Oireachtas Joint and Select Committees
Thursday, 18 October 2012
Public Accounts Committee
2011 Appropriation Accounts of the Comptroller and Auditor General
Vote 36: Defence - Review of Allowances
10:05 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I welcome the witnesses and apologise for the delay in starting this part of the meeting but we had a meeting this morning with Department of Public Expenditure and Reform officials.
Before we begin the meeting I remind members, witnesses and those in the Visitors Gallery to turn off their mobile phones because they interfere with the sound quality and transmission of the meeting.
I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give to the committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable.
I remind Members of the provision within Standing Order 158 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits or the objectives of such policies.
I welcome Mr. Michael Howard, Secretary General, Department of Defence. I ask him to introduce his officials.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I welcome Colonel Brian O'Keeffe, general secretary of RACO, and ask him to introduce his officials.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I welcome Mr. Gerry Rooney, general secretary, PDFORRA, and ask him to introduce his colleagues.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I welcome the other witness.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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You are both welcome again. I ask Mr. Michael Howard, Secretary General of the Department of Defence, to make his opening statement.
Mr. Michael Howard:
To place today's discussion in an overall context, the expenditure in the Defence Vote in 2011 was of the order of €700 million gross of which slightly more than €500 million is accounted for by payroll. During 2011, the numbers employed in the Defence Forces averaged around 9,500, there were 735 civilian employees and 348 civil servants. In nominal terms, the Department of Defence spent a total of roughly €100 million on allowances. However, more than half of this figure - €53 million - is accounted for by military service allowance, MSA. MSA is a universal payment made to all military personnel to compensate them for the unique demands of military life. MSA is counted as part of the basic pay of military personnel in pay reviews. The balance of roughly €46 million covers allowances as the term is commonly understood, that is, payments that are made selectively to individuals albeit for widely varying reasons.
The term "allowances" covers a variety of payment types that are very different from each other. Some are intended to reimburse expenses and do not actually form part of remuneration. Some payments are made in recognition of particular technical or professional qualifications. The Defence Forces have to be self-sufficient. Therefore, in addition to having purely military training and qualifications, the military workforce is extremely diverse and it includes widely differing skills ranging literally from plumbers to pilots. The pay system has evolved different rates of additional pay to reflect that.
Finally, there is a range of allowances that seek to recognise particularly onerous duties whether at home or overseas that fall outside the norms taken into account in setting basic pay. I wish to emphasise that military personnel may be required to work around the clock, work long hours and remain on duty at weekends. The Defence Forces do not receive overtime, hence this third category of payment.
Overall, while there are around 65 separate allowances, it is important to emphasise that many of these allowances are paid to relatively small numbers of personnel. Almost two thirds of the €46 million is accounted for by the top three categories of allowance, that is, technician pay, €7.7 million; security duty allowances, roughly €10.5 million; and overseas peace support allowances, €10.7 million. The "tech" pay and the security duty allowance had already been selected for review as part of the Defence Sectoral Croke Park Agreement. Their review has now been subsumed into the larger central initiative and is being addressed with the representative associations in accordance with agreed procedures.
It is also important to emphasise that representation in the Defence Forces, compared to other areas of the public service, is a comparatively recent phenomenon. It was introduced around 1990. Roughly half of the allowances, 33, date from 1990 or later. That reflects the influence of the associations which identified discrete groups of military personnel performing duties that either impose more than the normal burden on personnel or that require unique qualifications.
Many of the allowances apply to quite small numbers of personnel. They frequently address circumstances where military personnel are required to perform duties for exceptionally long periods or where changes in technology require personnel to acquire additional qualifications. For example, an aid to the civil authority allowance compensates personnel who are called out after hours in emergencies such as flooding or bad weather. An explosive ordnance disposal, EOD, allowance is paid to bomb disposal personnel.
The committee may wish to note also the ongoing reorganisation, which is a major change in the organisation and structure of the Defence Forces. There have been strength reductions across the board.
The reorganisation has had and will have a very major impact on the lives and future careers of serving and future members of the Defence Forces right across the entire organisation. This programme has entailed barrack closures and a large-scale reorganisation process affecting thousands of personnel. There has been a reduction in the number of brigades, from three to two, requiring the redeployment of some 2,000 personnel. This is in train at present.
Throughout this very challenging period, the modernisation process in defence has been overseen by a sectoral implementation group. While very difficult issues have surfaced, and very robust negotiations have been necessary, there has been continuing constructive engagement by the representative associations at a particularly difficult time for their members. The Croke Park agreement has been adhered to in the most difficult of circumstances and it has and is being used to facilitate fundamental and far-reaching reform. The Government's recent decision on allowances is now in process. I expect the same constructive response, albeit in the context of robust negotiations.
The committee may wish to note that a small portion - less than 2% - of the approximately €100 million refers to allowance payments to civilian employees and civil servants. Pay issues in relation to grades employed in more than one Department are dealt with centrally. These grades are not comprehended by the defence sectoral agreement under the Croke Park agreement but are comprehended by central arrangements.
10:15 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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May we publish Mr. Howard's statement?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I invite Colonel Brian O'Keeffe of RACO to make his opening statement.
Mr. Brian O'Keeffe:
On behalf of the Representative Association of Commissioned Officers, RACO, I thank the members for the opportunity to address them today. We welcome the opportunity to provide the committee with our perspective on the matter of allowances in so far as they apply to our members.
The Defence Forces' remuneration structures are a complex mix of pay and allowances. This reflects the complexity of the organisation itself in terms of the spread of skills and expertise of its members and the range of duties performed by personnel across the three services - the Army, Air Corps and Naval Service. The organisation has been described as being like a microcosm of the overall public service. The Defence Forces have doctors, nurses, engineers, firemen, pilots, sailors, IT specialists, mechanics, teachers and lecturers, logisticians, carpenters, electricians, lawyers, cooks, accountants and more. Of course, we are also soldiers, sailors and airmen and women with a diverse range of specialised military skills and expertise. We perform a variety of duties on land, sea and air, at home and overseas, 24 hours a day, seven days a week, 365 days a year. It is inevitable that the remuneration structures for such an organisation will be complex and, perhaps, difficult to understand. We are not unique in this. Our research indicates that broadly similar structures apply in the armed forces of many other countries, such as the United Kingdom, Finland, Austria, Germany, Denmark. Australia and New Zealand.
A range of allowances and additional pay items may be payable to individual members of the Defence Forces, either on an ongoing basis or periodically. These relate either to qualifications, skills or expertise or to the nature or duration of particular duties performed. In general, our allowances are taxable and not pensionable. A large number were in place before representation was introduced to the Defence Forces, while many were introduced or restructured by the Gleeson commission in 1990. While RACO's preference would generally be for pay increases over allowances, it has rarely been possible for us to address particular remuneration problems other than through allowances. There are many reasons for this, not least the fact that the allowances route is often the most cost-effective one for the official side to take.
We note that the recent review of allowances carried out by the Department of Public Expenditure and Reform, DPER, identified structural weaknesses in the way members of the Defence Forces are paid and that the Government has decided that new pay arrangements will be developed in the medium term. We look forward to making a significant and positive contribution to the development of more effective structures. However, we caution that it will not be an easy task. It is not simply a matter of picking a few allowances to consolidate into pay and abandoning the rest.
More immediately, the Department of Defence has recently made proposals to withdraw certain allowances from current beneficiaries. Discussions on this matter have opened as part of the process provided by the Croke Park agreement. We will engage with this process and hope that we can reach a speedy conclusion.
My association is totally committed to the letter and spirit of the Croke Park agreement. The Defence Forces are delivering on all elements of the action plan for our sector. Currently, the most challenging item is the reduction of the number of Army brigades from three to two. Under this reorganisation many individual members of all ranks face redeployment to new locations or significant retraining to enable them to operate in new roles. They also face a serious reduction in career advancement opportunities through the reduction in appointments. In addition, the change involves a massive effort in administration, logistics and training. The plan for this reorganisation was only finalised in July but the new organisation will he in place by the first of November, with personnel filling posts in their new units. Of course, the retraining and up-skilling process will continue way beyond that.
The Defence Forces have been described as a model of public service transformation. The evidence of the past 20 years supports this description. Over this period, a process of continuous and radical change has transformed the organisation into one that is acknowledged internationally as being world-class. We have delayered and fundamentally restructured at every level, significantly reduced the number of barracks occupied, refocused our training, overhauled all of our administrative systems and processes, and brought our equipment right up to date through major re-equipping programmes. These have been funded primarily by payroll savings achieved through reduction in headcount. From 2001 to 2009, as public service numbers generally increased, the strength of the Defence Forces fell by more than 11%. This resulted in annual payroll savings conservatively estimated at €57 million in current terms. This followed on from a process in the 1990s that had resulted in a 20% reduction in military numbers during that decade. That is a 28% reduction in numbers since 1990.
We recognise that the issue of allowances is a serious one and that the overall costs are very significant. However, it has been dispiriting and demoralising for our members to see the considerable attention paid in the media and elsewhere to individual allowances paid to some members of the forces of as little as €27 per year when there is no coverage of the fact that headcount reductions since 1990 have yielded payroll savings of upwards of €170 million a year.
I thank the committee once again for the opportunity to address it on this matter.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can we publish Mr. O'Keeffe's statement?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I invite Mr. Gerry Rooney of PDFORRA to make his opening statement.
Mr. Gerry Rooney:
I thank the committee for extending the opportunity to PDFORRA to come here this morning and outline its position in relation to the allowances paid to its members. PDFORRA represents the 8,000 soldiers, sailors and aircrew of the Permanent Defence Force on all matters concerning pay and conditions. PDFORRA is established under the Defence (Amendment) Act 1990 and specifically DFR S6. PDFORRA negotiates and consults, in the main, through an agreed conciliation and arbitration scheme. Unlike fully fledged trade unions, PDFORRA and its members have no right to engage in any form of industrial action whatsoever. Moreover, PDFORRA is prevented from joining the Irish Congress of Trade Unions.
PDFORRA members receive very modest levels of pay. In the case of the most common rank, that of private, the basic annual rate rises to €34,910 at the top of the scale. In recent years, PDFORRA members have been subject to a reduction in the rates of pay and allowances of approximately 6%, a pension-related deduction of a similar level, and increased tax payments which cumulatively will see some members pay cut by 20%. Many of our members are struggling to balance family budgets and cope with mortgage debts and payments, and they now need family income supplement to survive.
The Defence Forces and their members have been delivering significant reform since the mid-1990s, and this process is continuing through the Croke Park agreement. The numbers have dropped from 12,750 in 1996 to an authorised strength of 9,500 today. The number of barracks has reduced from 29 to 14, representing a 50% decrease, and the organisation has been restructured by reducing its administrative and support functions and by reducing its number of brigades to two.
As a proportion of GDP, Ireland's defence expenditure, at just over 0.5%, is among the lowest of the 27 EU member states. The EU average expenditure as a percentage of GDP is 1.69%.
PDFORRA and its members have delivered everything that has been asked of them under the Croke Park agreement. This has had a significant impact on sections of the membership of the same order as the pay cuts and pension-related deductions. For example, the closure of certain barracks and the redeployment of the soldiers concerned to other posts will see them bear additional travel costs of up €4,000 per annum. This burden will be repeated in the context of the current reorganisation process.
At the heart of the Croke Park agreement is the deal that pay will not be cut in exchange for co-operation with a modernisation and change agenda. As the modernisation and change agenda is being delivered, pay therefore should not be cut - and this should include allowances. No distinction should be made regarding allowances as they are part of basic or core pay. This is especially the case given the particular circumstances that apply in the Defence Forces. The particular circumstances to which I refer are the fact that members of the Defence Forces do not receive overtime or unsocial hours payments for working additional or unsocial hours. Ordinary members of the Defence Forces who work long or unsocial hours or both are rewarded on many but not all occasions by way of allowances.
A large number of allowances are paid to members of the Defence Forces and this has attracted a lot of media comment. However, many of the allowances are intended to cover the same thing in different circumstances. For example, in most of the country, additional attendance and unsocial hours are rewarded by the payment of security duty allowance but in the original Border units, it was rewarded by Border allowance. When additional attendance or unsocial hours are worked in the context of the State's prisons, prison duty allowance is paid and when it is worked in the context of the explosive ordnance threat, explosive ordnance disposal allowance is paid. In the Naval Service, patrol duty allowance fulfils this function while in the Air Corps, flying pay is the relevant allowance. When called on to provide aid to the civil authority, aid to the civil authority allowance may then be paid and similarly, when such aid to the civil authority arises from industrial action, maintenance of essential services allowance may be paid. Other allowances also are paid to compensate for long or additional hours of attendance or both. The allowance bill for all members of the Defence Forces amounts to approximately 8.5% of the total pay bill.
Historically, these allowances emerged in circumstances where soldiers, sailors and air crew were required to work alongside gardaí, prison officers, customs officials and local authority workers who received overtime and unsocial hours payments. At that time, the existing pay system did not provide compensation for additional hours of attendance and the allowances that evolved were an effort to do this without conceding overtime. There are of course occasions where no additional payments are made for extra attendance or working unsocial hours and those concerned receive no additional payments but may get compensatory time off in lieu. Other allowances paid in the Defence Forces are equally as justified as those already mentioned. Typically they are paid to individuals who carry out the duties of a higher rank or have a specific skill which is not rewarded through the existing pay structure. It is worth noting that internationally, many armed forces pay out a substantial number of allowances and that much of this can be attributed to compensation for long and unsocial hours.
In summation, the allowance system in the Defence Force is largely driven by a necessity to reward members of the Defence Forces for working long or unsocial hours or both without conceding the payment of overtime. The allowances are basic pay and are something our members cannot do without, given the difficult financial circumstances in which they now find themselves. Finally, I thank the committee for giving PDFORRA the opportunity to put forward the position of our members in respect of their pay and allowances.
10:25 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank Mr. Rooney. May we publish your statement?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I remind members that Mr. Howard is the Accounting Officer and that 11 of the allowances are part of the 88 we already discussed this morning. I will now open the meeting to Deputy O'Donnell.
Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome the witnesses to the meeting. To put this in context, the committee is inquiring into the area of allowances within the public sector. I seek a complete understanding, whereby members and witnesses both learn in terms of the exercise and where members ascertain which allowances comprise core pay and gain a general appreciation of how they have evolved. I am unsure whether the public currently has full detailed knowledge of how the structures of the allowances work and how they have evolved over time. Certainly, when looking through the allowances, many of the lower-end ones make a significant difference in terms of core pay. I had the opportunity to look through the various presentations and reports and found a number of features to be striking. Mr. Howard should explain how approximately 100 allowances came about over the years. There are approximately 65 within the Army itself and a further 35 between the civilian employees and the Civil Service. Mr. Howard should explain how this evolved over time. I note the first allowance in the Army was for the equitation school back in 1922 and I presume it still is in place. Various other allowances have been introduced and Mr. Howard made reference to the years. It strikes me that many public sector allowances appear to be large in number and quite cumbersome. Moreover, many of them have been there for many years and a lot of them constitute core pay. Mr. Howard should provide members with an understanding of how this has evolved. Could some of the allowances be amalgamated? I note Mr. Howard made reference to discussions being under way in that area.
As for enlisted personnel, from 1 January a private now starts on €220.37 per week, which is below the minimum wage. How has that position evolved? Are allowances also built into that rate and what is the basis for it? Another issue I wished to raise concerned allowances and pensions. How many allowances are built in for pension entitlements? I again am attempting to distinguish between core pay and specific allowances. I have two further items I will raise with Mr. Howard. In respect of the level of training within the Army, are the courses undertaken and qualifications gained by Army personnel at FETAC or HETAC level? My understanding regarding people leaving the Army is it takes 21 years before one can get to a point at which one can leave. I seek general information on the type of qualifications gained. On a general note, the representative bodies referred to the level of reorganisation that is taking within the Army. In general, how do they perceive morale to be among Army personnel at present? I invite Mr. Howard to address these points. I seek an understanding of how it came about that effectively, there are 100 allowances within the Department of Defence and the Army. I wish to understand the reason some of the aforementioned allowances were not simply reclassified as core pay.
Kieran O'Donnell (Limerick City, Fine Gael)
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That is what I am hoping for.
Kieran O'Donnell (Limerick City, Fine Gael)
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No, I refer to the 65 allowances.
Mr. Michael Howard:
Okay. However, in respect of the 35 allowances, an awful lot of them cover the same ground as is covered for military personnel. Very often, the allowances are set at a rate that, among other things, probably is influenced by the basic rate of the personnel concerned. Consequently, if the base rates were different, civil servants or civilian employees also would have got an allowance that might be roughly equivalent.
Kieran O'Donnell (Limerick City, Fine Gael)
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Let us then work off the list of 65 or 66 allowances.
Mr. Michael Howard:
On the 66 allowances, I will revert to what I stated at the outset and perhaps will elaborate on it a little. Basically, many different things are called an allowance. For example, the first one, namely, military service allowance, accounts for half the money we spend at present. After so many years, there is probably no harm to the public interest in stating it probably would have been called military service pay and not fallen into the allowance category at all but for-----
Kieran O'Donnell (Limerick City, Fine Gael)
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It has been in place since 1979.
Mr. Michael Howard:
Yes. I hope I am not overturning anyone's position by making this point but perhaps it is easier to say this by way of explanation. The reason for this was for the fear of repercussive effects. In other words, what makes any public sector employer different from a private sector employer is that other organisations are watching anything it does. At that time in particular, there was a great fear that were any group to receive an increase in basic pay, it would spill out into other groups. This often has informed the way in which the pay structure has developed. I refer to it as the tyranny of repercussive effects.
We not only have to deal with the representative associations, but must also check to see what the effects will be if we give some concession to the Defence Forces, which may only affect a small number of people.
To return to the other allowances in the Defence Forces, some of them reimburse people for expenses. Of course, there is scope for amalgamation. However, the important thing to remember is that if one amalgamates the allowances one will not necessarily save a whole lot of money. That is because one will still have to reimburse people on some basis.
10:35 am
Kieran O'Donnell (Limerick City, Fine Gael)
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The public sees a figure of 65. I have looked back through the allowances, including the years they were introduced, and it strikes me that they have done a disservice to people working in the Army. There is a perception that there is a myriad of allowances when in fact the military service allowance applies to virtually everyone in the Army. It has been there since 1979, over 30 years, and clearly that is core pay. As regards the public perception of Army pay structures, would it not make more sense to find another method without these large numbers of allowances? Some things are deemed to be core pay, while others are allowances.
Mr. Michael Howard:
I will return to the point about expense-related allowances. The allowances that are paid evolved when the associations were established just as pay negotiation was becoming centralised. Once the associations came into that system they were required to sign up to national pay agreements which provided that only small claims could be submitted. So the only avenue open to the associations to advance a claim if they had a group of people was to make a small claim which was ring-fenced for that group. On the management side, we were under what I would call the tyranny of repercussive effects. If the associations brought to our attention a particular group with a problem we dealt only with that particular group and we isolated it. It was a cost-containing strategy by management. The price we may have paid for it was administrative complexity, but the alternative - if one had allowances of general application and did something that could spread beyond our own domain - could have set off very expensive repercussive effects. Therefore there was a rational managerial strategy to contain costs but we paid a price for it.
Part of the difficulty is that, for policy reasons, we cannot pay overtime. That is a fundamental and long-standing policy. It is in the nature of military service that such personnel have to be available for service 24 hours a day, seven days a week. Given that they are in military service, they are exempted from the Working Time Directive and health and safety legislation. When they came in with particular groups, many of whom genuinely had merit, we had to deal with them by way of allowance because it was the only instrument available. In addition, if we had sought to deal with it under basic pay the repercussions would have been serious and probably against the public interest in the long term.
The Deputy is right in that the system we have now evolved is complex. In the medium term there is scope for amalgamation, but I would caution that it is not necessarily going to give a big return in terms of money. That is because many of these allowances do not apply to many people.
Kieran O'Donnell (Limerick City, Fine Gael)
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The money factor is a huge one.
Kieran O'Donnell (Limerick City, Fine Gael)
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As it has evolved, the allowance system within the public sector strikes me as cumbersome. I expect it is difficult to administer. The representative bodies came in the 1990s. The military service allowance has been there since 1979 which is over 30 years ago. That is clearly core pay. Why was that not incorporated into core pay? That is the bones of ten or 12 years prior to the representative bodies.
Mr. Michael Howard:
There are two points I would like to make. First, in its deliberations I would ask the committee to bear one thing in mind. What has gone on in the public service generally and what has gone on in the Defence Forces are different things. Many of the things we have to address through allowances are addressed elsewhere in the scheme of overtime or other payments. It is not fair to the Defence Forces to compare the number of allowances with employment where overtime is available.
Kieran O'Donnell (Limerick City, Fine Gael)
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I am not doing that.
Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. Howard is saying something there that we have not said.
Kieran O'Donnell (Limerick City, Fine Gael)
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Clearly, looking at allowances, the Army is relatively unique amongst Departments where there is no overtime. The military service allowance makes up nearly €53 million and concerns 8,700 of the Army staff. Effectively, therefore, the bulk of the staff qualify for it. The figure was put out as including that when it is clearly core pay. I am seeking to understand why that was not included and incorporated as core pay in the ten years prior to the representative associations being formed.
Mr. Michael Howard:
I know I should not discuss any of the negotiating positions we may take in the future. With the latitude of the Chair, I can assure the committee that we will still not be trying to amalgamate it into core pay because there are unique conditions of military life. People are subject to military discipline and are liable for service 24-7. They are exempted from certain protections that other employees have because of the hazards of military life. We have to recognise that in their basic pay because it is universal for all of them. However, we must do so in a way that is ring-fenced so that somebody else somewhere else cannot say "I'm an electrician. A soldier who is an electrician gets paid more than I do". We have to have that element of the soldier's pay that is unique to the Army clearly identified.
I accept the Deputy's point about scope for amalgamation in the future. I accept the fact that from a presentational point of view this is difficult for somebody who comes to it for the first time. I hope the committee will understand that sometimes one evolves a situation like this because we can only address our business within the policies and constraints that bind us. In that context, the associations arrived on the scene representing a workforce that had never had the right of representation before. They naturally had a lot of issues. We dealt with them this way because it was the only way we could deal with them but neither could we refuse to hear them. At that time, they made the point - I believe reasonably - that they had never had an opportunity before to go to any forum with a pay claim of any kind. Just when they arrived the era of making individual pay claims was over so they did have specific issues and we dealt with them as we did. It may not have been ideal but within the constraints we had it was the only way we could. In the different situation we are in now, the Deputy is right that there is scope for amalgamation.
Kieran O'Donnell (Limerick City, Fine Gael)
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I am making the point in the context of the private or officer working in the Army. The perception might be that there is a myriad of allowances when it strikes me that a lot of them are core pay.
Kieran O'Donnell (Limerick City, Fine Gael)
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That is purely the basis from which I am coming.
Mr. Michael Howard:
Could I add one other point of information about the rationale? If one looks at the military payroll, pay and allowances, in the round, it does tend to operate in a way that the soldier or officer who acquires more qualifications, who volunteers or makes himself available for difficult or demanding duties, at the end of the year they will have earned more. That is also a rational objective. In other words, where we had some discretion and some money available it has tended to be channelled towards people who have served overseas or are doing security duty such as guarding Portlaoise Prison. I hope the discretionary element of the payroll has tended to reward people who are doing onerous duties.
Kieran O'Donnell (Limerick City, Fine Gael)
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There are two other issues, one of which concerns the HETAC qualifications. The starting pay for a private soldier would strike me as being very low at €220 per week.
Mr. Michael Howard:
Certainly and, again, I appreciate that in terms of the complexity of our system. The figure I have is for a recruit on enlistment, including the military service allowance, with €286.43 per week. That rises fairly quickly. It is effectively a training allowance.
Within 12 months the recruit will see an increase to €336 and then, following two years' service, €432.
10:45 am
Kieran O'Donnell (Limerick City, Fine Gael)
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Sorry, €286.43 in year one. What of year two?
Kieran O'Donnell (Limerick City, Fine Gael)
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If there is someone starting-----
Kieran O'Donnell (Limerick City, Fine Gael)
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The rate of €286.42 is still below the minimum wage. I want to be fair.
Kieran O'Donnell (Limerick City, Fine Gael)
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What of the FETAC and HETAC qualifications?
Mr. Michael Howard:
If the Deputy is happy, we will send the committee a more detailed note on it. The general point in regard to this is that there has been a lot of work done in the Defence Forces in terms of professionalising and organising training in a formal way and an awful lot of military courses now get accreditation. I do not have any details with me. If the Deputy is happy, I can get the committee more in relation to that.
Kieran O'Donnell (Limerick City, Fine Gael)
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I would appreciate that.
I want to ask the representative bodies about the reorganisation of the Army. What is the general feeling among their membership in terms of Army morale? Where stands the body of men and women in the Army? How do they view the process?
Mr. Gerry Rooney:
From the point of view of PDFORRA's membership, there is probably a number of points. There is a certain exhaustion with reorganisation in it. Certainly since the mid-1990s, it is a continuous wave of reorganisation. That has created a certain dissatisfaction in reorganisation around that.
The other issue, obviously, is the modern day issues of people being unhappy in terms of their current financial position. Pay cuts have affected that. Also, people are affected by - a point to which Deputy O'Donnell has referred - perhaps a misunderstanding of the organisation in terms of the public and there has to be a continuous re-telling of the allowance system and why it would be paid. I suppose it does wear people down.
Kieran O'Donnell (Limerick City, Fine Gael)
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Would I be pushing Mr. Rooney to ask his overall view on my point to Mr. Howard on allowances versus core pay and the structure within the Army? How does his association regard core pay? There are discussions ongoing. Can he give me a sense of the association's view on the issue of pay being given in the form of allowances as distinct from core pay? Is it unique to the Army? Would he give the association's general overview on that?
Mr. Gerry Rooney:
I would not say it is unique but I would say some of the circumstances in which it is paid are unique because it is not an overtime organisation. That, in itself, creates a grievance among the membership who would then say that because we do not get overtime we are being criticised for having a series of allowances that addresses that aspect. Certainly, the membership would like that cleared up. Obviously, the view is that those allowances are core pay because that is what they are rewarding people for. It has created an undoubted sense of grievance and that has contributed to lower morale.
Kieran O'Donnell (Limerick City, Fine Gael)
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We got an idea of the top ten allowances. Would many of those be pensionable? Is the military service allowance pensionable?
Mr. Brian O'Keeffe:
None of them is, with the exception of military service allowance. There might be two other allowances for officers paid to very small numbers that are pensionable. The military service allowance is the main one.
If I could, I might throw some light on why it was not amalgamated into pay. It was not pensionable until 1990. When it was made pensionable, it was only made pensionable for people who were in receipt it from 1990 forward. If it had been amalgamated before that, of course, the pension of retired personnel would have increased. That is why it was done.
Kieran O'Donnell (Limerick City, Fine Gael)
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It was a question I put earlier about the pensionable allowances.
Mr. Michael Howard:
I beg Deputy O'Donnell's pardon. If one takes the list of ten that we are discussing with the association, obviously, we will not go into it. One of them, the Border duty allowance, is the only one that is pensionable.
In general, for personnel serving at present, the allowances tend not to be pensionable. There are some exceptions to that. The MSA, the military service allowance, is pensionable, as Colonel O'Keeffe has said.
Kieran O'Donnell (Limerick City, Fine Gael)
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Is it that, numerically, the greater majority of the allowances are not pensionable?
Mr. Michael Howard:
Again, I am at risk. I do not want to accidentally oversimplify matters in that Colonel O'Keeffe adverted to the existence of new pension arrangements for people who came in post-2004. What I have said is that for the majority of personnel serving right now, the great majority are not pensionable. Chairman, I wonder if it would be better if we wrote a note to the committee on this specific issue because I am concerned I might accidentally misdirect the committee.
Kieran O'Donnell (Limerick City, Fine Gael)
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When I was looking through the allowances I noted in the case some of the allowances that no payments have been made even through they still exist. For instance, there is a ration allowance for cadets introduced in 1937 and there was nothing paid on it last year. There was a uniform allowance for cadets which was introduced in 1939 and there was nothing paid on it. There was a search and rescue allowance introduced on 1 January 1997 and there was nothing paid on it. Then there was a children's allowance, AWOL, on which there was nothing paid. If there was nothing paid on them, Mr. Howard might explain why.
Gerald Nash (Louth, Labour)
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Nobody went AWOL.
Kieran O'Donnell (Limerick City, Fine Gael)
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On the latter one, Mr. Howard might tell us exactly what it is.
Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. Howard does not have many discussions with PDFORRA on that.
Gerald Nash (Louth, Labour)
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Nobody has gone AWOL or at least from the perspective of this allowance.
Kieran O'Donnell (Limerick City, Fine Gael)
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What about if the wife goes AWOL?
Gerald Nash (Louth, Labour)
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There are many people under a great deal of pressure at present.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Deputy O'Donnell is assuming that all soldiers are men.
Kieran O'Donnell (Limerick City, Fine Gael)
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Apologies. I note there is an allowance for women as well that is not the subject of discussion. I think it is prohibited. It is one of the 11 allowances to go.
I am making a general point. I very much take on board Deputy McDonald's point. I was about to conclude by saying, "women and men".
Mr. Michael Howard:
Of the other allowances they have mentioned, some of them are legacy allowances that have not been paid because the circumstances that gave rise to them did not happen in the course of the year. For example, search and rescue is an allowance that was paid to personnel involved in air search and rescue. That has been privatised by the coast guard so the duty no longer arises. Simply for completeness, it has been included in all the submissions because it still exists on the regulations, but it is a legacy and nobody is being paid it.
Similarly, the rations is a form of compensation, I think, for circumstances if somebody was out, they should have been fed and they were not. Army catering arrangements, no matter what has given rise to difficulty in my years-----
Kieran O'Donnell (Limerick City, Fine Gael)
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By natural evolution in terms of change, some of them will become obsolete.
Gerald Nash (Louth, Labour)
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I, too, welcome the representatives of the representative organisations and Mr. Howard and his colleagues for this important discussion. It never ceases to amaze me the low level of pay enjoyed by privates in particular, and often how long it takes somebody to reach the middle of the scale. It is important to look at the discussions that we are having this morning on allowances in the context of low pay. The general issue of low pay is a discussion for another day. We are here to discuss allowances.
The representatives may be able to assist me in informing the meeting how long training takes for an enlisted private. I will pose a series of questions and I would be happy if they answer them one by one. The PDFORRA representative may be in a position to best answer that one.
10:55 am
Gerald Nash (Louth, Labour)
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After about two years of service, core pay only reaches €391.06, which is approximately equal to the national minimum wage.
Gerald Nash (Louth, Labour)
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Approximately €5 million was paid out on Border duty allowance. I have some understanding of that allowance in the context of County Louth, where I was born and reared and which I represent as a Deputy. I am aware of the importance of that allowance to members of the Defence Forces in my own area. How long has the allowance been in place and is it the case that a member of the Defence Forces in receipt of a Border allowance foregoes the military service allowance?
Gerald Nash (Louth, Labour)
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The Border duty allowance for enlisted personnel is €96.23, which would amount to 15% to 20% of pay even for somebody in a middle grade. It represents a significant amount for a family. It is ironic that members of the Defence Forces are often required to accompany personnel of other emergency services who enjoy overtime and various other allowances. Mr. Howard shone a useful light on the fact that the lack of overtime in the Defence Forces is made up by a series of allowances. How do allowances and the pay structure of the Defence Forces compare internationally, including with our nearest neighbours in the United Kingdom?
Mr. Michael Howard:
I only have an outsider's knowledge of what happens internationally. From what we know, most armed forces have to deal with the same issues. The civilian world with all its diversity of remuneration is almost entirely replicated in the Defence Forces. As the Army has to be self-sufficient it has to provide for itself on matters for which any other organisation would turn to an outsider. When we deploy troops to Lebanon or Chad, they have to travel with carpenters, plumbers, electricians, emergency medical technicians and a range of other specialists. All armies face the same issue and, generally speaking, they provide systems of allowances or additional pay to take account of it. They provide a basic or line pay associated with rank alongside further payments based on particular skills. For example, every air force in the world has to pay pilots more than other officers of the same rank or they would not be able to retain them. Similar considerations apply for professional officers such as engineers and, among other personnel, highly trained craftsmen such as mechanics and technicians. To offer a broad brush answer, while our pay system is unique in detail the principle of it addresses the same problems in an equivalent way to other countries.
Gerald Nash (Louth, Labour)
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Is that the experience of RACO and PDFORRA? I assume they meet regularly with colleague organisations internationally.
Mr. Brian O'Keeffe:
We do and we have done a lot of work on this issue. Internationally it is common that pay structures are complex. Some armies pay overtime but the experience is that when one is on exercise with such armies, the exercise stops at a certain time. That is not a situation we would like to see in Ireland.
Gerald Nash (Louth, Labour)
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In regard to reorganisation and the challenges it presents to members of the Defence Forces and the system in general, have the representative groups identified additional personal costs for its members which are not catered for in existing pay structures?
Mr. Gerry Rooney:
Certainly in the longer term the reorganisation is leading to deployment of staff around the country to different locations. An allowance is paid for an initial nine month period to defray some of the expenses associated with redeployment but after that period any additional costs arising from commuting are borne by the individual. Some of the distances involved are substantial. The figure of €4,000 may be conservative in some cases but this is an issue which arises regularly for us.
Gerald Nash (Louth, Labour)
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The Croke Park agreement restricts redeployment to a 45 km radius. That clearly does not apply to the Defence Forces given what we know about barracks closures and the obligation on personnel to move. It is right that the structure is based on strict discipline and order but it must impact on morale.
Gerald Nash (Louth, Labour)
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As a Deputy who represents members of the Defence Forces, I am struck by Mr. Rooney’s reference to the reliance of personnel on family income supplement. The Oireachtas needs to reflect on that. If a decision was taken to remove the Border allowance or any other allowance that, in my opinion, forms part of core pay, does Mr. Rooney agree it would be a false economy because responsibility would fall on the Department of Social Protection to make up the difference in providing a reasonable income for a family? I find it unconscionable that members of the Defence Forces, on whom we depend for our safety and security, must rely on family income supplement to survive.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We do not want to get into a discussion on matters that are under negotiation.
Gerald Nash (Louth, Labour)
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I am asking for the view of PDFORRA because it deals with these matters on a daily basis.
Mr. Gerry Rooney:
Yes, because not only would there be a higher instance of people claiming family income supplement but, within the Defence Forces, they would be precluded from claiming security duty allowance while claiming Border allowance. If they no longer received the Border allowance the State would incur the increased costs associated with security duty allowance as well as wider costs such as family income supplement.
Gerald Nash (Louth, Labour)
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We have discussed the reorganisation and changing role of the Defence Forces. Do the representative organisations believe there is a compelling case for consolidating the allowances that have built up over the years into a reformed pay structure? I ask them to identify pitfalls for their members in such an approach.
Mr. Brian O'Keeffe:
There is scope to consolidate some allowances but not many because of the reasons outlined by Mr. Howard. Some duties are not performed by all personnel and not all personnel have the same qualifications. How would one pay a balanced amount to all personnel? A certain degree of rationalisation would be possible and we did some of that in 1998, when we consolidated certain officers’ allowances into three bands of pay. Pay is now calculated by band, or professional classification, as well as rank. Three captains could be paid differently according to their bands. That is common in other armies. The British army in particular have developed pay banding in lieu of other allowances. However, there is not a great deal of scope for expanding that. We look forward to the review and we will engage with it enthusiastically.
11:05 am
Gerald Nash (Louth, Labour)
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It takes longer to reach the next increment, if I can use that expression.
Paschal Donohoe (Dublin Central, Fine Gael)
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I welcome the delegation. I have a series of questions I will go through one by one. The format we decided upon whereby the representatives of the employees sit alongside the employers shows that this will be a fruitful way of looking at the issue. If we only heard one voice or each voice at separate times, we would have missed the point. I very much hope we can replicate this when we go through all our hearings.
My first question relates to some information shared with us by the Department of Defence. It relates to when we asked it to set out the percentage of total compensation that consists of basic pay, core pay and allowances. Could we put this up on screen for the purposes of discussion? Questions 2 and 3 were answered. While our colleague is displaying that on screen, I will read out some of the figures. Could each of the parties give me their views on the figures we have heard? I will use figures for enlisted personnel but the same trend exists for officers. It is the screenshot showing questions two and three.
Kieran O'Donnell (Limerick City, Fine Gael)
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It was sent by e-mail last night.
Paschal Donohoe (Dublin Central, Fine Gael)
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Do we have that one?
Kieran O'Donnell (Limerick City, Fine Gael)
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No.
Paschal Donohoe (Dublin Central, Fine Gael)
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It is the on the next page. Could we go down to the middle, which relates to enlisted personnel? Could participants comment on the fact that for people from the lower to the middle end of the wage scale, allowances occupy a far larger percentage of their total income than they do in respect of the income of people higher up the scale. For example, between private and sergeant, the figure is between 8.9% and 12.5% of total compensation. However, the figure nearly halves if one goes up to sergeant major level and is considerably smaller when one goes up into officer rank. Could Mr. Rooney and Colonel O'Keeffe give me their observations on that table?
Mr. Gerry Rooney:
I would have thought that the justification for those figures from private to sergeant is that, essentially, they are the operational workers. It is not that the other groups do not carry out operational work but the bulk of it would be carried out by those people so they probably are the main group who, on a day-to-day basis, work additional or unsocial hours.
Mr. Brian O'Keeffe:
It reflects the pyramid that is the military structure with a lot of soldiers at the bottom and fewer soldiers as one goes up. Also, from the rank of commandant up or their equivalents would not be regarded as overtime grades so they would not be in receipt of security duty allowance.
Paschal Donohoe (Dublin Central, Fine Gael)
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I am asking this because the detail is where all of this lies. It is very easy to make observations at top line level, as I have done, but it is when one gets into the real detail of this that one begins to understand the picture. Mr. Rooney said it is because many of the allowances are related to operational work and because those operations are concentrated at the mid- to lower end of the salary scale that there a higher percentage of the total compensation is taken at, say, private or sergeant level. Have I understood that point correctly?
Paschal Donohoe (Dublin Central, Fine Gael)
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Does Mr. Howard have any observations in respect of a table like this?
Mr. Michael Howard:
To repeat what I already said, the effect of many of the allowances is to increase the earnings of those who do operational duties. If one looks at the structure of an infantry battalion serving overseas, it will contain a lot of infantry privates who will be paid an allowance for serving overseas. If one looks at a cash or prisoner escort, there will be a small number of senior people in charge and a much larger number of private soldiers. This is exactly what we would expect from the structure of the pay system we have.
Paschal Donohoe (Dublin Central, Fine Gael)
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I compliment the Department for providing a table like this with such detail and very much hope that when all the corresponding Departments come before the committee, they can do the same. There are other parts of the public service where I want to understand this very point because the question of what allowances are for and who gets them goes to the core of the debate about them. A discussion like this helps me understand the matter a bit more.
Perhaps one of the issues we are facing here is the fact that "allowance" covers such a disparate amount of different things for everybody. The Department provided us with a very helpful document that listed all 65 allowances in the Defence Forces. I will not go into all the figures but that list contains allowances paid to rangers and somebody removing a possible explosive device. The list also contains the underwear and night attire allowance and the allowance for the editors of Connect and An Cosantóir. I put it to the delegation that this could be part of the difficulty through which we are trying to find our way. Since they are all seen as allowances, it introduces parity as regards activities and indicates that one activity is the same as another when, of course, this is not the case. The work carried out by somebody who removes something that could be a bomb is a very different kind of work compared to that carried out by somebody editing a magazine. Does the delegation have any observations in respect of this point?
Mr. Brian O'Keeffe:
I agree with Deputy Donohoe and I think it is compounded by the fact that the public generally does not understand the work of the Defence Forces. It does not understand the organisation and what we do, which makes it very difficult. When it sees a list of allowances, it cannot relate them to what they are for, which has caused us huge difficulties. The vilification of the public sector, particularly, the Permanent Defences Force, has been very damaging to its morale when one sees certain allowances in lights, shall we say.
Paschal Donohoe (Dublin Central, Fine Gael)
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Can I drill into this with the example of the allowance relating to the Army Medical Corps? A senior surgeon in the Army Medical Corps is paid an allowance. This appears to make eminent sense given the environment within which some of the surgeons could be operating but why is that an allowance? I know Colonel O'Keeffe does not like the comparison with private and public sectors in this context because there is no private army so one cannot make the analogy. However, a useful analogy is where someone doing a more demanding job in very difficult circumstances is simply paid extra for it. It is not an allowance, rather it is extra salary in compensation for the fact that one is doing a difficult job. How have we got to the point where something like that is seen as an allowance?
Paschal Donohoe (Dublin Central, Fine Gael)
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I would make the same point about air traffic controllers, of which there are 19. For example, a watch supervisor, of which there are a few, get paid extra because that is an extra job.
11:15 am
Mr. Michael Howard:
The Deputy has made a valuable point we will have to take into account. It is not only about a need to rationalise and amalgamate. Many of these payments have titles to which nobody gave any thought at the time because nobody foresaw the public debate now taking place. The Deputy is absolutely right; if we were to go back over the list now, with the wisdom of what has happened in recent years, we would rebadge many of the allowances. When we engage with the association in the medium term I expect some scope for amalgamation but, as Colonel O'Keeffe pointed out, we can only make the system of pay as simple as possible and we cannot make it any simpler than it needs to be. I agree that no particular thought was given to naming these payments when they were established. Much thought might have gone into the conditions under which they would be paid, but what the allowance was called was not something people reflected on to any great degree. Unfortunately it has landed us in the situation we are in now, which was completely unforeseeable. While all of us have different opinions about where to go at times, we would probably all agree the public debate on this has taken place on the basis of little knowledge. This has been unfortunate for the Defence Forces and for the personnel.
Paschal Donohoe (Dublin Central, Fine Gael)
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The best example is the military service allowance, which is paid to people for their work over time based on the number of years for which they have done the work. Having considered the detail of it, this is not an allowance because somebody does a particular type of work well over a period of time and gets paid a little more for doing it.
Paschal Donohoe (Dublin Central, Fine Gael)
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The X factor?
Paschal Donohoe (Dublin Central, Fine Gael)
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I strongly suggest we do not rename it the X factor. It could land us in a whole lot of other difficulties.
Kieran O'Donnell (Limerick City, Fine Gael)
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Where has Simon Cowell gone?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is it part of core pay?
Paschal Donohoe (Dublin Central, Fine Gael)
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To end on a different point, if we were to draw a graph with the value of the allowance and the number of people earning it, it would have a very long tail as it would slope off to a very low value of allowance earned by very few people. It is the length of the tail which is getting us into difficulties. I will pick out as an example the isolated outpost allowance claimed by 78 people, which is a small number of the total number in the Defence Forces. This is crying out to be reclassified as part of core pay. How do we handle something like this? Some people would consider it part of being in the Army to work in places where nobody else is around for long periods of time and so one should not be paid extra for it. What is the response of the witnesses to this?
Mr. Brian O'Keeffe:
The outposts are not so isolated any more. They were when the allowance was introduced. The allowance was not for work done; it was to compensate people for the fact there were no support structures to provide meals. It was to cover the cost of providing meals for oneself. Of course there would be another way to do this.
Paschal Donohoe (Dublin Central, Fine Gael)
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It was to cover the cost of people providing meals for themselves.
Mr. Michael Howard:
No matter how the title looks, these payments often have a rationale. The basis of the pay system historically was that soldiers joined up, lived in barracks and were fed and provided for. If they were permanently placed in a situation where they could not be provided for, they were given a payment in lieu. Obviously we will not negotiate this in a public place and we must have a discussion.
Paschal Donohoe (Dublin Central, Fine Gael)
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Is this one of the 88?
Paschal Donohoe (Dublin Central, Fine Gael)
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Okay.
Mr. Michael Howard:
We have a medium-term review and we will address it in this context. Travel and subsistence allowances apply generally to all public servants who must provide meals for themselves because of their work. The biggest danger from our point of view is that one must understand why and under what conditions it is paid because we do not want to create a more general problem by abolishing an allowance which is ring fenced. I ask people not to jump to conclusions about an allowance simply because it may have a rather archaic title.
Paschal Donohoe (Dublin Central, Fine Gael)
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I thank Mr. Howard.
Simon Harris (Wicklow, Fine Gael)
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I thank the witnesses for coming before the committee. To pick up on the point made by Deputy Donohoe, this is a very useful process and a good reflection on the Oireachtas. A criticism of social partnership in previous years was how the Oireachtas was never allowed comment on social partnership or public sector reform and everything was done behind closed doors with announcements made with much fanfare. This is a much healthier process. While we do not make the decisions and negotiations must continue in private, we can make a positive and constructive contribution. Having the representative bodies before the committee is particularly useful and I thank them for attending.
Deputy Donohoe put his finger on it; the fact we are calling these "allowances" is the problem. Looking at allowances across the public sector and in particular with regard to the Defence Forces and the Department of Defence, they break down into three categories. One category is money reimbursed to people for expenses they incur when doing their job and once this is reasonable most people understand it. The next category is where people carry out an additional task, take on an additional responsibility or obtain an additional skill they receive an extra payment for it, and this is what we should be trying to do in the public sector and it is what is done in the private sector. There are a number of such payments to the Defence Forces and my colleagues have referred to them.
The third category is where the difficulty arises and we can broadly categorise it as "other". It is the failure of public policy to grasp the nettle of public sector pay, particularly with regard to the Defence Forces. I would go so far as to say to RACO and PDFORRA that our Defence Forces have been badly served by a breakdown in public service policy. I learned a new phrase from Mr. Howard today, "the tyranny of repercussive effects", which I may explore with him. It says a great deal about how our policy of dealing with the public sector has evolved. I take from this that we have paralysis within the public service whereby we cannot address the legitimate pay needs of some members of our Defence Forces who earn ridiculously low sums of money for fear it would have a knock-on domino effect and everyone in the public sector will be jumping up and down looking for more money. Is this the correct representation of what Mr. Howard said?
Mr. Michael Howard:
I was describing an historical situation and I would like to make this clear. I explained what happened prior to the situation we have now. For the general guidance of the committee, without going too far outside what is proper for me to comment on, I have worked in this area for a very long time. I was around during the 1990s and 2000s when agreements were negotiated. I offer as an empirical observation that the Croke Park agreement facilitates change and flexibility in a way no previous agreement did. I described the situation as it was when the allowances were being built up. It is no longer the position.
Simon Harris (Wicklow, Fine Gael)
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I accept this. I agree with Mr. Howard. What has happened is what I politically call "Bertie economics", which is rather than addressing basic public sector pay we introduced a range of allowances to meet the legitimate expectations of people doing, in many cases, dangerous and important work.
I was just making that point. However, it is not a defence for continuing some allowances. Colonel O'Keeffe discussed incorporating allowances into pay. I will reiterate the stance taken by the Representative Association of Commissioned Officers, RACO, and the Permanent Defence Force Other Ranks Representative Association, PDFORRA, on this matter. Will Colonel O'Keeffe expand on the scope to which he referred for incorporating allowances into pay? I will not ask him to negotiate in public.
11:25 am
Simon Harris (Wicklow, Fine Gael)
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Does Mr. Rooney have a similar opinion?
Simon Harris (Wicklow, Fine Gael)
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There would probably be broad public agreement on that point.
The Defence Forces' allowances have been the subject of much focus, but I wish to discuss the allowances for staff within the Department of Defence. They replicate allowances across the public sector. Mr. Howard referred to the need for rebranding while speaking with my colleague, Deputy Donohoe. If I could give one piece of advice, it would be to rebrand quickly. Much of the public debate is based on how the allowances are viewed and uses terms such as the "franking machine allowance", the "switchboard allowance", etc. What is the franking machine allowance, who gets it and what is it for? In 2011, only 1.5 people were in receipt of it at a cost of €2,588. The small allowances are dominating the public debate. If we could have greater public understanding of what they entail, it would be helpful.
Mr. Michael Howard:
I must preface what I say about this category of payment. Sometimes, payments apply to more than just our Department, and we are not in the driving seat. A franking machine operates in the postal system. It franks the post on the way out. The franking machine allowance has been around for a long time. It was probably introduced many years ago when franking machines were first introduced. Somebody made a claim for operating a new form of technology and had it conceded to.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We can deal with this matter later.
Simon Harris (Wicklow, Fine Gael)
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Yes, this issue will arise across Departments. My final question is on the business cases that were put forward. I have read many of them. Calling some of them "business cases" was possibly an overstatement. Is Mr. Howard in a position to offer me his opinion of the quality of the process? This is an important issue. Morale in the Defence Forces has been mentioned. There has been a significant amount of pressure on and demoralisation in the public sector. Many of the "business cases" I read were not business cases. Rather, they stated that an allowance had been in place and that its removal could result in industrial action. This has not served the process well.
Mr. Michael Howard:
I am satisfied, given the extraordinary pressure that we were under. I must ask the committee to bear a point in mind. We have limited resources and we try to concentrate them on following the money, as it were. The overall figure for allowances is approximately €100 million, of which more than half is spent on the military service allowance. The bulk of what is left is connected with technician pay and security duty allowances, namely, Portlaoise and overseas peace support allowances, which have been reviewed in relatively modern times. We have identified these and will focus our analytical ability and attention on them, as they are where the money can be found.
Regarding the 65 other allowances, we did the best job that we could in the time available. One can devote an excessive amount of time to researching some allowances that might not yield much money. The Deputy is entitled to form an opinion on the quality of the business case. Given what I know of the allowances and the circumstances in which they are paid, the material submitted should have conveyed sufficient knowledge to make a decision. This was the purpose of the exercise. Given the country's difficult situation, such exercises must be completed quickly. It is important that they be completed. We are proud of the fact that, when we are given deadlines, we meet them. I gently and respectfully disagree with the Deputy regarding the quality of the process.
Simon Harris (Wicklow, Fine Gael)
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As Mr. Howard is entitled to do. I thank him for his reply.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I welcome the delegates. I wish to ask about specific allowances. Archaic language was mentioned. The chaplain's housekeeper's allowance is €1,868 per year. Where an additional maidservant is required, the payment is €842 per year. I am intrigued by these figures. Fourteen individuals are in receipt of these allowances. Does Mr. Howard see the allowances?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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These number among the 88 allowances.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Could Mr. Howard repeat that, please?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Hallelujah for that. I am greatly relieved. The allowance that received most publicity was for underwear and night attire for female personnel. Drilling into the detail, one sees that abolishing this outrageous payment for 377 recipients would yield just under €13,000. This best reflects how a level of sensationalism can take hold. It is useful to have this information before us.
Another dilemma presents. I ask the delegates to follow my logic. It makes no more sense to pay a military service allowance to military people than it does to pay pilots an allowance for flying. That is what they do. The presentation of these allowances is important. Some of the delegates mentioned morale within the ranks. It is important that those serving in a military with military discipline and who are exempted from basic things that other people take for granted, be it representation in ICTU, coverage by health and safety legislation, etc., are protected by the system that they serve. I mean this in the most positive of ways.
I agree with other members, in that the allowances' names are misleading in the most benign way. They also damage the reputation of the Defence Forces. Mr. Howard has explained the history of the situation and I accept that it was a hodge-podge arrangement put together with the best of intentions. However, I hope that it is abundantly clear that this is not a situation that can continue. It cannot be logically explained. Archaic allowances need to be stripped away and people must be paid properly. For those following this part of our examination of allowances, the main revelation will be how poorly paid privates are, for example. It is scandalous. In any other sector, their pay would be viewed as slave wages. Not only is it unacceptable, but it is also unwise of the State to pay people so poorly for the evident reasons, for example the nature of their tasks, our reliance on them for security and how the security of the State hinges on the quality of service at every level.
Those levels of pay cannot be stood over. The situation of supplementing deplorably low basic pay levels with the military service allowance is unacceptable. I do not accept either the argument of the law of unintended consequences in terms of people claiming that because an engineer in the Army is getting X he or she should get the same. It is self evident why the Defence Forces, in this sector in particular, are an exceptional case. We have no difficulty making the exception in respect of some of the other areas I mentioned. It is clear that the average worker in the public or Civil Service is not on call 24/7, except those of us involved in politics.
11:35 am
Kieran O'Donnell (Limerick City, Fine Gael)
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A few of us.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Some of us. Not all public service employees are subject to the rigours and demands which military service entails. I do not accept that as stated this had to continue or should continue just because the Defence Forces is looking over its shoulder at other areas of the public sector. That is badly conceived. It does not add up. It is an easy task to identify the exceptionality around the Defence Forces, which is self-evident.
Mr. Michael Howard:
On the first point in regard to the naming of allowances, we are all agreed that it is an issue that needs to be addressed going forward. I can only repeat what I said earlier, namely, while at the time the allowances were introduced great thought and attention was given to the conditions in terms of who would be entitled to them and so on, naming them was never an issue. Those of us who work within a particular community such as a defence organisation may often, when talking to each other, lose sight of how a person with no prior information in this regard would arrive at a particular view. I accept that point.
Regarding the repercussive effects, respectfully, I must disagree with the Deputy. The point I am making is an observation of experience. While I agree with the Deputy on the fact that the unique attributes of military life are self-evident, in my experience, one would be surprised at the ingenuity, perhaps legitimately, of trade union and representative associations in terms of monitoring what members of each get and then seeking to use that as a lever to get more for their respective members. It is a response to something that was actually happening in terms of leap frogging. Some groups within the public service were believed to have succeeded in catapulting their pay up the system by watching what other people got and then being creative in terms of presenting a case for why they should get it. The fear and concern was based on events that occurred, although some time back. We are in a vastly different place now.
During the 1990s and the noughties, when centralised pay determination mechanisms and agreements such as benchmarking 1 and 2 existed - I must emphasise at this point that this is national pay policy and I am only responsible for what goes on in the defence domain - links were established between the Defence Forces and particular key marker grades within the public and Civil Service so that that when the latter obtained increases others elsewhere also got them. To break that link, there was a need to identify the military service element and make it unique.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Where were those linkages historically between the military service and the public and Civil Service?
Mr. Michael Howard:
I must emphasise at this point that while I am satisfied as to the general accuracy of what I am saying, I am citing my memory of events more than 20 years ago. For example, my recollection is that an awful lot of military personnel pay moved in response to the EO and HEO grade in the Civil Service. That grade was also used as a marker for other groups around the system. The fear was that if something was done for the Defence Forces other grades which had previously been linked to it and others further out the system would say they were linked-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Relativity.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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The net point being as follows, namely, the State should not be underpaying people to the extent that it does and then trying to take the bad look off it through the system of allowances, which then come under pressure and put the individuals concerned and their families under further pressure. I understand that all of this needs to be negotiated and debated among the Defence Forces and that Mr. Howard is perhaps constrained in terms of what he can say in this particular forum. However, a sustainable and fair pathway, in terms of rewarding people, will need to be identified going forward. That serving soldiers are reliant on family income supplement, which was not news to me as I have met with many such families, is shocking. I do not believe it is widely known that this is the case. All of this needs to be straightened out because it is anachronistic, clumsy and not good practice. It is important to say in this forum that people need to be conscious, when taking a cheap shot at an incidental allowance, that the people in receipt of these allowances are people who are vastly underpaid. This must be to the forefront of our minds.
While I understand that a section of these allowances are up for discussion and negotiation, perhaps Colonel O'Keeffe and Mr. Rooney could provide us with a slightly longer term view on the issue of a fair, equitable, transparent pay system that recognises the unique position of people in military service.
Mr. Brian O'Keeffe:
As I said before, we will enter this review in a positive manner. We look forward to it. These allowances cause us as much difficulty as they do other people. We have always contributed positively on such issues. How we get on will depend on the motivation of each side. If the objective is to save money by cutting people's pay packet we will not make much progress. If it is about rationalising the system and coming up with a more effective one for everyone, including the State and our members, then we will make good progress. We would like to be part of the review from the start rather than have the official side do the review and then engage with us. We hope we can achieve that.
Mr. Gerry Rooney:
We are in a broadly similar position. I do not think that there is anything to fear, financially, from our perspective. While there are some anachronistic payments they are, in the round, well justified. Consolidation of these allowances into pay would be a positive. This is not the ideal environment to do this from a trade union or representative association point of view. However, I do not believe we have anything to fear from the review.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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In Mr. Howard's view, how inclusive will the process be?
Mr. Michael Howard:
We will have to talk to the associations about how we will go about this. As the employer side, we will seek to be as objective as we can. It would be remiss of me not to take up the point made by Mr. Rooney. The management side is bound by the financial constraints placed on it by our current economic situation.
We have a very good and open relationship with representative associations. Very often we find at the start of the process that we may have very different points of view, and there may be quite a lengthy and robust, though open, process for us to go through with the associations. We have always found in the difficult positions we had to deal with up to now that nobody gains from anything other than an open and inclusive process. How we go about setting that up is something we must reflect on and speak with representatives about. I cannot do that today.
We hope that at the end of the process we can make whatever progress is possible. I must reference the very difficult economic position of the country, which will form an important consideration in any review process.
11:45 am
Mary Lou McDonald (Dublin Central, Sinn Fein)
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That is entirely appropriate. The difficult circumstances of individuals and their families must also be considered. There is legislation concerning the minimum wage and thresholds below which nobody should fall. I very much hope that will form a very clear part of the agenda and perspective of the State as it pursues those discussions.
Kieran O'Donnell (Limerick City, Fine Gael)
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How long will the process take?
Mr. Michael Howard:
This is something identified for the medium term and the task lying immediately before us and which we have in process is to address the issues arising in the Croke Park agreement. That would be technician pay, security duty allowance review, etc., as well as other allowances that are subject to a Government decision. We would have to go through that process first.
Kieran O'Donnell (Limerick City, Fine Gael)
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So the initial areas are a short-term process. The broader review is a medium-term process.
Paschal Donohoe (Dublin Central, Fine Gael)
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I wish to return to a theme touched on briefly by Deputy Harris, namely, the difference between an allowance and an expense. Perhaps that is something we should be refining and have in mind with the report. Deputy O'Donnell picked up on the point regarding the equitation school. I apologise as I left briefly. Approximately six months ago I had the privilege of visiting the equitation school at McKee Barracks and seeing what a wonderful facility it is and the work it does. Allowance No. 59 is a special uniform allowance for officers of or attached to the equitation school. This illustrates my point. When I met the officers they were wearing different uniforms because they do different work to the other officers. They are getting paid an allowance but are not benefitting, at least from what I saw, as the allowance goes to purchasing different equipment and uniforms. Is this not part of what we must refine? There is core pay and non-core pay and also the issue of allowances versus expenses, which are fundamentally different?
Mr. Michael Howard:
One of the big lessons we will take away from the committee is the importance of the public communications element. I strongly agree that it is important that we classify clearly in people's minds what is income or remuneration and what is simply an expense. To describe an expense allowance as if it is some sort of benefit to the individual is not accurate. As the Deputy noted, it is a case of people for administrative convenience being allowed - like in the equitation school - to buy safety helmets, boots, etc. I take that point entirely.
Paschal Donohoe (Dublin Central, Fine Gael)
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Another example is the entertainment allowance, which is listed. I have a selection of the business cases printed in this regard. There were seven claims in 2011. If this money is being used, I assume it is covering money spent on a particular purpose as opposed to providing a pecuniary benefit to the individual unit. The principal military appointments entertainment allowance is a good example. Each commanding officer of a naval vessel has an entertainment allowance of €200 per annum, which is to cover the purchase of goods necessary for any kind of entertainment. I imagine if one of our vessels is on a foreign shore and hosts a reception, with somebody coming on board, something will be given to recognise the event. That allowance would cover the purchase of that item and nobody is benefitting from the allowance, apart from the shop where the item may be bought.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is one of the allowances.
Paschal Donohoe (Dublin Central, Fine Gael)
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The broad point is the difference between an allowance and an expense.
Kieran O'Donnell (Limerick City, Fine Gael)
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If they are vouched, it is a reimbursement. It should be classed as an expense rather than an allowance.
Mr. Michael Howard:
The trouble is that a vouched expense may be described as an allowance. I know I am repeating myself but when this was being set up years ago, nobody foresaw the discussion or the issue of principle that it could turn into. The system operated for many years and nobody paid any attention to the labels.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In concluding the meeting I thank all the witnesses for attending. We set out this morning with some concern as to how the meeting might work out because the Accounting Officer and the two representative organisations are present but we did not want to get into a position where we would interfere with negotiations or begin to negotiate publicly on allowances. The meeting we had earlier, with the Secretary General of the Department, was most helpful. Some of the members have commented on how helpful it was, as well as the meeting here.
There is a mystery which is grossly misunderstood relating to how the allowances are described, what they are for and, in the case of the Defence Forces, the poor pay, some of which is core pay. If the process entered into this morning helps to take some of that mystery away and encourages those who are negotiating to a point where they see that the public wishes to understand what is going on and who is being paid what, there can be a better judgment call. If agreement cannot be reached on what is to be paid, the process can nonetheless be clarified for the public in what would be a helpful act. If the negotiations can be as open and constructive as this exchange this morning, they will be most helpful in reaching some sort of a positive conclusion for those who serve and those who administer. It would also be helpful for us on the Committee of Public Accounts, who represent the public and seek a greater understanding of what is going on.
Deputy Donohoe raised the point about the different questions and the table emerging from those. That came from the questions put by the clerk and officials of the committee, which gave us a greater understanding. That is also helpful. I hope other Accounting Officers and other representative groups could look at this meeting, as there is much to be learned from the very positive exchanges that can take place at a public accounts committee meeting and how helpful can be those exchanges. That applies not just to this process but to others which will come afterwards. It was a positive exchange of information that will be helpful for everybody.
I thank the witnesses and members - who did their homework, put questions and extracted information in a constructive and helpful manner - for their part in the meeting.