Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Thursday, 22 Oct 2015

Vol. 894 No. 1

Financial Emergency Measures in the Public Interest Bill 2015: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

As I was saying before I rudely interrupted myself yesterday, there is context to this legislation. While referring to the Bill, I am keen to elaborate on the issue of social solidarity because the term was used a good deal in the context of bringing forward this emergency legislation between 2008 and 2011 and asking the people to make inordinate sacrifices to adjust the public finances. In the context of the adjustment of the public finances, another issue had to be addressed. This was the adjustment to and the repair of the balance sheets of our banks. That required the investment of vast sums of money into the banks by the taxpayers and the people.

When we discuss the difficulties and trauma this country has experienced, often we forget that many players were responsible for the downturn in the economy. There were many international circumstances and factors. Of course, these were always ignored in this House by some political parties. The difficulties we faced related to the collapse of Lehman Brothers, the international credit squeeze, the locking out of access to international markets and the difficulties Irish banks had at the time in trying to access wholesale money markets on a short-term basis. Furthermore, there has been a move away from traditional banking practices in recent years. Previously, banks used to take in deposits, lend money out and charge a margin. That system was overtaken and we were into a situation where banks funded loans on the wholesale money markets. That is fine while there is a continual flow of funding but the moment it stops, banks are immediately impaired. That happened here in 2008 and the consequences were catastrophic. I refer here to the bank guarantee and all that flowed from it. There has been a continual discourse. The banking inquiry, which has held its meetings in the bowels of this Parliament for the past year or so, has investigated the matter in detail. I imagine it will make recommendations and finalise a report sometime in January.

Through all of this, members of the public have asked questions on a regular basis as to why certain individuals were asked to make major contributions to the readjustment in the public finances. They are probably wondering why it now seems to be a case of business as usual again. There is a good deal of justifiable anger because we have asked the people to carry a major burden. That burden has been lightened in recent times in terms of improvements in the economy, unemployment dropping, changes to the FEMPI legislation, the Lansdowne Road agreement, pension levies and the recent budget as well. However, there remains a concern that nothing has happened, that nothing has changed and that it is business as usual for many of the banks. For example, let us consider a person who took out a loan between 2005 and 2007 - the height of the property boom - and purchased a house. That person could have rightfully assumed that his income would be X for the foreseeable future, only to find that his income was no longer X but was in fact Y because the State had taken a substantial amount of that money in order to shove it into the banks. These same people were defaulting on their mortgages yet we find that the banks, which they had helped to save by extraordinary effort and sacrifice, are now penalising and punishing them on a continual basis. One need only visit any court in the land to see the number of repossessions being pursued. It is simply disgusting. Something has to be done to rectify this if we are to have genuine social solidarity and if we are to be a republic where everyone has a fair crack at the whip. In any event, the fact that these institutions, which were supported by this Parliament through legislation and funded by the people, are now viciously assaulting that social solidarity is repellent. Repossessions occur on a regular basis. The banks dismiss people's trials and tribulations with regard to the financial difficulties in which they find themselves. It is business as usual and that is simply wrong.

I recall occasions when a number of Labour Party Deputies who used to sit on this side of the House but who are now on the benches opposite consistently accused the then Government of not jailing bankers and not having them all locked up. The bottom line is that it is almost five years since the current Administration entered office but I do not see anyone being imprisoned in Mountjoy for mismanaging or damaging the economy or misappropriating funds. There seems to be little responsibility or culpability accepted. I have no difficulty in accepting my share of culpability. In fact, I have accepted it. That matter was adjudicated by the people in 2011. However, it is business as usual for many of the same people. They are back in business. Indeed, the institutions are back in business in a harsh way.

When we discuss FEMPI legislation and lightening the burden on people, we need to be mindful of the untold damage that is being done on a continual basis to ordinary people. All they wanted to do was buy a house, put a roof over their heads and those of their family members and go through life in the normal way with normal hopes, dreams and aspirations. They are callously being cut away every day by the same institutions that limply, lamely and deceitfully walked into Government Buildings and asked for a handout from the people. Indeed, those institutions got a very large handout.

We often discuss FEMPI, sacrifices and burden-sharing. However, I do not see much burden-sharing when I witness the daily carry-on in the courts in respect of repossessions. People are being dragged over the coals and their hopes and aspirations are being completely shattered while the lads are back in the corporate boxes again. That is simply not acceptable, particularly if we are to have a society in which everyone is to have a fair hope that their aspirations and general outlook on life can be accommodated. The people who bought homes at the height of the market were not buying for any reason other than that they wanted to put a roof over their heads. These were no investment properties, these were their homes. The thuggery going on in terms of repossessions is something that I find most distasteful. It is happening as we speak in this Chamber.

I welcome all the provisions in the Bill in terms of lightening the burden placed on people and the public service in the context of the FEMPI legislation and the very deep and harsh cuts that were made. It is a little raw for those in government to say they are lightening the load on people now when 300,000 individuals with variable mortgages are still being charged exorbitant interest rates and when the banks are inclined to ignore the pleas of the Minister and this Administration. These banks are literally extorting money from their customers at exorbitant interest rates and if those customers cannot pay up, then the banks will head down to the courts.

What is happening in this country in terms of repossessions is quite disgusting. Those in banks will provide all the figures about mortgage resolution mechanisms and everything that goes with it but, ultimately, it is they who decide who stays in the house and who does not. They are the people who decide whether an individual is entitled to his dreams and aspirations. These corporate entities should be brought to heel by the Government in terms of the way they are dealing with individuals on a daily basis.

When those in government start to lighten the burden, they should not applaud themselves and point out that people have been very good to take the medicine and that the Government is now helping them in their recuperation. The Government should be mindful of the fact that the public has not forgotten that they went through difficult times to bail out institutions.

Those institutions seem to be oblivious to the misery and suffering on a daily basis in this country, in terms of the repossessions and the extortionate variable rates charged for mortgages.

We may also accept that there are only two lending institutions in this country with regard to credit flows. I do not believe there is a proper competitive edge in the marketplace. The Minister for Finance will tell people to move mortgages, but it is very difficult for families, who are under major stress and pressure, to try to find other lending institution to move mortgages to. I meet families every day of the week in my clinics, and I am quite sure if the Minister of State holds clinics he meets families who are finding it exceptionally difficult to make progress in terms of resolutions.

The changes to FEMPI will be welcomed by the people, but we should also be conscious of the fact that many people who carry burdens are still suffering. While this might lighten their load to a certain extent, other corporate institutions in the country are crushing people on a daily basis. That shameful activity must stop.

I welcome the Minister of State, Deputy Humphreys. I congratulate Deputy Kelleher on his Pauline conversion. I agree with him in regard to the banks. He is absolutely correct.

I have never been on the road to Damascus.

I am glad he fell off the horse in the right way and has come over to our side in regard to how we can rescue our country. For that I applaud him. I will come back to his remarks on the banks.

This debate is to be welcomed because the Bill is significant in the context of the road travelled by the country and people to recovery. Let us cast our minds back to the days prior to 2011. Deputy Kelleher said the people gave their verdict. They still face a choice. Do we jeopardise the recovery or go back to the good old days, in terms of largesse, spending and no plan at all?

Promises of more spending.

The reality, as Deputy Kelleher knows, is that our election manifesto in 2011 was quite clear. This Bill is welcome. I speak as a public servant who has spent all of his life teaching and being involved in a voluntary capacity with organisations dealing with disability. I fully understand the role played by public sector workers and their families in our communities as we as a country rose above the economic catastrophe that befell us.

This debate is about pay restoration, and that is why it is important to acknowledge and thank our public servants. They are the men and women who have had to endure two and, in some cases, three pay cuts. We must acknowledge the sacrifice they and their families have made as they assisted the Government in bringing the country back from the brink. That required a gargantuan effort by the people, but the Government has had a plan to fix our economy.

We may be the fastest-growing economy in Europe, which makes for wonderful reading and a great banner headline, but we must now ensure that translates into the lives of every citizen, no matter where they are from. They should feel the benefit of our economic recovery.

There is a narrative espoused by certain commentators about the public service. I remind such people that public servants are the men and women of our Defence Forces, Garda Síochána, nurses, teachers and first responders, to name just some. They are also the men and women who work in the Houses of the Oireachtas and provide a valuable service to the nation. When people are in trouble, they look for help from those working in community welfare offices, which provide a last refuge or first port of call for many of our citizens.

When I hear members of the Fourth Estate pouring scorn and derision on our public servants, I often ask myself whether they know about whom they are writing or talking. The great mantra is that public servants have permanent and pensionable jobs. I ask the people who write in our newspapers and commentators whether they would do the work of a garda at 3 a.m., a first responder to an accident or a nurse working in an ICU ward.

The Bill before us is symbolic in that it reflects how we as a nation have come on a journey. As the Minister, Deputy Howlin, said, it is about arising from the fiscal emergency to support middle and low-income earners. That is why it is important. I appeal to the ASTI, in particular, to reconsider its decision on pay talks. It has a duty to reballot its members in the context of a larger number who may vote in a future ballot.

I am acutely aware of the major imposition of the past ten years on many workers, be they in the private or public sector. People have lost their jobs, had their livelihoods decimated and their quality of life severely damaged. Thankfully, we are beginning to emerge into a better place as a country. It is important that we recognise that the future is about quality of life, balancing the pay recovery and sustaining and improving our public finances, which offer us an opportunity to bring about reform in how we as a country do our business.

Deputy Kelleher and I are members of the Joint Committee on Health and Children. I wish to focus on health. We have seen progress in areas such as the national children's hospital, how we treat patients and carry out procedures, Healthy Ireland and the introduction of free GP care for those aged under six and over 70 years. They are just some of the measures about which I want to speak.

Deputy Kelleher and I may have a difference of opinion on how we achieve what we want to achieve in health, but we all want to see a health system that is based upon the medical needs of patients, rather than what is in their pockets. We need to take time to arrive at a universal health service. Unfortunately, the health system is not like a car. If it breaks down one cannot bring it to a garage, put it up on a ramp and give it a service.

The health system is demand-led and people-centred, and cannot be stopped and overhauled. Changes have to be carried out incrementally. We have succeeded in increasing the health budget and have seen greater investment in information technology, which I hope will see projects like e-referrals proceeding, waiting lists being put online and the issuing of the first individual health identifier.

It is important that we examine how hospital groups can bring profound and real change to the delivery of our health care model. Equally, it is important that we acknowledge that the journey for our health system will continue, in particular in the area of primary care.

New primary care units have opened. A societal change is required in our attitude towards what is seen as the first port of call, namely, emergency departments. As Chairman of the Joint Committee on Health and Children I have become a major proponent of the need for primary care as an alternative to accessing hospitals as a first port of call. Work is done in hospitals which can be done in primary care units, and such work should be expedited and prioritised.

Today we have signs of progress in the Oireachtas, with this Bill in the Dáil and, in the Seanad, the final legislative programme piece on the road to marriage equality. This morning the Oireachtas Joint Committee on Health and Children engaged in pre-legislative scrutiny of the adoption (tracing and information) Bill, which will give those who require information that has been denied them for so long the opportunity to obtain it. Reform is taking place and change is happening in Ireland. We are trying to make Ireland a better place, cast aside the darkness of the past, deal with the legacy issues and allow people to flourish and become the best they can be.

I often wonder about some of the people opposite - not Deputy Kelleher, I have to say - who engage in absolute populism. This week I was on local radio with a particular person who was populist, to say the least, who had no policy or alternative but opposed everything and gave a message that everything could be better in a faraway place. Populism does not create policy, fix the economy or lend itself to creating jobs, and it certainly did not challenge the economic uncertainties that we had. Has the Government achieved everything we wanted to achieve? Of course we have not. Have we made mistakes? Yes we have, but the important point is that we are trying and have succeeded in creating employment, fixing the economy and offering hope to people. That is what the Bill is about: offering hope for the future.

The plan now must be to use the increasing resources we receive to benefit those who most need them, whether in the area of disability, and autism in particular, or in any other area. I hope the Minister for Health, Deputy Varadkar, and the Minister of State, Deputy Lynch, will look at the area of autism and how we can provide services for those children and adults who require them. We must look at this in the long term with regard to how we can prepare for those school leavers who will come into society with a real need. There is also the area of public health, particularly the Healthy Ireland initiative, and how we can promote a different type of health system and a way of looking at the whole aspect of health in the context of obesity, smoking and the sale of alcohol Bill, which is to be a priority before we go to the country for an election.

If I may digress for a second, Laverne McGuinness, the deputy director general of the HSE, is to leave her post, and on the floor of the Chamber I acknowledge her contribution and commitment to public service and I thank her. She is a person of great experience and commitment who will be missed in the HSE, and I thank her for her commitment and service.

In his remarks Deputy Kelleher made reference to the banks, and I must say I agree with much of what he said. We saw the banks being given very generous assistance by the Irish people. They now have an obligation to work with people to keep them in their homes, lend to business and create employment. We must look at the issue of the banks in terms of how they engage with people. I very much echo Deputy Kelleher's serious call for them to stop dealing with some people in a particular way. There are some people who do not engage with the banks, and we cannot condone this, but those who do and make a decent effort to meet the banks' requirements should not be forced into court or be forced to do anything under duress or with fear. It is important that the banks recognise this. We have made huge sacrifices as a people, and now the banks we assisted have an obligation and duty to work with people.

When we meet the banks they often tell us about their great figures, and sometimes their figures do not add up to reality. Every day all of us meet people in our constituency offices and clinics who have issues with overdrafts being reduced. I met a small business person who was told the other day that his overdraft was being stopped for no apparent reason. Every week we meet people in our offices who have issues with how they can work with the banks to repay their mortgages. It is important that the banks work with all of us to ensure we keep people in their homes and, in particular, to see how they can assist the construction sector and work with people to provide capital where we need to build private and social housing.

As a positive, we as a country have been creating 1,300 jobs a week in 2015. Since the Action Plan for Jobs came into being, 125,000 jobs have been created. Our unemployment rate has decreased to 9.5% from a height in 2012 of 15.1%. These people are back at work. If one travels the roads of Cork city one sees queues of people going to work in the morning in the industrial park at the end of Curraheen Road and City Gate in Mahon, and one sees the investment in One Albert Quay in the city. There is a tailback of traffic down to the harbour with people going to work in the pharmaceutical industry. People are being employed and jobs are being created. What we must do now is ensure that the jobs that are being created are sustainable and that we allow people to have a quality of life commensurate with what they do.

Last week, the budget reduced the contribution that people will pay in the form of the universal social charge, and we all very much welcome this. We have seen the minimum wage increase twice under the Government. It is about people being at work, a value and a job. The past eight years have been painful, stressful and deeply difficult for our people but they have, with the Government, risen to the task, which is why it is important to acknowledge the Bill today.

I will make reference to another issue. Today we as a country are finally passing the Marriage Bill in the Seanad, and it is imperative that we celebrate this great achievement. Next year we will celebrate the anniversary of our Rising. We are a very beloved people throughout the world. Today, our President is in the United States meeting various interest groups celebrating the Irishness and uniqueness that we bring to the world.

In passing this legislation, it is important that we recognise the role and work done by our public servants. It is not about pitting private against public; it is about recognising the work all of us in society do that contributes to a better and more equal Ireland. Our economic recovery means we will have more money at our disposal, and this money must be used to ensure the recovery is sustainable for the next generation, that we never have to go back to the days of the past and that we never have to see the type of auction politics engaged in previously. It is about ensuring there is clarity in the run-up to the next election and that those on the far side of the House recognise that there is a better way of doing government, which is the way the Government has done it over the past four and a half years in putting our people first. Sometimes Sinn Féin really baffles me with its voodoo economics, because if we look at their policy regarding public sector pay, it really is all over the place. In Stormont in 2012 it implemented a two-year pay freeze for 12,000 civil servants earning more than £21,000, which equates to approximately €24,000. It also cut 22,000 jobs this year in the North.

It tried to capitalise on the Haddington Road agreement process here by opposing it. What is its policy? As the Minister for Health, Deputy Varadkar, stated recently, the party wants to recruit 250 hospital consultants on less pay. The difficulty we have in recruiting staff for the health system is that we must ensure we can retain them on levels of pay that will not force them to go abroad.

I welcome the Bill and I am delighted I had the opportunity to speak on it. I speak as a public servant and I am very proud of what our men and women do in the public service. I know this is a step on the road to recovery. Like Deputy Kelleher, I will mention our banks, which must again begin to work with people. I should not name banks, I suppose, but we know the AIB advertisement to the effect that it is working with people. Let us see the banks working in collaboration with people so we can bring about a better and more prosperous country, where we can all live in our own homes or houses provided by the State. That is the next step in the Construction 2020 project, which we need to see expedited as well.

I thank the Deputies for their contributions and support for this legislation. The Bill before us is not lengthy but it has very important consequences. I will briefly summarise three of the main issues it addresses regarding the pay and pensions of serving and retired public servants. The first is pay restoration. All serving public servants stand to benefit from these reductions in the cuts from the 2009 and 2013 Financial Emergency Measures in the Public Interest, FEMPI, Acts, but importantly, the lower-paid stand to benefit more, proportionally speaking. The second is the pension-related deduction. This additional levy on the wages of public servants has been in place for six years and this Bill reduces the amount payable for the first time. Just as the levy was applicable across the board, so too is this new measure. This is in keeping with the Government’s emphasis on fair and equitable treatment for all. The final issue is the public service pension reduction, which has been applied to the majority of public servants, at varying rates, since 2011. The amelioration of this measure by the Bill is done in such a way that not only do all benefit from the restoration, but it also ensures that through appropriate calibration of rates, all benefit proportionally. No one group is singled out for either preferential or prejudicial treatment.

I will now address some of the specific issues raised by the Deputies. I thank Deputy Sean Fleming for his support and welcome his contribution to the discussion. I will address the main issues he raised, leaving the remainder for Committee Stage. The Deputy inquires as to whether the lower incremental scales for new entrants to the public service, introduced at the beginning of 2012, can be adjusted. The answer is simple, as they already have been adjusted. As part of the Haddington Road agreement, public servants had the 10% reduced scales merged into pre-existing scales in November 2013, so all new entrants could gradually achieve parity with existing gardaí, nurses, teachers, civil servants and so forth.

Deputy Fleming also referred to the concerns of the Association of Retired Public Servants. I assure him that the Government is fully aware of those concerns and officials from the Department of Public Expenditure and Reform have continually maintained an open dialogue with them throughout this process. The approach adopted in ameliorating the public service pension reduction focused the majority of relief on impacted public servants in receipt of relatively lower pensions. This approach will achieve a result whereby the significant majority of retired public servants will be exempt from the public service pension reduction from 2018 onwards.

Having noted this, the required fiscal recovery is not complete and we are not yet at a stage where we can remove-----

Notice taken that 20 Members were not present; House counted and 20 Members being present,

The required fiscal recovery is not complete and we are not yet at a stage where we can remove the financial emergency measures for all public service pensioners. It is estimated that from 1 January 2018, in the region of 25,000 retired public servants in receipt of pensions substantially higher than the average public servant’s pension will continue to be subject to pension reductions. Quite properly, the pension reductions imposed remain larger for public service pensions of higher value.

There is the more general question of this country's financial status and whether the word "emergency", as used in the title of this Bill, is still relevant or apt. The Bill has this title because it is mainly concerned with amending the previous FEMPI Acts. Given the extremely promising signs of economic recovery that we are seeing, the Deputy wishes the Government to declare the emergency over, but we cannot do that. Certainly, the end is in sight and we have come very far from where the last Government had landed us but that is all the more reason to remain cautious and not jeopardise the recovery for which we have all worked so hard. As was outlined yesterday, this restoration is being done responsibly, and part of that responsibility is to not rush and declare the job done. Instead, this Government is patiently staying the course.

Several Deputies have suggested that more should have been done for lower-paid public servants. The position is that the Bill gives effect to the provisions of the Lansdowne Road agreement, which was reached following extensive consultation with trade unions representing all public servants, including lower-paid public servants.

The public service committee of the Irish Congress of Trade Unions accepted the terms of the agreement on 16 September 2015. Any deviation from the agreement at this juncture would seriously undermine the agreement and potentially cause significant industrial relations difficulties. The agreement has been crafted in such a fashion as to ensure that lower paid public servants gain most from the application of the terms of the agreement.

Deputies will be aware that these measures are being introduced at a time when the country is emerging from the economic crisis, but the Government is clear that it must continue to be prudent with budget expenditure. Notwithstanding this, the Bill contains specific measures to address those on annualised salaries of less than €24,000, who will receive a 2.5% increase in addition to a flat €1,000 increase and those on annualised salaries between €24,001 and €31,000 will receive a 1% increase in addition to the €1,000 flat rate increase. Moreover, lower paid public servants will benefit from the reduced pension-related deduction rates.

The issue of additional working hours has also been raised. While not a matter that is addressed in this Bill, it is the case that this measure brought public servants into line with industry norms in the context of working hours. Even with this measure, the public service continues to offer a wide range of family-friendly schemes to its staff.

Deputy Daly has made a point regarding the situation of teachers, specifically in relation to statements by the ASTI or TUI regarding the Lansdowne Road agreement regarding accusations of bullying by the Government. First, it must be made clear that sections 4 and 10 of this Act, which deal with the increment freeze and the ability to increase pay in certain circumstances respectively, are by no means targeted at teachers. Rather they are general provisions dealing with non-compliance with the terms of collective agreements and represent measures included in the FEMPI 2013 Act, which are now being amended to accommodate the extension of the Haddington Road agreement through the Lansdowne Road agreement.

The Government’s position on this matter is very straightforward. All unions abiding by the terms of the Haddington Road agreement, and the Lansdowne Road agreement which extends it, regarding workplace reform and so forth, will continue to enjoy the protections and benefits of those agreements. These would include such things as being excluded from the more severe increment freeze and the payment of allowances where they have been previously agreed. Obviously, should any union not comply with the terms of the agreement, it would be extremely difficult to justify their gaining from it, particularly in light of the sacrifices made by their fellow public servants.

All unions and associations were invited into these discussions, with those in ICTU operating under the auspices of the public services committee of ICTU and its processes. That the vast majority of public servants have accepted this agreement by aggregate vote was confirmed by the public services committee on 16 September 2015.

Deputy McDonald has argued that the Bill is too generous to higher paid public servants. I have three points to make by way of answer to this. The Lansdowne Road agreement, and this Bill which gives effect to it, are very much geared towards benefitting the lower paid more, proportionally speaking. It should be noted by the House that those public servants earning over €65,000 will not receive the extra €1,000 in September 2017 and that those very few earning over €110,000 will not receive the full restoration of the cuts imposed on them in 2013 until 2019. However, it is the view of this Government that since all public servants have endured the measures imposed by the five FEMPI Acts, it is only right and equitable that all should now stand to benefit from the partial and phased restoration that this Bill will bring about.

While the 2013 higher pay cuts are being restored over time in these measures the full effect of the 2009 and 2010 reductions will remain in place in 2019. To give an example, the pay of the Taoiseach was some €285,000 in 2008. It is currently just over a net €168,000. When the restoration measures contained in this bill are completed in 2019 that pay will then be a net €182,175, still well below the 2008 level.

Finally, and in support of what I have just said, the FEMPI Acts are predicated on the sharing of the burden across all levels. If this Bill were to exclude the higher paid, the Government would surely be opening itself to a legal challenge regarding the equitability of its measures. Deputy Creighton argued that we should not give any pay increase to public servants and should instead put the money into increasing services. The only way to do this would be to put money into significantly increasing the numbers employed in the public service. She went on to argue that we should do away with blanket increases for all public servants and instead switch to a model of paying by performance payments and bonuses. She maintained that the vast majority of public servants would welcome such a move because they would fare better under such a system with better payments. However, if the numbers employed are increased and the pay model is changed to give the majority of staff more money, we will once again have a runaway pay bill. It is not so much the political philosophy as the arithmetic which is clearly suspect.

I believe that I have now substantively covered the points raised by the Deputies. This Bill gives the Government the statutory basis to make good on the commitments made under the Haddington Road and Lansdowne Road agreements, both of which are vital components in the reform and renewal of our public services. I believe it is right and fair that we honour those agreements, and that we give something back to those public servants, serving and retired, who contributed so much during our country’s financial emergency.

The crisis Ireland has endured has made us wary as a nation, wary of give-aways and poor planning. This is why the Government has been so careful to ensure that the reductions effected by this Bill are done in a way that is fully sustainable going forward. We believe that restoration must be accompanied by responsibility. I thank the House for its support and initial comments and look forward to detailed discussion on Committee Stage.

Question put and agreed to.