Priority Questions

Public Sector Pensions Data

Dara Calleary


1. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform if his Department has compiled data from other European countries on the different ways public sector and civil servant pensions are administered, the amount they pay on average per employee and the rules they have for public pensions and in total; and if he will make a statement on the matter. [26201/17]

I seek some information from the Minister on the background to pensions and the data his Department is using. I tabled this question in anticipation that we might have some sort of resolution to the current pay talks, so I would appreciate it if the Minister could give the House an update on the status of the talks and when he envisages they will be completed. I understand they will not be completed before tomorrow. I would be more interested in finding out that information in the Minister's first response than the answer to the question.

I thank the Deputy. I will answer the tabled question first, and I will then give him the update he seeks.

My Department is responsible for Government policy on civil and public service pensions.  In that context, the Department monitors relevant pension developments outside the Irish public service, including in the areas of private sector pensions, social insurance based pensions and international public sector pensions.

With regard to international public sector pensions, proactive data compilation as to the position in individual other European countries, including in respect of the scheme specifics referred to in the Deputy's question, is undertaken by my Department according as need dictates and within available resources.

We are a member of the Organisation for Economic Co-operation and Development, and my Department is affiliated to the European Association of Public Sector Pension Institutions. These and other similar links allow my Department to leverage extensive repositories of pension information and comparative international pension studies which are available.

In that context, there are two particular reports that have been of great help. The OECD Pensions Outlook 2016 included a chapter examining the pension system for civil servants in OECD countries, including Ireland. The 2014 published OECD report entitled Reviews of Pensions Systems: Ireland provided a detailed international perspective of retirement income provision.

Comparisons like these are helpful. However, they have to be approached with a degree of caution given the significant diversity often present from country to country in regard to key pension-related variables. They include contribution rates, benefit levels, pension qualifying ages, dependant benefits, tax treatment of pensions, scheme financing and other matters.

With regard to where we are in the current negotiations, I expected them to be difficult, and they are difficult. The Government has raised matters regarding productivity and pensions. I do not believe those negotiations will be complete this week.

On the pension issue, can the Minister clarify if any work was done specifically in advance of this round of talks? Has the Government made proposals in this round of talks around pensions and pension contributions? With regard to the talks, does the Minister have a new timescale in mind? Can he confirm the reports that even though we are ten days into the process, a pay offer has yet to be tabled by the Government?

On the Deputy's first question as to whether this work was done in advance of the Public Service Pay Commission and this process beginning, it was done in advance of it, but it would be fair to say that it was not commissioned for it. This was work that we had under way and it has informed what we are doing.

Regarding the Deputy's second question about what we have tabled, we have discussed proposals on pensions. There has been some comment about that publicly and in the media. I have to respect the fact that these negotiations are happening inside the Workplace Relations Commission, WRC, and they form an integral part of people's compensation overall. We will table other proposals as the process moves forward.

In terms of when I believe the process will end, it is a difficult enough process without me setting deadlines to which the Deputy will then hold me accountable. I am more focused on seeing if we can get an outcome that I can recommend to Government and in the context of next year's budget rather than a particular deadline which I may or may not be able to hit.

With regard to pensions, changes were made to pensions and all the people involved suffered deductions as part of the financial emergency measures in the public interest legislation. I am aware the Minister has an ongoing engagement with the Alliance of Retired Public Servants, but what status will its members have in terms of the pay talks? This affects them. I know they have a relationship with ICTU's public services committee, but they believe that decisions are being taken affecting their income without their input.

In terms of how we will deal with that body and people who are already pensioners, which is what the Deputy is referring to, I have met that body and had a discussion with it regarding issues on behalf of its members. They will not be part of the process currently under way in the WRC because they do not have a representative status. They do not have the same parity as either a union or a representative body, but in the aftermath of an agreement - if we can reach one - I will meet them. My Department has already met them to engage with them on issues that are under way. The Deputy has written to me on this topic outlining his views on the status of the public service pension reduction, PSPR, and its viability in the future, and he has raised issues on behalf of those pensioners. I am well aware of them and in the aftermath of an agreement being reached - if one can be reached - I would then propose to engage with that sector.

Public Sector Pay

David Cullinane


2. Deputy David Cullinane asked the Minister for Public Expenditure and Reform the progress his Department has made in costing a return to a single tier pay structure across the public sector; and if he will make a statement on the matter. [26405/17]

Dara Calleary


3. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform his plans to provide for equal pay for new entrants into the public service; the timeframe he expects this to become a reality; the cost of implementing same; and if he will make a statement on the matter. [26408/17]

The Minister will know that on several occasions I have attempted to get a costing on returning the public service to a single tier pay structure. He will also know it is an issue I have raised with him several times. I wish all sides well in the current pay talks, and it is one of the issues I would imagine has been raised, but has the Minister's Department made any progress on costing a return to a single tier pay structure?

I propose to take Questions Nos. 2 and 3 together.

The 10% reductions in starting pay for certain new entrants were introduced in January 2011 as part of the national recovery plan in order to reduce the public service pay bill 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- 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 payscale is equivalent to the first point of the pre-2011 scale.  Guidelines on that are available on my Departments website.

Any further remuneration adjustment for any group of public servants, including new entrants, can be examined under the framework of the Lansdowne Road agreement but must also be considered in the context of the total cost of the agreement, which is €844 million, and the total cost of the outstanding financial emergency measures in the public interest, FEMPI, restoration post the Lansdowne Road agreement, 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, new entrant payments in the education sector and the restoration of rent allowances to new entrant firefighters.

Indicative estimates of the total cost of moving all staff hired on new entrant scales up two increment points would be over €209 million, excluding any cost in respect of a retrospective payment.

I welcome the fact this is the first time we have got a figure on this from the Department. Obviously, much work has been done on this. We wanted this for last year's alternative budget process but, unfortunately, the information was not available. I understand there are many competing demands in the current pay talks and I genuinely wish all sides well. I want to see a fair pay deal and a collective agreement emerging from those talks and I have always said the agreement must be fair. It is not just a matter of the flexibilities the Minister might have or the flexibilities there might be within trade unions. It is a fact that the two-tier pay structure is still in place. I acknowledge some moves were made in 2013, but the Minister has stated even in the response he has given that there is still a two-tier pay structure. I believe it is reasonable and fair that this sore, which has been at the heart of many disputes in classrooms, hospitals and Garda stations, is dealt with once and for all. It is the fair thing for us to do and we have made this a red-line issue regarding what we want to see emerge from these talks.

This matter has been raised by the Deputy and a number of other Deputies for some time, and I and my officials instigated much work to clarify what that figure would be. We estimate, as I said, that it would be more than €209 million. We have come to this figure on the basis of a cost in education of €70 million, using that figure then to work out what the consequences would be in other Departments.

Regarding the principles of what the Deputy has just said to me, I will make a broad, two-fold point to him. First, as the pay commission pointed out, at current levels of remuneration, we are successful in attracting very good graduates and new starters to nearly all aspects of our public service. The pay commission stated that: "Based on the numbers of applicants and the gradual increase in overall public service numbers, we found no evidence to support the view that reduced pay rates for new entrants represented a barrier to recruitment to the public service in general." Second, in workplaces all over the country and all over the public sector, not to mention the private sector, it is the case that many employees joined based on the economic health of the employer at the point in time at which they joined that organisation. The same applies in the public services. There are many different circumstances available to different employees at the points they joined. That said, these are the figures. It is a huge amount of money from the point of view of pay, and we will do what we can to address many matters in the context of the negotiations now under way.

I call Deputy Calleary.

Does Deputy Cullinane wish to follow through on the Minister's response?

I ask him to keep his contribution brief.

I respectfully say to the Minister that, when examining this, the fact it is a barrier to recruitment should not be the principal issue he should consider. The point is that it is simply unfair. In some areas in the public services we are finding it difficult to recruit. We can all give examples of hospitals across the State where we simply cannot recruit nurses. The Minister will be aware, because I raised this with him previously, that a number of wards in hospitals in Waterford were closed recently, one in University Hospital Waterford and another in Dungarvan Community Hospital, which simply could not recruit nurses. They put out a call for retired nurses and for people working part-time to do more hours. They are crying out for nurses but cannot get them. Whatever about the reduced pay rates being a barrier, they have been a source of frustration, anger and hurt felt by many front-line workers and the source of many of the industrial disputes we have seen in recent years. From the point of view of fairness, the Minister should act on this.

If one were to accept - and I do not - that we have a generalised recruitment issue within our public services, and if one were then to go on to argue that its main cause is insufficient pay, the largest single contribution the State can make to higher levels of pay is the affordable unwinding of FEMPI legislation. If that is done in a way that is affordable to the State, it will result over time in affordable wage increases being made available to those who work in our public services and those who wish to join them. I go back to the figure to which I referred earlier, the scale of the figure and what it would mean for other needs we must meet. We are engaged in a process that is focused on whether the Government can reach an agreement on the affordable unwinding of FEMPI legislation, with all the very significant consequences and costs it will entail for the Exchequer.

I welcome the confirmation of the figure of €209 million. The Minister quoted from the Public Service Pay Commission report, but it also stated there may be an issue of equality regarding the different pay scales. Our public service is different. When we send two gardaí out on the streets this evening, one of them will be on one pay rate, the other on another one. They are both putting their lives in danger for us. The Minister says we do not have a generalised recruitment issue. Can he then explain to us why we are haemorrhaging nursing graduates; why 25 graduates from the paediatric nursing course in UCC are leaving to go to a hospital in London; why the HSE regularly sends missions to India to recruit nurses to staff our hospitals; and why the emergency department in Limerick, which opened on Monday, is predominantly staffed by nurses from Croatia? We have a recruitment problem, and pay and pay equalisation are part of that problem. Unless a signal is sent or a pathway provided from these talks, if they are finalised, that the Minister understands this problem and understands that the public service must be an employer of equality, I am afraid he will have a very difficult job selling that agreement to those whom it is supposed to benefit.

I have always been very clear about recognising the huge contribution our public servants make to our State and our economy, and I am very happy to make that clear again. Deputy Calleary used the example of the gardaí and the huge contribution they make to keeping our streets and communities safe. I will develop his analysis further. The pay commission accepts that in certain specific areas there may be an issue, but that issue is likely to be generated by a variety of reasons. Pay could be one of them but there could be other matters such as career development, training, workplace morale and so on. If the Deputy is going to argue that pay is a cause of a recruitment or retention issue, the largest single contribution we can make to increasing pay is seeing if we can afford to unwind the FEMPI measures. They are measures that offer the potential to benefit people at all levels within the public service and Civil Service. However, as I have said on a number of occasions, this has to be in a way that recognises the many other priorities and pressures we face, such as improving services and investing in the many needs we have in our schools and hospitals.

I accept that pay is one issue and there are others, and that has been highlighted by the Public Service Pay Commission, but it is the Minister's Department that is effectively the human resources, HR, agent for Government. He and his Department need to take the lead in concentrating on these issues. He needs to pull the HSE in and ask why we are losing the best graduates we have to offer and why representatives of hospitals from all over the world are flying in to recruit them before they leave college. If there are other issues, it is the HSE's fault, but the Minister is the overall HR guardian of Government employment, and his Department needs to step up and start challenging other agencies in this regard. Again, I put it to him that the money being spent on travelling around the world to recruit people for public service jobs for which we have graduates here is surely money that could be better spent within our health system or within a system of keeping people working and keeping our best graduates, in whom we as a country have invested enormously, working for Irish services.

Then let us consider what is happening in the HSE at present. From November of last year to March of this year, the HSE recruited 500 persons per month to work in the different services the HSE provides. This is because of our commitment to treat people fairly but in a way that is affordable to the Exchequer and recognises all the other needs on which all the Deputies will question me in a moment. They will ask me why we are not spending more money on schools and hospitals.

They will ask me what measures we are taking to improve services elsewhere.

If we are going to do all of that, this has to be an agreement that is affordable and recognises that meeting all of the competing demands also has a cost. It is because I want to address the need to recognise the contribution our public servants have made to our society and economy that we are involved in negotiations to determine whether we can secure an extension to the Lansdowne Road agreement.

Pension Provisions

David Cullinane


4. Deputy David Cullinane asked the Minister for Public Expenditure and Reform his Department's objectives regarding public sector pensions in view of the current pay talks; and if he will make a statement on the matter. [26406/17]

This question relates to the objectives of the Department and Minister in respect of public sector pensions, in view of the current pay talks. I note that the commission on public sector pay has raised the issue of pensions. It is a red herring that has been injected into pay talks and is potentially being used as leverage by the Government side in respect of issues relating to pay restoration and other issues. I am interested in hearing the Minister's objectives in respect of pensions and the current pay talks.

When inviting the public services committee of ICTU last month to the public service pay talks which are now in progress, I indicated a separate process of consultation would take place with an association representing public service pensioners. Most recently, my officials met representatives of the Alliance of Retired Public Servants who articulated the concerns and interests of public service pensioners in regard the impact of the financial emergency in the public interest legislation on pensions in payment through the operation of the public service pension reduction, PSPR, and related matters. A further meeting is planned.

I should point out that a very significant part-unwinding of PSPR in three stages is taking place under FEMPI 2015, with PSPR affected pensioners getting pension increases via substantial restoration of the PSPR cuts on 1 January 2016, 1 January 2017 and 1 January 2018. This three-stage part-unwinding of PSPR is delivering significant pensions increases to PSPR-affected pensioners.

On 1 January 2016, all pensions of up to at least €18,700 became exempt from PSPR. From 1 January 2017, all pensions of up to at least €26,000 are now exempt from PSPR, and from 1 January 2018 all pensions of up to at least €34,132 per year will be exempt from PSPR. Those pensioners not fully removed from the reach of PSPR by dint of these changes will, in the majority of cases, benefit by €1,680 per year from 2018. The cost of these changes is estimated at approximately €90 million on a full-year basis from 2018.

The Alliance of Retired Public Servants recently posted a startling fact, namely, that around 4,000 retired public sector pensioners pass on every year. The cuts in pensions was one of the cruellest of many cruel cuts over the past number of years. The Minister said an effort was made to restore some of those cuts, and there has been, but it has been too slow for many retired public servant.

In our alternative budget last year, we advocated that for those in receipt of a gross pension income band of on or below €34,132 the restoration they would receive in 2017 and 2018 would be combined, alongside last year's budget change. That would have cost €6.8 million and accelerated the restoration for that cohort of pensioners. Of course, the Minister's party and Government chose to cut taxes instead.

In respect of the PRD, the Minister has chosen to put that on the negotiating table in respect of the current pay talks as a bargaining chip. He has also put faster accrual pensions on the table. He failed to note that they are in place for a reason. They apply to public servants in uniform who are statutorily required to retire early.

I understand and accept that the issue of pensions is difficult. It has to be addressed, in terms of public and private sector pensions. Many issues need to be addressed, but they should not be a bargaining chip in terms of pay talks that should be dealing with pay restoration, which we all accept needs to happen over a reasonable time period, along with equal work for equal pay and all of the other issues such as retention in the public service and sectoral issues.

All the Deputy is offering is hollow rhetoric. He stands up on issue after issue, and in respect of groups that have been affected by the decisions that were made and the calamity of the crisis the country went through he brings them all in and promises them Sinn Féin will give them everything they want. It is hollow rhetoric at best.

Deputies stand in the House and say they want issues like pay restoration dealt with and that we should invest more in the here and now in our schools and hospitals. I agree there is a need to do that. They also stand up and say that pensioners need more and they need it now, and that Sinn Féin will give it to them. Sinn Féin promises anyone who comes into its representatives all they want.

That may work on the Opposition benches, but it is the route to going back to the kind of crisis our country is trying to put behind us. Why do Opposition Deputies not recognise that by 1 January 2018 anybody who is receiving a pension of €34,000 will see the PSPR eliminated? The kind of changes that the Government felt needed to be brought in to help our country get out of the crisis will be eliminated by that point.

As the Deputy knows, we need to bear in mind that the average level of pension payment for somebody in receipt of a pension is €23,000 for a former public service worker. The measures that we have in place up to next year look to deal, in so far as we can, with the kind of agenda and anxiety to which the Deputy referred.

The Deputy can ask a brief supplementary question.

It is not brief. We have a set time for questions. The Minister has given his response.

Deputies always know when they are cut short, but never note when they are allowed over time.

I thank the Leas-Cheann Comhairle. I will not take lectures from the Minister about hollow rhetoric, that is for sure. I do not promise people everything. If the Minister had bothered to read the submission document I sent to him in respect of our proposals on public sector pay, he would see that we said it was not possible to unwind all of the FEMPI cuts in one go or in one round of pay talks or one pay agreement. Instead, we had to prioritise. We set out our priorities. We did not promise people everything.

Fine Gael, of course, promised to abolish the universal social charge, a promise it dumped in recent times, if the Minister for Social Protection, Deputy Leo Varadkar, is anything to go by. It also promised universal health insurance, a promise it has dumped. Given all of the big promises made by the Government, perhaps it should examine them before it attacks any other party.

With respect, I do not promise people all that they want and tell them they can have whatever they want. I believe in fairness and equality. We should, of course, cut our cloth according to our measure. The Government gave significant pay restoration to those earning above €65,000 and gave €1,000 to those earning below €65,000. That was a political choice that the Minister and Government, and not my party, made.

The Deputy may declaim that he accepts the need to cut our choices according to the resources that are available, but I never see any evidence of this from Sinn Féin. I read the document to which the Deputy referred and I am aware of what he wants to do from a public pay policy point of view. My point is still very strong against all that the Deputy claims.

Every member of the Deputy's party promises that every problem would be immediately fixable if more money was spent. That is not the case. We have a certain amount of revenue that we take in every year in tax, we have expectations about how that will grow in the future and we know what we are able to do.

We are able to borrow on top of that. We have to make choices available to us on the basis of the funding we have. If we do not do that-----

The Minister is making things up.

I am very used to this. It does not make any difference. Again and again, I see that Sinn Féin is well able to dole it out but is not able to take it back. The only way it can respond to its arguments being challenged is in the same manner as Deputy Cullinane.

I make the point again that we have seen regarding pensions and pay their efforts to promise to people money and resources which are not available now while ignoring the fact that we need to invest those same resources to improve services for citizens.

European Investment Bank

Seán Sherlock


5. Deputy Sean Sherlock asked the Minister for Public Expenditure and Reform the interactions he has had with the European Investment Bank on the issue of capital investment; the persons he met with; if he discussed the relaxation of Stability and Growth Pact measures; and the timeframes that were agreed for future discussions on European investment in capital infrastructure. [26404/17]

The last few minutes have felt like a form of intellectual water-boarding. Some people know a lot more about that than the rest of us.

Is that the best the Deputy can do?

This question is on the situation regarding capital investment and the European Investment Bank's capacity to genuinely assist Ireland as opposed to just talk about it.

Responsibility for policy on the Stability and Growth Pact rests with my colleague, the Minister for Finance. Both the Minister for Finance and I visited the European Investment Bank, EIB, in Luxembourg last week on 23 and 24 May 2017 and met with a large delegation of EIB officials led by President Werner Hoyer and Vice President Andrew McDowell. The purpose of our visit was to review progress in the ongoing discussions between the Irish authorities and the EIB taking place in sub-groups under the auspices of the Ireland-EIB financing group, which was established last year to explore possible ways for Ireland to access additional EIB funding for necessary projects.  This was the second meeting of the financing group following its inaugural meeting in Dublin in December 2016. We had a wide-ranging discussion on the capital and infrastructural needs of the Irish economy and the key issues that arise in trying to address these needs. These include the limited fiscal space within which the Government must operate, the threats posed by Brexit and the assessment of priorities for additional funding that is currently under way as part of the mid-term review of the capital plan.

The EIB has now presented some suggestions on how the bank could provide new and innovative financing mechanisms for assisting small businesses and tackling infrastructure needs in ways that could prove useful to the Irish authorities in grappling with these issues. We have agreed a number of next steps. We will explore potential financing options for delivering metro north, drawing on the EIB's knowledge and experience of financing similar projects elsewhere. There is an agreement to engage in exploratory discussions on the EIB's knowledge and experience of different user-pay PPP or concession type models without prejudice to decisions we might make later in the year on particular projects. It was agreed, partly regarding mitigating the impacts of Brexit, to explore the potential for the EIB to become involved in funding a scheme to provide access to the enterprise and agriculture sectors. Follow-up meetings on all of those topics have now taken place.

I thank the Minister for that reply. When senior European office holders speak, they often refer to the European project. If there is one thing which will kill Europe, it is the startling failure of almost all European countries, rich and poor, to invest in capital infrastructure and next-generation facilities. When one looks at people living more impoverished lives, part of the cause is that the infrastructure where they live, whether in inner cities, regions or very rural areas, has failed to keep up. That is the enormous difference between the Europe of the post-war era and the Europe of today. I am very pleased that the Minister met representatives of the European Investment Bank. While I am sure he and the Minister for Finance, Deputy Noonan, did their best, it is like wading through treacle to get these guys to talk in a way and within a timeframe that is meaningful. While I am grateful for the Minister's answer, all of the things he set out are on the very long finger whereas this country cannot afford to wait much longer on infrastructure.

I agree with some of the Deputy's analysis on the importance of infrastructure for Europe now. I contend that one of the great risks we face is that if we get the EU and the eurozone back on a trajectory of economic growth, it may not be inclusive, which it has to be. If one does not have infrastructure in place, whether it is housing or education, one will not be able to deliver inclusively. The EIB has already played a major role in Ireland over the last number of years in delivering projects like Luas cross-city, the Gort-Tuam road and the DIT project in Grangegorman. It has enabled a significant amount of infrastructural investment to take place. Building on that, the engagement we are having with the bank at the moment is not at all like trying to wade through treacle. What did the Deputy say again?

The Minister should not let Oliver Callan hear that.

Yes, indeed. We are having significant technical discussions with the bank at the moment to see if there are new ways to address the project needs we have. We have to decide what the project needs are first and then decide whether the EIB offers an attractive source of funding for them.

Again, I thank the Minister for his response. We have urgent requirements. Everyone agrees about housing. The critical issue having regard to housing development in this country is that it lacks scale. The EIB has very significant resources. None of the local authorities nationally, including the large urban ones, is talking about anything like 1,000 social houses. Everything is well under that, sometimes in the low hundreds, or tens, 20s and 30s. We are not going to be able to address the housing situation unless both affordable and social housing are part of the mix on a scaled basis. We have seen the European Investment Bank have a positive involvement in projects like roads, the DIT and schools bundles, but its average capital spend over the last ten years in Ireland, which has a growing population and an enormous demand in terms of foreign direct investment for public transport and so on, is less than €700 million a year. Has the Minister targeted specific amounts for infrastructure or will it be a case of taking whatever is offered?

No. I have a clear figure in mind as to where I think infrastructure investment needs to get. I am now working with all of my Government colleagues to decide what projects will get us there because while a figure is important, it is even more important to have quality projects in which we want to invest. As regards the funding role of the EIB, we must bear in mind that there are other options available to the State to fund projects like this. The EIB is one of them but there are others we might choose to take. The Deputy made the point in her opening contribution that the scale of delivery in housing is not delivering the many hundreds of units she believes are needed, which I agree with her about, but in my experience the issue is not so much where we are on funding, but rather where we are from a planning, regulation and policy point of view. That guides issues like density of development. These are the guiding factors on the scale of development we get, not the role of the EIB.