Thursday, 18 April 2013

Ceisteanna (7, 39)

Bernard Durkan


7. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he continues to monitor the performance of the various Government Departments in respect of the achievement of targets and or reforms; those Departments that so far have achieved the best result and those that might be expected to improve; and if he will make a statement on the matter. [17830/13]

Amharc ar fhreagra

Bernard Durkan


39. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he expects to be in a position to meet the targets set by the troika and agreed by his predecessors in respect of public pay and expenditure; the extent, if any, to which he expects any changes by way of alleviation of the impact on the economy in the short and medium term; and if he will make a statement on the matter. [17829/13]

Amharc ar fhreagra

Freagraí ó Béal (18 píosaí cainte) (Ceist ar Public)

I propose to take Questions Nos. 7 and 39 together.

The Government continues to make good progress in achieving all of our deficit targets and priorities, as articulated in the Government programme. We are bringing public expenditure back onto a sustainable path and driving forward the public service reform agenda to ensure that efficiencies and reformed work practices play a full part in contributing to the overall budgetary consolidation effort, which is essential to achieving our annual deficit targets. To date, all quantitative fiscal targets set as part of the EU-IMF programme of financial support have been met in full.

The expenditure report 2013, published on 5 December 2012, includes further well-specified expenditure savings measures across every area of government spending. While the Government's structural economic and budgetary reforms will bring a return to prosperity and growth in the medium term - indeed, the economy grew in real terms in 2011 for the first time since 2007 - the current international economic position, combined with a high level of uncertainty across the world's financial markets, will require Ireland to maintain fiscal discipline into 2014.

Regarding the monitoring of the performance of various Departments, it remains a matter for each Minister and his or her Department to ensure that the Vote-level allocations are adhered to while ensuring that it continues to provide essential front-line services and manages increasing demands. With this in mind, the new medium-term expenditure framework aims to incentivise Departments through the implementation of a new carryover facility for those that exceed targets and successfully manage their allocations within budget in any year so that they can use those savings in the following year. There will be no pressure on them to spend. The Departments that are proactive in driving reform, innovation and structural planning will be best-placed to avail of this facility. Departments that exceed their current expenditure ceilings in any given year will consequently bear an offsetting adjustment in their envelopes for the following year. They will be required to devise appropriate policy measures to live within their reduced allocations. It will be a matter for Ministers and heads of Departments and offices to devise forward-looking plans and policies and to ensure that the ministerial expenditure ceilings are adhered to.

I thank the Minister for his comprehensive reply. I acknowledge his herculean efforts and those of his Department, the Labour Relations Commission, LRC, and the trade union movement in the long and detailed negotiations. In the end, the proposals did not receive support in the recent vote.

Without disadvantaging those who engaged in the discussions and being mindful of the need to include those who raised particular issues, will it be possible to engage in a meaningful and useful way with a view to achieving the preferred result, recognising the important achievements to date and the need to comply with the troika arrangement entered into by the Minister's predecessors?

I might have the opportunity to respond to Deputy McDonald's question if I piggyback it onto these questions, as I did not mention the troika when she raised that matter.

We need to find €300 million in payroll savings in this year's budgetary arithmetic. We must embed them in a way that achieves savings of €1 billion by 2015. When we embarked upon this process, I had no illusions about how difficult it would be. I commended the public sector unions on engaging in the process. It would have been easier for them not to involve themselves and to tell us to impose what measures we wanted so that their fingerprints would not be on them.

Nevertheless, they did engage and they put forward solutions. Some engaged tentatively. Some attended but did not engage at all. That was their own decision, but those who did engage contributed to what was demonstrably a reasonable package. One could ask what is fair. Is it fair to take a cent off anyone? In truth, all the reductions in expenditure impact on people and we would rather not do it. Any of the reductions could be described as unfair. I refer to the reductions in the social welfare budget in recent years. A previous Government decided to unilaterally cut all pensions and social welfare benefits. All of those things are very difficult. I commend those who were involved. We must now reflect on how we can go forward but the inescapable truth is that we need to get the money.

I had more than one discussion with the head of the troika since the vote. He understands the result and what it means. No doubt my officials and the officials from the troika will engage in discussions over time, but they like us understand that this is an issue that must be addressed. We must find a solution that finds the money in the payroll and pensions Bill.

I call Deputy Durkan for a brief question.

If someone else wishes to speak he or she is welcome to do so.

Deputy McDonald was also offering.

Okay. I am being very magnanimous.

That is very gallant of Deputy Durkan.

Absolutely. This is the spirit of co-operation.

I have heard the Minister called lots of things but never Hercules. That is great. The Minister is fixated on the need to find €300 million within the public sector payroll. Has the troika instructed him that it must be found there, or is it the case with many policy areas, including the sale of State assets which we just discussed, that the targets are set and the troika is hands-off in terms of where the Government finds the money or makes the adjustments? Has the troika instructed the Minister to find the money in the public sector pay envelope?

On the same subject, why do we hear the mantra of €300 million for 2013 given that an agreement was made until the middle of 2014? In addition, we have had a series of financial reports such as the one from the advisory council over the two weeks the Dáil was not sitting which indicated that will have a primary balance in 2015 and that because of the horrific sacrifices ordinary people have made since the disastrous Fianna Fáil blanket bank guarantee – supported by Fine Gael to the hilt-----

Now Tommy, keep it clean.

-----there was an attempt to rewrite history the night of the promissory notes but we know the history. The Minister and I and a few others stood against it. Given those circumstances and given the fact that we have an earlier budget this year because of the two pack, is there not a case for giving public servants and the rest of the population a bit of a break, and to give them some kind of encouragement and reward rather than chastising them again? I say that given the kind of pressures people have and the feeling that they are on the edge of a precipice. Could the Minister explain the focus on the €300 million?

I entirely understand the sentiment expressed by Deputy Broughan and I agree with much of it. I do not wish to be in the current position. I do not wish to reduce expenditure in any area of the public service. I do not want to ask public servants to make a contribution.

I say that because people call for an end to austerity. I would love to end austerity today. The problem is that we are borrowing €1 billion a month for public services. In truth, that is not sustainable in the future. A target has been agreed to get our deficit below 3% of GDP by 2015. In order to do that there is approximately €5 billion in further adjustments remaining. We will divide that between taxation and expenditure reductions. There is €3 billion in the expenditure reduction side. That is in the budgetary arithmetic, in the medium-term fiscal plan and in the agreement with the troika. If we have to save €3 billion, approximately one third – 35% - of expenditure relates to pay. We must focus on that or else pile on the cuts in other areas. That was the choice we made last year. One must decide whether one piles on more on health, education and social welfare. Instead of that we gave those areas relief. The Government added back €150 million last year to health and social welfare in particular to lessen the awful decisions that had to be made in those areas. It is reasonable in a balanced way, if one is going to ask social welfare recipients, those dependent on the health service or who want an education to carry some of the burden, that public servants who earn above €65,000 would make a contribution, in the same way as Members of this House, myself and others, as well as people who are consultants, doctors, judges or senior gardaí – those who are significantly well paid. That is reasonable. That is the strategy.

Could I ask the Minister whether in the context of the discussions he has had with the head of the troika if he had an opportunity to discuss any of the alternatives in order to bring to a satisfactory conclusion to the discussions that have already taken place and the need to address the issues arising? I accept this is based on hypothesis to a certain extent. Was it possible to illustrate for the troika the Government’s ability to meet its requirements by the end of the year?

We have a track record with the troika of delivering on every promise the Government made to the troika. Our reputation was rubbish as a nation internationally when we came into office. Among the many big jobs we had was to build our reputation so that people could trust us. The two things we said is that we would not over-promise and we would not under-deliver in what we undertook to do. We have reached all our targets. We have delivered upon 190 individual commitments in the troika programme, many of them involving substantial bodies of legislation.

I am mindful of what Deputy Broughan said, that people need a break. We must have a horizon that gets us out of this crisis. People want to know that there is hope. That is what we are about now. The bulk of the adjustments have been made - painful, difficult and awful for many people that it was. Let us look forward now to growth, job creation and jobs investment. Let us unite with those who had a strategy of denial on the means to that end on the next phase. Although there is some way to go yet, and there is pain involved – often the last 20% of any journey is the most difficult - when we get beyond the rebalancing we have within sight the prospect of exiting the troika deal, of growth and job creation in our economy. Let us work in tandem to achieve that.

I thank the Minister.