JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE debate -
Wednesday, 13 Feb 2008

Vol. 188 No. 12

Business of Joint Committee.

Chairman

I remind members to ensure their mobile phones are switched off for the duration of the meeting. This is important because they cause serious problems for broadcasting, editorial and sound staff. Members are also reminded of the parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

The first item on the agenda is the minutes of the meeting of 30 January, which have been circulated to members. Are they agreed? Agreed.

The second item is correspondence. The joint committee has received a letter from the clerk to the Joint Committee on European Scrutiny regarding the European Commission's legislative work programme for 2008 for its consideration and written observations. If members have observations on the work programme, they may submit them; otherwise we can mark the correspondence as read. We can keep in touch with the joint committee to be updated. Is that agreed? Agreed.

I refer to a letter from the clerk to the Joint Committee on European Scrutiny in respect of five proposals for EU legislation which have been referred to this committee for its information. COM (2007) 46, which concerns statistics on public health and safety at work, is referred for information in the event that we wish to ask the CSO to keep us updated on developments on negotiations and the likely implications for Ireland. It is proposed to write to the CSO to ask it to keep us updated. Is that agreed? Agreed.

No. 2 concerns the energy tax directive referred for information in view of the Department's concern regarding the element of harmonisation involved. It is proposed to write to the Department and ask it to keep us updated. Is that agreed? Agreed.

Deputy Richard Bruton

I do not believe members have the list of material to which the Chairman is referring. Is he working from a list?

Chairman

Yes.

Deputy Richard Bruton

Was it circulated at a previous meeting?

Chairman

The items were deferred at the last meeting.

Deputy Richard Bruton

I do not believe many members brought the list.

Chairman

We may have enough copies to go around.

No. 3 concerns the pension rise referred for information in view of the cost implications. It is proposed to note this correspondence. Is that agreed? Agreed.

No. 4 concerns the common customs tariff. Is it noted? Noted. It is proposed to note draft amendment budget No. 7. Is that agreed? Agreed.

The next item concerns information from the European Parliament on its adoption of a directive on consumer credit.

Deputy Kieran O’Donnell

Where is the Chairman reading from on the list?

Chairman

I refer to letter No. 59. It is proposed to note the correspondence. Is that agreed? Agreed.

No. 60 is from the Department of Finance on the comprehensive review of the Department to assess the organisation's ability to fulfil its mission. I am due to meet representatives of the Department as part of the consultation process. I propose to note the correspondence. Is that agreed? Agreed.

Deputy Richard Bruton

Is it inviting the committee to take part in some way?

Chairman

The invitation is to me, as Chairman. The meeting was to take place yesterday but had to be postponed due to scheduling problems.

Deputy Richard Bruton

It is just directed at the Chairman.

Chairman

Yes. The invitation was for me and I agreed to meet the representatives. I will report back to the committee on the matter.

No. 61 is a letter from the clerk to the Joint Committee on European Affairs regarding a meeting of the European Parliament Committee on Economic and Monetary Affairs. This invitation was previously received by the committee and the Chairman attended following its agreement. It is proposed to note the correspondence. Is that agreed? Agreed.

No. 62 is a letter from the OECD to inform the joint committee that the OECD forum will take place in Paris on 3 and 4 June 2008. The letter is accompanied by the OECD magazine, which can be viewed on request. It is proposed to note this correspondence. Is that agreed? Agreed.

No. 63 is an overview of the EU budget of the European Parliament. It is proposed to note it. Is that agreed? Agreed.

No. 64 is a reply from the Department of Finance on approved retirement funds, ARFs.

Deputy Seán Barrett

I do not have a copy.

Chairman

Does the Deputy require a copy.

Deputy Seán Barrett

I made the point that in last year's Finance Act, the Minister imposed an obligation on those with ARFs to begin using some of the moneys in those funds, namely, 1% this year, 2% next year and 3% the following year. This was decided at a time when stocks and funds were doing very well. However, the markets have taken a dive and many of the funds have a negative value. It seems pointless to be forcing people to take money from a fund when its value is decreasing and when there is no need to do so. I refer to the average person with an ARF. I disclose an interest in that I have one myself.

I have no problem complying with the stipulation if it is the law but it is pointless for people who depend solely on the funds for their future income to be removing money therefrom when they are subject to a downward trend. In the context of this year's Finance Act, we should ask the Minister to consider the matter and postpone the implementation of the measure. I did not receive the correspondence, or perhaps I did and did not have the chance to read it.

Chairman

If the Deputy considers it appropriate, I can accommodate him during the consideration of the Finance Bill for three days next week. There will be an opportunity to amend the Bill but that is a matter for the Minister.

Deputy Seán Barrett

I thank the Chairman.

Chairman

It is proposed to note Nos. 65, 66 and 67, which relate to attendance by witnesses at the previous meeting. Is that agreed? Agreed.

No. 68 is a reply from the Review Body on Higher Remuneration in the Public Sector reconfirming its decision to decline the committee's subsequent invitation to attend a meeting. It has been circulated.

Deputy Richard Bruton

I find this very unsatisfactory. Regardless of our views on the findings of review bodies, their decisions determine the way in which taxpayers' money is spent. The bodies have made decisions that have been the subject of considerable controversy. Recently IMPACT was strongly critical of the way in which pensions had been dealt with and the manner in which the averaging procedure that had been used in the previous review had been changed.

Many issues arise when deciding on a fair means of comparing the public and private sectors in the calculation of pensions. Members, including Deputy Mansergh, have asked how appropriate private sector pay practices are to a public sector environment. It appears the Review Body on Higher Remuneration in the Public Sector is making public policy because the Government's view is that it is in place so long that its decisions should be accepted without debate. I have a different view and believe any body that makes a decision that imposes a charge on the Exchequer ought to be held accountable. We should be able to question the basis on which decisions on the cost of public services are being made by the body making the recommendations, while bearing in mind the principle of confidentiality.

It is excessively precious to believe the Review Body on Higher Remuneration in the Public Sector is like a supreme court that cannot appear before this committee. It is not such a court and its staff, who have been working in different walks of life, have been brought together to assist the Government in determining pay policy. The body should be absolutely open to public scrutiny.

I do not want to speak on behalf of other parties but there is a sense that this matter should be open to more discussion, irrespective of what we feel about different pay levels at different grades.

While I do not know the view of the other members of the committee, I am not happy with the body's declining our invitation. The Review Body on Higher Remuneration in the Public Sector and the Public Service Benchmarking Body are making significantly controversial and important decisions that affect taxpayers, therefore we need to assert our role as representatives of taxpayers, who ultimately must pay to implement the bodies' recommendations.

Deputy Martin Mansergh

There would be some value from the point of view of the future. We have had exhaustive debate in recent months about the last recommendations. How that might be carried on, if it is to be carried on in the future, is something at which we could legitimately look. I made that point during the Second Stage debate on the Finance Bill.

Deputy Kieran O’Donnell

I wish to follow up on what Deputies Bruton and Mansergh said. Deputy Mansergh said in the Dáil that going forward, we should look to decouple the whole issue of linking public sector pay with the private sector. The findings here are public and the body should be required to come before the Oireachtas Joint Committee on Finance and the Public Service to give us its views. There is no legitimate reason it should not appear before us. It would provide very valuable insight into its thinking on the whole process and it would hear all our views on the issue. A further request should be made to the body to appear.

Chairman

The committee can only issue an invitation; it does not have the authority to compel people to attend. The other point the body makes is that its position is consistent with other bodies, such as the Labour Court.

Deputy Richard Bruton

This is a policy input into saying how we should determine pay. This is not an adjudication body. The union and the employer are not going before it and presenting evidence with it adjudicating on the matter while having some kind of due process protection. This is different in that it is determining comparators in the private sector, which it deems appropriate. Obviously, it has its reasons for deciding how it does this in different cases. It has extraordinary implications for public pay. It does not have an adjudication or quasi-judicial role that would protect it from public policy scrutiny, which is what we do.

I do not accept the defence put forward by the body. The Chairman, as the leader of this group, needs to exercise a bit of authority and say that while we cannot compel it to attend, important issues of public policy are being determined. How else can the Oireachtas carry out its role of scrutinising the appropriateness of the public policy being pursued?

Chairman

I understand the point being made but the position put forward by the body is very clear in that it only makes recommendations and that it is a matter for Government to implement them, which is obviously a matter that can be debated by the Oireachtas. However, it does not see itself as being in a position to do so. It says that is consistent with the approach of other bodies, such as the Labour Court, in the areas of pay and industrial relations in terms of attendance before the Oireachtas Joint Committee on Finance and the Public Service. As I said, we can invite people to attend but we cannot compel them to do so. I must advise the committee of that.

Deputy Kieran O’Donnell

The deliberations and recommendations of this higher remuneration group have become policy. The Minister for Finance stated in the Dáil that the Government will always accept the recommendations so, de facto, it is policy. We need an opportunity to find out how the group determines this policy and its thinking. It would also hear our viewpoint. It is extremely important that the Chairman follows up on Deputy Bruton’s suggestions in this matter.

Senator Marc MacSharry

It is clear there is no statutory basis on which we can compel it to attend. It clearly does not want to attend having received a second invitation. We should not waste time going over this again and again when we have an agenda before us today. What can one do? We can invite the Minister and perhaps talk to him about it or we can write a letter saying we are disappointed in the extreme that the body has chosen not to attend.

We have people to meet today and a report to go through and I would like us to proceed with that. We had this discussion the last day and we are no further down the road. We cannot make proposals and compel the body to attend, so let us get on with the business rather than talk shop.

Chairman

I will respond to the contributions made by writing to the body expressing—

Deputy Richard Bruton

Before Senator MacSharry came in I suggested that we should first invite in the people we are waiting to see, but the Chairman decided we should handle this correspondence because it is outstanding, which is a fair point. I do not accept the contention that simply because we have other business, we should forget about correspondence we receive. This is an issue of public policy and I do not share the Senator's view that we should rush on to the next business.

Senator Marc MacSharry

As the Chairman knows, the great thing about democracy is that we are entitled to have different views. I would appreciate a bit of progress.

Deputy Richard Bruton

I note this committee is becoming a good deal more partisan and perhaps that is welcome. However, I suggest the Chairman, who is neutral, speaks to Mr. O'Brien saying that there is a belief among some members of the committee that an important issue of public policy is at stake and that we, as the people who vote on public moneys, should at least have an understanding of from where these decisions are coming, that they are robust decisions and that they meet our requirements as representatives of the people who have to pay. I ask the Chairman to make that effort to elevate this from the level of correspondence by speaking to the body and explaining the feelings of the committee.

Chairman

We would not wish the joint committee to be partisan. There will be an opportunity to be partisan next week when the select committee takes the Finance Bill 2008. Generally, we operate on the basis of collective thinking. I hope we will continue in that way.

Deputy Joan Burton

I apologise for my late arrival. From the replies the body has sent us, I do not believe there is any way we can compel it to attend. However, there are two issues of public interest which we can address, either with or without it. In preparing the current review and recommendations, that body, according to replies to parliamentary questions I received, spent close to €1 million on various forms of consultancy, including €500,000 on one, if my memory serves me correctly. It is difficult to understand why the Department of Finance would sanction such expenditure on an outcome which one could have predicted on the back of an envelope. It did not have to spend approximately €750,000 and almost double the fees of the chairman and other people who took part in the study. That is one issue which should be addressed.

The second important issue relates to the public service. As politicians, do we accept the policy direction of the public service where senior public servants, such as Secretaries General, and not the people at the bottom of the scale, are now saying their salaries should be pretty much the same as, or close to, those in the private sector, less a discount for their pension entitlements? If we accept that, it means the gulf between lower paid public servants and the higher echelons, from principal officer to Secretary General, will continue to grow. We are simply aping international trends.

Chairman

I must interrupt the Deputy. These recommendations are made to Government and not to this committee. It is a matter for Government to deal with those recommendations. It is not a matter of whether we accept them or not. All we can do as a committee — we have done this through the secretariat — is invite the body to address us. However, it has declined to do so. I will reply in writing outlining the concerns and position of individual members of the committee to the stand it has taken. We should move on to the next item on the agenda.

Deputy Richard Bruton

I propose that the Chairman speak to the chairman of the body because this correspondence could go on indefinitely. The Chairman should convey our feelings on the matter.

Chairman

We move to item 08/69, Combat Poverty Agency magazine, of which one copy has been received and is available to view on request. Is it agreed to note the correspondence? Agreed. Is it agreed to note the letter from the Department of Finance regarding the timetable for the Finance Bill? The Dáil will decide the slots tomorrow for next week. Committee Stage will be taken next week and Report Stage will be taken on 2 and 3 March.

Item 08/71 is the January/February issue of the Friends of Europe newsletter. I propose to note that correspondence. Next is a letter to the Chairman, also copied to Deputy O'Keeffe and Senator MacSharry, from the Revenue Commissioners regarding an individual's case. This relates to a draft report to be discussed later.

I propose to note the timetable and agendas for the European Economic and Financial Affairs Council meetings between January 2008 and June 2009.

Next is a letter from a public private partnership enclosing a draft order entitled the National Development Finance Agency Act 2002 — Prescription of Public Authority (Grangegorman Development Association). This order has had the effect of reinstating the association on the list of State authorities covered by the provisions of the Act, having been inadvertently omitted. It is proposed to note the correspondence. Is that agreed?

Deputy Richard Bruton

Will that come before us at a later stage?

Chairman

No, this is for the information of the committee and to be noted unless somebody has an issue with it.

Item 08/75 is an e-mail enclosing an invitation from the OECD to participate in a high-level parliamentary seminar on recent financial market trends and other issues that takes place in Paris on 21 February between 9.30 a.m. and 5 p.m. I propose to note this on the basis that the Finance Bill will be taken by the committee that week. Is that agreed? Agreed.

Next is a letter from the Minister for Finance in reply to the committee's request to be furnished with reports on the national development plan. It is proposed to note this correspondence. The secretariat will follow up on obtaining the reports for the committee. Is that agreed? Agreed.

Next is a reply from the Department of Education and Science concerning correspondence forwarded by the committee from the Dyslexia Association seeking an amendment to the Taxes Consolidation Act 1997. Does the committee wish to invite the association to make a presentation? I suggest the association should be given the opportunity to attend.

Deputy Richard Bruton

Is the letter from the Department or the association?

Chairman

It is a reply from the Department of Education and Science concerning correspondence forwarded by the committee from the Dyslexia Association.

Deputy Richard Bruton

I tabled an amendment in this regard to last year's Finance Bill and it was turned down on the ground that the Minister for Finance viewed this as mainstream education provision and tax relief was not an appropriate way to go. He had a case but the difficulty is the gap remains in many of these areas and the Government has acknowledged this by introducing tax relief for speech and language therapy. The issue is live and I agree with the Chairman's proposal. There are two sides to this issue as only those who pay tax can benefit from tax relief but it is worth hearing the views of the association.

Chairman

Is it agreed to invite the Dyslexia Association to make a presentation to the committee? Agreed.

Item 08/78 relates to a preliminary programme for a tax forum to be held in Brussels on 7 and 8 April. The invitation will issue. Is it agreed to note this correspondence? Agreed.

Item 08/79 is a submission by Mr. Leo Boyle on behalf of the Irish Salmon Netmen's Association seeking an amendment to the Finance Bill in its interest. The correspondence was circulated to members of the select committee due to the immediacy of the Finance Bill. I propose to note it. Is that agreed? Agreed.

Next is a letter from the Minister for Finance regarding annual output statements and reports on the important functions of the select committee in scrutinising annual Estimates of expenditure. This is for discussion and it has been circulated by the secretariat. The Minister suggests that the committee should have an overview of all Estimates. It is a matter for the committee but perhaps members have other suggestions. A meeting of the chairpersons working group is coming up shortly.

Deputy Richard Bruton

I do not have the Minister's letter but this reflects the Committee of Public Account's recommendation to the Dáil in a report drafted by Deputy Rabbitte, which viewed the Estimates procedure as very lax. The committee made a number of recommendations regarding timing and so on, many of which have not, unfortunately, been adopted. The proposal that this committee should have an overview of the Estimates and become more adept in assessing value for money in the process is a welcome change. This is the first year we will be able to compare output statements with what was said would happen last year. Without usurping the role of other committees which examine the Estimates from their own point of view, this committee should have an overview role and it should take it on.

We discussed earlier scrutinising a body that sets substantial sums of taxpayers' money aside for pay and we are precluded from speaking to its officials, let alone from carrying out a value for money or policy review, which the Minister is urging upon us. Has the committee the authority to do what it is being asked if bodies can say it is not its business? I fully support the Chairman in championing our cause but we must make sure we have the powers and resources to do this in a meaningful way because the proposal will require us to scan the process in other Departments and gain an understanding of the way the Estimates are put together. However, it is a worthwhile initiative but it must be borne in mind it has implications for our powers and our research capability because research will be needed to present the committee with meaningful reviews across Departments.

Chairman

I am conscious of that and the committee does not wish to impose on other committees but it is suggested we have a role to play. It is open to us to acquire research and specialist support at any time. This is an opportunity for the committee and it is not intended that we would take work from other committees. We should pursue this as far as we can and define a role for ourselves in the context of value for money and policy reviews.

Deputy Joan Burton

I concur with the Chairman's remarks. To do this properly, we need to set a framework for educating members. If we were in the United States or the United Kingdom, we would be able to call on the Centre for Government and International Studies in Harvard University or one of the colleges in the UK. Perhaps we could request advice from the Smurfit School of Business or another institute in Dublin because the basis of information on accounting for public finances has changed dramatically. My background is in accounting but I realise how much I do not know about the changes that have taken place. We should draw on expertise that can advise us on reading revised accounts and statements.

It might be appropriate to consider how the Committee of Public Accounts works in terms of allowing individuals to investigate particular headings in depth rather than taking a scatter gun approach. We will need a great deal of assistance because the departmental heads we will meet have all the information and output statements are challenging to understand. We were given a sample statement on bus corridors in Dublin which outlined seven, nine or 13 corridors. It was a case of tick the box and achieve the target but it was not possible to ask whether any buses were running along the corridors. I speak from a non-partisan perspective. I am sure we could find examples all over the country of promises civil servants claim were met. However, services on the ground are not necessarily as complete as summary output statements indicate. We should approach the various universities for their help and insight into the changes that have taken place in accounting so that we can elicit valuable information by asking non-partisan questions.

Deputy Seán Barrett

If the Tánaiste asks this committee to carry out a particular function, that should be respected regardless of who is in Government. If we cannot meet our remit under existing terms of reference, there is nothing to stop us going back to the Dáil and Seanad to ask for the power to do our job. I do not accept that we should just lie down because somebody refuses to meet us. We are asked to do a job, so we should do it. Not long ago, we held a debate about a Supplementary Estimate after the State spent €1.5 million on legal advice that would have cost much less if it was sought five years earlier. If we conduct value for money audits and find that people are not prepared to assist us in the job the Tánaiste asked us to do, why do we not ask the Dáil and Seanad to amend our terms of reference to give us the power to force them to attend the committee?

Chairman

According to the advice I have taken, the issues I have put to the committee are within our remit. We should proceed on that basis.

Deputy Edward O’Keeffe

We are here to discuss the specific matter of the Financial Ombudsman.

Chairman

I appreciate that but these are important matters.

Deputy Seán Barrett

With respect to those who are waiting, we can only deal with the agenda before us. If we are asked to address particular matters, we should not ignore them.

Chairman

I appreciate that people are waiting to make a submission.

Deputy Kieran O’Donnell

We do not want to rubber stamp matters.

Chairman

We can proceed on the basis of the document before us and I will keep the committee updated.

Deputy Kieran O’Donnell

We are being asked by the Tánaiste to review value for money and policy issues, yet we cannot make inquiries of the higher remuneration group.

Chairman

We shall move on to No. 0881, the press release accompanying the legislative programme for Government, which is circulated to all Members by the Chief Whip's office.

Deputy Richard Bruton

The agenda before me is incomplete. It only goes as far as No. 78.

Chairman

The details circulated are based on the agenda of the last meeting.

Deputy Richard Bruton

Perhaps I can have a new copy.

Chairman

I propose to note No. 0881. Is that agreed? Agreed.

No. 0882 is a letter from Chambers Ireland enclosing its recent publication on local authority development charges for businesses. I propose to note the matter. Is that agreed? Agreed.

No. 0883 is a letter from the Department of the Environment, Heritage and Local Government enclosing a CD copy of the new statement of strategy 2008-10. Is it agreed that we note the matter? Agreed.

No. 0884 is a quarterly bulletin from the Central Bank. I propose to note the matter.

No. 0885 is a letter from the Financial Regulator supplying information requested at a previous meeting. That has been circulated. The information was requested by certain members because the answers were not available on the day. I propose to note the matter.

Deputy Joan Burton

Is that the letter from the Financial Regulator?

Chairman

Yes.

Deputy Joan Burton

At the risk of sounding contentious, this reply is a disgrace. I asked about the sub-prime sector and people who are fleeced by charges when they run into arrears and face enormous legal fees when their cases are listed for the courts. The reply states that the Financial Regulator is not aware of any approved mortgage default or arrears charges imposed by credit institutions which could be considered excessive and that, as legal fees tend to be imposed by third parties and passed on by the institution to the consumer, they do not require approval. I do not know what parallel universe the Financial Regulator inhabits but that is an outrageous reply to the detailed questions I asked.

I also asked questions on rolled up interest practices among the commercial banks in respect of people who have borrowed for large purchases of land. I do not know whether the regulator was listening when I gave specific examples of developers buying substantial tracts of land with the assistance of borrowings from banks. The reply given relates to domestic borrowers purchasing houses where an interest respite is presumably allowed in cases of difficulty. It is a non-answer to my question. I would like the matter listed on the agenda of a subsequent meeting. This is a disgrace.

Chairman

If the replies are unsatisfactory, maybe we should invite the Financial Regulator to return. He indicated that he would not be in a position to answer all the questions put to him because he was originally invited to address specific issues pertaining to the stability pact. In fairness to him, he indicated his availability to meet us again. If the committee so desires, we can invite him to return. Is that agreed? Agreed.

A list of statutory instruments, with the corresponding explanatory memorandums, was circulated to members. If any member wishes to receive a copy of any of the statutory instruments, he or she should contact the secretariat.

The draft report on the Eurofi conference held in Brussels on 3 and 4 December, which I attended, is before the committee for consideration. Is it agreed? Agreed.

The draft report on the meeting of the budgetary control committees held in Brussels on 18 and 19 December was circulated for members' consideration. Is it agreed? Agreed.

The draft report on the acceptance by public bodies of the recommendations of the Ombudsman concerns an individual. Therefore, I remind members that the said individual's name cannot be mentioned. Certain members of the committee were not present for the compilation and completion of the report. While I will be guided by the committee, it is my suggestion that we adopt the report, with the necessary appendices, and allow it to be laid before the Houses. It is a matter for the committee. I was contacted by some individuals and discussed the matter with the secretariat. Is it agreed that the report be adopted and that the secretariat add to it the names of the new members of the committee? Agreed. Do members agree that the report should be forwarded to the individual concerned and the Ombudsman and laid before the Houses? Agreed.

Deputy Brendan Kenneally

Will the report be forwarded to Revenue?