Tuesday, 29 September 2020

Ceisteanna (99)

Bernard Durkan


99. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he expects to be in a position to continue with outstanding issues relating to the FEMPI legislation in the course of 2020; and if he will make a statement on the matter. [26668/20]

Amharc ar fhreagra

Freagraí ó Béal (6 píosaí cainte) (Ceist ar Public)

I hesitate to go down the route of this question but it must be asked. I seek to ascertain the progress to date and intentions with regard to restoration of cuts made under the FEMPI legislation given that vast swathes of public servants, including doctors, nurses and many others at the coalface whom we aspire to support, had to take severe cuts during the economic recession.

As the Deputy is aware, section 12 of the Financial Emergency Measures in the Public Interest Act 2013 obliges me to submit a written report on the operation, effectiveness and impact of FEMPI legislation to the Oireachtas before 30 June each year.  As part of those reports, I consider whether or not any of the provisions of the relevant Acts continue to be necessary having regard to the purposes of those Acts, the revenues of the State and State commitments in respect of public service pay and pensions.

My report was submitted in June of this year and highlights: the economic circumstances of the State, the budgetary outlook, the debt position, returns from taxation, Brexit and preparedness for other economic shocks. It concluded that, on the basis of the prevailing economic and fiscal outlook, the timetable for pay and pensions restoration up to July 2022 continued to be appropriate and necessary.

The report references the Public Service Pay and Pension Act 2017. This Act provides for the restoration of reductions made to public service pay and pensions by the FEMPI Acts. In that regard and as the Deputy knows, on 1 October 2020, public servants will receive a 2% pay increase. This will complete pay restoration for public servants earning up to €70,000 per annum. Also on 1 October, reductions of between 5% and 8% made to certain allowances in 2010 will cease.

In addition to pay, the Public Service Pay and Pensions Act 2017 provides that, by the end of this year, an order shall be made to restore, at a date to be decided, reductions made to certain public service pensions.

Taking what I have just said into account, very substantial progress will be made in completing the FEMPI restoration process by the end of this year. I highlight that the elements I have set out relate to the thousands of public servants who have been at the front line in delivering key services during the current pandemic. These services are critical and range across the areas of health, education, justice, welfare and business supports to name but a few. They have ensured that this Government continues to deliver a comprehensive national response to the Covid-19 pandemic.

I thank the Minister for his reply. Given the pivotal nature of the services provided by public servants generally, during the current Covid crisis and during the previous crisis, does the Minister remain satisfied that it will be possible to proceed along the lines anticipated heretofore into 2021 and 2022 without interruption, having particular regard to the disquiet among some in the public sector and what they see as the unfairness of the cuts which were, understandably, imposed upon them?

I thank the Deputy. It is fair to point out that the emphasis of the restoration process to date has been on low and middle-income earners within the public service. By 1 October, people earning up to €70,000 will have had their pay fully restored. That is a significant milestone. There are further measures in the FEMPI Acts, to which I have alluded. A process is set out in the legislation with regard to the unwinding of the remainder of the FEMPI provisions. These will be considered in due course. As I have highlighted, under the current Act, by the end of this year I have to signal a date by which the public service pension reductions will be reversed. There is also a schedule in place so that, by July 2021 and July 2022, restoration will be complete for higher-earning public servants. All of those matters remain under consideration but for now the priority is to see out the current public pay deal and, it is hoped, to negotiate a new one.

The Minister obviously remains satisfied in the ability of the Exchequer to deal with the situations outstanding, particularly those situations in which it was felt there was an unfairness regarding the way cuts were distributed in that they impacted more upon one sector than another. The reply the Minister has given correctly states that those earning up to €70,000 will have had their pay restored but, in the meantime, they would possibly have reached a higher bracket had they not these severe cuts imposed. I am not suggesting for one moment that the cuts could have been avoided at the time. They want right across the board and affected everybody. Everyone was hit very severely. Many people in those income brackets lost their homes for a variety of reasons including having entered financial commitments with which they could not continue. The Minister has confirmed that we will continue with the restoration of cuts made under FEMPI legislation to the best of his ability.

In overall terms, it is very important that we manage the public service pay and pensions bill, which is of the order of €20 billion and which represents approximately one third of the State's overall current expenditure. This needs to be managed in an affordable and responsible manner. That will inform and guide my approach with what remains to be done with regard to the FEMPI legislation. Cabinet gave approval today for the drafting of legislation to remove what has become known as the FEMPI handcuffs. That is another important step along the journey. The 2% pay restoration to be implemented on 1 October will have a full-year cost of €264 million. On balance, it is the right thing to do to honour the agreement in full. I hope it will create a better and more positive environment within which it might be possible to negotiate a new deal with the public service unions, albeit in very changed and difficult circumstances.