Vol. 827 No. 2
1. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the actions he is taking to ensure that all top-up payments over and above taxpayer funded salaries paid by agencies contracted by the State are ceased; and if he will make a statement on the matter. [2776/14]
I ask the Minister for Public Expenditure and Reform the actions he is taking to ensure all top-up payments over and above taxpayer funded salaries paid by agencies contracted by the State are ceased. The Minister will be aware that ten months ago the HSE produced a report on 44 organisations, which his Department received last July. To date, only eight of the 44 organisations are compliant with public sector pay guidelines. What has the Minister been doing for the past ten months?
Government pay policy is clear that remuneration rates for public servants must be appropriately approved and sanctioned in advance of payment. Pay policy is underpinned by administrative and legislative requirements. In the majority of cases remuneration rates for public servants must be approved by the relevant line Minister, subject to my consent as Minister for Public Expenditure and Reform. It is a matter for each Accounting Officer to ensure only those remuneration rates which are appropriately sanctioned and approved are in payment in Departments and agencies under their aegis.
In regard to the recent revelations on additional unsanctioned payments being made in the health sector, to which the Deputy referred, my Department has supported the work of the Department of Health and the HSE, as well as the work of my Oireachtas colleagues on the Committee of Public Accounts, in addressing the payment of unsanctioned amounts in the section 38, Health Act, agencies and will continue to do so, as appropriate. While my Department creates the policy on payments and sanctions the salary rates within the health sector, it cannot monitor implementation or audit compliance. It is properly a matter in the first instance for the Department of Health and HSE to ensure Government policy on pay is being complied with.
I am aware also that the Deputy has a particular interest in two agencies under the auspices of my Department - the Economic and Social Research Institute and the Institute of Public Administration - about which he asked me last week and which are in receipt of additional non-Exchequer income. These bodies have confirmed that no additional top-up payments are being paid to employees in these organisations.
I thank the Minister for his short reply. Essentially, he has passed the buck. Everybody is responsible and nobody is responsible at the same time is the response of his Department. He has said he sets a policy but that it is not up to him to implement it. There is no point in having a policy if there is no mechanism in place to implement it. It is just words on paper if it is not implemented.
As the Minister knows, the internal HSE audit report on the 44 organisations was published in March last year and went to his Department over the summer, but he did nothing about it until the matter came up at the Committee of Public Accounts. His Department was aware of it. The Minister should have been making the line Department deal with the issue. That is his function. It is not his job to involve himself in the 44 organisations, but it is certainly his job to make the Department of Health do so. That Department has not got to the bottom of this issue.
This is not just a matter for the HSE in that we have seen top-up payments and salaries exceeding pay policy in third level institutes and in various other bodies.
This is the first Government to establish a clear pay policy which is undoing the ad hoc policies of previous Administrations over decades, Administrations which did not know or certainly did not care who was paying what to whom. That is now being rectified, but it cannot be done overnight. My Department which is new is responsible for setting the pay norms. However, there are 30,000 public servants and there is a variety of line Departments with their own Accounting Officers who are statutorily and constitutionally charged with doing this job. Unless the Deputy wants all of them to be set down and my Department to run every aspect of the public service and every agency of the State, we will have to do this in the systematic way we have set out.
The Deputy is quite wrong in his assertion that everybody is responsible and nobody is responsible at the same time. We are getting to the bottom of this issue. The lines of responsibility are clear in unveiling it. The HSE and the Department of Health are pursuing the matter actively with my full support. Of course, there is a role for the committees of this House and the Committee of Public Accounts which is doing a good job in ensuring public pay policy is implemented.
Every Member of the House agrees that there should not be top-up payments. The policy is not being implemented and it will be a very difficult process to get to the bottom of this issue in every line Department. I know it is not the Minister's job to micro-manage Departments, but it is his job to ensure their Accounting Officers are doing theirs.
The Minister has said that in the past people did not know or care. A week ago at a meeting on the Estimates I asked him about possible top-up payments in the Institute of Public Administration and the Economic and Social Research Institute. I never suggested there were; I just wanted confirmation. However, the Minister did not know or care and could not answer the question. It has taken him eight days to answer it. He did not know or care about his own line Department until I put the question to him last week.
Does the Minister agree that we need legislation to deal with this matter to put it to bed once and for all?
We have an array of legislation dealing with these matters. What we need is full transparency and that is what we are trying to achieve. A particular issue has arisen in regard to the section 38 and 39 agencies under the Health Act. There was an opaqueness in the degree of oversight and transparency with which these agencies which were independent but contracted to the HSE to provide services operated, but that day is over. We need to know exactly on what they are spending the money and what people are being paid in order that we can evaluate whether value for money is being achieved for the State. That process is well in train.
2. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if he has lifted the ban he imposed in 2011 on performance bonuses for chief executives of commercial semi-State companies. [2890/14]
4. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform his views on the payment of bonuses within the commercial and non-commercial semi-State sector; and if he will make a statement on the matter. [2927/14]
My question refers to the ban on performance bonuses for the chief executives of commercial semi-State companies which has been in place since 2011. It also asks straightforwardly whether the Minister has lifted that ban or whether it continues. He might enlighten us on how long he envisages the ban continuing, if it is still in place. Will he refer, in particular, to Irish Water and the considerable public controversy surrounding the bonus payments proposed in that company?
I propose to take Questions Nos. 2 and 4 together.
I thank the Deputy for the question. In 2012 the Government reviewed the position on the payment of performance-related awards or bonuses for chief executive officers in commercial semi-State companies and agreed, on my recommendation, to continue with the policy we had introduced in 2011 of requesting the State companies concerned not to award such bonus payments in the light of the serious state of the public finances.
Furthermore, the Government agreed to continue the practice of excluding the payment of bonus provisions in the employment contracts of any newly appointed chief executives to such state companies as well as in respect of contract renewals for incumbent chief executives. The requirement to cease such forms of bonus payment, together with other basic salary reductions introduced by the Government in respect of the chief executives of state companies, was necessitated by the difficult financial and economic circumstances we have faced. Accordingly, the Government will continue to consider future policy developments on performance-related pay to chief executives in the light of prevailing circumstances.
I have no role in the performance-related award schemes for staff below chief executive level in commercial State companies. It is expected that the boards of these organisations act responsibly in designing and implementing a pay structure that drives performance while ensuring they are fully compliant with Government pay policy. It is a matter of Government policy that performance-related award schemes continue to be suspended on an indefinite basis for the non-commercial state companies. Access to such schemes is no longer included in the employment contracts for newly appointed chief executives or in contract renewals for incumbent chief executives of non-commercial semi-states. It is a matter for parent Departments in the first instance to ensure that all bodies under their aegis are compliant with the set-out Government policy.
The Minister has repeated the fact that he has no role in bonus payments to people in roles below that of chief executive. I wonder out loud whether the Minister for Social Protection, Deputy Burton, and the Minister of State, Deputy Hayes, are aware of that, because they had a good deal to say on the matter on the public airwaves. Perhaps the Minister said it and I missed it. Will he confirm whether it is his intention, notwithstanding the change to contracts for incoming chief executives, to continue this ban on bonus payments for current serving chief executives? If it is to continue, then for how long?
The figure of €7,000 as an average proposed bonus payment to workers in Irish Water has gained considerable traction in the media. I note this is an average payment. Has the Minister more information on where exactly these specific bonus payments might fall? What might be the maximum bonus? What might be the minimum bonus anticipated for the workforce?
There are two questions. The first question was on chief executives. The policy we introduced in 2011 not to give performance-related pay to chief executives stays in place. I promised the Cabinet that I would review it annually. We reviewed it in 2013 and there was a determination that we continue with it because of economic circumstances. We will continue to review it periodically.
I believe we should get back to performance-related pay but we should have clear commercial targets set for the commercial semi-State companies. Where those targets are exceeded there might be a bonus remuneration added to chief executives' pay.
A question was asked about Irish Water. Bord Gáis Éireann and the staff group of unions have delivered on a transformational programme on pay, pensions and allowances under a programme that aims to save a total of €12 million in payroll costs. One element is allowance reform - that is, the discontinuance of legacy arrangements and allowances that used to be paid. This was implemented by the company throughout 2012 and delivered an estimated saving of €2.3 million to the company last year.
I thank the Minister for the background information on Bord Gáis Éireann. However, I am asking specifically about Irish Water. It is necessary to have clarity in the public domain on this matter, because a figure of €7,000, as an average, has been cited. Perhaps the Minister does not have the detail today and, if not, I am asking him to get it as soon as he can and to report it to us. What is the envisaged maximum payment under the scheme? What is the envisaged minimum payment? No more than anywhere else, in Irish Water not every staff member is on the same salary level or arrangement. If there is to be a public discussion on bonuses in the new utility, it is only fair, rather than giving an average figure, that we have clear information on the maximum and minimum. If the Minister cannot answer me today, he might give an undertaking to get that information for us.
Does the Minister envisage that the ban on bonuses for chief executives would come to an end in 2016? I note that is the timeline referred to by the chief executive of Irish Water in respect of what he called a pay freeze at the utility.
There are several questions. The questions the Deputy asked about Bord Gáis Éireann are more appropriate to the Minister for Communications, Energy and Natural Resources. He is the line Minister with responsibility in that area and he has the detailed knowledge. I set Government policy on a cross-sectoral basis. As I have indicated to the House, I do not have responsibility for commercial semi-State company staff below the level of chief executive.
Deputy McDonald is right: we need to have a debate about this. We need to decide whether we want commercial semi-State companies. I do. We need to allow them to operate in a commercial way and to structure performance-related pay in a way that delivers best for the company and, ultimately, for the shareholder - that is, the taxpayer. There is an issue in respect of transparency and that should be examined. Anyway, the company is migrating from bonus payments or increment payments to a performance-related payment on a commercial basis.
I understand that. I am simply looking for information on the average payments of €7,000.
As I said, the detailed information would be properly provided by the line Minister responsible, in this case the Minister for Communications, Energy and Natural Resources.
What about the 2016 issue?
Sorry, we are over time.
I do not know about the other question. That was the agreement reached in Bord Gáis Éireann on the pay freeze. In fact, I am told the pay freeze will last until December 2015 in BGE. I presume that was simply a three-year horizon, similar to the negotiations on the Haddington Road agreement. One must take a horizon of a reasonable period. I hope our economy will have improved at that stage to allow for consideration of wages in the economy generally.
Is that a "Yes"?
3. Deputy Tom Fleming asked the Minister for Public Expenditure and Reform how he expects to reduce the public service pay bill over the next two budgets by the introduction of new technologies and more efficient management techniques, introduced from the private sector; and if he will make a statement on the matter. [2972/14]
I asked the question because recent events have demonstrated that there is an urgent need for total quality management and more productive and efficient outcomes in State and semi-State bodies.
I thank the Deputy for the question. There have been major efficiency and productivity gains in the public service in recent years. New working arrangements have been introduced, including longer working hours, new rosters - some of which have not been changed in 30 years - and standardised arrangements for annual leave and sick leave. The numbers working in the public service have been reduced by over 30,000 since 2008. At this stage, the public service is at 2005 staffing levels, while the Exchequer pay bill has been reduced from €17.5 billion in 2009 to an estimated €13.5 billion for 2014 net of the pension-related deduction. These and other areas of progress were set out in the detailed progress report on public service reform, which I published last week and circulated to all Deputies.
Public service reform will remain a key element of the Government's strategic response to the ongoing challenges we face. It is in this context that a new public service reform plan 2014-16 was published last week. Again, I have sent a copy to everyone in the House. The next phase of reform will continue to focus on cost reduction. However, it will also focus on better outcomes for service users and on delivering real improvements in how citizens and business customers interact with public services.
Under the new plan the reform agenda will be about protecting and improving public services. Over the period of the plan there will be an emphasis on savings to invest. This is about freeing up resources by making existing processes more cost-effective and efficient and using the savings to invest in new and improved services. I have classified this as the reform dividend and it will underpin and sustain the reform agenda beyond the current crisis. We will be taking steps to ensure that the public service makes maximum use of digitisation and open data to deliver services. My time is almost up but I would be happy to deal with any supplementary questions the Deputy may have.
The matter has been exemplified in the recent past with regard to the formation of Irish Water. We have a farcical situation whereby it will take a transitional period of 12 years to bring it to formation.
Ireland is regarded as a First World country. The objective should be to reduce the period to three years. With the most modern technologies and with the experience and efficiencies at the disposal of councils, more responsibility should be given over to all local authorities. There is currently a surplus of engineers and crucial staff and such staff would be able to reduce it to a much shorter period of perhaps three years.
I understand the Deputy's concern, but Irish Water will be the biggest utility and the biggest State company to be established in my political lifetime. Nothing like it has happened since the establishment of the ESB. A similar process in Northern Ireland on a much smaller scale took the bones of 20 years to fully implement. We want to ensure that the services are not discommoded. That is the reason we have arranged for service-level agreements with every local authority. Some would say we should have been more robust in negotiating those agreements, but we wanted to bring a harmonious migration of local authority employees under the wing of this new important utility. There is a convincing case - not for me to make now - for establishing a proper utility to ensure we have a safe water supply. The nexus of the Deputy's question is transformational focus on efficiencies within the public service. I refer to the reform agenda and the progress report which we published last week on shared services, procurement, property management, downsizing and changes in rosters and sick leave. These measures have been transformational and of significant benefit to the State.
I believe we are wasting a fortune in this exercise. I reiterate my point about the bonus systems which has been raised by other Members. Because of the culture in this country we would not have the integrity or the competitiveness to control bonus systems in the first place. Who will adjudicate such a system for top-up payments if it is put in place? We must face the reality that this country is bankrupt and we cannot afford a figure of €85 million in consultancy costs. I note the revelations about Coillte and the row about a top-up payment for the outgoing chief executive officer. In defiance of ministerial orders they have given a very substantial sum, in the region of €56,000. We need to put a stop to this immediately.
We need to have a debate about performance-related pay. It is easy to talk about the notion of bonus payments as being unacceptable. Performance-related pay is the norm in the commercial sector. All commercial companies set targets and reward people who over-achieve and there are consequences for those who under-achieve. A fortnight ago I published a new performance analysis document for public consultation to establish accountability in the public service for performance, to set targets, to have a fair and objective monitoring system for those targets and to remunerate public servants appropriately. We need a debate about performance-related pay, not to say that performance-related pay should never be given. I have made it clear that we cannot afford such pay now and it is not provided for in the Civil Service nor in the non-commercial semi-State sector. I have indicated to the Deputy previously that at the moment it is not provided for with regard to chief executive officers of commercial semi-State companies.
Question No. 4 is in the name of Deputy Sean Fleming.
This question relates to bonus payments in the commercial and non-commercial semi-State sector. The Minister has dealt with the issue of payments to chief executive officers but I ask him to say what approval is given by his Department to the line Ministers to approve schemes in organisations under their remit. I refer in particular to State monopoly companies such as Irish Water, Iarnród Éireann and EirGrid.
I answered Questions Nos. 2 and 4 together. I will not give the Deputy the same answer that I gave to Question No. 2. I suggest that I will not read the reply again but I will be happy to answer supplementary questions.
The position I set out is that chief executive officers are not given performance-related pay. This was our decision in 2011 when we came into government. As I have indicated, it is not fixed in stone forever. Because of the current pressures on the public finances we cannot accede to payments, but we will review this policy. I am pleased to have this opportunity to explore the implications. For example, there are people who would be immeasurably beneficial as chief executive officers of commercial State companies who are paid much more in the private sector. We must ensure we can attract people who will perform well into semi-state companies with a commercial mandate. Such people may bring multiple benefits to the company and to the State. We must use methods that are measurable and reasonable. Unfortunately, it is not possible in the current economic climate to breach the reduced pay levels we have set in the revised pay rates since 2011, as I have indicated to Deputies. That will remain the situation until our financial circumstances improve a great deal.
At the meeting of the Committee of Public Accounts last week it was made very clear that the bonus scheme in Irish Water was part of the Bord Gáis bonus scheme, which was approved by the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, and which had been notified to the Department of Public Expenditure and Reform. The Minister's Department is in the loop.
The cuts under the FEMPI legislation are in place. It in incongruous that civil servants are still suffering cuts under the FEMPI legislation while various line Ministers are approving bonus schemes for other public servants in the commercial semi-state sector delivering public services. The issue of the State monopoly companies should be examined separately as the Minister regards them as a different case from the other commercial semi-state bodies.
The Deputy has asked a number of relevant questions. The FEMPI legislation applies to public servants on the public payroll, Members of the Houses of the Oireachtas, the Judiciary, teachers, nurses and civil servants alike. Under the most recent FEMPI legislation, those earning over €65,000 took a pay cut. That was necessary in order to reduce the public pay bill.
The Deputy asked why I would not apply the same logic to the commercial semi-state companies; it is for the very reason that they are commercial companies. We have to set standards of moderation in pay across the economy as best we can. This is normally done by means of taxation policy. I have given an indication of moderation through the cap on pay for chief executive officers that we imposed from 2011. However, companies must have the flexibility to make pay arrangements that meet their commercial needs. I will give an example in my reply to the next question.
I did not say they were directly comparable; rather, I think it is incongruous. I understand the differences. Employees of local authorities are subject to FEMPI cuts. If you have now gone on secondment to Irish Water, you can get a bonus and migrate back to your local authority in a year or two depending on your secondment arrangement. There is a difficulty there. We talk about transferability of people not just within the Civil Service but across the broader public service. That issue needs to be examined.
I come back to the issue of the monopolies. Irish Water is a monopoly. While it must operate on a commercial basis, I would hope every Government Department and non-commercial semi-State body operates to good commercial practices. We should not to mix up achieving value for money and being in the competitive commercial world. Could the Minister address the issue of State monopolies that are not really out in the commercial world.
We expect all State companies to operate in a commercial manner. These are technical deliverers of services. We have a very ambitious programme. It is not for me to give the Deputy the case for the creation of Irish Water but I am very strongly in favour of it. We have a situation where 18,000 individuals are on a "boil water" notice. There are a million households whose water is vulnerable because of inadequate supply. A third of wastewater plants are subject to concerns of the EPA and may fall foul, if I may use that phrase, of the European Commission. We need to invest in our water treatment and water provision system in an integrated way like the rest of western Europe so we need to have this.
Irish Water is unique in terms of pay because it is migrating from a number of local authority entities to one State entity and there is a transition that makes it unique. We need to have regard to that and also to the general principle that all companies in the State sector are expected to operate in a commercial way.
5. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if it is still his intention to further reduce public sector numbers by 10,000 whole-time equivalents by 2015; and the percentage of this reduction that will come from health services.. [2891/14]
My question refers to the Minister's stated intention to reduce public sector staff numbers by 10,000 whole-time equivalents by 2015. Could the Minister set out how he intends to progress this commitment regarding these public sector worker reductions. Could he tell us how many of these he envisages coming from the health sector and whether he intends to initiate another incentivised redundancy scheme in the lifetime of this Government? Could he provide details of any new hires that are envisaged, when they will be brought into the system and where they might be targeted?
Budget 2014 sets out a revised target for public service numbers of 287,000 by the end of this year. With serving numbers already below 289,000, this is a lower net reduction than in previous years, reflecting the fact we have already downsized a huge amount and the public service is now almost 10% smaller than it was in 2008. The appropriate path beyond 2014 will be considered as part of this year's comprehensive review of expenditure, which will examine public spending and resource issues in the context of the fiscal parameters, service demands and the reform and efficiency opportunities arising from the new public service reform plan, which I launched last week.
With regard to the health service, it is required to deliver a modest 1% reduction in head count during this year, which reflects a significant readjustment of the previously set target. In education, in acknowledgement of the growing needs in the classroom, serving numbers are actually profiled to increase by over 1,200 posts in 2014. As part of this, provision was made in the last budget for 960 additional resource teachers by the end of 2014. As I mentioned, public service numbers have been reduced by almost 10% in the last five years. The approach to public service numbers reduction has been informed by financial necessity, of course, and also by recognition of the significant opportunity to reform work practices and business processes to rationalise the number of State agencies and to introduce money-saving initiatives such as shared services. As a result, the public service today is more efficient and effective than before the crisis and for that, the contribution of those working across the system must be acknowledged. I acknowledge the work of all public servants who are valued.
The new reform objectives will also help drive change in the way the public service is organised and how it delivers its back office functions. To give just one example, PeoplePoint, the HR and pensions shared services centre, became operational last March and is now servicing over 15,000 employees across 13 organisations. When fully operational, PeoplePoint will provide services to 40 organisations with savings estimated at €12.5 million annually. This example, and there are others, shows how service levels cart be maintained, and in some cases improved, with reduced numbers. I have made reference to the idea of a reform dividend. I had a chance to begin discussion on that at the committee last week. I will be happy to expand in response to the Deputy's question.
Additional information not given on the floor of the House.
It is about understanding that reform and efficiency drives are about improving public services, not reducing them, and that the dividend comes from identifying and tackling waste and inefficiency and making savings - savings which can then be used to invest in areas that work best for the citizen. What is important over the medium term, therefore, is to continue to introduce new ways of doing business and to make the best use of new technology and of shared services so that we have a public service that is affordable, that is consistent with a sustainable fiscal position and that works for our citizens. This is the best way of protecting front-line services in health and education and right across the public service.
I note that the public service reform plan, which is the most recently published document from the Minister, cites an OECD study from 2010 which reflects the fact that prior to all of these cuts in the public sector, this State was beginning from a very low base in comparative terms in respect of the numbers of public sector employees. It is a point I made to the Minister very many times - a point that he rejected very many times - but I am very happy to see that this thought and analysis have found their way into his current thinking.
The Minister has reduced his target of the number for reduction within the service by year end, which is welcome. In respect of the health service in particular, could the Minister be a bit more specific in his answer? At the Oireachtas Sub-Committee on Public Expenditure and Reform, I raised the fact that there is a crisis in the service, which is reflected in the trolley count numbers and many other indicators. Could the Minister be more forthcoming on that?
When I spoke to the committee last week, I indicated that I was not fixated on numbers. Numbers were an instrument we had to employ to bring down costs. It is happening across every sector of the economy. People are not providing services in the same way. If one checks in with an airline, one does not normally do so in a queue with an array of people checking you in. One does so online or at a terminal at the airport. We are now providing more than 400 public services online and will greatly increase that number. The public service card is being rolled out this year. A total of 500,000 were offered last year and an additional 900,000 will be issued this year to make it much simpler and easier for citizens to access State services. That will reduce the necessity of having a huge number of people processing material that will be done electronically. That will allow us to do what I have described as having a reform dividend. We are not simply going to bank all the savings. We will re-invest a portion of them in better front-line services.
The Minister has drawn that analogy with checking in with an airline many times but the simple fact is that the majority of public services are not comparable to checking in with Aer Lingus or any other airline operator. No offence to the Minister but I do not think that is a good comparison to draw. The fact is that front-line services are under huge pressure and that although the Minister now says he has no fixation with numbers, he and his predecessors have had an absolute fixation with numbers. I take it that he has moved from this target of a reduction of 10,000 whole-time equivalent posts by the end of 2015 and envisages a cut of 2,000 posts this year. I do not know what figure he envisages for next year. How is that to be done? I initially asked him about an incentivised redundancy scheme. Is that in his thinking? When would it come about and would it be targeted?
Again, the Deputy has asked a number of questions. She disputes the contention that the majority of services are analogous to checking in with an airline. There are front-line services that are not analogous but there are many process services that are such as renewing a driving licence and all the other things one does automatically that can be done much more effectively and efficiently. We are doing that. That gives us the capacity to supplement the front-line services.
Having that capacity has allowed me to sanction the recruitment of gardaí again this year. We will increase the number of gardaí. The general number of workers in the public service will not diminish this year by the volume we initially outlined. We will utilise the reform dividend - the savings we are making by providing general services more efficiently - by churning it into better front-line services. There will be more teachers in schools. As I said, we will have an additional 1,200 resource teachers this year and there will be more gardaí on the streets. I have mentioned that we are beginning to recruit gardaí again after many years of not being able to do so. That is the approach I want to take. I do not want to take a crude approach.
