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Public Sector Pay

Dáil Éireann Debate, Wednesday - 4 July 2012

Wednesday, 4 July 2012

Questions (2, 3)

Mary Lou McDonald

Question:

2Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if he will review senior management pay across the civil and public sector under the provision contained within Section 1.6 of the Croke Park Agreement in advance of the Implementation Body’s Third Review of the Agreement. [32716/12]

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Mary Lou McDonald

Question:

5Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if he intends to revise pay caps implemented and overseen by his Department. [32717/12]

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Oral answers (32 contributions) (Question to Minister for Public)

I propose to take Questions Nos. 2 and 5 together.

I assume the Deputy is referring to section 1.16 of the Croke Park agreement in Question No. 2 which relates to the statutory requirement under the Financial Emergency Measures in the Public Interest Acts of 2009 to review the operation, effectiveness and impact of the Acts on an annual basis before 30 June. The review also takes account of the sustainable savings generated in the implementation of the Croke Park agreement.

The statutory reviews have been completed and the reports on the reviews undertaken this year were recently laid before the Houses of the Oireachtas in the days leading up to 30 June in accordance with the statutory obligation. In the review of the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 which imposed the pay reduction on public servants with effect from 1 January 2010 I concluded there was a need to continue to apply the reductions in remuneration of public servants, as well as other measures controlling the cost of the public service pay and pensions bill provided for under the Act. Any amendment of pay rates for existing public servants would have to be the subject of separate legislation. I have no plans to review the annual pay caps of €200,000 and €250,000 for the public service and commercial State sector, respectively, which were introduced by the Government in June 2011. Public service pay will, like all other public expenditure matters, be considered in the context of the 2012 budget and the absolute necessity to reduce the fiscal deficit.

The Government has reaffirmed the key commitments in the public service agreement 2010 to 2014 on pay rates and job security for serving public servants. These commitments are contingent on delivery of the necessary flexibility and reforms to public service delivery required under the agreement. The implementation body for the Croke Park agreement is representative of both public service management and staff representatives. Following the recent publication by the implementation body of its second progress report, I will be meeting the body shortly to review the report and emphasising the need for management, staff and their representatives to press ahead with even greater urgency with the delivery of further change under the framework of the agreement.

As two of my questions are being taken together, I hope the Leas-Cheann Comhairle will allow me some latitude in my exchanges with the Minister.

I will allow for that.

I am sorry the Minister did not deal with the questions separately. To deal with Question No. 2 first, I asked the Minister if he would review senior management pay across the Civil Service and the public service. His response was that doing so would require new legislation. Is he prepared to introduce that legislation?

The Deputy has to be clear about what she means. If she is talking about setting new pay scales into the future, it will obviously require legislation. However, it would be a different matter to interfere with existing pay rates because not only would it upset the Croke Park agreement, but it would also involve significant industrial relations issues. If the Deputy is talking about putting a new ceiling on public sector pay, we have introduced a ceiling and substantially reduced pay at the top rate. Two years ago Secretaries General, grade 1, would have been earning €285,000. Their pay is now capped at €200,000, a substantial reduction. No Secretary General is in receipt of a salary above €200,000, even those legally entitled to it. At my request, they subjected themselves to a waiver of the amount in excess of that sum. This should be acknowledged as an important gesture of solidarity by those who were earning a substantial amount in excess of that threshold.

As a socialist or a social democrat, the Deputy would support the notion of a progressive tax regime. The way to deal with high earnings in a progressive way is to have a progressive tax system. Between the universal social charge and levies introduced in recent times, the marginal rate for deductions for anyone in the public service earning over €100,000 is 62.5% which by any international comparator is a significant reduction.

To be clear, I am not referring to new or future entrants. I want the Minister to deal with the issue in the here and now. He has stated doing so would require new legislation. I understand why public servants, particularly low and middle income earners, cling to the Croke Park agreement simply because they believe that in its absence there would be a free-for-fall on their earnings. However, it is not defensible for the Croke Park agreement to be used to shield those earning excessive salaries.

What is an excessive salary?

We have said time out of number that as the State is insolvent, there will have to be emergency measures and that people need to shoulder the burden. The Minister has asked what is an excessive salary. A sum of €200,000 - the salary cap - is an excessive salary. I have repeatedly told the Minister that, in these times of financial emergency, pay should be capped at the level of €100,000 across the Civil Service and the public sector. I have said this time out of number, but it seems the Minister is not prepared to hear it. Is he prepared to legislate for this and, for once and for all, deal with the issue?

My second question was related to salary caps. The Minister set a number of caps but then went off and broke them. Let me instance the specific case of special advisers.

There is a specific question on this matter.

The salary of the special adviser to the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, is above the cap at €127,000.

A Leas-Cheann Comhairle, I am going to deal with these matters specifically and would like time to deal with each of the questions Deputies submitted.

The special adviser to the Minister for Social Protection, Deputy Joan Burton, earns €127,796. There are five special advisers to the Taoiseach whose chief of staff earns €168,000.

Does the Deputy have any question, a Leas-Chathaoirligh?

I have said this before in the Dáil and I am saying it again.

Does the Deputy have a question?

The chief adviser to the Tánaiste earns €168,000, while his economic adviser earns €155,000. All of these salaries breach the cap the Minister designed and enunciated. He has to forgive me if my faith in his ability to enforce a cap has been weakened.

A Leas-Chathaoirligh, it is not normal to pre-empt other Members' questions, especially when time is limited. However, I will respond to several of the questions raised by the Deputy. She is of the view that there should be a general salary cap of €100,000 across the public service. That would mean no doctor, researcher, academic or senior administrator would earn over €100,000. The problem is we would not get people of quality into the public sector as the marketplace would pay more than this. On that basis, we would only have a private health system for those who could afford access to it because we would not have people working in the public health service at that pay rate, by and large. That is a simple fact.

The normal way in a progressive society to deal with these matters is not to look at net pay. Most progressive parties do not distinguish between public sector and private sector workers in these matters. A progressive taxation system deals with income, whether one is in the private or the public sector.

The Minister should try it himself sometime.

What the Deputy is doing in her constant attacks on the public sector is ensuring there is a thriving private sector; she wants to destroy the basis of public sector provision of key services. I am not going to go down that road. We have a highly progressive taxation system. The marginal rate of taxation, including levies, for those earning over €100,000 is 62.5%. If we need to go higher, we should look at the matter. I do not believe someone in the public sector earning €100,000 should be treated differently from someone in the private sector earning the same amount. I do not believe a doctor providing health care should be supported in a different way in the private sector or encouraged to enter it in the way the Deputy is suggesting.

The Deputy referred to special advisers to Ministers. I do not want to spend too much time on this issue as there are specific questions on it. I set the pay norms for advisers at principal officer, PO, level.

Then the Minister went and broke them.

I made it clear that exceptions could be made in cases where the people recruited specifically could show me that their income in the place from which they had left to join the public service on a temporary contract was greater. The people to whom the Deputy referred have, by and large, taken substantial pay cuts in order to move into the public service. I instanced my own adviser in this regard. I asked the latter to leave a full-time pensionable job and come to work for me for less money, no bonus and no job security. In addition, he lost his pension entitlements.

There is a populism relating to this matter, and we can play along with this. However, the end product will be that serious damage will be done in the context of our ability to encourage people of calibre to move into the public sphere and work in the recovery programme for our country. We must ensure that we have available people of the highest calibre to steer the ship of state at a time when it is in peril. I fully accept that there must be absolute solidarity in respect of these matters. That is why the Government has taken the unique step of introducing pay ceilings and a progressive taxation system. We will continue to refine both of these.

I asked two questions.

I accept that but we have already spent 12 minutes on these questions. We must have shorter supplementary questions and answers if we are to deal with all the matters Members wish to raise.

The Minister referred to consultant doctors and stated that they would flee the system. He should look to the NHS in Britain in order to learn a few lessons in this regard. Consultants in that jurisdiction do not have the luxury of private practice in order to supplement their public incomes.

This business of saying that if we do not pay the big bucks we will not get the right talent is absolute waffle of the highest order.

A question, please, Deputy.

I will provide the Minister with an instance in which he broke his own pay cap.

These are not questions. The Deputy is making a speech.

Will Deputy McDonald please ask a question?

Okay. Why was the pay cap breached to secure the services of a special adviser for the Minister for Agriculture, Food and the Marine, particularly in view of the fact that this individual - whose expertise was apparently required - has since vacated the post? We were informed at the time that the big bucks were paid because of the commitment and skill of this individual and in view of the pain and suffering he would be obliged to endure in order to take up the post, but - hey presto - he has since departed.

This goes well beyond the scope of the original question. However, I know the Deputy likes to be current and is always keen to follow up on whatever stories are being focused on in the media.

I have been raising this matter with the Minister for over a year.

The adviser to whom Deputy McDonald refers was previously in receipt of an income which was a multiple of what I authorised when he came to work for us. Perhaps that man's departure had something to do with the constant focus on his salary and conditions and the fact that, in the private sphere, he could earn multiples of what we were paying him without having his conditions of employment, his family and everything else focused upon by individuals such as the Deputy opposite.

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