Dáil Éireann Debate, Wednesday - 3 February 2010
88 Deputy Kieran O’Donnell asked the Minister for Finance his views on whether performance bonuses for certain senior public servants should be regarded as core pay; and the reason he believes the suspension of performance bonuses should allow high paid public servants take a lower pay cut from 1 January 2010. [5681/10]
View answerPerformance-related pay, while not part of the basic salary of assistant secretaries and deputy secretaries in the Civil Service and of related grades in other parts of the public service, has formed part of their remuneration package since 2001, on foot of a recommendation by the review body on higher remuneration in the public service in its report No. 38. The review body recommended that 10% of the bill for the grades would be set aside for performance-related payments. The Government accepted the recommendation. Accordingly, while the payments to individuals varied, the average payment was 10% of salary. It was decided in 2009 that the scheme would be terminated, but this was subject to discussion on the implementation of the decision with the relevant staff association.
It is not the case that the reduction for the grades in question is less than for other grades. In applying the recent reductions in pay, the Government considered that account had to be taken of the reduction in remuneration for assistant secretaries, deputy secretaries and related grades arising from the termination of the scheme of performance-related pay. In plain language, we decided to look cumulatively at the losses suffered by public servants in 2009. Otherwise, the total reduction in remuneration for these grades would have been greater than those for other public servants, including higher paid groups at the level of Secretary General or above. This would have been particularly unfair, given that the review body noted in its report that uniquely among all the grades they benchmarked against counterparts in four other countries, the salary level for assistant secretaries and deputy secretaries grades was broadly similar or lower.
In these circumstances, the Government decided that the reductions should comprise both a reduction in the salary scale and the termination of the scheme of performance-related pay that was previously payable to the grades. The resulting adjustments, including the effect of the termination of the scheme of performance-related pay, produce significant reductions in remuneration of 14% in the case of the grade of deputy secretary and 11.8% in the case of the grade of assistant secretary. These reductions are higher than those applying to other groups at the lower salary levels and significantly higher than the minimum reduction provided for under the legislation of 5%.
It is a fact that the scheme of performance-related pay provided an average payment of 10% of salary, although there were variations in the amounts paid to individuals. Therefore, this was an intrinsic part of the pay package for the grades and the termination of these payments cannot reasonably be ignored.
The Minister appointed a review body on higher remuneration in the public sector to look at the salary scales of higher paid public servants. The body recommended an 8-12% cut in salary for higher paid public servants. It did this on the basis of their basic salary, but did not take their bonus into account. The Minister announced the budget on 9 December and brought in the Finance Emergency Measures in the Public Interest (No. 2) Bill 2009 on 15 December. In both cases, he basically stated that he would implement the recommendations of the review body. What change took place between 18 December, when the Bill went through the Seanad, and 23 December, when the circular was issued?
The Taoiseach stated that we cannot undermine the budget, while the reversing of budgetary decisions made two months ago is not an option. The decision to have an equitable system where the recommendations of the review body would be implemented was taken on 9 December. The Minister reversed that decision under the darkness of Christmas on 23 December via the circular. Furthermore, he will rely on section 6 of the Act, which states that exceptional circumstances will apply. When he spoke in the Dáil on 15 December, he stated that it was intended to exercise this power sparingly, and only when just and equitable. Does the Minister regard this as just and equitable? Why did the Minister not take on board the recommendations of the review body? Will the Minister explain what happened between Friday, 18 December, when this was put through based on the recommendation of the review body and Wednesday, 23 December, when the circular was issued? Surely this undermines the budget.
Nothing happened between Friday, 18 December and Wednesday, 23 December.
Clearly something happened.
Nothing happened. A circular may have issued during that period but it was on foot of a Government decision already taken. The Government considered all these issues when settling the legislation. Deputy O'Donnell referred to my contribution in the Houses. I was present during the debate on Second Stage and he correctly quoted from my speech. I was not in the Chamber during Committee Stage, when the matter may have been explored in greater detail. On Second Stage I drew attention to the fact that the section was there. The Government's view was that it was inequitable to that group to insist on a cumulative reduction in 2009 greater than that of the grade above it. The statistics on the changes in net pay from 2008 include the pension levy and taxation changes. A Secretary General at level 1 has had a net reduction of 33.9%, a deputy secretary general has had a reduction of 27.3%, an assistant secretary general -- the group we are arguing about -- has had a reduction of 24.9%, and a clerical officer has had a reduction of 7.3%. Let us be clear who is taking the reductions. In respect of their own salaries and arrangements, Members of this House should be aware how much misrepresentation can take place.
The Minister is working from the top down. What about the people at the lower end on €30,000 taking a 5% hit and those on €50,000 taking a 6% hit? How does the Minister regard this as just and equitable? When the Minister spoke on 15 December he referred to a substantial inequity. A substantial inequity is happening here, where the Minister is effectively ignoring the recommendations of the review body, which stated this category should take an 8%-12% cut. Once again, the small man is paying and this undermines the budget based on what the Taoiseach stated. How does the Minister regard these cuts as fair and equitable with regard to the lower paid?
What I regard as fair and equitable is to examine the cumulative position since 2008 for various grades. I will repeat them for Deputy O'Donnell. The reduction for a Secretary General at level 1 is 33.9%, 27.3% for a deputy secretary general, 24.9% for an assistant secretary general, 19.3% for a higher grade principal officer, which is the position we have as Members of this House, 16.8% for an assistant principal and 7.3% for a clerical officer. If Members of the House wish to devote themselves to the proposition that sections of the community can be entirely exempt from making a contribution to the economic crisis or the necessary savings that can be effected in the public service, well and good. However, these are the facts and they speak for themselves.
When was the Government decision taken?
