500,000. There are avenues for funding.
When I met people in Portrane, I told them that the OPW would provide whatever help or advice that the local authority required, as we would for any local authority, with a view to finding a solution.
The residents have been patient beyond belief with this situation. We are seeking vigilance and intervention by the OPW. It is mad that coastal protection measures that were assessed and recommended in a study two years ago, when we had a different liaison group and residents gave of their time to protect their homes, are not being implemented and the council now wants to undertake another study. Something is wrong with that. There is a high level of engagement, but the council needs to do more and be more attentive. If the OPW can do anything, it would be appreciated. This situation is urgent. We will lose homes. The weather is worsening. It is sad to hear the same reply that was given by someone three Ministers of State ago. The situation on the ground is the same but the weather is worse. This cannot continue indefinitely. If those who are charged with responsibility at local authority level are not delivering, they should be called to account and the OPW should intervene.
I share the Deputy's frustration. I was challenged on that matter and was asked whether I was only there to visit. Deputy Brendan Ryan raised the issue with me in the Dáil three weeks ago and following the discussion I gave him a commitment that I would go out there, which I did the following week. In going there at that stage I was demonstrating our commitment to assist in any way we could, but the bottom line is that Fingal County Council must make an application. On the day, I looked at proposals that were on the table, with residents, who are now engaging with the local authority. I implore local representatives to remain vigilant. They should notify me or my office if there is anything they want me to do. If I can do it, I will do it but we cannot do anything until we get the application. In the meantime, as I said previously, we can offer advice.
15. Deputy Bríd Smith asked the Minister for Public Expenditure and Reform his plans to certify in 2017 that the financial emergency still exists in order to retain the FEMPI legislation; and if he will make a statement on the matter. [10501/17]
I was wondering if the Minister is going anywhere nice for St. Patrick's Day and if, when he is away, he will be doing some public expenditure exercises. Will he be thinking about the public sector worker who have been hurt very badly by the FEMPI legislation, and whether he will renew that legislation in June? After all, when we get back after the St. Patrick's Day break there are only about two months including the Easter break for the Minister to make a decision on whether the financial emergency legislation will be reinstated.
Time is limited. The Minister does not have to answer the question about St. Patrick's Day but he should attempt to answer the question about FEMPI. The Minister should be brief.
You allowed time to Deputy Smith to put her point, Acting Chairman. When I am abroad I will be representing the country on St. Patrick's Day.
Where is the Minister off to?
I will be doing my best to represent the interests of citizens. I will be in Japan and Korea, but it does not matter where I am, I am always aware of the commitments I have. I am also aware of the commitments I have to those who work in public services and who have undergone tremendous changes in their circumstances to allow the economy and country to get to this point.
A legal commitment is laid out as part of a process in regard to the FEMPI Act which requires its renewal - or not - to be laid before the Oireachtas by the end of June each year. In doing so I must have "regard to the overall economic conditions in the State and national competitiveness" and the "revenues of the State and State commitments in respect of public service pay and pensions". My last review was informed by the instability in the international economy, the still fragile nature of our economic recovery, the level of our debt, the need to borrow and the obligation to comply with the Stability and Growth Pact. To date, none of those factors have lessened appreciably, while the risks of international economic instability have, if anything, increased.
The Deputy should be very brief as we are eating into the time for Topical Issues.
I think the Minister is a bit out on his own on this one because all of the other Ministers, including the Minister for Finance, the Minister for Education and Skills and the Minister for Health have declared there is no more financial emergency, that we are in recovery and that the money is there to be spent. The possible future leader of Fine Gael, Deputy Simon Coveney, in particular keeps telling us there is no shortage of money to deal with the housing crisis. The Minister, Deputy Donohoe, seems to be the only Minister who believes we are still in a financial emergency and, therefore, he wants to hold onto the FEMPI legislation. If he is the only one who believes it then perhaps he should stay in Korea or Japan because he is on his own in this Parliament in believing it. All the other Ministers say the emergency is over.
The Deputy and her group appear to be displaying what I can only call an unhealthy degree of interest in the potential leadership of this party. My interest is in representing the interests of those who work in the public services while balancing that against the other service needs of the country. Far be it from me to be out on my own: every day Deputy Bríd Smith comes to the House she points to the different levels of emergency in regard to the delivery of public services. She points every day to the needs we have in housing, hospitals, schools and our ability to recruit and retain those who work in public services. That is the point she makes every day. What I need to do is balance the level of need against the wage needs of those in the public service. All of my Cabinet colleagues are aware that we must maintain order in terms of how we structure public pay. I look forward to coming back from my work representing the country abroad and continuing to point out the inconsistency in the Deputy's argument in terms of coming into the House seeking more investment in services and at the same time-----
So the Minister still believes we are in a financial emergency and he will retain the FEMPI legislation.
Deputy Smith should allow the Minister to speak without interruption.
-----asking me not to maintain the kind of order we have in terms of public wages to allow services to improve.
I got the answer I wanted. The Minister will reinstate the FEMPI legislation.
Deputy Bríd Smith should please address the Chair. There should be no shouting across at people when they are trying to answer a question.
