In order to achieve the general government deficit target of below 3 per cent of GDP by 2015, all components of the public finances must make an appropriate contribution. Public Servants have made a significant contribution to the fiscal recovery of the State, through a number of measures which have helped to reduce the Public Service gross pay bill from its peak of €17.5 billion in 2009, to an estimated €13.63 billion net of the pension related deduction in 2014. In this context, reducing the Exchequer Pay Bill has been an important element in reducing public expenditure. While unprecedented efforts have been made to reduce the cost of the public service pay bill since 2009 through the operation of the Financial Emergency legislation and other measures, pay costs still account for some 29 per cent of current expenditure.
The Haddington Road Agreement (HRA), which came into force on 1 July 2013, included a number of measures including pay reductions for those public servants on annual salaries of €65,000 or more under the Financial Emergency Measures in the Public Interest Act, 2013. These measures provided for a reduction of the public service pay and pensions bill by €1 billion by 2016. It is a three year Agreement covering the period to end June 2016 and forms the basis for current public service pay policy over that period. Through its provisions, the Agreement is also delivering an unprecedented structural increase of almost 15 million additional working hours annually in the productivity of the Public Service. That productivity is contributing to the maintenance of our public services at a time of significant resource constraints and is a core enabler for a sustainable reduction in the cost of the public service pay bill. In addition, it is important to note that the measures introduced under Haddington Road provides the scope to recruit additional staff to frontline services, particularly in the Education Sector and the Health Sector. This is a reform dividend that will help sustain the Public Service Reform agenda by re-investing some of the efficiency savings we are delivering into improved services.
Under section 12 of the Financial Emergency Measures in the Public Interest Act 2013, I must review the Financial Emergency Measures in the Public Interest Acts 2009-2013 annually and cause a written report of my findings to be laid before each House of the Oireachtas. As part of that review I am required to consider whether the measures continue to be necessary having regard to the purposes of the legislation, the revenues of the State and State commitments in respect of public service pay and pensions. My next such report will be laid before the Houses of the Oireachtas by 30 June 2014.