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Seanad Éireann debate -
Wednesday, 3 Jul 1940

Vol. 24 No. 23

Local Authorities (Cost of Living) Bill, 1940—Second and Subsequent Stages.

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

By the Civil Service (Stabilisation of Bonus) Regulation, the Minister for Finance stabilised the cost-of-living bonus applicable to Government servants at the figure 85 which obtained during the six months to 30th of last month. This Bill will restrict the upward variation of the bonus in the case of local officers and servants to the figure in operation last month. The same restriction will apply to bonus on pension.

The number of local officers and servants who have a variable bonus is limited. Local authorities generally did not adopt the Civil Service scheme, but some authorities did. The Dublin Corporation and the vocational education committees and committees of agriculture adopted the Civil Service scheme to a large extent. It is only persons with variable bonus that will be affected by this Bill.

It is important in the present emergency that any tendency to increased expenditure on the remuneration of particular classes at the expense of other sections of the community should be avoided. Additional burden will be thrown on everybody and local authorities like other bodies have a duty to guard against the danger to our economic position which would follow from rising salaries and wages.

As I stated, the Minister for Finance has stabilised the bonus with regard to civil servants. It is thought right that those other people employed by local authorities, some of them perhaps in a better position than civil servants, should have their bonus stabilised also. It applies only to a very limited number of officials—the officials of vocational committees and of committees of agriculture and the officials of the Dublin Corporation and one or two other bodies.

Might I ask the Minister whether the stabilisation of the cost-of-living bonus at the figure which obtained during the six months to 30th June is the same as in the case of civil servants?

One point which struck me on reading the Bill is that I did not think there were any boards of guardians in existence now, or that they will be in existence under the County Management Bill which has been passed. We have borough councils, county councils and urban councils, but I did not think we had boards of guardians.

Legally they are not gone.

Therefore, they are there still. As a representative of a vocation in this House and also as an official of a local authority I should like to get those points clarified. If Senator Fitzgerald was here he would appreciate the fact that I have a vocational interest in matters like this.

Senator O'Donovan is the representative of cultural interests, not of a vocation.

It is cultural and vocational.

Most emphatically not. That is an absolute and complete misunderstanding.

I rise to oppose this Bill, which I think is practically a wage-cutting device. There is no great sum of money involved and certain classes seem to be picked out for a reduction of wages. We know that the record of the previous Government was a very bad one in regard to wage-cutting. There was a series of cuts made in wages which was responsible for creating much discontent with the previous Government and putting them out of power. I do not think that this Government want to follow the same road. Wage-earners will react in the end to these cuts in wages. Pin pricks inflicted on various classes of people are inclined to become poisonous to the body politic and result in serious opposition to Government work. Instead of giving a good example to private employers, the Government are giving a very bad example. The cost of living has soared up in the last 20 years by nearly 100 per cent., and the Government's way of dealing with that situation is to cut down wages. In the other House, the Bill was rushed through all its stages and scarcely any time for criticism was given. Surely it would be simple justice for employers to have had consultation with the representatives of their employees before this Draconian method of inflicting a cut in wages by Act of Parliament was adopted?

There is the further point that this is a direct violation of a statutory guarantee given in the Act of 1930. A statutory guarantee was given to certain classes of employees, including some of the employees affected by this Bill. Under Section 99 of the Act, employees transferred from the old technical committees to the new vocational committees were given a guarantee that their conditions would not be worsened. Their basic salary was fixed at a low figure, on the understanding that the cost-of-living bonus would increase or decrease according as the figure increased or decreased. That was a fairly just arrangement, but the Government now stabilises the figure at 85, which is much below the present cost-of-living figure. It is a serious thing, I suggest, to break statutory guarantees. It destroys people's faith in Government. You pass an Act to-day giving a statutory guarantee, which gives a certain feeling of settlement and ease to those affected, but they find next day that the statutory guarantee is not worth the paper it is written on.

The Government, of course, will plead the exigencies of the case, but pleading the exigencies of the case in a matter like this is not, I think, sufficient reason. The Government are bound in honour by an Act of their predecessors and to violate that Act is a very bad procedure. It destroys the confidence of the people and creates a good deal of uneasiness amongst a very important class of public servants who are doing work of a very specialised nature. To have such people distressed by the perpetual fear of having their rights—because rights they undoubtedly are—filched from them is very bad for administration as it prevents these people from giving the best possible in them. There was no consultation with the representatives of these people who have organisations and officers to represent them, and the Government, so far as I know, had no contact with them before inflicting this cut. I happened to be connected for a number of years with vocational employees and I know the work which they are doing, and I know the perpetual dread which has haunted them for some time past that their conditions would be gradually worsened. As an example, the salary of an officer of the highest grade 20 years ago was £430. At present, it is £300 odd, the difference being £113 per annum. That is an extraordinary reduction in salary, considering that the cost-of-living index figure, when the higher salary was paid, was much lower than it is at present.

The Bill also affects the pensions of officers and that is a very important point. Their pension is a basic figure and the cost of living is added to it. If men have served 40 years in a particular job and then find that their pension is being filched from them, it is pension-cutting on a large scale. It was bad enough to take 1/- a week off old age pensions, but this is a much heavier cut, and very old people who had undertaken certain commitments in life will now find that they cannot carry on on their attenuated pensions. I suggest that the Bill should not apply to officers who were given a statutory guarantee by the Act of 1930, that that guarantee should not be violated. I also suggest that the cost-of-living figure on the date on which the Bill comes into operation should be adopted. If any figure is to be maintained, it should be that figure and not the figure of 85, which is much lower than the present figure. It would prevent the bonus from rising in future and give some measure of stability and satisfaction to those affected. I think the Bill, which will not enrich the Central Fund by any considerable amount, is an unfortunate Bill.

I have some misgivings about the propriety of this Bill, and I find myself in agreement with a good deal of what has been said by Senator Cummins. I think it is always a mischievous principle, on the face of it, to interfere with a contract by legislation, and I do not think the House should pass such a Bill as this on a few moments' consideration and without giving thought to the fact that they are interfering with a contract between certain employees and their employers. As the Senator has pointed out, some of these employments have a statutory sanction already given to them, but, whether they have statutory sanction or not, it seems to me improper that the House, without grave consideration, without very serious reason, should exercise itself at all to interfere with existing contracts. More particularly, I think, is that the case where the contract is between a class of public servants and the authorities which employ them and for whose safeguard the Government, and, behind the Government, the Oireachtas, has a certain responsibility.

These people took their appointments on a certain contract. They believed that they had the guarantee of the State behind them for the fulfilment of that contract, but when it becomes a little inconvenient, the Government invites the Houses of the Oireachtas to vary that contract as against an employee and in favour of a public employer. That certainly gives me some misgivings and I do not like to agree without uttering a protest. I have studied very carefully what the Minister said when he was conducting the Bill through the other House, and have found it hard to find any justification for the measure. There were two points which he stressed, neither of which I thought convincing. He stated that the object of the Bill was to put these employees on the same lines as civil servants. That opened at once a prior question as to how civil servants were dealt with. It appears that civil servants were dealt with by an order of the Government—a vicious system of employers regulating the position of their employees without considering the matter with the employees.

That is what I read into the debate which took place in the other House. It raises the question as to whether that was a just decision and, if it was not a just decision, whether it should be made a precedent for another decision of the same sort. I would not admit, in any case, that the Government should have power to regulate the terms of employment of the Civil Service in this way or that they should ask the Oireachtas to take such power with regard to the employment of other persons in public service, even local service. This is one point on which the Minister relied. The other is a curious one, which always arouses a certain amount of suspicion, that if it were an injustice it was a very small one. That is a very bad excuse for doing wrong, that it is a very small wrong, and it has been made in strange circumstances before. If the Minister wants to get this Bill through, he should give us some more convincing reasons than those he offered in the other House. The Seanad should be slow to legalise the interfering with contracts. People who have a contract rely on it, in the belief that they have the guarantee of the State behind it.

I thought there would be very considerable discussion on the principle of this Bill, but nobody seems particularly interested and I should like to make only a few personal remarks. I agree to a great extent with the arguments, as regards the continuation of contract, which have been put forward by Senator Cummins and Senator Rowlette, but it is really about time we realised that in the world of to-day— in Europe, and particularly in Great Britain, from whence a great deal of the income is derived to employ people in this State—the present circumstances are very remarkable and extraordinary and may become more so in the future. The farmers are suffering in 100 different ways through loss of income, loss of prices and loss of freedom to sell. Many investors' incomes have dropped by half, yet they have to carry on and pay their way, both to the State and through the ordinary cost of living. Taking it all round, everybody should suffer to some extent in order to help the country. In particular, Government servants—although they are going to have less money to spend, owing to the rising cost of living—enjoy a definite competence as regards salaries and cost-of-living bonus. One might as well argue that, amongst the others, are old age pensioners who have no bonus of any sort or kind. It appears to me that this is a reasonable economy to put before the public and before this House.

I can understand the point of view of Senator Cummins in advocating opposition to the principle of the Bill. After all, as Senator The McGillycuddy has just pointed out, we cannot exactly afford to ignore the serious position which exists. Possibly it is only a temporary period of stress— let us hope that is so—but assuming that it is likely to continue, there is no guarantee at all of any security in positions, not to mind salaries. We must assess the value of the position at the moment, when there is a great deal of security. A certain amount of sacrifice must be made by everyone in a spirit of co-operation. The cost of living as we know it to-day is about 19 points higher than stated in the Bill. The value of the return per week would be only a matter of a couple of shillings to local government officials on the average, but the cost to the general taxpayer would be considerable when the total sum is taken into account. This extra cost in taxation, being spread over the population as a whole, would probably mean inflicting greater hardship in times of stress on poor people who cannot afford to pay for this extra increase in the cost of living. In the last resort, it probably means developing a position where certain classes of employees remain in sheltered positions and work on an even keel, while other sections of the community are suffering serious losses as a result of the state of emergency.

I doubt if the Government are very wise in stabilising this bonus at 85, or in stabilising it at all, for that matter. One has to look a little further than the present emergency and visualise the position afterwards. Even if we have continued peace, it is quite possible that, as a result of the chaos in Europe, there may be a complete dislocation of our economics as we know them to-day. As a consequence, the standard of living and even the cost of living may be reduced considerably and be far lower than is presently stated in the Bill at 85, and then the Government will be in a more difficult position.

There is the question of pensions as mentioned by Senator Cummins. The pensioner suffers losses as a result of stabilisation, but he would also be liable to suffer losses in normal peace times, before the stabilisation at 85, as the cost of living may have gone below that figure at any time during the past five years. In taking advantage of the cost-of-living figure in these times, he was all the time risking what his pension would ultimately be, if what Senator Cummins pointed out is correct. He was taking the risk that it would go below the figure that he would normally consider fair at the period he was going on pension but he was prepared to make that gamble. I doubt if from the taxpayers' point of view it is wise to stabilise the cost-of-living figure at 85. There is something final about that arrangement. While there is a stable Government here, the State employee is guaranteed a salary of a certain figure no matter how the taxpayers may be affected.

Might I ask the Minister a question? Can he tell us the number of people and the amount of money involved in these proposals?

I could not give the Senator an exact figure. Outside the three authorities I have mentioned— the Dublin Corporation, vocational education committees and committees of agriculture—it would affect very few.

Does it affect an institution like Grangegorman Mental Hospital?

Some of the officials there are, I think, affected by the Bill, but it only affects a very small number. It does not affect the bulk of the employees in Grangegorman.

I think this is a matter of principle. A number of people entered the municipal or public service and had a contract with these public authorities stipulating that their wages would be at a certain rate with a bonus fixed on a certain standard. In view of what is going on in the world to-day, the bonus must substantially increase in order to maintain the agreed wage. That being so, the Government step in and say: "Thus far and no further; instead of maintaining the original wage we are going to reduce it." I submit that that principle is entirely wrong. I think that Senator Dr. Rowlette put it very moderately and very clearly when he stated that the repudiation of that arrangement was tantamount to the breaking of a solemn contract entered into by public bodies with their employees, a contract recognised by legislation. We are dealing in the main with ratepayers' money in these cases, not, as Senator McEllin says, with taxpayers' money. The ratepayers are mainly concerned, and, as far as I know, there has been no outcry from public bodies or from the ratepayers in the various areas demanding that this change should be made. I am, consequently, rather suspicious that, if the Government got away with this proposal, they would try to impose the principle generally. That is not outside the bounds of possibility. Before they think of imposing this arrangement upon other sections of the community, I would suggest that they take a line from a neighbouring country in connection with what they are doing. If we are going to suffer as Senator McEllin mentioned, let us all suffer alike. Do not single out a comparatively small section of the community to try this out on them with a view to imposing it on a greater number in future. Let us bring all sections of the community into the suffering, and regulate profits, on essential commodities at any rate. If we are going to be thrust into this awful crisis and turmoil that we see all around us, what provision are we going to make to ensure that the burden will be shared equally by everybody? We, as Labour representatives, have no particular interest in this Bill, but we see in it a very dangerous principle. We are very bitterly opposed to the principle contained in the Bill, and we are going to vote against it now and on every stage.

It seems to me that the position is not by any means so simple as one might think from some of the speeches. I should very much like the Minister to deal more fully with the suggestion made here that there is a breach of contract involved in this Bill. I am not at all clear that that is so. If it is so, it might affect my attitude towards the Bill. As far as I can see, the position now is that the total income of the people of this country is going to be reduced while the cost of most commodities is being increased. I quite agree with Senator Foran that as far as is humanly possible, that reduction in income should be shared by all sections, but I would remind him that the attitude taken by the Prices Commission is that they will not allow prices to be charged which they have any reason to believe would increase the profits of any concern during this year. That creates very considerable difficulties for manufacturers and others, but that is the definite line that has been taken. What I am not clear about is this. If a Bill is passed fixing a rate of wages for certain persons, is that for all time to be regarded as a statutory contract? If that is the only ground on which this Bill is opposed, I do not think that such opposition is justified, because you might as well say that if I start business and the State allows me to work my employees for ten hours a day at a certain rate of wages, and if the State afterwards passes a Bill reducing the working hours to eight per day for the same rate of wages, then that is a breach of contract, because the law has been deliberately changed to my loss. If, however, a person accepts an appointment for a specific period at a certain agreed rate, and these rates are changed before that period has expired, I would say that that is a breach of contract. If I, as an employer, engage a person for a certain number of years at certain specified terms, I should stand by that arrangement whether I lose by it or not. But if you are going to provide that under no circumstances can conditions of employment be changed, that is entirely a different question. I should like to hear the Minister deal with this matter, because I am not at all clear on what his views are.

Most of us have had to face this question of a cost-of-living bonus, as it is called. Those of us who remember the last war, what was called the Great War—I think the name will have to be changed henceforward—will recall that during that period, you simply had inflation and prices mounted up. So did wages and you simply agreed to the cost of living without any question at all. Prices for all classes of materials were increasing and an employer did not mind increasing a wage of £2 to £5 as long as he was getting a proportionate increase for his goods. The position now, because of our economic relationship with England, whether we like it or not, is very different indeed. While there has been a very considerable increase in prices of certain commodities—although, perhaps, not many—and some lesser increases in prices of other commodities, these increases have not occurred to anything like the same extent, and I think there is no possibility whatever of large profits being made or of profiteering taking place. I do not think there is any serious danger of that occurring, and at any rate the State is doing its best to prevent it.

The conclusion I have come to is that, where the rate of wages payable is just bordering on the standard of existence, and where you have people being paid the lowest standard of wages, no matter what happens to the rest, you will have to agree, as a matter of national interest, to an increase in that rate of wages, but it should only apply to those who are on the lowest rates of wages. So far as I can see, however, there is no ground for anticipating an increase in prices of commodities or in profits in this country which would justify an increase of wages except in the case of those who are paid on the lowest scale of wages, because I do not think we could stand it as a nation.

At the very outset I should like to dispose of this matter of a contract that has been talked about here. There is no such thing as a contract in the ordinary sense between the officials of local authorities and the local authorities. That was settled in a Monaghan case—I forget the name of the case, but I think it was Thistle— where it was decided that local authorities had full discretion with regard to pay. They have, of course, certain statutory rights, but those rights have been changed from time to time in the past. Senator Douglas has given us an example of that: where you change the hours of work and so on. Now, take the position that we have at the moment. You have here an ascending spiral of prices and costs setting in in the country, and where is that spiral going to stop? Take the position up to last month. The bonus rate was 85 at the beginning of this month—ten points higher than last December—and it is time to stop somewhere or to stabilise the position somewhere, because the fact is that other sections of the community are going to suffer, and I believe that civil servants themselves are going to suffer in the end, by the continuance of this spiral. Is it suggested that they did not foresee that if at some time an emergency of this sort should arise something would be done to stop this thing going up, or are you going to say that it can continue going up and up and that the spiral is never going to stop? This Bill must be regarded as an emergency Order, because it is following upon an Order of the Minister for Finance dealing with the civil servants. Naturally, when that Order is brought to an end by the Minister for Finance, the position of the Minister for Local Government and Public Health would be untenable if he were to try to keep static the position with regard to the officials of local authorities after the civil servants had been restored to their previous conditions.

I only want to deal with the matter from the point of view that it is not a question of any injustice. It is following the position that has been adopted with regard to the civil servants. The bonus of the civil servants has been subject to review from time to time. You had a review of the original terms in England, which by way of "super-cuts" fell heavily on the people with a salary of over £500 a year. There was no suggestion, even then, that there was a breach of contract with the people affected, because they knew that, if the bonus operated under certain conditions, these conditions were subject to review from time to time, according as circumstances might change. As I have said, the best example that could be given was the one given by Senator Douglas, where you can change a contract very much against the employer, and which might be very much against the local authorities also, as employers, such as in relation to the hours of working, and nobody can complain that these things might not be good or right in the given circumstances. This is purely an emergency measure to deal with the position with which we are now faced. We have to step in somewhere and stop this spiral, because if it is not stopped a very serious and dangerous economic position will be created here.

Before the Minister concludes, perhaps he would explain in what way this Bill, if enacted, will interfere with Section 99 (3) of the Vocational Education Act of 1930, which seems to safeguard the position and conditions of servants employed under that Act.

They are not protected in this. They will be dealt with the same as the others, and the bonus will be stabilised at 85.

In defiance of the previous Act?

But there is no proposal in this Bill to repeal or amend any Act?

I do not think that is necessary.

Question put.
The Seanad divided: Tá, 27; Níl, 6.

  • Brennan, Joseph.
  • Colbert, Michael.
  • Concannon, Helena.
  • Corkery, Daniel.
  • Douglas, James G.
  • Goulding, Seán.
  • Healy, Denis D.
  • Honan, Thomas V.
  • Johnston, James.
  • Keane, Sir John.
  • Kehoe, Patrick.
  • Lynch, Peter T.
  • MacCabe, Dominick.
  • McEllin, Seán.
  • MacFhionnlaoich, Peadar
  • (Cú Uladh).
  • McGillycuddy of the Reeks, The
  • Madden, David J.
  • Magennis, William.
  • O Buachalla, Liam.
  • O'Donovan, Seán.
  • O'Dwyer, Martin.
  • O'Neill, Laurence.
  • Nic Phiarais, Maighréad M.
  • Quirke, William.
  • Robinson, David L.
  • Ruane, Thomas.
  • Stafford, Matthew.

Níl

  • Campbell, Seán P.
  • Cummins, William.
  • Foran, Thomas.
  • Lynch, Eamonn.
  • Rowlette, Robert J.
  • Tunney, James.
Tellers:—Tá: Senators Goulding and O'Donovan; Níl: Senators Campbell and Cummins.
Question declared carried.
Agreed: That the remaining stages of the Bill be taken now.
Bill considered in Committee.
Sections 1, 2, 3 and the Title agreed to.
Bill reported without amendment.
Question—"That the Bill be received for final consideration"—put and agreed to.
Question: "That the Bill do now pass."
The Seanad divided: Tá, 26 6; Níl, 6.

  • Brennan, Joseph.
  • Byrne, Christopher M.
  • Colbert, Michael.
  • Concannon, Helena.
  • Corkery, Daniel.
  • Goulding, Seán. Healy, Denis D.
  • Honon, Thomas V.
  • Johnston, James.
  • O'Callaghan, William.
  • O'Donovan, Seán.
  • O'Dwyer, Martin.
  • O'Neill, Laurence.
  • Nic Phiarais, Maighréad M.
  • Keane, Sir John.
  • Kehoe, Patrick.
  • Lynch, Peter T.
  • MacCabe, Dominick.
  • McEllin, Seán.
  • Mac Fhionnlaoich, Peadar (Cú Uladh).
  • Madden, David J.
  • Magennis, William.
  • Quirke, William.
  • Robinson, David L.
  • Ruane, Thomas.
  • Stafford, Matthew.

Níl

  • Campbell, Seán P.
  • Cummins, William.
  • Foran, Thomas.
  • Lynch, Eamonn.
  • Rowlette, Robert J.
  • Tunney, James.
Tellers:—Tá: Senators Goulding and O'Donovan; Níl: Senators Campbell and Cummins.
Question declared carried.
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