Vol. 878 No. 1
182. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform his objectives for the forthcoming talks on public sector pay and conditions; his proposed timescale; and if he will make a statement on the matter. [18370/15]
I would like the Minister to outline his objectives for the forthcoming talks on public sector pay and conditions. What timescale and main objectives would he like to see achieved by the end of the process?
Following consultation with my Government colleagues, I issued an invitation to the representative organisations for public servants to enter discussions with public service management. The discussions commenced today and I am sure the Deputy will understand my reluctance to engage in negotiations in public. Further formal discussions will take place in the coming weeks and although I am not in a position to predict when the talks will conclude, early agreement will facilitate the assignment of resources and better budgetary planning.
The end of the period of acute financial emergency which necessitated the introduction of the Financial Emergency Measures in the Public Interest, FEMPI, legislation by this and the previous Government is now in sight because of the actions of the Government. Planning for the orderly wind-down of the legislation in an agreed and sustainable process, rather than risking a successful legal challenge, is the appropriate, prudent and correct approach. The Deputy is aware that I am required to review the FEMPI Acts annually. My next review of the Acts is due to be carried out and a report laid before the Houses of the Oireachtas before the end of June this year. Any proposed change to the legislation arising from the discussion process will be subject to Government approval and brought before the Houses of the Oireachtas.
When the economic crisis determined that further reductions were required of public servants in 2013 under the Haddington Road agreement, agreement was secured by negotiation and discussion with the representatives of those directly affected. A similar approach in current circumstances is also appropriate. The Government considers any pay agreement should be prudent, modest and sustainable in the overall budgetary context as set out in the spring economic statement. Through the Haddington Road agreement and its predecessor, the Croke Park agreement, and through the supporting FEMPI legislation public servants have made a significant contribution to our fiscal recovery, including by way of direct reductions in pay and pensions. From 2009 to 2014 the cost to the Exchequer of public service pay was reduced by €3.7 billion, or more than 21%. Notwithstanding the improving economy, because of the magnitude of these reductions, the Exchequer could not sustain the immediate restoration of such reductions. I have stated previously that both sides need to be realistic in terms of the expectations and outcomes of the talks regarding what can be achieved in the coming weeks.
I understand that the Minister is not able to commit himself to any details and I was not really expecting him to do so as nobody could realistically expect that. He must, however, be going into the talks with some overall objectives and we did not hear about them in his reply.
The Minister will agree that every family has suffered financially in the past eight years and all families in Ireland, both in the public and private sectors, are entitled to share in any improvement in the economy. He will also agree that the initial focus should be on low and middle income earners. There is room in the public sector area for improvements in pay through not just pay rate adjustments but also reductions in the public sector pension levy, the USC and various other taxes. It is important that any discussions take place in the context that every household has contributed and any pay increases in the public sector should be in line with pay increases in the private sector. The public sector should not run ahead nor should it fall behind. What was missing from the Minister's reply was the 85% of the workforce outside the public sector whose position should also be taken into account.
I strongly agree with many of the points made by the Deputy. The FEMPI legislation underpins the cuts and that legislation is anchored in the emergency but, mercifully, we are now exiting from that emergency. The prudent and right approach is to prepare for the exit in an orderly way but in a way that does not risk the recovery that the Irish people have worked so hard to achieve.
I agree that we need to share in the improvement and that is why, during the discussions last year, we began the process of reducing the universal social charge on all workers from 1 January this year. Up to three pay reductions have been imposed on the public service and we agreed in the teeth of the emergency that when we next spoke we would be talking about pay recovery and that is what is under way right now.
I put on record my thanks to the Minister for acknowledging the great work done by the previous Government in introducing the FEMPI legislation which, as he said, has underpinned the reductions in public sector pay by correcting the national finances. I welcome his acknowledgement of the great achievements in that area under the Croke Park Agreement, even though an agreement was very difficult to get at the time. We paid a price in the short term for introducing those measures and it has taken time for them to work their way through but I am pleased that the Minister has continued to work with the FEMPI legislation that he inherited when he came into office. I acknowledge that he continually refers to reductions in the public sector pay bill from 2009 to the current date. He knows that the majority of those decisions, which have put us on the right road, were taken in 2009, 2010 and 2011, prior to the present Government coming into office. Everybody in Ireland suffered financially and every family is now entitled to some share of the recovery, both in the public and private sector. It should not, however, be at the expense of front-line services.
I do not recall giving great credit to those who set fire to the State for calling the fire brigade and I will not do that. It was necessary because of the collapse of our economy due to a variety of factors, above all poor administration, politically, in the last part of the previous Administration. We have had to do a number of difficult things including bringing in the FEMPI legislation, which we have maintained because we could not have survived and made the adjustments we needed without it. Unfortunately, that is the position we were left in but I want to look forward. The Irish people have gone through a very difficult period but public service workers, unlike many in analogous countries who were in difficulties, did not go on strike, instead taking a round of pay cuts and working harder. We are doing much more with less and we now have 10% fewer people working in the public service doing an awful lot more. I want to keep that productivity so that we have a sustainable future for public services and for the people of Ireland.
183. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform the projected annual increase in public expenditure over the next three years. [18406/15]
My question relates to projected increases in public expenditure over the next three years.
I raise it in light of the spring economic statement, in which, to much fanfare, the Government announced that the bad times were over and that the good times were dawning. In the course of making that series of announcements, the Government identified a 50:50 split in respect of taxation and expenditure, but provided precious little detail on the level of expenditure on investment in public services.
As outlined in the spring economic statement, SES, Ireland is on track to reduce the general Government deficit to 2.3% of GDP this year. This will enable us to exit the excessive deficit procedure, EDP, at the end of the year. After we exit the EDP, we will enter the preventive arm of the Stability and Growth Pact, SGP, which will require that we make sustained progress towards achieving the medium-term budgetary objective, MTO. In Ireland's case, the MTO is to achieve a balanced budget in structural terms. Our progress towards achieving the MTO will be judged against two fundamental pillars, namely, compliance with the expenditure benchmark and making the minimum structural adjustment of greater than 0.5% of GDP every year.
Ireland has fully supported the EU fiscal governance reforms, given that we understand all too well the consequences of irresponsible management of public resources. We also understand, however, that the rules need to be applied in a sensible manner. Following interventions by Ireland, changes have been agreed on the technical application of the rules.
The SES outlined that fiscal space of approximately €1.2 billion to €1.5 billion will be available for budget 2016. The fiscal forecasts contained in the SES are based on a technical assumption of a budgetary package of €1.2 billion in 2016, split evenly between expenditure and tax. This provides the opportunity to reduce the tax burden for low and middle income earners, encourage further economic growth and increase investment in public services.
The fiscal forecasts included in the SES post-2016 have been compiled on a "no policy change" basis, with provision made for a €300 million increase in gross expenditure to offset demographic pressures. While policy changes must be made, the only issue being taken into account beyond next year is the unavoidable demographic pressures in areas such as social protection, health and education.
The SES assumes that after 2017, the voted capital expenditure allocations are left unchanged in nominal terms. This is a technical assumption. These amounts will be finalised by the Government in the coming weeks and announced in the capital review next month.
The concern is that, while moving outside the EDP and into the preventative arm, investment in real terms in essential public services will not see the kind of boom at which the Minister hinted during the spring economic statement. In the Minister's Comprehensive Expenditure Review Report 2015-2017, the planned investment in areas such as health and education were underwhelming. It suggests a Government strategy not of any great investment in such services, which have borne the brunt of very serious cuts, but of a holding position. The Minister will agree with me that he cannot argue from one side of his mouth that there will be relief in terms of investment in services while adopting an "as you were" position on real investment.
In Sinn Féin's response to the spring statement, it accused us both of trying to buy the election and of being parsimonious in our expenditure. Sinn Féin cannot have it both ways, although it tries. We have been under pressure to provide a balanced budget. We have reduced the deficit in actual terms from 30% of GDP in 2010, an underlying deficit of 11%, to 2.3% projected for this year. Given that we are moving into the preventative arm, we have more flexibility.
We have said there will be space of approximately €1.5 billion next year which will be divided in a 50:50 expenditure and tax reduction process. Beyond this, we obviously have to look at how the economy will grow. We have only given indicative figures for expenditure on the current side to cater for inflation and demographics. We will see what real capacity we have closer to the budget in October.
It is the Government which wants to have it both ways. On the one hand, it wants to send a message to the electorate that it will dispense largesse from the Government’s coffers. When one actually looks at and drills into the figures, however, one finds that this is not the case. I am working on the assumption that the projections made in the comprehensive expenditure report still hold. Will the Minister clarify that nothing in this document has changed in the light of the spring economic statement or from the forecasting in the Department of Public Expenditure and Reform or the Department of Finance? For all of the rhetoric and the Minister’s compliance with the various rules and regulations for which he argued at the time of their introduction by way of treaty change, the reality is that the health system is still stuck in gridlock, with patients on hospital trolleys in accident and emergency departments and long waiting lists. I cite the example of the Department of Health because, of all Departments, it is the one in need of the largest propping up year-on-year.
The economy, thankfully, has improved since we published the figures included in the budgetary documentation last October and we have progressed further. Last October the deficit we expected in 2015 was 2.7%. The spring economic statement indicated that it would be 2.3%. We have made more progress, with more people back at work and the unemployment rate falling quicker than we envisaged. Thankfully, this is all good news and will give more scope to address issues such as, for example, the demographic pressures we are facing. We have started recruiting gardaí again, as well as 1,700 teachers, including resource teachers, and 1,000 nurses. That is the capacity we have because of the improvement in the economy.
184. Deputy John Halligan asked the Minister for Public Expenditure and Reform in relation to possible public service pay restoration, if he will confirm the level at which it is anticipated public service pay will be restored; the grades at which restoration will take effect; if he will confirm which pay-related deductions he will seek to cut and by what margin; if it is likely that there will be a link between the restoration of pay and the provision of additional productivity by public sector staff; if any move to restore pay will take into consideration the terms of the 2013 Haddington Road agreement; and if he will make a statement on the matter. [18415/15]
Reform, innovation, doing things more smartly and more efficiently, as well as having regard for new technologies, are now a constant part of the norm for public servants, as they are for the private sector. As I said last week, they are now hard-wired into public services. When I took office four and a half years ago, I was given two jobs, namely, to balance the books as Minister with responsibility for public expenditure and to be the first Minister of Cabinet rank to reform the public sector. A remarkable amount of reform has been carried out since. That reform is not a crisis-only event but needs to be a constant part in the way public services are delivered. This will ensure quality public services are available to all citizens which are not subject to boom and bust. It will mean people who have grown used to a service are not suddenly deprived of it simply because we cannot afford to provide it. That is a sustainable future on which we have set our sights and that we are determined to achieve.
There appear to be conflicting views from the Government. Would the Minister accept that many people in the public service have seen their pay dramatically reduced over the last number of years? It started with the pension levy which, I accept, this Government did not introduce. Even those in the public service who were not entitled to any pension had their hours increased and sick leave reduced.
During the week, Mr. Robert Watt, Secretary General of the Department of Public Expenditure and Reform, said that public service staff will have to continue to implement work practice reforms and improve productivity in future. In addition, the Minister for Health, Deputy Varadkar, says he would prefer more staff and fewer earning more. Would the Minister, Deputy Howlin, agree that the time has come to lift the moratorium, if we are to get a decent public service? It has not happened, however. An example of that is where class sizes have increased but the number of teachers has been reduced.
Increasing expenditure in the public service also increases consumer spending which allows the economy to grow. What are the Minister's views on lifting the moratorium on public service recruitment, which many in the trade union movement have said is essential?
I am conscious that there are real bottlenecks because we have not had the capacity and have been downsizing. That is why, last year, I moved to recruit more gardaí and in the budget I announced 1,700 more teachers. We are recruiting more SNAs and are recruiting nurses again. They are front-line staff. That is part of what I have described as the dividend from the reforms we brought about.
We have abolished the moratorium and are now devolving to each agency and Department control of their own pay bill. They will therefore determine, within an agreed pay framework, what level of individual skills they need to provide their services. With the exception of one adjustment at secondary level, we have always maintained the pupil-teacher ratio which required us to hire a lot more teachers.
As regards the Haddington Road agreement, which I have been responsible for, we did not have a general reduction in pay. We had a reduction in pay for those earning over €65,000 per annum. Even for those, it ranged from 5.5% at the bottom to 10% at the top, to be fair.
I will make a final point so that there will be no confusion about it. In terms of the pay recovery we are now involved in, it is my intention that the pay ceilings I put in place immediately on taking office, will be retained.
In the spring economic statement we were told that there is €1.5 billion to spend in the October budget, and that the money would be split between taxes and spending increases. However, we were also told that the public sector rises would have to come from the €750 million within the Department of Public Expenditure and Reform.
Are we talking about a sum between €250 million and €300 million in 2016? The Minister has also insisted that all cuts to public service pay and pensions cannot be measured over the next year. There was a total of €2.2 billion in cuts over that number of years. Can the Minister give some indication to the House today in that respect? If the cuts were €2.2 billion, the Minister has €750 million to spend within his remit. That does not add up to increasing pay levels by much in the public service, however, as well as dealing with the moratorium.
I revert to the two questions I asked earlier. Will the Minister comment on what the Minister for Health, Deputy Varadkar, said, that he would prefer more staff with fewer earning more, and what Mr. Robert Watt, Secretary General of the Department of Public Expenditure and Reform said? If we cut €2.2 billion and have €750 million, it does not add up. How will that be spent?
First, €2.2 billion is the actual value to the budget of the series of cuts provided for in the FEMPI legislation.
Yes.
That is why I am saying we cannot undo that in one fell swoop because it would undo all the progress we have made. Obviously, however, that is not the totality of the pay bill reductions because we have also reduced numbers by 10% over the same period.
Pay restoration or pay recovery will be part of the expenditure side of the equation, which is understood. I have not put a figure on it, nor have I brought a figure to Cabinet concerning what will be determined in that regard. I have a figure in mind myself.
We will engage with the public service unions. Throughout my dealings with them over four and a bit years, they have been reasonable and understanding. Every public servant - each garda, teacher, civil servant and local government worker - has a vested interest in our country recovering so we can have quality public services and a place in which families can thrive and find jobs.
185. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform if additional resources for front-line services will be a priority in the allocation of any leeway in the public finances in the years ahead; and if he will make a statement on the matter. [18371/15]
In light of the spring statement, will additional resources for front-line services be a priority in the allocation of any leeway in the public finances for the years ahead? Will the Minister specifically make a statement on restoring and improving front-line services?
The economic crisis had a profound impact on the public finances. The fiscal adjustment implemented in order to exit the EU-IMF programme of support and return sustainability to the public finances required significant tax increases and expenditure reductions. We all know the figures in the House but they are very stark. Gross voted expenditure was reduced from its peak of €63 billion in 2009 to €54 billion last year. In implementing expenditure reductions, the Government's priority has been to ensure that a targeted approach was adopted in order to protect key public services and social supports to the greatest extent possible.
Budget 2015 marked a turning point in our recovery when expenditure reductions were no longer required to meet our fiscal targets and we were in a position to begin a modest improvement in front-line services. Additional funding in the education sector last year will go towards providing 900 new classroom teachers, 480 new resource teachers and 220 new special needs assistants and so on. Last September this Government oversaw the first recruitment of new gardaí since 2009. To date, 300 new recruits have entered the Garda College, with a further 250 new gardaí to be recruited this year.
The Minister mentioned figures but with every previous statement on education he spoke of demographic issues and increases in the number of pupils attending schools. He has spoken about extra teachers but the Government is not maintaining the pupil-teacher ratio; that has now deteriorated. There are 27% of children in classrooms with 30 or more pupils around the country. Despite the extra teachers, the number is not keeping pace with the number of new pupils attending schools.
Will the Minister provide funding for the 400,000 people waiting for outpatient appointments? There are people on trolleys in accident and emergency departments in record numbers this year and there are people waiting for operations, which is a very serious issue. Key staff must be hired again in the education sector, including career guidance teachers. Will the Minister do something meaningful about the housing crisis and the homelessness issue that is specifically a creation of this Government?
The Deputy is wrong about the pupil-teacher ratio, as we did not adjust it and we did maintain it. We have provided the additional teachers to do that. We have also had to deal with the demographic pressure in the education area.
The Deputy asked about the health sector. Deputy Fleming assaulted me for approximately ten days at the end of last year about providing a Supplementary Estimate of €680 million for the Department of Health but he is now demanding more money for the Department. I have provided €650 million into its budget this year and since the beginning of the year I have allocated another €74 million to deal with the issue of pressure in the fair deal scheme and accident and emergency departments. This was to ensure people are treated in the appropriate setting.
With respect to housing, Deputy Fleming will recall that I regarded this as the most important issue in my budget speech last year, and I allocated €2.2 billion to start a social housing programme that had not happened in the entirety of the previous Government's term in office. These are important issues and we are addressing them on the basis of our capacity to do that.
When it comes to a Supplementary Estimate, Fianna Fáil and I will always support the Government where it will improve the health service. We will oppose the Government completely if the Supplementary Estimate is a cover-up for a flawed Estimate that was introduced in the first place. With most of what the Government introduced last year, we told the Minister on budget day that the Estimate was flawed. The HSE and the Minister for Health stated it was a flawed Estimate. The Minister believes we should applaud him when he corrects his flawed Estimate but we will not do so. I will support the Minister with a Supplementary Estimate to improve the health services.
In regard to the €2.2 billion for housing, the biggest announcement in the budget last year, much of that is by way of public private partnerships in the private sector, none of which has been put in place. Every time I hear the Minister for the Environment, Community and Local Government, Deputy Alan Kelly, speak on the issue that €2.2 billion moves from 2020 to 2021 to 2022. I do not know where it will end. That promise of €2.2 billion will not even end in the lifetime of the next Government.
Deputy Fleming cannot have it both ways. Fianna Fáil demands more spending all the time, on Topical Issues debates and on Private Notice Questions, yet it says it is wrong to spend more. The people know what Fianna Fáil did to the economy. In terms of housing, social housing was commenced in every county in the country last week by the Minister, Deputy Kelly, with a budget of €300 million.
186. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if he will prioritise low-paid workers in the forthcoming pay talks with public sector unions. [18407/15]
My question brings us back to today's talks and the issue of public sector pay. I want to know if and how the Minister will prioritise low-paid workers in the current round of talks. I heard the Minister say earlier that anything that is agreed must be prudent, modest and sustainable. He urged realistic expectations. What does that mean for low-paid workers in the public sector?
As I have indicated, the negotiation process is underway and I do not propose to compromise it by engaging in speculative comment or debate on the detailed negotiating mandate of the people I have sent to talk on the Government's behalf. I want to make it clear, however, that all public servants from the lowest paid to the highest paid have contributed to our economic recovery. We designed the cuts imposed in the FEMPI Act I introduced in 2013 to be as progressive as possible. We protected the core pay of 87% of public servants; that is those who earn less than €65,000. The Haddington Road agreement reiterates the commitment to give priority to those public servants on salaries of less than €35,000. The agreement also contains commitments to those who suffered an additional real pay cut in 2013 either through a direct cut in core pay or through the loss of the supervision and substitutions allowance paid to teachers. The agreement is a collective agreement registered with the Labour Relations Commission and it contains detailed commitments on the restoration of those pay cuts. As Minister for Public Expenditure and Reform, I will respect the terms of the collective agreement I solemnly entered into as should any person who respects the formal industrial relations processes of the State.
My intention is that any agreement reached will maintain and build upon the productivity and other reforms delivered through earlier agreements, including the Haddington Road agreement, and secure an industrial relations framework that will foster and support further productivity and change in the workplace. Reform is now a constant part of employment for public servants and is a central element of my strategy to deliver a public service that will in turn deliver improved outcomes for all stakeholders, including the business sector and every family in the State.
The difficulty with the Minister's reply is that it jabs at an answer. Previously, he has stood up in the House and given a commitment of sorts that those on lower incomes within the public service, including the Civil Service, would be prioritised. Ever since he made that commitment, the Minister has studiously rowed back from it. He says that every public servant has made a contribution. Yes, they were all captured by the FEMPI legislation. However, the big scandal in terms of the payment system within the public service is that there is a small minority at the top end who are outrageously overpaid by international standards while there is a set of people further down the chain who do not even earn the living wage. Some 4,000 of them, in fact, rely on family income supplement. When the Minister talks about winding back FEMPI and reinstating pay, he should start with that set of workers as a matter of logic as well as decency. What is the Minister going to do for them that is prudent, modest and sustainable?
The Deputy asks first about my actions. The only clear action I have taken was in regard to the Haddington Road agreement whereby anyone earning less than €65,000 received no cut in actual pay.
Those who earned more than €65,000 received pay cuts ranging from 5.5% to 10%. That is the reality and that is my record. It is not the previous Government's record but my record.
On pay comparisons, I am sure the Deputy has had an opportunity to look at the comparisons published by the CSO last week. Up to 2006, the public service, on a pay comparison basis, was paid more than the private sector. The snapshot of 2010 showed that situation no longer exists and that the public sector and the private sector were less than 1% apart. However, where they were apart was in respect of the lowest cohort of workers in the public sector who were better paid than comparable workers in the private sector. The highest half of public service workers were less well paid than their comparators in the private sector. I am sure Deputy McDonald will be conscious of that when we have to recruit consultants, people to man our health service, judges and so on.
The point I am making is not so much a point of comparison between the public and private sectors, although the Minister may note the advance and the toxic reality of zero hours contracts, casualisation of work and a driving down of terms and conditions in the private sector which, I suggest to the Minister, might account for the situation he described in terms of lower paid public sector workers. I have just told the Minister that some 4,000 of such workers rely on family income supplement. This fact is an admission by the system that these workers do not earn enough to maintain a basic lifestyle - not luxury, nothing fancy, just the basics. I want to know where low paid workers feature in the mandate the Minister has given to his officials in these talks. It seems to me that the Minister has stepped back from what he said a number of weeks ago about prioritising lower paid people. That is how this sounds to me. I would like the Minister to get up from his seat and tell me that I am wrong and I respectfully ask the Minister not to tell me about everyone because I want him to focus on the low paid in the public and civil service.
The response of the Deputy opposite is almost amusing because the day the Haddington Road agreement was negotiated, that early morning before it was actually published and certainly before it was distributed to anyone, the Deputy opposite, never having read it, was on the plinth denouncing it and its contents. Now she is concerned about the next phase of the process.
I am concerned about the low paid.
The House will be glad to know that the Minister of State, Deputy Gerald Nash, will be introducing before the summer recess groundbreaking new legislation to protect low paid workers, including the protection of collective bargaining and the restoration of registered employment agreements, which were struck down by the courts. That is something with which all trade unionists and all workers will strongly agree.
In respect of my aim in the pay talks that are currently under way, I have said that I will be faithful to the Haddington Road agreement, which was solemnly entered into by myself and the Government on one side and the trade union movement on the other, and which reflects the importance of ensuring that the focus is on low paid and middle income workers in particular.
