Vol. 462 No. 8
16 Mr. Clohessy asked the Minister for Finance the proposals, if any, he has for the reform of the public service; if he intends to introduce incentive payments for public servants; and if he will make a statement on the matter. [5550/96]
45 Miss Quill asked the Minister for Finance the proposals, if any, he has for the reform of the public service; if he intends to introduce incentive payments for public servants; and if he will make a statement on the matter. [5551/96]
I propose to take Questions Nos. 16 and 45 together.
The Government will announce in the near future a comprehensive programme for reform of the public service. This programme will comprise a number of initiatives within an overall framework setting out a strategic direction for the future. The initiatives will address a number of matters such as greater delegation and devolution and improved accountability within the public service, an improved approach to service quality and delivery, regulatory reform, better co-ordination across Departments, and improved financial management and personnel management systems.
These improvements will be aimed at enhancing and maintaining a high level of performance. In this context, consideration will be given to incentive payments, for example, performance-related pay, as a means of rewarding good or excellent performance either by an individual or by groups of individuals. The Deputy will appreciate that the introduction of such a system will merit careful examination and consultation before a decision can be taken on its introduction.
I am glad the Government is open to the concept of performance related pay in the public service. Has the Minister examined the model set by the New Zealand Government which established a state services commission which carries out effectively an evaluation role on behalf of the Government in New Zealand? It effectively requires the administrative head of Government Departments to form a contract with the state services commission for the purposes of delivering certain quantities of service within certain performance criteria.
The Government has been implementing performance related pay for some time in some semi-State companies. There are performance related pay contracts in which a bonus, related to certain criteria and judgment, forms part of the salary package. One contract currently under consideration will enhance considerably the bonus component of a salary in the semi-State sector. With regard to the New Zealand experience, the Government has examined some of the examples to which the Deputy referred. All bonus related pay programmes must, of necessity, have clear benchmarks against which performance can be measured. There have to be criteria against which one can set a level and if targets beyond that are achieved they can be rewarded by way of bonus payments. To do that, we have to set targets for different Departments. It will be open to the Strategic Management Initiative, in due course, to move in that direction. The first essential requirement is to clearly define the targets to be set for any Department, and how achievement of them can be contrasted, one year against another, and to what extent their achievement would relate to overall salary reward.
Is it envisaged that it will be necessary to have an independent referee to fix these amounts other than the Department of Finance, which would be under pressure at budget time? Is not some kind of agency or referee body necessary to prevent performance related pay becoming an administrative burden because of the difficulties of calculation and the wrangling about it and so on?
That is one of the issues that will have to be given careful consideration for the reasons outlined by the Deputy. It is a complex area. We are aware of the New Zealand experience and have examined it.
The issues that have been discussed are how the benchmarks are to be set, who is to control them and who will adjudicate on what happens to those who might be entitled to performance related pay. Do I take it that within the Strategic Management Initiative performance related pay is a substantial issue and the Government has every intention of trying to find a way to ensure it forms a major part of incentives within the public service?
We are open to the concept. There are sectors of the public service where it can be applied and where it is being applied in varying degrees. All of the issues to which the Deputy referred — and more of which he is aware — will have to be examined and negotiated with the relevant unions and personnel involved.
On that point, I noticed recently that the unions had grave concerns about performance related pay being introduced as a concept that would form a fairly substantial element of the potential to earn income. Have the Minister's officials had discussions on that specific point with the unions involved?
I am not aware of any detailed discussions having taken place. Such discussions would be premature. As the Deputy will have heard in reply to earlier questions to the Minister of State, Deputy Gay Mitchell, the formal Strategic Management Initiative will not be launched until some weeks from now. There will then be the detailed Strategic Management Initiative application for individual Departments and the question of remuneration will form part of that in due course. I am not in a position to give any more precise information.
