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Dáil Éireann debate -
Thursday, 16 Jun 2022

Vol. 1023 No. 6

Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Public Sector Pay

Mairéad Farrell

Question:

86. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform if he will report on his negotiations for a new public service stability agreement; and if he will make a statement on the matter. [31505/22]

The Minister is currently involved in very important negotiations for the new public sector pay deal. The current public sector stability agreement is set to conclude at the end of the year. Given we are now at the midway point, will the Minister provide the House with an update on the negotiations for the new public service stability agreement?

I thank Deputy Ryan for the question. Public service pay has been governed by a system of collective agreements since the Croke Park agreement was negotiated in 2010. These collective agreements have helped to ensure public pay is managed in a sustainable, affordable and orderly manner. These agreements have also enabled significant reform of public services and changes to work practices.

The value of public pay agreements to the Government and the taxpayer is ensuring pay costs are managed in a sustainable and orderly way and in a climate of industrial peace. By and large, public pay agreements have delivered on these objectives over the past 12 years.

The current public service agreement is Building Momentum. This agreement is weighted towards those at lower incomes, with headline increases of approximately 5% for the lowest paid public servants. These groups will also benefit more from other measures in the agreement, including the overtime rates and premia payment adjustments. The current agreement is a two-year agreement that is due to expire, as Deputy Ryan has said, at the end of 2022.

As Deputies will be aware, exploratory discussions have taken place between the parties to the agreement following the triggering of the review clause in Building Momentum by public service unions and associations due to the increasing cost of living. These discussions have now moved to a formal phase of discussions, which are being facilitated by the Workplace Relations Commissions.

As the Deputies will appreciate, while these discussions are ongoing it would not be appropriate for me to comment on the detail of those talks, which should remain confidential to the parties. However, inflation and cost of living issues are a feature of those discussions.

These are very challenging discussions given the impact high levels of inflation are having on living standards of workers but also because of the uncertainty in the global economic outlook. The aim in these talks will be to strike the right balance and seek to achieve a deal that is fair and affordable to taxpayers generally and public service employees.

An agreement on public service pay could play an important role in underpinning stability, minimising industrial unrest and supporting the continued delivery of reform and quality public services over the period ahead. However, any such agreement would need to reflect the broader economic context and the current fiscal position where significant challenges are emerging.

As the Minister will be aware, ordinary people are really feeling the pressure in the midst of the unprecedented cost-of-living crisis. Workers and families are really struggling. There are increased energy prices, increased food prices, and even increases in the price of housing. Yesterday, an AA survey showed that petrol prices have increased by 11.5% in the past two weeks. Diesel is now 45% more expensive than it was last year. According to the latest residential property price index, property prices nationally rose by 14.2% over the past year. It should be clear that workers need a pay rise. They need a pay rise that accounts for inflation. Anything less will be a cut in real terms. We are aware the wages of public sector workers can help to anchor the wages of those in the private sector. A genuine wage increase would have a positive spillover effect for the wages of those in the private sector. The Tánaiste has recently spoken about making the minimum wage a living wage, which would be most welcome. The Tánaiste referred to 2026. We cannot wait until 2026.

I thank Deputy Ryan. As we stand here today in the Chamber, the officials from my Department are in negotiations with the public services committee of the Irish Congress of Trade Unions to see if new pay arrangements can be agreed. I do not want to say anything that would be unhelpful to that process. I hope it comes to a successful conclusion. We are entering a critical phase in those discussions now.

The aim here is to strike the right balance. We must be fair to public service workers and recognise the impact of inflation on their living standards. We also must recognise the needs of the State generally. We are now in an environment where the global economic outlook is increasingly uncertain. There is no sign, unfortunately and tragically, of the war in Ukraine ending any time soon. Obviously, the inflationary environment is having a direct impact on workers and on the State generally. It is about striking the right balance. I believe we stand a good chance of reaching agreement but this will require goodwill and co-operation from all parties. We will know shortly whether that is possible.

I completely understand where the Minister is coming from and that we must try to manage the public finances in a prudent manner. I get that. We in Sinn Féin get that. We are, however, constantly hearing the talk about the risks of a wage-price spiral. There is a problem in that. The argument has been there was not any evidence for that, and there has been wage growth in some sectors. The Minister will be aware this wage growth has mostly been in the multinational sectors. For many other sectors wage growth has been stagnant for some time. We are going back to like it was in the 1970s. We cannot go back 50 years and use the same model currently. It is not possible. By giving public sector workers a proper pay rise, I believe this will help them to deal with the cost of living and it would help to ease the burden on families. It would help them to cover their increasing costs. At this stage these are ever-increasing costs. We do not need to transport back to the 1970s. We need to move forward, if possible, please.

I have acknowledged publicly the need to go beyond terms of the current agreement. This is why those negotiations are under way today, and it is hoped they will come to a successful conclusion shortly. The backdrop is challenging in a number of respects. I have acknowledged the impact of inflation on the living standards of workers, both public-sector and private sector workers. There is an increasing level of uncertainty about the global economy. We are facing significant fiscal pressures in the State also. We must make sure whatever arrangements we enter into are affordable. It is certainly my objective and my desire to have a public service pay agreement. It is in the interests of all parties because it does afford industrial peace, which is an important ingredient in having a successful economy.

We must watch the competitiveness agenda. We have to make sure we do not make any decisions in this very difficult time that would disadvantage Ireland from a competitiveness point of view. Ultimately, the success of our economic model is that Ireland has been very competitive in attracting inward investment and as a base for Irish companies to export throughout the world.

Covid-19 Pandemic Supports

Mairéad Farrell

Question:

87. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform if he will report on his Department’s guidance for public service employers during Covid-19 in relation to special leave with pay for Covid-19; if there are further plans in this regard; and if he will make a statement on the matter. [31504/22]

With regard to the Department's guidance for public service employers during Covid-19, the special leave with pay for Covid-19, what are the Minister's further plans in this regard and will he make a statement on this?

I thank Deputy Ryan for raising this important issue. I will take this opportunity once again to acknowledge and pay tribute to the immense contribution made by our public servants, in particular across our health services, during the course of the Covid-19 pandemic. Their efforts ensured we kept services to the public and to the vulnerable in our society running, to the greatest extent possible, in the most challenging of circumstances. In recognition of this, the Deputy will be aware the Government provided for an additional public holiday earlier this year and a special recognition payment for healthcare staff, which is currently being paid to many of them.

Reflecting the obligations to self-isolate laid down in public health advice and to assist in the prevention of the possible onward spread of the virus in the workplace, special leave with pay for Covid-19 arrangements were introduced by my Department in March 2020. This was a temporary measure in response to the unprecedented circumstances presented by the Covid pandemic. Special leave with pay has been used in lieu of sick leave across the public service to assist in the prevention of the possible onward spread of Covid-19 in the workplace.

From the outset of the pandemic it has been made clear in the guidance and frequently asked questions document that was published at the time that special leave with pay is a temporary measure that is kept under regular review. Changes have been made to the arrangements over the course of the past two years in line with changes to public health, Government guidance, and the general return to the workplace.

It is important to note that special leave with pay is not ending. From 1 July 2022, special leave with pay for Covid-19 will continue to be available for the stated self-isolation period, which is currently seven days.

This is in keeping with the rationale of assisting in the prevention of the possible onward spread of Covid-19 in the workplace. I understand the Department of Health is working on a proposal to deal with legacy Covid cases in the healthcare sector. My officials will examine any proposals as soon as they are finalised. This issue has been raised directly with me by a number of colleagues across the House. The public service sick leave scheme continues in operation and in many instances the critical illness protocol will be relevant as well.

My colleague Deputy Mairéad Farrell has raised the issue of long Covid with the Minister on a number of occasions. When she did so, he informed us that flexibility was to be provided to public service workers. That is good. The scheme provides for certain payments to staff during periods of absence from work due to illness from long Covid. This is despite long Covid not being recognised by the likes of the HSE as a specific illness. With the pandemic emergency declared over, the scheme is being wound down. Is it still the case that the Government has no plans to introduce a special scheme for those suffering with long Covid? Many who are still suffering feel the additional resources the Government is providing are insufficient.

The special leave with pay scheme was an exceptional intervention, which was warranted back in March 2020 because of the need to ensure people who contracted Covid did not have to go to work and would be paid accordingly. It was never designed as an instrument in itself to deal with long Covid, which was not even recognised at the time as being in existence. We have the standard public service sick leave scheme and, as I have acknowledged, there is also the critical illness cover. There are examples of public service workers, particularly in healthcare, who contracted Covid and may still be out of work because of it. That is why I have acknowledged that the Department of Health is examining that specific issue and is engaging with my Department on it. I expect that the Department of Health will finalise a proposal in that regard shortly. We stand ready to examine that and assist in any way we can, while recognising that this probably impacts on quite a small number of people.

I appreciate what the Minister is saying. The Government has taken some measures in response to long Covid, but those who are still suffering feel it is not enough. The pandemic emergency may have been declared over but they are still suffering. For these people, long Covid is with them every day. It manifests in shortness of breath, chronic fatigue, brain fog, an inability to concentrate and a multitude of limiting impacts. I appeal to the Minister at the very least to meet the campaign group and hear what it has to say.

The Minister for Health is acutely conscious of this issue and there is work on it ongoing within his Department. There are legacy cases of people who, unfortunately, contracted Covid, quite possibly in the workplace, at a time when the risks were not fully known. They went to work to protect everybody else. The Department of Health is working on proposals that will be shared with my Department once they are finalised and we will respond as quickly as we can. The general public service sick pay scheme continues in operation. There are other categories of people who suffer from conditions and are availing of that scheme, as opposed to special leave with pay, because of when they contracted that condition. I am alert and aware of the issue. The Department of Health is working on proposals at this time. Those proposals will come to us and I will then respond as quickly as I can.

Construction Industry

Seán Canney

Question:

88. Deputy Seán Canney asked the Minister for Public Expenditure and Reform if he intends to introduce a new public works contract for the construction industry to ensure the risk in these contracts is shared in an equitable way; and if he will make a statement on the matter. [29034/22]

I raise the issue of public works contracts, which have been in place since 2007. I acknowledge the Minister's efforts in introducing a variation to the contracts for the unreal price increases that have happened. However, I fear that if the contracts are not overhauled, we will have serious issues in trying to get contractors to do work for us. Are there any plans to reform them or introduce proper contracts?

As Minister of State responsible for public procurement, I will be taking this question. The public works contract was introduced in 2007 in response to significant cost overruns on public infrastructure projects and must be used for projects that are delivered under the Exchequer-funded element of the national development plan. Contracting authorities are expected to ensure projects are comprehensively designed to enable contractors to price with greater certainty and account for any risk that is transferred under the contract. The contract, which is a key component of the capital works management framework, CWMF, has undergone significant reforms over the years since it was introduced, and the level of risk contractors are expected to carry has been reduced in a manner that is proportionate and in line with market developments. The most significant review was conducted in 2014 and it has undergone a series of further refinements since then. It continues to be amended when appropriate.

Most recently, in January 2022, in response to materials price increases not seen in over a generation, amendments were made to reduce the level of inflation risk transferred. By March it was clear a further intervention was necessary in light of the growing inflationary pressures and uncertainty in supply chains brought about by the war in Ukraine. In May, the Minister and I introduced the inflation and supply chain delay co-operation framework after extensive consultation.

The contract is but one element of the CWMF. In March 2019, a much broader review of the policies and practices deployed in the procurement of public works projects commenced and is ongoing. The focus of the review is on improving the delivery of construction projects in terms of quality, timely delivery and outcomes and will result in significant changes to the CWMF over the coming years. It should be read in the context of a suite of measures, including the review of the public spending code; the establishment of the commercial skills academy to provide relevant training for people involved in public procurement; a review of productivity in the construction sector; and a review of the capacity of the public sector to deliver the national development plan. All of these taken together will improve the performance of the construction and operational phases of a project. The CWMF review involves extensive engagement, with both industry stakeholders and the public bodies charged with the delivery of public works projects on a range of issues, including price variation; risk management; reflecting quality in the award of contracts; the adoption of building information modelling, BIM, on public works projects; liability, indemnity and insurance requirements; performance evaluation; and encouraging collaborative working.

The Minister of State said a lot there. I will give him some facts. Right now, the construction industry is in free fall. Contractors are not going to price public works contracts as they stand at the moment. It is a particular risk in the engineering contracting. The Minister of State, Deputy O'Donovan, is here. This also affects flood relief schemes, where there is an enormous risk in taking on one of these projects. Civil engineering contractors will not take them on because they cannot price the risk and the risk is not seen. A lot of the work is in water and rivers and cannot be seen. I have tried to elicit this information from various Departments.

Since the contracts were introduced, what has the performance been in terms of delivery on time, the cost and the overruns? There is also the cost of litigation, arbitration and the claims environment that now exists within the construction industry. How is that being costed into each project? I saw a project from the HSE that was 60% over the tender price. Some of that was probably due to additional works but a lot of it was contractual claims. The head of one contracting authority told me last week that before a project starts, the first thing that goes on site is a Portakabin and into that go quantity surveyors who start the claims process against the contracting authority. We have an adversarial industry and we need to correct that as a matter of urgency.

Two major changes have been made to counter the new problem of inflation that has arisen as a result of the Ukraine war. First, the contract template is meant to take inflation into account. That is not just the consumer price index, CPI, but the sub-indices of inflation that apply to that contract. If there is a particular material involved, such as concrete or wood, that sub-index will be taken into account. That is a risk transfer whereby some of the risk is being taken by the State rather than the contractor. If all the risk is transferred to the contractor, the bid would have to be very high and may result in people not being able to bid. Where somebody has taken on a contract, they may find they cannot feasibly complete it without their company folding or becoming insolvent. It is with that in mind that we changed the template. We also made retrospective changes whereby contracts taken out since the start of the year were compensated with a view to preventing those contractors from ceasing operation, where it could be shown that contract was suffering from material price inflation.

I accept that, but when we think about how to have a collaborative industry in which contractors and the contracting authorities will work together, we need to look at what has been established in other jurisdictions such as the UK, where there is the new engineering contract, NEC. In that case, there is risk-sharing and more is got out of the contract.

The Minister of State referred to building information modelling, BIM. That is for the large contractors, but what about the small contractors that build one-off houses, an extension or a housing adaptation? They have to comply with the same criteria within the public works contracts. It is unfair and totally wrong that this contract amounts to an albatross around the necks of contractors, the construction industry and the public money going into it. A lot more money is being spent but, in my view, we are not getting the jobs built on time or to budget. The cost is being masked by the arbitration and the claims that go on within contracts. We need to look at this in a more realistic way.

We have a collaborative system of working with the construction companies and their representative bodies. We want to avoid an adversarial situation; that does not work for anybody. We cannot end up in court or in disputes. With that in mind, I meet representatives of the Construction Industry Federation every quarter and I am in regular contact with people such as Sean Downey in order that I can ensure their concerns about how construction contracts with the State will be taken into account, that we will have a practical framework for co-operation and that our projects will be delivered on time. That is under constant review. At the moment, a working group of representative bodies of employers, including the Construction Industry Federation, is reviewing the guidelines for public construction contracts.

We absolutely need to work with the industry. We do not want to be in an adversarial position and we are not in one. We are in constant communication, as recently as within the past week.

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