Seanad Éireann debate -
Wednesday, 19 Nov 1947

Vol. 34 No. 12

Superannuation Bill, 1947 ( Certified Money Bill) —Committee and Final Stages.

An Leas-Chathaoirleach

The next Order is the Superannuation Bill, 1947, in Committee.

There is a recommendation to this Bill which has caused the Cathaoirleach some anxiety. He was given to understand that it is the first case of a recommendation to a Money Bill proposing an increased charge on State funds since the Seanad was reconstituted in 1938. While there is a discretion given to the Chair under a Minute of the Committee on Procedure and Privileges in regard to amendments to non-Money Bills proposing increased charges, there is no provision either in the Standing Orders or in the Minute of the Committee on Procedure and Privileges in regard to recommendations on similar lines in respect of certified Money Bills.

The Cathaoirleach, accordingly, decided he would summon a meeting of the Committee on Procedure and Privileges to consider the matter and that meeting was held this morning. The matter was very fully discussed but, unfortunately, owing to the time available, a decision was not reached. While the matter is, therefore, in a sense sub judice, he will not avail of the discretion which has been given to the Chair in regard to “money” amendments—under the Standing Orders “recommendation” and “amendments” are, apparently, interchangeable terms—and he is accordingly allowing this Recommendation to be discussed by the House. As was clearly understood by the Committee, his action in doing so is not to be regarded as a precedent and the matter will come forward for further discussion and decision before a similar case arises.

Sections 1 and 2 agreed to.

NEW SECTION.

Mr. Douglas

I move recommendation No. 1:—

That after Section 2 a new section be there inserted as follows:—

3.—(1) Where any annual allowance granted under the Superannuation Acts was originally granted subject to a provision that such allowance or any part thereof shall be periodically reduced by reference to any reduction in the index number, such allowance or the appropriate part thereof may be periodically increased by reference to any corresponding increase in the index number and such increase may be paid notwithstanding the fact that the total of such allowance or allowances as so increased exceeds the total of the allowance or allowances originally granted.

(2) For the purpose of this section the index number shall be deemed to be not greater than an index number of 270.

(3) The provisions of this section shall have effect in relation to the payment of any allowance to which this section applies in respect of any period commencing on or after the 1st day of November, 1946.

(4) The provisions of sub-section (4) and sub-section (6) of Section 2 shall apply to payments to which this section relates.

I should like to say that, following the discussion that took place at the meeting of the Committee to-day and the statement made from the Chair, I quite accept the view that, whatever is finally decided, this should not be regarded as a precedent, and, in moving the amendment and arguing for it, I think it right to say that I do not propose to divide the House on it. The main reasons for the amendment were set forth fairly clearly by me a week ago. Before giving a brief resumé of these arguments, I should like to clear up the question as to what is the nature of a Civil Service pension and why it is paid. When speaking on this matter last Wednesday, I stated that, for income-tax purposes, a Civil Service pension was treated as earned income by the Revenue Commissioners, and the Minister alleged that it was so treated simply because pensioners had pressed to have it regarded as such and had obtained a concession on the point. I am at a loss to understand where the Minister got his information. I can assure him that it is quite incorrect.

Speaking on this Bill in the Dáil on the 30th October (Parliamentary Debates, column 1214) the Minister said:—

"It is not a social service. They can draw the pensions whether they are rich or poor. We have small pensioners who have other means of income and we have large pensioners who have no other means of income. I do not believe anybody wants us to establish a means test for ex-State servants, seeing the violent objections there are to a means test in relation to the ordinary social service payments that we make."

It would seem that the Minister had no clear idea in his mind as to what is the nature of a pension or why it is paid.

The principle of differentiation between earned and unearned income was not introduced into the income-tax code until 1907. Long before that time, it was the custom of many large concerns to pay pensions to their retired employees, and it was necessary for the income-tax authorities to determine the nature of such payments. If they were made on philanthropic or charitable grounds they would not have been admissible as legitimate expenses in computing the profits of the concerns in question. If, on the other hand, they were pay ments for services rendered they were, of course, legitimate business expenses, and as such admissible as proper deductions in determining the profits of the employers for the purpose of assessment. In fact, they were always regarded as payments for services rendered and as falling into exactly the same category as wages and salaries. How could it be otherwise? In effect, the employer said to each new entrant into his service: "In return for your services you will get a salary of so much while you are working and a pension when you retire," and in this country to-day, when the Civil Service Commissioners advertise a competition for established posts in the Civil Service, the advertisement, having stated the scale of salary, invariably adds an intimation that the posts in question are pensionable under the Superannuation Acts.

When Mr. Asquith introduced into the Finance Bill of 1907 a provision for granting a measure of relief in respect of income-tax on earned income there was never any question as to how pensions should be treated. The relevant portion of the definition section in the Act was as follows:—

"For the purposes of this section the expression ‘earned income' means—

(a) any income arising in respect of any remuneration from any office or employment of profit held by the individual, or in respect of any pension, superannuation, or other allowance, deferred pay, or compensation for loss of office, given in respect of the past services of the individual."

I ask the House to note particularly that the word "pension" is linked up immediately with remuneration from an employment and that a pension is expressly recognised as—

"given in respect of the past services of the individual."

Of course, a pension is a payment for past services and nothing else, and therefore no question of a means test arises. When you are paying a man for services rendered you are concerned simply with the value of his services, not with the amount of his income from other sources. The Minister himself will be legally entitled to a pension when he ceases to hold office, and quite properly entitled to it. That is one of the ways in which the State remunerates him for his work as a Minister over a period of years. There will be no means test attached to it, and it will quite properly be treated for income-tax purposes as earned income. It will be earned income. He is earning it here and now. I hope I have established to the satisfaction of this House and of the Minister that a retired civil servant's pension is remuneration for services rendered, that it is of exactly the same nature as the salary he received during his service, and that in fact it is delayed salary and nothing else.

It is clear, I think, that up to now the Minister has had no very clear conception as to what a Civil Service pension is and why it is paid. The lack of clarity in the mind of the Minister on this point has led inevitably to a wrong outlook on the question of the Government's responsibility in relation to Civil Service pensioners. In reply to Deputy Norton in the Dáil on the 30th October the Minister said (Parliamentary Debates, column 1212):—

"The position is that the State has not been able to guarantee the value of its currency in goods to any section of the community",

and later (column 1213) he said:—

"If we were to step out of that particular class of civil servants (i.e., the pensioners to whom this Bill relates) and undertake to revise the basis of the pensions of civil servants who retired before July, 1940, there are lots of other classes of the community who say they have the same right to full compensation because of the increase in the cost of living."

He put forward the same type of argument in this House last Wednesday.

The position, therefore, emerges that, in the mind of the Minister, a civil servant who has retired on pension is aligned with the ordinary private citizen who has never been in the service of the State. The State has certain responsibilities towards all its citizens. Its responsibilities towards its own former employees is no greater and no less. And so we find that whilst the Minister recognises the increased cost of living as a ground for increasing the remuneration of men still in the service, and quite rightly adjusts the salaries, he claims that the increased cost of living affords no ground for adjusting the pensions of men who retired before 1940.

Last week I gave as an example the case of a pensioner who retired in June, 1940, on a pension of just over £3 a week, and pointed out that if an index figure of 270 were adopted in his case his pension would be about £4 4s. 0d. a week, an increase of a little over 30 per cent. The Minister opposed any such increase. But last June the Minister introduced the Ministerial and Parliamentary Offices (Amendment) Bill, now an Act, which, by reason of the increase in the cost of living, increased the remuneration of Parliamentary Secretaries by 30 per cent., i.e., from £1,200 to £1,560 a year. In the mind of the Minister there is no inconsistency between the State's treatment of the Parliamentary Secretary and its treatment of the Civil Service pensioner. The Minister's position, as I understand it, is that the State, as employer, has special responsibilities towards the former. The latter is now just an ordinary private citizen, and, whilst the State must do what it can to maintain the value of its currency, if it fails it is entitled to pay his pension in depreciated currency and is not to be asked to make any adjustment.

The point I want to make, however, is that the Minister's entire case collapses because it ignores the essential nature of the pension, or rather pensions, because in fact each pensioner gets two, one being a proportion of the salary, which is fixed, and the other being a proportion of the bonus, which is variable, to which the pensioner was entitled at the time when he retired. I have established that what the pensioner is receiving from the State is simply further remuneration for past services. The pension based on salary is delayed salary. The pension based on bonus is delayed bonus. This being so, the Government still has an obligation in justice towards the pensioners, which is precisely the same as its obligation towards civil servants still in active employment.

Ministers are, of course, trustees for the general body of citizens. In some sense, their position approximates to the position of the directors of a public company in relation to the shareholders or the position of the trustees of a charitable institution towards its beneficiaries. But the directors may not inflict injustice on their employees for the benefit of the shareholders and the trustees may not inflict injustice on their employees for the advantage of the beneficiaries.

The State should be a model employer, yet the pensions awarded to the men for whom I am pleading are subject to the utterly unjust condition that if the cost of living falls the pension will be reduced, but that, however much the cost of living rises, the pension will never go up, and this, although, as I have said, there are two elements in the pension and one of the two, called the "additional annual allowance", is expressly related to a cost-of-living bonus.

Let me summarise very briefly what I said last week as to how this rather amazing position came into existence. A Superannuation Act passed nearly 90 years ago provided for the granting of fixed pensions related to length of service and made no provision for any variation in the amount of the pension as originally granted. The completely stable economic conditions, which rendered it unnecessary to provide for any variation in the amount of a pension, came to an end with the 1914/18 war, and the bonus scheme was introduced. In 1922, when the cost of living was very high, but was falling rapidly, it was felt that the granting of fixed pensions by reference to the existing high cost of living was unjust to the State and a new scheme was announced in the House of Commons which was to provide that all pensions granted for the future were to be revised both upwards and downwards from time to time by reference to rises and falls in the cost of living.

The Superannuation Acts gave no authority for revision upwards. No one at that time foresaw, or could be expected to foresee, the recent world war, and it was expected that the cost of living would continue to fall until stable conditions, at somewhere approximating to the cost of living as at July, 1914, were reached. It was considered unnecessary, accordingly, to legislate to provide authority for any increase in pensions, and the scheme as finally announced by the Treasury provided only for decreases. No really serious hardship was suffered by pensioners until about 1938, when the recent world war began to cast its shadow before it, but very grave hardship has been suffered since through this evil feature of the pension scheme, which came into existence simply by accident, and which can now be eliminated if the opportunity which this Bill offers is taken.

I want to put one final consideration to the Minister. I suggest that, if it were his duty to prepare a completely new scheme for Civil Service pensions, and anyone proposed to him that he should bring forward a scheme to provide that pensions should be reduced when the cost of living fell, but should never be increased, however much the cost of living rose, he would reject the proposal without hesitation because it would offend his sense of justice, as it would offend the sense of justice of every member of both Houses of the Oireachtas. As I have shown, this utterly unjust provision has crept into the pension scheme in a purely fortuitous manner, and I suggest that, if the Minister feels that he would flatly refuse to be responsible for introducing such a provision, it is incumbent on him now to take the opportunity of removing it which this Bill affords.

The form of the recommendation will probably need adjustment and if by any chance it was accepted I recognise that other consequential amendments would be necessary. I do not think it necessary to go into all the details because I think this recommendation makes clear what I have in mind and is sufficient for the purposes of the debate.

Mr. M.J. Ryan

I support this recommendation. The recommendation is set out in rather involved language and may not be easily understood by the ordinary person but behind it lies a very important principle. We can boast that we have in this State a most efficient Civil Service. In my opinion, the best brains of this country are in the Civil Service. Civil servants have had to pass highly competitive examinations and they are engaged by the State at rates of pay which might be described as cheap labour having regard to their qualifications, their training, their education and their efficiency. The State, therefore, owes a duty to its efficient servants. When a young man is starting off in life and has to select a career for himself a career in the Civil Service appears a rather tempting one because there is held out the hope that at the end of a number of years' service he will have security in his old age. I say security and by security I mean a pension that will keep him from penury when he is no longer able to work.

I think it will be generally agreed that there are men in the Civil Service to-day drawing moderate salaries from the State who, if they had embarked on professional or business careers, would have amassed a considerable amount of money to provide for the rainy day, and for their old age. Therefore, the position of the civil servant must be regarded as a whole. We cannot divorce his moderate remuneration from his pension. I think it can be well said that the pension or superannuation is merely deferred pay. As Senator Douglas pointed out, the question of fixed remuneration, and the question of a fixed pension, did not present any difficulty when economic conditions were stable. But the cost-of-living figure was introduced when economic conditions became unstable. That shows that the fixed salary and the fixed pension can no longer remain. I cannot see why, if superannuation is regarded as deferred pay, and the pay continues until the civil servant dies, deferred pay should not be treated in the same way as pay received by a civil servant while actually serving the State.

The idea of the introduction of what might be called the overriding maximum as regards bonus does not do justice to the person who is drawing deferred pay. The cost-of-living figures published from year to year speak for themselves. It is clear, once the principle was introduced of a bonus being added to the basic salary, that that principle must be carried to its logical conclusion. I say that it is unjust and unfair to men who have served the State during their lives for very moderate remuneration that, in their old age, they should find themselves on the brink of penury, not through any fault of their own— because they had shown that during their lives—but because economic conditions have changed; that the State, having reaped the benefit of their services, should refuse to do the right thing.

Therefore, whether this recommendation imposes a charge on the Exchequer, or whether it is not being pressed now, or the Government refuses to accept it, I think the principle embodied in it should be recognised as merely the essence of justice to civil servants who are now on pension, with a bonus on a cost-of-living of, say, 150 when the cost-of-living figure is over 300. I cannot see any answer to this recommendation, except the answer which no doubt the Minister will give: "Where am I going to get the money?" That is an answer he could give to many other proposals not half as worthy as this one. He could say to an unworthy proposal: "I have no money for it, I must reserve it for a worthy proposal." This is a worthy proposal.

Whatever the fate of this recommendation now, I trust the Government will reconsider the whole question of pensions for civil servants, that is, that they will regard the pension at all times as merely deferred pay, that a man who is on pension is really receiving pay, and that that pay should be commensurate with the cost of living at the time at which he receives it. Most of the pensioners cannot live very long. The bonus on basic salaries has been consolidated. This recommendation will apply only to a limited number of ex-civil servants but, at all events, it will perhaps lengthen their lives by providing them with more money to meet their needs. It will lengthen their lives by causing them to cease to worry over the ingratitude of the State that had their services instead of finding themselves thrown on the scrap heap.

Business suspended at 6 p.m. and resumed at 7 p.m.

Professor Johnston

I would like to add my support to the very able case that Senator Douglas and other Senators have already made for this recommendation. I do not suppose I will succeed in adding anything to the very complete factual and intellectual case made by my predecessors, but I do wish to add my moral support, for whatever it may be worth, to the case which they have made. I think that if the Minister persists in going through with this Bill in its present form he will do a serious injustice to a number of very worthy citizens. I think, moreover, that he will probably do that unintentionally and unwittingly, and in the result there will be a reflection not, perhaps, so much on the Minister himself as on the argumentative and persuasive powers of people like Senator Douglas and myself.

I would like to approach the consideration of this matter from the point of view that it is our duty to try and persuade the Minister to alter his view and to take a view more in accordance with what ordinary people like ourselves regard as the equities of the case. As far as I can see, there is no distinction in logic, equity or reason as between the case of civil servants who retired after the 1st July and those who retired before the 1st July, 1940. Therefore, whatever is applicable to those who retired after that date ought, equally, to be applicable to the others who retired before that date Further, the Bill could easily be rounded off so as to include this whole category of civil servants, namely, those who during their working lives have their pay partly determined by a variable element which reflects the cost of living. Their pensions are also affected by the same consideration of that variable cost of living. Therefore, that category of civil servants seems to me to be a rounded off category, and whatever decision is come to with reference to that category does not imply any commitment or in any way prejudice the case with reference to those other classes of public servants whose emoluments during their working lives, and their pensions when they retire, are not influenced in any way by this variable element based on the cost of living. The Minister could safely extend the application of that principle contained in the Bill to those who retired before the 1st July, 1940, without necessarily prejudicing himself with reference to the other categories of public servants.

The dominant fact that seems to me to govern this case is that the pensions received by civil servants are, in fact, deferred pay, a continuing payment by the State for services rendered during their working and active life. As the Bill now stands, there will be an obvious inequality, because people of the same grade and quality in the Civil Service who retired before a certain date in 1940 and those who retired after a certain date in 1940 for essentially the same services will, in the years of grace ahead of us, continue to be paid at entirely different rates. It seems to be quite unreasonable and inequitable that people should be paid different rates for rendering the same quality and grade of service. I would like to emphasise these points and also the fact that what I have said is mainly with the view of underlining what I regard as the outstanding points in the case that Senator Douglas and others have made much more effectively.

Mr. Summerfield

In rising to say a few words on this Bill I will endeavour not to travel over the ground already so well covered by previous speakers. I want to say, at the outset, that I have sympathy with the Minister for Finance who is a constant target for all those who criticise the amount of taxation they are called upon to pay. In this debate he is being asked to increase the amount of State expenditure which inevitably must increase taxation. It looks to me, on the other hand, that the basis of the case made for civil servants of the class described by Senator Douglas in his motion could be said to rest on an action that might be described as tossing with a double-headed penny. The State in this case tossed the penny and no matter what way it came down the civil servants were bound to lose. Their pension and bonus would decrease if the cost of living went down but it would not increase if the cost of living went up. Without making a long speech I think that the average man will say that that is an unfair situation. The Minister indicated that for him it was not merely a matter of a few thousand pounds per annum, but that there were bigger issues involved. If there is a big principle involved then the case now being made for the civil service pensioners is not unique, as I think it is. I was very much impressed by the case made by Senator Douglas. He and the other speakers had one thought and that was that this is a case of injustice, and that an injustice is being done. If it is injustice and the Minister is convinced, then no matter what it costs, the injustice should be removed, but if the Minister can get rid of the idea that is in my mind at the moment, if he can show that he was not tossing with a double-headed penny and that, in fact, it was an ordinary penny, and that the toss was quite fair, I am prepared to be convinced. We all know it is the general desire of all sections of the community to be no worse off than before the war. The Minister has indicated he cannot restore to every member of the community the pre-war purchasing value of the £, but I think at the moment that something is expected of the Minister to clear away the doubt that exists that this particular class of civil service pensioner is labouring under an injustice and that it can be removed at a cost of £2,000.

Sir John Keane

I should like to support this plea, and I agree with what Senator Summerfield has said. If it is a question of justice the cost should not count. I do not want to make comparisons in expenditure at this stage, but I think the House will know that later on we will be asked to write off something like £500,000, money spent on mineral exploration. Similarly we have been asked in the past to write off substantial sums of all kinds lost on ill-starred commercial State enterprises. When it comes to a question of human justice the cost should not count and that seems to be the view which comes from all quarters of both Houses.

Pádraig Ó Siochfhradha

An cás atá ag an Aire i dtaobh rud éigin a dhéanamh ar son na ndaoine a chuaigh ar pinsean tar éis 1940, is é go ndearna an Rialtas de ghníomh cinnte díombáidh nó laghdú ar thuarastal nó ar chearta pinsin na ndaoine seo. Tá sin ceart agus sáthach go leor ach ní hé sin an rud a gcuirfidh an pobal a n-aire air. Is é go cinnte an rud a d'airigh an pobal leis féin: má tá leasú le déanamh ar cheart pinsin daoine ón mbliain 1940 i leith, ná fuil an ceart céanna ag na daoine a fuair pinsean níos lú roimh 1940 agus de thairbhe na seirbhísí céanna? Is dóigh liom go mbeidh sé an-deacair dúinn-ne a bheith sásta in ár n-aigne gur ceart dúinn an leasú a dhéanamh don dara cuid agus gan smaoineamh ar na daoine a chuaigh ar pinsean roimhe sin.

Nuair a bhí Bille eile os ar gcomhair anseo, do labhras ar na seanmhúinteóirí scoile. Ba mhaith liom iad sin a lua arís mar dhaoine gur cóir agus gur riactanach leor-ghníomh nó faoiseamh a thabhairt dóibh. Ní hamhlaidh atá mé ag ceapadh go n-athrófar an Bille anois, ach bhféidir go mbeadh tionchur éigin in aigne an Aire ar an gceist sin tar éis dó na cainteanna agus na tuairimí anseo a chlos, seachas na tuairimí a bhí aige cheana mar gheall ar an dáta 1940. Ba mhaith liom féin an dáta sin a scrios amach ar fad as an mBille.

Mr. Aiken

Instead of my mind changing, Senator Ó Siochfhradha has made it more certain that I was doing the right thing in confining the benefits of this Bill to the civil servants who retired after 1940. He pointed out that he would not be satisfied with dealing only with Civil Service pensioners whose condition is not improved by this Bill but would go on to deal with pensioned teachers, and there are a lot of other classes of State pensioners, in respect of whom the total pension bill amounts to about £2,400,000, whose pensions would have to be improved if we went any further than we are going in this Bill. The reason that 1940 is set down in this Bill, that improvement is granted to civil servants who retired after 1940, is that it was only the civil servants who retired after 1940 who were injured by the standstill Order in regard to their pensions. The State interfered with the contract it had with civil servants in regard to their pay, that their pay would rise in stated proportions to the cost of living and that their pensions, on retirement, would be fixed in relation to their salaries so based. It was a question of justice in this case. The State interfered because of the conditions of the emergency, breaking a contract with the civil servants and we are now taking this opportunity, immediately after the abolition of the standstill Order, to put the civil servants who retired since 1940 in no worse position than they would have been in, had it not been for the operation of that standstill Order.

To go back to the civil servants who retired before 1940 for a moment, it is not true to say that their pension was subject always to a decrease and could never be increased again. When a civil servant retired, his pension was fixed in relation to his salary at that date or the cost of living at that date. If the cost of living fell, the bonus portion of his pension fell, but if it fell 50 points and recovered 30 or 40 points again, his pension rose until it reached the point at which he retired. If it went up further than the point at which he retired, his pension would not increase.

Senator Douglas and other Senators are very strongly of the view that pension is deferred pay. I think it is a little more than deferred pay. From one point of view, it is a payment toward an insurance annuity payable because both the State and the civil servant made a contribution each year during his pensionable service. If the State 15 or 20 years ago had no scheme of pensions for civil servants, the State might have done as numerous business concerns do when they want to provide pension schemes for their servants. They go to an insurance company and say: "Each man in our employ is prepared to give you a certain contribution out of his wages and we are prepared to supplement that by an annual sum," and they bargain as to the pension to be obtained by employees on retirement for as long as they live. If the State had made such an arrangement 20 years ago, the insurance company would be liable for any increase at present, and I have never heard of any insurance company guaranteeing its payments in relation to the cost of living, the price of gold, of wheat or of any other commodity.

If you pay a premium, the insurance company undertakes to give you a certain number of legal tender notes each year from the year in which it contracts to pay. What the Senators are asking the State to do in this case is, instead of undertaking to pay civil servants a certain number of legal tender notes each year after retirement, to give them a certain amount of wheat, of beef and of other commodities; in other words, to guarantee that their £ in relation to the cost of living will always represent the same amount. That could be done. I am not saying it could not be done. It can be done for a section of the community. The smaller the section the easier it would be to do it. If we take the civil servants, as Senator Douglas wants us to do, and concentrate altogether on the pre-1940 Civil Service pensioners, the Seabhac will come along and want to add the school teachers and someone else will want to add somebody else and we will get very quickly to the time when all State pensioners get the value in goods in the present year represented by the amount of money they were promised from the State in terms of legal tender notes and the value at the date on which they gave the service. No sooner would we have done that for State servants than a lot of insurance people will come along and say that they too should be guaranteed.

If we leave pensioners for a while and take Senator Douglas's definition of a State pension as deferred pay, what about the civil servants who have no pensions, who gave service to the State, some of them, as long as and, in many cases, longer than, those who are awarded pensions? Are we to go back to men who retired without pension 20 years ago and say: "The State gave you £500 a year and now we want to give you another £100 in respect of each £150 that we gave you at that time in order to make up"? I do not see how this particular principle can be admitted as a question of justice in relation to any single section of the community because, if it is a question of justice in relation to one section, it is a question of justice in relation to all sections and the State cannot guarantee all. They can guarantee to give them money because money is easy to make but it is what money represents, or should represent, that it is hard to provide, and the only way that we can guarantee the community as a whole as high a standard of living as they had in 1938 or any other year that you like to take is that we have the same production and, if we want to guarantee each section the same standard of living, not only have we to have the same production but, if we could manage it at all, the same distribution of that production.

I cannot admit that there is a question of justice. The State, as far as justice is concerned in this issue, is doing justice by restoring to civil servants who retired and with whom it broke contract the position they would otherwise have had. In respect of other civil servants who retired pre-1940 the State is fulfilling its contract with them and I do not think we can go any further in regard to civil servants or teachers without dealing with the whole of the pensioners who are drawing pensions from the State, apart from old age and blind pensioners, whose total pensions amount to about £2,400,000 a year.

Mr. Hayes

I do not want to detain the House on this matter but the Minister has given us an excellent example of special pleading. He began with the appeal made by Senator the Seabhac for the teachers and he mixed up the teachers and the civil servants. The Minister for Finance, of course, could not possibly be ignorant of the fact that the civil servants and teachers are on two entirely different footings. He knows that extremely well. Senator the Seabhac did not appreciate that in Committee on this Bill he had no longer an opportunity of arguing the teachers' case but the teachers' case is of a different nature from the case of these particular civil servants and the Minister, no doubt, knows that. I am, of course, entirely in favour of the teachers but they have to be argued after an entirely different fashion from the argument you would apply to these particular people with whom Senator Douglas is concerned in this recommendation.

This is not a case of how the State is going to treat pensioners generally, but of how the State is going to treat a very small and very diminishing number of pensioners who were its own employees and whose condition is not contrasted with teachers or with old-age pensioners or with anybody but with their own colleagues in the Civil Service whose pensions are now being fixed by this Bill, while a small section of them are being left out. It concerns the position of the State as an employer. It is not an excuse for me to say that I am prepared to settle everybody in my employment except a particular person and that I will not do him justice because I cannot get justice done all round in the world.

That is what the Minister is arguing. He may have a good case but he did not make it this evening. The Minister's argument is that, because he cannot make everything right everywhere, he will not deal in a particular way with this very small number and very diminishing number of Civil Service pensioners. The principle is, what responsibility has he to these pensioned officers? He repeated to-day his point about making the value up in terms of goods, in terms of purchasing power of wheat, coal and butter. Nobody is asking him to make these particular Civil Service pensioners' pension equal in purchasing power to what it was in 1939 or 1936 or whenever they went out. In fact he is not doing it for the people who are dealt with in the Bill. He is not purporting to do that in the Bill for the people with whom he is dealing. Nobody asked him to do that. What is suggested is that a certain small number of people who retired before 1940 should get the same treatment as those who retired later. Is it not the case that if they were in England or Northern Ireland they would get the same treatment?

Mr. Aiken

Not quite.

Mr. Hayes

Not quite, but very nearly. I understand that there was a British Act in 1934 which had certain effects in increasing pensions and a further British Act in 1944 which also applies to the North.

Mr. Aiken

If the Senator is going to go into all that, the British civil servants were stabilised in 1935 and since that their pension and salaries did not go up, with the exception of a very small percentage that was given during the war.

Mr. Hayes

Yes, but at any rate they are better than these.

Mr. Aiken

They are not, no.

Mr. Hayes

The standstill Order of which the Minister speaks, in 1940 affected the salaries of existing civil servants, but the cost of living affected the pensioners and there was a standstill Order on them without any action of the Minister at all by the terms on which they went out. The analogy of insurance companies is not sound either. No insurance company insures a person and guarantees him a pension which will go down with the cost of living beyond a certain point but which can only come up to a certain point. They do not do it at all. The Government made a particular kind of contract with these civil servants and they should fulfil it.

Indeed, Sir, what strikes me about all this discussion is that it is doubtful if I am right in using the word "contract" at all. I do not think the civil servants have any contract. It would appear to me that civil servants have no contract of any kind now with the Minister for Finance. They are entirely at the mercy of the Minister himself or the Parliamentary majority of the moment and no principles of any kind apply either to their pay or pensions. That may be, perhaps, going too far. These particular people of whom we are speaking now retired before 1940. A person who retired then at the age of 65 is now 72. Those who retired earlier are older. They are a very small body and, obviously, a diminishing body and their case should be dealt with. Their position when they were civil servants was that they suffered reduction in the bonus as the cost of living went down. When the cost of living went down, their salary went down. They retired with the bonus down. Then the cost of living went up. They suffered a reduction of their salaries but could not get an increase of their pensions.

The number of people involved must be very small. The amount of money involved must be very small, and it seems to me that there is no defence whatever for stopping at 1940. If the Minister were being asked to bring in a large class of persons such as, for example, postmen or some large class of people, which would be very costly, and would be a continuing and perhaps an increasing burden on the State, that would be a different case. What he is asked to do here is to meet the case of a small number of people in respect of whom the only thing they can be certain about is that they are going to die. The charge the Minister would undertake would be a diminishing charge and it would have the effect, at any rate, of putting them all on the same level.

That is the whole case, Sir, and to talk about the purchasing power of the £ and giving them wheat and meat and coal and sugar is quite irrelevant and, as a matter of fact, to treat them on the same basis as the teachers also, I think, is quite irrelevant. It is a matter of dealing with a very small class of people and of putting them on the same level, not as the general public nor as a general class of pensioners but on the same level as the Minister is now putting their own colleagues. While I do not hope to convince the Minister, I think that is the proper way in which the matter should be considered.

Mr. Foran

Until now, no one has told us the principle covered by this amendment or the possible cost to the State. The Minister embraced all pensionable State employees in his reply, but I understand the amendment only applies in specific cases where people are subject to the downward trend in the cost of living where their pension would be reduced. Surely it is only right and proper, if those people are subject to the downward trend, that they should get the advantage of an upward trend? That is the amendment Senator Douglas has recommended. To introduce teachers and the various other State employees is only complicating the issue. If these people have to forego part of the pension when the cost of living goes down, surely their pension ought to be stabilised by increasing it when the cost of living goes up? It is not very creditable to this or any other Government that takes advantage of a downward trend and ignores an upward rise. If I can get from the Minister the amount involved and the numbers involved in this amendment by Senator Douglas, I am sure every member of this House would be in favour of the amendment.

I know we cannot change the Bill, but we can make a recommendation. I do not think the Minister has convinced anyone that this is going to disturb the relationship between the whole body of pensioners and the State. It is a very specific amendment and applies only to those who retired subject to the arrangement that their pension would be reduced. I take it that that is a comparatively small number and applies to those who retired quite recently. At any rate, I am sure it does not go back for a very long period and embraces only those who retired during the emergency. Consequently, when the Minister talks about the cost on the pension list of £2,400,000, if there is an injustice there that could be removed for the expenditure of a comparatively small sum of money in relation to that, the injustice ought to be removed. So long as these people are subject to a downward trend, they ought to get the advantage of the rise and while they do not get it they are labouring under an injustice.

I appeal to the Minister to study this amendment and tell us the numbers and probable cost involved. It does not affect pensioners who are not subject to these conditions. I take it that teachers and various other State pensioners went out on a set amount according to the cost of living—which is entirely inadequate now—but no proviso was made that they would have to sacrifice some of that if the cost of living went down. In their case, they have the advantage that their pension was stabilised, but in the case of these people it was not stabilised and was subject to reduction. Considering all the circumstances, I am convinced that these people are suffering under an injustice and are entitled to an increase to meet the increased cost of living.

Mr. Aiken

Senator Foran is trying his blandishments on me to-night by saying: "You need not do anything for the teachers, as they are getting what they contracted to get." If I fell for that type of argument, well, I should not be let out. The argument that other Senators here are putting up is that even though we are giving these civil servants what the State contracted to give them, it is not enough and we should give them more. Naturally, if we gave them more than the State contracted to give to civil servants because of their need, they would be followed by teachers' claims, very naturally and rightly, and as justly, in my opinion, and by all the other pensioners, whose total bill amounts to £2,400,000 a year. Senator Hayes said that all the pensioners over in England are better off than the pensioners over here. That is not a fact.

Mr. Hayes

These particular people would be better off, I think.

Mr. Aiken

No, some of them would not. When the British stabilised civil service salaries in 1935, the cost-of-living index figure in England was 145. There must be civil servants living in England who were pensioned at 145 and who have not got a single shilling extra. Those who were pensioned off here prior to 1940 are on a pension at the appropriate figure prior to the standstill Order. It might have gone even to 210. Those in England were pensioned at 145 and some of them have remained there since.

The scheme introduced in England to increase the pension had two legs. One was a means test whereby, if a civil servant could prove that his means were very small, he might get an additional annual grant. If he elected not to be subject to a means test and to stand on the other leg, he could get a 10 per cent. addition up to a certain amount, 7½ per cent. to a certain other amount, and then 5 per cent.; and over a certain amount, nothing. There must be fair numbers of civil servants in England who retired at 145 and have got no addition since. There is no breach of contract in not going back to the civil servants who retired before 1940. Before then there were retired civil servants living on different rates of pensions, who had the same salary and responsibilities. It all depended on the height of the cost-of-living index figure at the date of their retirement. That was the luck of the game. It was there and the State did not undertake to even them all out. It gave a certain undertaking when they became civil servants that grew up by tradition. I do not see if we were to go any further than we are going in this Bill regarding civil servants why we would not have in justice to take all the other State pensioners and deal with them on the same basis.

Mr. Douglas

It is quite obvious that the Minister and myself have a fundamentally different point of view. His attitude is, as expressed in his own words, that the position of men who retired before 1940 is what he calls "the luck of the game". To me it is a matter of right relations between employers and employees. While it might be implied, I never said that there was a breach of contract. I know perfectly well that what these men are receiving is what the law set out, but I say that the promise made at the time the law was passed, or immediately before it, and the conditions intended by the then British Government were that the pensions payable on that part of the remuneration called the bonus should be variable. It might rise or might fall. We have to take into consideration the circumstances of the time that the Bill was brought in. As has happened in this country, it did not fulfil exactly the promise made by the then Minister because nobody at that time believed it would rise.

Whereas legally the Minister is perfectly right in saying that these men have no legal claim, I say that the State as an employer should have regard to circumstances, apart from the question whether it is just or not. I do not admit that civil servants being treated according to what to me seems justice but which the Minister calls "the luck of the game", would in any way necessitate as of right a change in the pensions of other officers. It would be the same as if I said I would not treat my employees properly unless I knew that everybody else was doing so. I cannot look upon the position of the State in relation to employees as being fundamentally different from others with the best and highest standards. It is quite obvious from the Minister's remarks that we have a completely different point of view and I had better leave the matter there.

His argument regarding insurance societies shows that he does not understand my case. If the State as an employer chooses, as they sometimes do, to enter into an agreement with an insurance company providing for a retirement payment after a certain number of years the amount would not be reducible. The Minister said it would not be increased. It would not be increased, but it would never have been subject to such a condition. I dare say it would be possible to take out such a policy. Here we are dealing with normal cases. The Minister thinks that this recommendation would be on a par with such a case if conditions did not provide for a reduction. Remember that during the period these men were working their bonus was greatly reduced as the cost of living went down. When they retired the bonus was fixed on the basis of the then cost of living.

I say that the whole system of paying anyone a pension which would go down, but could not go up, is a rotten one. I do not believe the Minister would introduce such a system to-day. The position is that you have a number of persons who retired at 65, whose ages must now be from 70 years upwards, and most employers, unless they were bankrupt, would try to deal with them. Good employers would. Others would refuse if they had no money. The State is not in that position. It is for that reason I put down the recommendation. We have had a debate, and as the Minister has no intention of moving, and as we have a fundamentally different point of view, I ask leave to withdraw the recommendation.

Recommendation, by leave, withdrawn.

Sections 3 to 6, inclusive, and the Title agreed to.

Bill reported without recommendation.

Agreed to take remaining stages to-day.

Question—"That the Bill be received for final consideration"—put and agreed to.

Question—"That the Bill be returned to the Dáil"—put and agreed to.

Ordered: That the Bill be returned to the Dáil.