Oireachtas Joint and Select Committees
Tuesday, 23 October 2012
Public Accounts Committee
Department of Public Expenditure and Reform, Houses of the Oireachtas Commission - Review of Allowances
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. Robert Watt, Secretary General at the Department of Public Expenditure and Reform, and invite him to introduce his officials.
Mr. Robert Watt:
I thank the committee for the invitation to appear before it. I thank the officials from my Department, whom I have introduced, for their hard and detailed work on the review and for providing the committee with all the information it required for this meeting and in relation to its further discussions in regard to other sectors. A large volume of information on allowances has been provided which it is hoped will be of help to the committee. We are also available to provide further information if members of the committee feel that is useful.
Last week, I briefed the committee on the overall aims of the review of public service allowances and the next steps proposed in each sector. Today, I will speak about allowances which are common to two or more Departments within the Civil Service. Members will be aware that the allowances review conducted by the Department is the first comprehensive public service-wide attempt to address outdated allowance-based pay structures across the public service, many of which date back to the 1920s and have built up progressively over the years to address many different issues at particular times. The review to date is the first step of an ongoing process. It is also only one element of a sustained programme of cost reduction and productivity increases across the public service.
Members will be aware from previous discussions that the Minister, Deputy Howlin, and Government have set out a plan to reduce the overall cost of the public sector by 20% between 2008 and 2015, through a variety of different measures. My purpose here is to speak on the review as it relates to the very small number of Civil Service allowances common to two or more Departments. The committee has been provided with information in respect of those allowances, the cost of which to the system is €4.7 million, with most being paid to the lowest paid grades in the Civil Service. I will comment further on these allowances later. I have also been requested by the committee to discuss allowances paid to Members and parties of the Oireachtas and I am happy to do so.
It is important to point out that the term "allowances" covers a wide variety of payment types, namely, reimbursement of expenses, payments for qualifications held and allowances which were introduced in recognition of particular duties being undertaken. In the context of the review, it was evident that many allowances were used or retained as a supplement to basic salary for particular groups. This is particularly relevant in the context of those allowances pertaining to the Civil Service. While they may have been introduced for a valid purpose, in particular to resolve a dispute in the era of pay relativities, they continue to be paid despite that justification for them no longer holds.
It is our view that allowances should only be payable in circumstances that meet the criteria set out for the review. Those criteria are that they should reflect the arduous nature of unsocial hours, including the need to remain on call at weekends and other times, clearly associated with the duties of posts, they should ensure work of additional value is actually received by an employer, or they should cover an actual cost accruing to the employee derived from their employment. These are the important criteria set out as the basis for this review.
The common Civil Service allowances are those in payment on the same basis in two or more Departments across the Civil Service. These allowances form only a small part of the overall Civil Service pay bill.
Based on the data submitted to the Department for 2011, they cost an estimated €4.7 million. This represents 0.35% of the overall pay bill for the Civil Service, which for 2011 was €1.34 billion. This is a very small quantum of money in percentage terms, probably smaller than any other sector the committee will have the opportunity to review.
Allowances do not normally form a part of the pay of civil servants, who generally receive basic salaries only. No duty-based allowance is payable to senior management such as Secretaries General or assistant secretaries. One group of allowances was paid to management grades, primarily principal and assistant principal officers, and higher executive officers, for attendance at overseas meetings. These were the chairpersons' and delegates' allowances, which made up 17% of the overall cost of allowances in the Civil Service in 2011 and amounted to €800,000. This cost was expected to increase during the course of the forthcoming EU Presidency in 2013. The Government decided to abolish this allowance for current incumbents and new beneficiaries following the review, and this decision has been notified to Departments. Of the €4.7 million costs in 2011, €800,000 was for this allowance, which has been abolished. The 0.35% share of the pay bill will be lower for 2013 when the decision is rolled out throughout the system.
The largest number of the common civil service allowances, 14 of the 20, are paid to service officers, who are a group of low paid civil servants. The wages of service officers vary from €398.74 a week to a maximum of €495.55 a week. Like the pay in some other sectors, over many decades their basic pay rates have been supplemented by allowances. The allowances are payable for specific additional tasks. The review concluded that a medium-term review and restructuring of the pay arrangements for these grades is merited.
The review also found that the retention of a part of the allowances paid to Ministers' private secretaries after they completed their duties was no longer merited. Private secretaries to Ministers could retain 50% of the allowance after they ceased being private secretaries. New individuals taking up these posts will not be able to retain this allowance after they leave.
Other than these, the review found the remaining small number of the common civil service allowances in payment are justified, as one might expect given the small number that fall within the category. They provide value to the employer, apply to a small number of personnel and are mostly paid to staff at the lower end of the salary scale. The Department will engage with staff interests through the various representative councils with a view to securing their early agreement to the changing or elimination of certain allowances we have identified. I am happy to discuss these common allowances for the Civil Service with the committee and answer any questions from members.
In this session the committee intends to examine the allowances paid to Members and parties in the Oireachtas. While the Minister for Public Expenditure and Reform is the regulatory authority with regard to the Oireachtas allowances regime, the amounts paid under this regime to Members of the Oireachtas are administered and paid for by the Houses of the Oireachtas Commission. The Accounting Officer, Mr. Coughlan, is present to speak to the payment of these allowances. The only allowance paid directly by the Department to Members or parties is the party leaders' allowance and the Minister has indicated his intention to review this. For the committee's information, this cost €7.92 million in 2011. We are happy to assist the committee in its work this afternoon and in subsequent reviews of various sectors and I ask the Chairman to let us know if we can provide any further information or assistance.
Mr. Kieran Coughlan:
I am glad to have this opportunity to address the committee on this issue. In my letter of 4 October to the clerk to the committee I outlined under broad headings, the various allowances paid to Members. Article 15.15 of the Constitution stipulates that provision be made by law for the payment of allowances to Members of the Oireachtas in respect of their duties as public representatives and for travelling and other facilities in connection with these duties. Expenditure under these various headings has fallen broadly in line with other cuts in the public service generally. I have circulated a detailed breakdown of these figures relating to each allowance.
From this breakdown it is clear the principal allowance is the parliamentary standard allowance, PSA, which is provided for under the 2009 legislation which consolidated the allowances into one allowance, the PSA, with two tranches, namely, the travel and accommodation allowance, TAA, and the public representation allowance, PRA. The scheme which came into operation in March 2010 was also innovative in providing greater transparency in terms of verification and coincided with a number of budgetary cuts imposed by the then Minister for Finance across the public service.
To put the PSA scheme in perspective, since there is often incorrect speculation on what allowances our parliamentarians are provided with, the total spend on Members' expenses this year will be approximately €11.7 million or 11% of the total parliamentary budget. The corresponding figure for Members' salaries is just under €20 million or 18.3%. The total spend on allowances and salaries this year, therefore, will be €31.7 million. This represents a fall of approximately 16% since 2008 when the total spend was €36.7 million and represents a tiny fraction - one thousandth - of total State expenditure for 2012. Of course, this is not to belittle what is a significant sum or to say that we should not have excellent monitoring, audit and control systems around the expenditure, which we do, but simply to position the sums involved in the overall picture.
All allowances bar two are statutorily based and the Minister for Public Expenditure and Reform, as Mr. Watt indicated, is the regulatory authority who, under law, sets the rates and scope of the allowances. The PSA is under review by the Minister. A review was earmarked originally to be undertaken within a year of the new scheme but was delayed due to the 2011 general election. For obvious reasons of a potential conflict of interest, neither the Houses of the Oireachtas Commission nor Members can set the rates or scope of these allowances. However, as an aside and in view of the apparent persistent negativity in regard to any expenditure in this area, the question arises as to whether it is time for the Minister's role in setting the rates and scope of allowances to be changed to an independent body, as is the practice in other countries. I suggest consideration of this option from the perspective of ensuring public trust in how these public funds are accounted for but also as it may help insulate our parliamentary democracy and our parliamentarians from unfair commentary that is corroding the public's trust.
Longer serving committee members will recall that the higher body on remuneration used to include Members' allowances in its review in the late 1980s and 1990s. While the review body decided subsequently in 1996 in effect to leave claims for improvements in expense allowances and facilities to the Minister for Finance, many of the key elements of the system of allowances as we knew it up to the change in 2010 arose from analysis and recommendations by the independent review body. Unlike other Civil Service and public service allowances, Members' allowances, being statutorily based, are not amenable to being the subject of business cases. For all of these reasons, it may be more appropriate to have the review of allowances for Members restored in the future to an independent body review mechanism.
In the context of this committee's review of allowances, it is important to draw a distinction between allowances for Members and other public service allowances. By definition Members of the Oireachtas are not public servants in the accepted sense of being an employee. The allowances and expenses system for Members is thus not a regime of company expenses but a series of payments provided for in the Constitution and set mainly by law arising from election to or appointment as a Member of the Oireachtas. The payment of the expenses incurred is subject to the normal system of Civil Service administrative controls, and the rates applicable for Members' travel and accommodation expenses are based on the rates payable to public servants.
The role of the Houses of the Oireachtas Service is thus to ensure the payments are made in compliance with our system of financial controls and in accordance with the laws providing for them. In this regard it should be noted the statutory schemes require self-certification by Members and thus operate to a very significant extent on trust. That being said, there is a robust system of financial controls in place. For example, the Members' public representation allowance has been subject to two independent external audits since its inception in 2010. Moreover, in 2009 the internal auditor for the Houses of the Oireachtas Service conducted an audit of the payment systems and administrative control procedures for Members' allowances and the processing of these allowances was found to be satisfactory with many strong controls in place.
I have tried to give a brief pen picture of the Members' allowance regime and to draw the distinction between these and other allowances under the committee's examination and I have emphasised, as with all public expenditure, that the expenses are subject to rigorous financial controls within the relevant law.
I understand I have 20 minutes and I will try to stay within this time. I am glad Mr. Coughlan acknowledged in his statement that €31.7 million, which is the sum for salaries and allowances, is substantial. He is right to acknowledge this.
I take issue with Mr. Coughlan when he says the system for accounting for this money is robust. He used that term a couple of times.
I would like to explore a couple of issues with him. Why is there still the phenomenon of unvouched expenses and allowances in the system? I will give two examples. The first relates to the public representation allowance. A Deputy can either claim vouched expenses of €25,700 or unvouched expenses of €15,000. I do not see the logic of that. There is a big disparity between the vouched and unvouched options. The bigger issue is how one can claim the system is robust when there is an unvouched system such as that.
Mr. Kieran Coughlan:
I prefaced my remarks by saying the law provides for vouched and unvouched expenses. We have Civil Service controls in audit, and so on. Our system of controlling the money is robust. We cannot do anything about the fact that the law allows that the option be given to Members to have unvouched or vouched expenses. That is set down in law and we have to work within the law.
Could someone add that up and I will come back to it?
Mr. Coughlan then moved on to the secretarial allowance, that is, the staffing issue. Deputies, Ministers and Senators can opt for an entirely transparent system or for one that is at least partially unvouched. I accept that Mr. Coughlan is not the person who set out the parameters of this system, but it is completely and utterly illogical. It makes no sense to offer a Deputy, Senator or Minister the option of getting an annual allowance of almost €9,000, unvouched and paid in two instalments, plus the balance in a vouched manner. That looks extremely hokey, as it were. The average citizen would say there is something not quite right about it. It looks cumbersome. Could Mr. Coughlan tell us the number of Deputies, Ministers and Senators who avail of options D, B and C, respectively?
I do not expect Mr. Coughlan to do complex calculations on the spot. I appreciate the documentation he has given us, but it is not sufficient for the committee to have an informed discussion on the subject. We need to know the amount of unvouched payments. How much money is going through the system in representative or secretarial allowances for which there is no paper trail? It would be useful if Mr. Coughlan could provide that breakdown. The overall figure is €18.2 million. What portion of that is not vouched and to whom is that unvouched portion paid? Among those receiving these payments, can Mr. Coughlan distinguish Deputies, Ministers and Senators?
Combining the public representation and secretarial allowances amounts to just short of €2 million in unvouched payments. We have to cease that practice. I appreciate Mr. Coughlan's commentary. His idea of an independent body deciding on the allowances regime and the level of allowances is probably wise advice. Public representatives need to take note that money of that magnitude cannot be paid out to Deputies and Ministers with no paper trail. It is completely and utterly unacceptable.
Mr. Coughlan has given us the Houses of the Oireachtas rates of payment to chairpersons and members of select committees. I was surprised to see that chairpersons of committees get an additional telephone allowance of €11,000 per annum. I was not aware of this.
I am reading the document in which it states that members holding certain offices of Oireachtas committees have an additional telephone allowance of €11,000 annually, which is paid quarterly. So that figure should be €1,100?
Thank God for that. I only wish there were several more typographical errors.
Does that additional payment of €1,100 go to other members, as well as to the chairpersons of committees? Is that payment unique to the chairpersons of the various committees?
It would have been useful to have that noted in the document.
I will now focus on the cost of the committees. One must take account of the additional allowance for the chairperson, payments to the Seanad Select Committee on members' interests and to the commission. That comes to a startling figure of €266,500 per annum. Is that calculation correct? The reason I am raising the figures is to show the total amount of money paid out when one tots up all the figures. One may view the figures in a table of expenditure as theoretical but when one adds up the figures, one sees the cost of the service.
Mr. Robert Watt:
A variety of allowances come under SI 347 of 2011. Under SI 530 of 2011, the allowances for the chairpersons of committees are listed. We think the figure is in the order of €400,000. I should say that is a significant reduction on previous figures. There has been a reduction from the 2010 figure of €1.1 million.
Will Mr. Coughlan please do that? I see no good reason to give €9,500 to the chairpersons of committees. I think at a time of austerity, when the cupboard is bare, the payment should be dispensed with. The payment of €9,500 each year to the members of the Oireachtas Commission is scandalous. I cannot see the rationale for that figure. That payment should be also dispensed with.
Let us look at the costs associated with the party whips. It would have been clearer if the costs were added up and we were given the total figures. My best guess at the figures provided by Mr. Coughlan, when one takes account of the whips in the Dáil and Seanad but excluding the Chief Whip, who has the status of a super junior Minister, is €103,000 per annum.
The cost of the whips is €120,000. It is a struggle to understand the presentation. We know there must be proper ordering of business and so on, but it is astonishing that it should cost the taxpayer that amount of money each year to order the business of the Oireachtas. I am not undermining the role of the whips, which is a necessary part of the parliamentary proceedings. They ensure that people turn up for votes and so on but €120,000 is expensive.
The allowance for travel and accommodation in its totality is unvouched. This causes significant difficulties for everybody concerned. What is the total annual payment under the travel and accommodation allowance?
Let me repeat, it is just over €5 million. I read in the note sent to members that Mr. Coughlan states that this covers the cost of travel to and from Leinster House, overnight stays and, for Deputies only, any other travel expenses within a member's constituency. Of course, that has been preceded by a comment from the Attorney General.
Mr. Kieran Coughlan:
There are some questions arising from our own side with the interpretation, whether travel was ever meant to account for outside a constituency. It was always to apply to a Deputy going to and from Leinster House and around his or her constituency. Some issues on that interpretation need to be clarified with the Department.
Mr. Robert Watt:
This issue arose after a Deputy, I think it was Deputy Higgins, asked for clarification. We sought advice from the Attorney General. The Attorney General has given advice which is very clear and we communicated it to the Houses of the Oireachtas. Mr. Coughlan has outlined his position.
We have received very clear advice. As far as we are concerned that is where it rests.
That is the position. We have nothing further to add in terms of our views on this matter.
I appreciate that progress has been made on all of these matters as against the last Administration and previous Administrations. That is unquestionably the case, but we must still acknowledge that there is a big problem when, in this case, we have €5 million in travel and accommodation expenses being paid out. I am not making a judgment on the integrity of any Member in the use of these moneys. The problem resides with the fact that it is not vouched, and that causes a problem not just for the system and the taxpayer but for the Members because to safeguard all of us, surely the smart thing to do would be to have a system where we can all verify, in concrete terms, how much we received and on precisely what we spent it. That seems to be good common sense. I take it from Mr. Coughlan's head movement that he agrees.
On those different elements I went through with Mr. Coughlan, it would be interesting to take all the figures, break them down individually and in respect of the unvouched elements, including travel, put the figures together and total them to see how much money is exiting the system without adequate accountability and an adequate paper trail and, in respect of the costs of the committees and the cost of Whips, to break the figures down thematically and give them back to us in that form. I would find that very useful.
I wish to raise one final matter with Mr. Watt regarding the party leader's allowance. Understandably, hard-pressed taxpayers would question the existence of a party leader's allowance. If we are going to reform politics and phase out corporate donations with all the negativity that brings, the party leader's allowance becomes all the more central in terms of funding democracy but, as with other things, it must be accounted for. It jumps out as very odd that the allowances paid to each of the political parties must be accounted for, which is as it should be, but that payments made to Independent Deputies and Senators are not scrutinised in the same way. Can Mr. Watt explain this system of payments to Independent Deputies and Senators and how much they account for in total? I might be wrong on this and perhaps there is a system for scrutinising how much is paid and where that money is spent.
Mr. Robert Watt:
We have sent information to the committee in terms of the cost of the leader's allowance. I think it cost €7.4 million in 2011. The payments for Independent Deputies averaged between €39,000 and €34,000. As the Deputy specified, the system as it pertains to Independents is different from the allowances which fund the political parties. This is a matter for our Minister. I have written to the committee on his behalf stating that he would welcome the views of this committee in this regard and that he has given an undertaken to look at the question of the leader's allowance. As the Deputy can appreciate, civil servants like me prefer to keep out of discussions on how the political system is funded. That is only right and proper, but the Minister has welcomed inputs from this committee. He is undertaking a review and he has made that clear. He may have mentioned that when he came before the committee on the previous occasion.
I am right in saying, therefore, that these payments to Independent Deputies and Senators do not have to be accounted for in the same way as payments to a political party. I am not asking Mr. Watt to make a value judgment on that.
Can we take it that the Minister's review of allowances, expenses and all these payments will be done in a holistic way and that he will examine not only the leader's allowance but each of the tranches of expenditure?
Mr. Robert Watt:
I understand he is doing that. I think he has said he would welcome the views of this committee in respect of these issues. He is looking at this and specifically looking at the question of a leader's allowance, which is distinct from some of the other issues the Deputy mentioned, but it will be considered in the overall context of how the system is being funded.
I am conscious I do not have time to move on to the Civil service allowance issues and I might return to those later in the meeting. I will finish by giving a view on this to the Minister's Department in particular. The era of unvouched expenses has to end and that is an absolute necessity. The scale of the allowances being paid must be revisited with an eye to cost reduction. Certainly, additional payments for duties such as the chairmanship of a committee or taking on the duties of Whip in the current climate simply must be abolished. In saying this, I am conscious that the Department has made some progress and that savings that could be made in this Oireachtas will not be the be-all and end-all in terms of our economic fortunes but, none the less, it is important that, first, we are efficient and, second, as a matter of public confidence, taxpayers are assured that every effort has been made to modify and to save, and we start with ourselves when we look for cost savings.
Mr. Robert Watt:
To give the context for this, this system was built up by previous Ministers for Finance in conjunction with previous Members of the House. A former Minister, Charlie McCreevy, in particular, reformed the system and built it up into what it is now. I understand at that time there were very significant discussions with Members of the House about this. The Minister has committed to looking at these. He has said explicitly that he would welcome the views of the committee. He will welcome the views of the committee in respect of where he should go in this area.
Mr. Robert Watt:
This happened. I understand the current system was developed in the late 1990s and early 2000s and that there were discussions about how Members should have their expenses remunerated. I think there was a ways and means committee. Was that the committee that was in place at the time?
Mr. Robert Watt:
I am just providing context to you, Chairman, on what I understand was the position. Our Minister made it clear that he would like to hear views. I do not think it is just a question of a Minister coming and saying this is how the system should be funded. He would like to hear the different views and he has made that clear on several occasions. I do not think the previous Minister for Finance imposed a system. There were discussions across parties on how to-----
We have some information in front of us but, as I indicated, I do not think it is entirely comprehensive. It would be instructive to carry out a case study on particular officeholders, say, the Taoiseach, and in saying that, I am not personalising this to the current occupant of the office.
It is a salary of €200,000 and expenses, I understand, of €118,981 although that figure is open to correction or modification to break that down for the taxpayer. Equally, with regard to the Tánaiste and other Ministers and senior officeholders, it would be helpful to have the information in that kind of format. As regards "super junior" Ministers, there was some controversy not so long ago around an additional allowance that two such office holders were receiving. I understood that was to be reviewed but I am not sure that it was. It remains my view that one could not make any kind of coherent argument to give an additional €17,205 to the Government Whip or the Minister of State with responsibility for housing simply because they were at Cabinet meetings. I do not think it stacks up.
Does Mr. Watt have any information as to where that particular review went? Will that form part and parcel of the overall assessment the Minister will make? In all of this, we have to be assured that there is value for money. We had the Defence Forces in the other day and we will scrutinise teachers, gardaí, nurses and others across the public sector. That is all right, but we must also show a willingness to do that for people in public office and particularly those in the most senior positions.
I thank the witnesses for coming in today. While I know we are focusing on amounts, it is also important to keep principles in mind. We can talk later on about allowances in the public sector. If an allowance is not justified as core warranted pay, then it should be reviewed. If there is an expense for a Deputy or Senator that is not vouched, then it should be vouched. We should keep the principles in mind and not just the amounts. Some of the debate so far has focussed on the little amount of money it might save, but that principle should also be borne in mind.
I wish to put some questions to Mr. Coughlan about the Oireachtas commission. The commission came before the PAC in January this year to discuss a review of allowances and expenses for Members that had already been undertaken or was about to get under way.
At that time, we talked about the system that had come into place before the election of the new Dáil in 2011. That was going to be subject to review but that review had been delayed because of the election.
Mr. Kieran Coughlan:
Yes. That is the review Mr. Watt was talking about, that the Minister is doing. To elaborate, the current review had an input from Members from the Joint Administration Committee on this occasion. The previous time, it was the commission and the formation of the new system which was brought in in March 2010. The commission was involved in that at the time.
Mr. Kieran Coughlan:
It was. When the scheme came in, it was anticipated that because certain elements were so new it would be reviewed. There were obviously teething problems with the changes that were made then. The view was that it would be reviewed in 12 months, but the election intervened in February 2011.
Mr. Kieran Coughlan:
Ostensibly the Minister for Finance brought it in, but there was a lot of consultation and negotiation with the commission and parliamentary parties at the time about drawing up the new scheme, which is before the committee today. There were a lot of improvements in it in the sense that at that point there were various allowances, like miscellaneous allowances and telephone allowances, which were paid automatically to Deputies regardless of the usage. These have now been transferred into a scheme where, potentially if they go for a vouched allowance, they are audited. It is based on usage. There are major improvements in that, plus the verification of attendance which was another big step forward.
Mr. Kieran Coughlan:
It was to fine-tune the new system. There are teething problems with certain aspects of it. As the Deputy said, it is coming out today that the emphasis should be on more vouching. It is probably better all round to follow the practice in other parliaments and go for an external body to review it. It does suffer from the fact that it seems to be drawn up, with all due respects to the Minister, within the political atmosphere.
Mr. Kieran Coughlan:
They range but the people sitting around the table would be able to tell the Deputy more about them than I would. As regards fobbing, rural Members felt they were at a disadvantage because Dublin Members can obviously check in on a daily basis, while rural ones would not be able to. There seemed to be a disparity in getting to the required minimum 120 days.
Mr. Kieran Coughlan:
It is a means of recording attendance. One can still record it and one does not have to fob. One can sign in as well, but that was tried in the 1980s and it was resisted by Members at the time. They had a strong view that as Members of Parliament they should not have to clock in like employees.
Mr. Kieran Coughlan:
It was there before in the higher review body on remuneration where all the salaries of the Judiciary and politicians, including Ministers, were reviewed periodically. At one point, they used to do Members' allowances as well. The Minister for Finance would make submissions on behalf of Members, which came from the Dáil Committee on Procedure and Privileges at that particular time.
They were then evaluated in the light of a benchmark against business practice in contemporary Ireland.
Mr. Robert Watt:
For the information of the Deputy, I sent a letter setting out the position to Mr. Ted McEnery, clerk to the committee, and it should be in members' briefing papers. In effect, for the Government parties, the first ten Members receive €71,520, that is, there is a payment in respect of the first ten Members of each of the Government parties. Thereafter, from 11 Members to 30, it is €57,214 and for more than 30 Members, it is €28,000. There is a different regime for Senators and then for the Independents, I think it is €41,000. The amounts for the individual parties was up on the monitors a second ago. The actual amounts for the different parties are included in something we sent to the committee and now can be seen. This obviously is based on the votes cast in the most recent general election. Members can see the position, which is separated out for the political parties and the Independent Deputies.
I thank Mr. Watt. Before getting into specifics on actual expenses, what would the proposed independent body involve? Were we to move to that system, would it entail setting up an agency or can this be given to someone else to do, as was the case previously?
Mr. Kieran Coughlan:
It would meet over a period of three months or something like that. It would get in the data and benchmark them in a professional way. Were one to read those reports of the mid-1990s and late 1980s, they are highly informative about how allowances were analysed, international comparisons were made and so on.
I found it odd. As I already have reached my 120 days of attendance, can I simply stay at home? That system does not work and I can understand the reason Deputies from outside Dublin would be frustrated with it as well, because it is unfair to them. While people expect Members to come in here to legislate and create laws for the land, they also want them to prove they are coming to work. It seems somewhat bizarre and I believe there is a better and fairer way of doing it that would protect Members' reputations. If it does not have the risk mentioned by Mr. Coughlan, it would be a good thing.
I wish to turn to some specifics regarding the expenses that Members can claim. I will look at my own as a Deputy, because I am trying to understand them myself. Deputies have the vouched €25,000 amount. This gets paid as a fixed amount every month to each Deputy. Deputies must then keep their own accounts and at the end of the year, one returns the amount one has not spent, if one has not spent it all. I understand a random selection of accounts then is undertaken-----
Mr. Kieran Coughlan:
There is movement in that regard. The commission, after both audits, drew up guidelines to facilitate that because, as I stated, there were issues about what should and should not be included. The guidelines were made on that point. It arose from "expenses, including any statutory deductions, for the purchase of secretarial support, public relations, information technology ... training services under a contract ... [and] persons engaged or expenses incurred under Regulation 9 [of] the Regulations of 2008" and then ministerial staff employed under the guidelines on staffing. There were a number of issues in the mix that Members themselves found. I have described this as teething problems.
I wanted to make that clear because I receive a lot of e-mails giving out to Deputies for the amount of money they claim for entertainment expenses, when they do not have an expenses allowance. If a school visits and a Deputy treats the teachers and children to a Coke and crisps, they get criticised for so doing. However, that is coming from Deputies' own salaries, which I consider to be correct. There has been a commentary in the media about an allowance for dry-cleaning, but Members cannot claim expenses for that under their allowance system.
I simply wished to make clear that we cannot claim expenses for that because that is another public perception that is not the case.
The amount of €25,000 is the same for Deputies in Dublin as for those in the country.
Was differentiating between those living in urban areas and those living in rural areas ever discussed? One reason, for example, would be because the rent of office space is somewhat higher in Dublin.
Mr. Derek Dignam:
A number of Dublin Deputies base themselves in Leinster House and do not have excessive office costs. In fact, it was a negotiated settlement because, as the Deputy is aware, there are 226 Members in the Oireachtas with different business models doing things differently. Consequently, trying to find a common solution was the subject of negotiation.
I thank Mr. Dignam.
Has real-time recording or real-time expensing been considered? I am referring to reporting the expense when it is incurred and not, for example, waiting until the end of the year. It might be done on a weekly or monthly basis. Members could supply proof of the rent paid for offices or proof of telephone costs.
Mr. Kieran Coughlan:
As part of the scheme, there were staff savings because in the year-end reconciliations we made savings of €150,000 a year on the staffing. So it was a more streamlined administration from our perspective in regards to being end of year. That was one of the reasons advanced for it.
I accept that but in the interest of transparency, these things come up and will continue to come up - the amount Deputies and Senators are expensing in the course of their jobs. At the end of the year, taking 10%-----
Mr. Derek Dignam:
The situation at the moment is that Members hold their own receipts and that is the principle subject to 10% of those on the vouched amount being audited. If at some stage there is a decision - a policy decision - to change away from that towards a fully vouched system, then real-time invoicing would, of course, be a natural option.
Mr. Derek Dignam:
If there is a move away from a system where the Members hold their own receipts, then obviously one needs some way of getting those receipts into the system and at that stage somebody will look at the economics of doing it the way the Deputy has just suggested, which, I think, is the way they do it in IPSA in the UK.
I thank the witnesses for appearing before us. We have mentioned the UK a few times. I do not want to get into it as being a model. I see nothing but controversy about the expense regime in the UK and it is the one place we should not look at. I am surprised we have had so many references to the UK. From the conversation we have had one would almost interpret that it is potentially a good model, but it is the one we should not go near.
I wish to speak about two expenses that are in the public domain. First is the travel and accommodation allowance, which is provided for under the legislation. It is based on the distance from Leinster House. We need to sign in - electronically or otherwise - a minimum of 120 times per annum. For the record, I am at No 98 today. While I know it is governed by legislation, is there a statutory instrument setting out how that is to be paid? Who signs that statutory instrument? Is it the Department of Public Expenditure and Reform?
Mr. Coughlan mentioned something that might be part of the issue. The Houses of the Oireachtas simplified the administration of the expenses regime, if one likes to call it that, as part of the last change and it led to savings in staff costs. Obviously, in the past people used to have to put in a claim each month for their travel outlining in a manual docket the number times they travelled to Leinster House and the payment came through in due course. Is it just for administrative convenience that the amount to be paid for travel and accommodation is based on a Member's annual expected amount of travel to and from Leinster House and in his or her constituency? For administrative convenience that is divided by 12 and we get it on a monthly basis. Am I correct in saying that?
I believe that has been damaging. Mr. Coughlan mentioned the view of politics. I would be slightly critical of how payments are issued to us and the same applies to Senators. It operates as follows. Based on the distance from Leinster House and if a Member travels his or her required amount per annum, his or her payment is divided into 12 equal instalments and he or she gets it by electronic payment at the end of each month. We had a controversy in the month of August when many Deputies were not here. Given how the Houses of the Oireachtas Service processes the payments, the public understandably came to the conclusion that Deputies were claiming and were being paid travel expenses to and from the Dáil when many Deputies did not travel. That system of payment was damaging to the body politic.
At the end of each month the Houses of the Oireachtas Service knows how many times we clocked in during the month. Given that it is in the service's computerised system it would not be too complicated to issue the cheque as follows. If I travel to Leinster House six times one month, 22 times the next month and seven times the following month, I would get paid for that. It should not be an administrative burden. I do not need to submit documentation - it is all on the electronic fob. During months when the Dáil is in recess and over the Christmas period, when Members would not be travelling to and from Leinster House, we would avoid cheques being sent to Members for what the public rightly believe is for travel to and from Leinster House. Instead of taking the handy administrative procedure of dividing the annual amount by 12 monthly payments, the service should pay it on the amount of travel undertaken and have it reflected monthly. Then we might find a number of visits during the months of March, April and May and a lower amount of visits in July and August. The payments to us would then reflect our attendance here, as they should. Treating it differently has been damaging to the body politic. There is no extra cost or saving, but that episode was damaging. It was not because any individual Deputy was getting money he or she was not-----
If a Member does not make those trips during the year, it will be deducted and he or she will have to pay it back. However, issuing checks on a pro rata basis - on a time basis - was damaging. What is Mr. Coughlan's view on the issuing of those payments?
I suggest that the regulation - if it is a regulation signed by the Department of Public Expenditure and Reform - be considered. There is no cost and no cost saving but it would be better for the body politic that the payments being received would reflect the amount of our travel to and from the national Parliament. I found that people were very angry about that and it damages politics. Mr. Coughlan takes my point but says there is nothing he can do about it because it is specified in the statutory-----
I recommend that it should be changed sooner rather than later.
As Deputies, we are in receipt of an allowance that I would like Mr. Coughlan to explain. What general areas does the public representation allowance cover? He need not cover the minutiae. This is the €25,700 fully vouched allowance, subject to audit for Deputies and if they go for the €15,000 lower amount it is not vouched.
Yes, so we understand what they are for.
There is a once-off grant when Deputies enter the Houses of the Oireachtas for the first time. How many of the 166 Deputies have received the once-off grant for setting up their offices? I got it 15 years ago so I cannot be counted.
How many Members have staff located in Leinster House in terms of secretarial and parliamentary assistants? We will start with the Deputies. Mr. Coughlan must know how many secretarial assistants and parliamentary advisers Deputies have.
No, I am referring to staff in Leinster House. For how many Deputies, approximately, is the Houses of the Oireachtas Service providing accommodation in respect of their secretarial assistants or parliamentary advisers? There are a number of staff members here. I am upfront about it. My staff are fully located in my constituency. I have no accommodation up here for staff, although I have for myself. Both my staff members are in the constituency and many Deputies are in that bracket. How many Deputies have accommodation up here for their staff?
If a Deputy had two members of staff in his or her constituency, they would be paid for and covered by the public representation allowance, which covers the Deputy's office, and other Deputies would also get this payment for providing an office in their constituencies. Despite this, the Houses of the Oireachtas Service also provides them with accommodation in Leinster House for some of their staff. Is there an extra cost to the taxpayer? If the Houses of the Oireachtas Service is providing office accommodation up here for some Deputies, including the desk and furniture, although not a computer as that would be provided regardless of the location, while other Deputies provide for it out of their allowances in their constituency offices, are the Houses of the Oireachtas Commission and the taxpayer providing an extra subvention to those Deputies who are being paid for the provision of their constituency offices for their staff?
Mr. Coughlan said 127 Deputies, which is probably 85% of the Deputies, have claimed a grant for a constituency office. The majority of them have their staff in their constituency offices if they have claimed the grant, but the Houses of the Oireachtas Service seems to be providing some Members with extra accommodation up here and yet some Deputies are being paid the full amount for the constituency offices even though accommodation for some of their staff is being provided here. Does Mr. Coughlan understand where I am coming from?
I can walk down the corridors here and see a Deputy's office and possibly a Deputy's secretary's office beside or adjoining it. One can clearly see there is a different office. On occasion, I could bring one of my staff members up here and he or she would operate out of my office because the Houses of the Oireachtas Service would not have provided me with space for staff up here. The Houses of the Oireachtas Service is paying for constituency offices for 127 Deputies, some of whom are doubling up by getting space up here as well.
There is an extra cost there that has not been adequately or fully taken into account and I am a bit surprised that we do not know how many Deputies are involved.
I have been listening to the figures in respect of the public representation allowance. There are two ways of looking at the fully vouched one. Obviously, the fully vouched one subject to authentication is the most expensive one for the taxpayer. That allowance is €25,700 versus the unvouched allowance of €15,000. That is a difference of €10,700. It is more expensive for the taxpayer where we put in the vouched receipts and less expensive if we go the unvouched route. I understand there has been much criticism here today about unvouched expenses but could Mr. Coughlan put the following figure into the mix? Mr. Coughlan said earlier that 39 Deputies claimed the lower, unvouched amount. If those 39 Deputies claimed the full amount, the extra €10,700, it would be an extra cost of €612,300 to the taxpayer. If the 12 Ministers who are claiming the smaller amount claimed the maximum vouched amount, it would be an extra cost of €96,000 to taxpayer. If the 44 Senators claimed the maximum vouched amount as opposed to the less expensive unvouched amount, it would be an extra cost of €253,000. Moving from the unvouched and less expensive cost to the taxpayer would cost an extra €961,300 to vouch.
People would do so because they would have to return a sum if a payment was issued every month and somebody got to the end. I know they are subject to authentication and if a person does not spend or incur all that expense, they might have to return some money at the end of the year. However, I am sure the majority of people on the vouched allowance claim the full allowance. Is that the case? I would assume so.
We should have a discussion about unvouched expenses. The unvouched one is always the cheapest option for the taxpayer but if somebody says I should be on the fully vouched amount at a higher level, that will cost the taxpayer €961,300. If we are making a recommendation, we want verification, auditing and vouching but we would also want to watch the additional costs.
The Houses of the Oireachtas Service engaged Mazars to carry out the audits in respect of 2011.
I thank the witnesses for attending. I have some questions for Mr. Watt. As part of the documentation he supplied on 12 October, a long table outlined all the different allowances within the Civil Service.
Mr. Robert Watt:
Is this appendix 1, common Civil Service allowances?
Yes. I wish to discuss the components of that. We had a discussion with Mr. Watt which then became a theme of the meeting we had with representatives of the Department of Defence last week. Once one gets under the skin of what an allowance is, there are a variety of things under that phrase. I want to tease out what all these things mean. The table lists 27 different allowances. Of those 27 allowances, is it correct that the delegate allowance is going?
Of the 27 allowances, 12 of them relate to someone doing a bigger job. I shall read them out. First is an allowance for supervisory duties for a service officer. I presume that refers to supervising somebody.
Mr. Robert Watt:
It should be pay scale. I will take the simplest one, which is the director's allowance. A principal officer in a Department goes through a competition and is appointed to director - I believe €11,000, €12,000 or thereabouts is the increase in pay. So rather than having a pay-scale director, they stay on the PO scale and they get an allowance. It is analogous to the situation in the education system where a teacher is made principal and gets an allowance for being a principal. That component is called the principal allowance when, of course, it should be a different pay scale for principal - absolutely. It is just the way the system has built up over time. Our preference would be - the Minister has said this - that allowances that are clearly pay for, as the Deputy says, higher duties for different responsibilities should be called pay. That is the exercise we are going to have to engage in to clear all this up and clean it up. Then one will have those elements that are not being paid for higher duties where there are different categories and focus on those. I absolutely agree with the Deputy. There are so many of them and the complexity of them is such that it is very difficult to get-----
Mr. Robert Watt:
Let us think about a private secretary to a Minister. There is a competition for that post. Somebody gets an allowance for that job. It is a job which involves being there all the time - weekends - always available to the Minister. There are more responsibilities associated with the job. It is a very responsible job to ensure that the Minister is looked after and so on. So there is an allowance for that, which reflects higher duties and different responsibilities. The position had been that one retained half of that when one left. The policy now is that one will not retain that.
Mr. Robert Watt:
It is an allowance. If one thinks about the director's allowance, that is clearly a new level and that should be pay. For the private secretary to administer, there is an allowance for a period - for a defined period. So that is higher pay for a period but in the system we have it is easier to say one is getting an allowance and then half of it is going to be taken away when one is no longer doing that job. If one calls that pay, then people say "Well, you're going to then cut my pay when I return to normal duties." However, the point the Deputy makes is correct.
I might be able to help with some of that. We should do it because it would be worth doing. The next allowances I grouped were allowances which are expenses by another name. These include footwear allowance, office accommodation, uniform allowance and uniform cleaning allowance. Those are really expenses rather than allowances. The first one must be vouched. The office accommodation is for people doing their work at home. I presume the person would have to prove he or she has an office at home. How is the uniform allowance verified? Is that for someone who gets a uniform? Presumably he or she must prove he or she still has it in order to get the allowance. How does it work?
Of course, and in the case of three of them it is specified that it is vouched. The other group is miscellaneous and one gets into all kinds of different things. The largest of them is the keyholder allowance, which comes to €520,809 a year and the franking machine allowance which comes to €319,321 a year. These are the big-ticket items and ones that are different. They are neither vouched nor do they fall into the category of a substitute payment for somebody moving into a different job.
Do any of these form part of the 88 allowances mentioned?
Mr. Robert Watt:
No. These allowances will form part of the overall review of pay structures. In respect of a service officer who is in receipt of an allowance, a much better system would be to modify the pay structures to reflect the reality of these higher duties. A service officer who as a key holder is required to undertake extra responsibilities in terms of being on call whenever something happens receives an allowance of €33 per week, which is not a considerable amount. However, the allowance is in effect part of the service officer's pay. The proposal in respect of these types of allowances is that they be reflected in future pay structures.
What about the franking machine allowance, which is €500,000 per annum? I had a look at the business case for this allowance, which states that given the huge increase in the use of e-mail in the past ten years, with a related drop in ordinary mail and so on, it is probable that the volume of franking required has diminished significantly and will continue to do so. These are the types of outlying allowances which it appears are at the core of some of the difficulties that have arisen. In my view a person whose job it is to operate a franking machine should not be paid an additional allowance for doing so. How is it proposed to address this allowance?
Mr. Robert Watt:
This allowance was introduced at a time when franking was a new activity. The person assigned to the task was paid an allowance for undertaking this work in addition to his or her other duties. It is a legacy work practice which is perhaps dated. This allowance falls into the category of having to be amalgamated in some way. Like the Deputy some people would wonder why a person should be paid an allowance for doing something which should now be an integral part of his or her work. I do not know the history of that allowance but I am sure there was some deal done, which was part of an attempt to modernise the manner in which the postal system in the Civil Service operated. I imagine that is what happened.
I am trying to put a structure on all of this. There is so much detail involved one might never establish anything. There appears to be a few different parcels into which all of these allowances are being categorised, one of which is additional duties, which at a time in the history of the State were huge duties in respect of which people were paid extra. These have been overtaken by the passage of time but the payment remains.
Mr. Robert Watt:
Yes. This gets to the complexity of the review in terms of the examination of 1,100 allowances, some of which date back to the 1920s and others which were added to for a variety of different reasons, including changes in technology, IR situations, the need to deal with a particular group of workers and so on. We tried to put some structure on this in the context of justifying retention of the allowances for those currently in receipt of them, suspension of them for new entrants, abolition for all groups or amendment of them. Some of the allowances may remain but will be amended. For example, we considered issues such as whether as an employer we are getting value for money in terms of on-call payments. We propose to abolish, modify and negotiate other allowances.
We have tried, based on the criteria as set out by the Deputy, to put the allowances into different categories and to rationalise them in that way.
Mr. Robert Watt:
In preparing for today's meeting, I came across the children's allowance, which is not the precursor for what we now know as child benefit, but a pay differential for married men with children. Their colleagues who were not blessed with children did not get this payment. It was first paid in 1925 and was extended in the 1970s by way of equality legislation to women. It is fascinating to look back at how individual aspects of allowances built up.
Mr. Robert Watt:
These are premium payments. The Deputy will note from the table that 853 people received payment in 2011 in respect of availability for work on a Saturday. The amount in respect of Sunday is lower. Also included are on-call payments. For example, part of the job of a small number of staff in the Department of Public Expenditure and Reform is management of the server for the public system. They are on-call at various times to deal with issues such as cyber attacks and so on. This is a feature within the system. Various shift allowances are also paid. We have asked Departments to examine whether we are getting value for money in respect of on-call allowances, whether we need a particular number of people on-call and if this is appropriate given how people are now paid and our current fiscal situation. These types of allowances are referred to as premium payments.
While in the Civil Service the amount paid out by way of premium payments is quite modest, in the health system they amount to €400 million to €500 million. Premium payments are a significant part of the pay bill in resect of front-line services, such as gardaí and so on.
How can this matter be progressed? Mr. Watt spoke of approaching this from a value for money point of view. Would it also be possible to address it by way of a different definition of the working week?
Mr. Robert Watt:
Yes, it would involve roster reform and defining the working week differently, perhaps on an 8 a.m. to 8 p.m. Monday to Saturday basis or other basis which reflects need and demand. As such, core pay would not be paid on a 9 a.m. to 5 p.m. basis, with additional premium payments for evening or weekend work. The working week would be defined based on the business needs of the entity. There have been some changes in this regard under the Croke Park agreement, including roster reforms and adjustment of hours worked. It is an issue we need to look at in the context of this review.
Mr. Robert Watt:
In respect of radiographers and medical laboratory technicians. While some progress has been made in reform of nursing rosters more needs to be done. There was discussion with the unions in the health sector last week - it may have been reported this week in the newspapers - on a paper which set out some of the proposals being pursued under the Croke Park agreement around roster reform and how the working week is organised. This has the potential to achieve savings, in terms of overtime and premium payments, of hundreds of millions of euro in the health service.
Mr. Robert Watt:
No. Allowances, premium payments and overtime in the public service amounts to approximately €1.8 billion.
We are speaking about core pay and other elements which make up various premium payments, allowances and overtime. It is very significant. There has been a 30% reduction in overtime over the past 18 months or two years. This significant reduction amounts to €150 million, which has been taken out of the pockets of various groups as we have changed rosters and structures in the system. Premium payments and overtime are separate from the specific allowances the committee is examining.
Last week we spoke about trying to bring together the income and allowance sides of the story. The Department of Defence did this very clearly for us. Mr. Watt has also done this in the column on allowances percentage of pay grade. Would it be possible to complement this with an understanding on whether any of these allowances form a significant part of compensation for people at higher grades?
Mr. Robert Watt:
They do not do so for higher grades in the Civil Service. Of the main allowances we set out, the delegates allowance is gone, the private secretary allowance was for HEOs and AOs and we have reformed this, and the director's allowance is for those promoted from PO to director. All other allowances are for service officers which, as I mentioned in my opening statement, earn between €400 and €500 a week, so they are lowly paid employees.
Mr. Robert Watt:
Yes, and they all refer to the service officers in the system. Apart from the allowances I mentioned, there are none for grades above this in the Civil Service. Allowances are not a feature of the system. We have repeatedly made the point, but it does not permeate the public discourse because it can get noisy and confused, that a large majority of allowances are considered part of core pay and are for lower income groups and front-line employees in various sectors. As the committee goes through its review in the coming week, it will see this is also the case for other sectors.
By my standards they will be very quick, even rapid. Mr. Coughlan spoke to Deputy Fleming about refurbishment costs for offices and the €8,000 allowance. To clarify, this is not a case of people claiming €8,000 for refurbishing an office. They must produce receipts for the work.
That is fine. I am interested to know the form of corroboration. It is an awful lot of money and it is good to put it on the record so people know how it is spent.
Will Mr. Coughlan put into context for us the cost savings that have been delivered in the Houses of the Oireachtas in recent years? What has been the trend in the running costs of everything here in recent years?
To clarify, the claims of 226 Members of the Dáil and Seanad are examined. When was the last time anyone conducted an analysis of the cost of a constituency office or of conducting the work of a Member of Parliament - Dáil or Seanad - and related it to the expenses and allowances we are discussing?
It did not examine the costs associated with a constituency office in Dublin or rural Ireland or what a Deputy is expected to do in terms of parliamentary duties or in his or her role as a local public representative. This was never analysed in terms of costs.
This is not a criticism of Mr. Coughlan or Mr. Watt; it is a fact. We have spoken about allowances in the public service and Civil Service and one knows what was expected of the paperkeeper or franker in respect of the allowance they received. However, it appears we are locked into a system of payments and no one has related these payments to the costs involved in being a Member of the Dáil or Seanad. Such figures could be applied to the various allowances. The reason I am raising this is because I have always argued allowances should be vouched. Someone should quantify what it is all about. My question is with regard to who will address this. We fob in here for a certain number of days, but no one fobs me in or out of my constituency office when I work there. No one physically checks on the size my office, how I conduct my business or how long I am there.
Deputy McDonald referred to the Chairman's allowance.
I will not defend it in any way but nobody has made an assessment of what they do for that money. Are extra hours really put in in terms of chairing this or any other meeting of the committee? I do not mind doing my job but in terms of being paid for expenses or allowances that are properly and legitimately incurred in the course of those duties, I believe Mr. Watt, the Minister and Mr. Coughlan and his officials should have a greater understanding of the costs of how we actually function. I am not making any case for us. I am simply saying that this would be done in business. One would find out what one's 226 cost centres are about and what it is that they do. Is that what we are electing and paying them to do? When one gets elected here, as Deputy Murphy said, one is given one's book about how the House functions and allowances and so on. Mr. Watt mentioned it in terms of people consulting us about what we do and how we influenced those decisions in the past to increase the levels of allowances or not. However, people are paid to sit in the committee at €9,500 per head and I do not know whether that is value for money. I would ask the Department and the Houses of the Oireachtas Service to look at what we do in this House. How do they know if they are getting value for money out of me or anybody else in this House.
To address a point raised by Deputy Fleming because it is a legitimate one, if all of these people - 39 Deputies, 12 Ministers and 44 Senators - were to claim their allowances at the higher level, how does one know they will claim them at this level? How does one know that they run an office that costs them "X" amount for electricity or the telephone because one does not know? The basis for any system must be based on the reality of what is happening to Senators, Deputies and Ministers. I cannot understand how when one is appointed a junior or senior Minister, one goes from this place and has allowances from here but the Department pays one something else. That needs to be analysed and to stand up in terms of the argument for it. Then we might not have the type of negative commentary or misunderstanding we get from the public because it is a factual thing. If that is seen as being reasonable to ask for, who will undertake that analysis of the cost? Will it be Mr. Coughlan or Mr. Watt?
Mr. Robert Watt:
I would have thought so. I came here today and spoke about the allowances in respect of 35,000 civil servants and the €4.7 million cost just in case the media have not picked up on that point. This is a total of €4.7 million in allowances for 35,000 civil servants. I have been able to give the committee the numbers of people in each category and the spending on each of those and that is for a system of 35,000 people. Our responsibility relates to those people and the other people who make the 292,000 in the public service. We have many issues to deal with, including the troika and budgets. The Chairman's questions are a matter for the Houses of the Oireachtas Commission and they are not difficult to answer.
Mr. Robert Watt:
Deputy McDonald asked the questions today and others have added to them. It is very simple to set out what the costs are. One has a cost made up of different elements and one has a number of Members and the different ways in which they work and operate and one can work out the situation.
That is where we need to direct our recommendations in terms of this because while other recommendations were made by other members, they are individual recommendations. We will come to a final conclusion on the recommendations at the end of our hearings but it is important that we know who we are asking to do what.
Mr. Kieran Coughlan:
While we could have an input into compiling and benchmarking these things, it is the Minister who will be signing off on those amounts. That constituency office allowance was reduced to €8,000 with no input from anybody here. A Minister sets the rates and scope of it. We have a professional input into it and benchmark against the office and rural and city areas but it is the Minister who sets the rates.
I respect what Mr. Coughlan is saying but it is not so much about the office but rather the role of a Member of Parliament - what we do. To take a simple example, we fob in here and nobody seems to take account of what I do in my constituency office. I could stay in bed for the rest of the year once I fob in 120 days here. It might not go down well with the constituents.
That is a very good suggestion from Mr. Coughlan and I hope both sides will take up.
My other question relates to the 10% of the Members who are audited. Most of the little corner shops in the country will submit their affairs to the Revenue Commissioners every year. They will pay their auditor and submit their figures. Did the Houses of the Oireachtas Service look at the proposal that people should have their affairs audited? Rather than the Houses of the Oireachtas taking the full cost of this, each Member would have his or her accounts audited and be investigated at the end of the year or some other time in the same way as the Revenue Commissioners would investigate small enterprises up and down Ireland.
Mr. Kieran Coughlan:
The emphasis at the time was to create this transparency and that would be an external auditor rather than Members carrying out their own audit and having that done by the Revenue Commissioners. The idea of having the external audit was to put that transparency in the system and it is one of the planks of it.
I want to look at appendix 1, at which Deputy Donohoe was looking earlier. Could I get an explanation of some of the terms used initially. In the column entitled decision taken in review, does the phrase "approved for payment to new beneficiaries" mean that it maintains for those new people? Does the phrase "allowances subject to review or modification" mean that it is part of the 88 being reviewed?
Mr. Robert Watt:
No, that is part of the overall review of pay structures so it is a question of whether we can amalgamate this duties allowance into the overall review of pay structures. We recognise that these are elements of pay that have affected allowances and need to be called what they are. Apart from the delegates' allowance, which has been abolished, none of these is part of the 88. These will be subject to review modification and will also be part of the medium-term approach in terms of pay consolidation.
Where I see that description, I can take it that it is intended that this allowance or amount will move into pay eventually. Are any of the 88 on this list the ones about which the Minister talked?
In respect of the service office supervisory role, Mr. Watt spoke earlier about certain allowances being paid, say, the principal's allowance in schools, for what would effectively be a higher salary grade and they should have done that. Is that what this allowance is? Is it one of those?
Mr. Robert Watt:
In a Government Department, there would be a number of service officers and attendants who would man the front desk, organise the post and organise and manage the facility, and a head is appointed to manage the group of staff. In our own Department, we have about 20 service officers so there is one individual who is head and makes sure everybody does what they are supposed to do.
Mr. Robert Watt:
A Department might have a number of different buildings. There are different structures depending on how it is organised. In effect, the allowance is part of pay for doing higher duties, for having responsibility for managing the staff and ensuring the duties in the service tenets are actually carried out.
With regard to the first part of the explanation, to which I referred, there is a head services officer but this person is getting paid the allowance to act in that role because the actual officer is not present.
Mr. Robert Watt:
It is in the absence of the officer. It depends on the structure. It is a case of the absence of the officer or of one acting as the deputy head where a Department is spread across a number of buildings. I presume the services officer for a particular building of a Department would not be the head services officer for the entire Department. Our Department is spread over a number of offices and complexes.
Ms Oonagh Buckley:
Most of these allowances have specific definitions. Supervisory allowances are very clearly paid where somebody might be brought in. There is a pay rate for the head services officer grade but there would be an allowance for somebody who is brought in, often after a competition, as a deputy supervisor or, as Mr. Watt suggested, as an officer in charge of a building subject to a head supervisor who is in charge of a complex.
Allowances including the driving and franking allowances, many of which date from the dawn of time, were brought in to account for additional roles. While a services officer may be paid according to a services-officer scale, some services officers have functions that were regarded as being of higher responsibility, certainly at the time in question. Being in charge of a franking machine, for example, involves financial responsibilities so an allowance would have been introduced at the time in question to reflect responsibilities beyond those of a standard services officer. Clearly, these pay structures are now not reflective of the sorts of normal flexibilities we expect of civil servants, including those at service office grade. As in other sectors where allowance-based pay structures are in place, we intend to consider introducing a more modern pay structure reflective of the fact that one officer might have responsibility that is at a very low level while another officer might have a responsibility that is at a higher level. The allowances, however, would not have titles such as "driving allowance" or "franking allowance". The system would allow for the movement of persons into different roles. This is work that has been done in a number of different areas; it simply has not been done yet for the services officers. It is the sort of work we would like to do on the pay structures of services officers. It takes time, however, because one must do pay banding, for example. It is a more elaborate exercise than could be carried out in-----
Mr. Robert Watt:
Some of these allowances were first paid as far back as the 1950s, and others date from the 1970s and 1980s. An allowance was put in place when the associated duty would have been new or attached to a position of some responsibility, or, as Ms Buckley said, when it involved looking after a particular area. We are trying to tidy it all up.
The key issue for the committee is that there is a plan to rationalise the structures to have a more modern pay approach. The amounts of money are modest and the numbers of people who claim the allowances comprise a small proportion of the overall number. However, we accept that we need to finish the exercise and work towards a more modern system that would, in addition to addressing the allowance issue, define clearly the duties and responsibilities in a way that suits business needs of today as opposed to those of the 1980s or another period.
They are getting paid an allowance because they may have to drive in the course of their working week but it is not certain that they will have to drive in the course of the working week. Is the allowance to be included as core pay by increasing the salary?
Mr. Robert Watt:
We need to engage with the staff side. We are going to determine what the responsibilities ought to be now and modernise the system to reflect the fact that there are duties that should be part of normal duties and which are no longer considered exceptional. They may have been exceptional when the allowances were first paid. It is not just a question of defining them in a different way but of trying to ensure the work reflects the realities of the business needs of today.
In the context of the previous discussion, it is important to consider the amounts in question. They are very modest. I refer to services officers who are paid a maximum of less than €500 per week, in other words, people on low pay.
Ms Oonagh Buckley:
Without referring to how we would approach this debate with the unions, I can state the approach on previous occasions, as with State industrials, which comprise another group of public servants not covered today, was to consider pay banding. It is a very common experience, including in the private sector. One determines the normal roles and functions of a person and then puts him or her onto a particular pay band. Instead of saying that somebody who might occasionally drive a car or van for their work should get a particular allowance or half an allowance, one says that if an officer is on a particular pay band, driving a vehicle is a normal part of his or her work. Therefore, driving on a particular day reflects the pay band and it is part of the flexibility required in a normal working arrangement.
The description the Deputy read in the first column is a description of what the allowance was designed to cover when it was introduced or of how it has evolved over the years. That is no longer fit for a more modern and more flexible public service. We must move from that to a structure that aligns more closely with the normal flexibilities we require in employment.
Ms Oonagh Buckley:
I cannot tell the Deputy that because the Civil Service is spread across many Departments. All of these allowances were payable to new beneficiaries up to 31 January. They have been approved subject to the wider review.
Were these the kinds of flexibilities we were trying to achieve under the Croke Park agreement, including in regard to core pay? We said we would try to achieve greater flexibility in the workplace. Did we then decide to pay an allowance on top?
Ms Oonagh Buckley:
The allowance was payable anyway. Facilitated by the flexibilities permissible under the Croke Park agreement, we want to say to the staff and their representatives that we would like to change the way in which we pay staff more radically in order to facilitate the greater flexibility we want.
We do not want older structures.
I would be interested in it. A criticism of the Croke Park agreement that is always levelled at me is that it is meant to be delivering greater flexibilities, yet this review seems to imply that we have been paying extra allowances for those flexibilities.
Mr. Robert Watt:
When we discuss Croke Park flexibilities in terms of service attendants and service officers, we are referring to a small number of people who are the lowest paid public servants. Our Department focuses on initiatives, changes and reforms that deliver the greatest possible savings for the State. As such, we spend time on the key issues that matter to the Exchequer. There has been a significant reduction in the number of service attendants in the system. There have been pay savings across the board, greater flexibilities and more redeployments. We are always told of service officers doing much more, being spread across several offices because their colleagues who used to look after office X have moved on, etc. The Croke Park agreement has delivered office micro-changes and the co-operation that exists now might not have been forthcoming in the past.
To be blunt, we are engaged in a process with the services office in this regard and it is not our priority to go after allowances for the lowest paid groups in the public service, as they are few in number and account for €4.7 million out of a pay bill of €15.3 billion. We are referring to 0.34% of Civil Service pay, a rounding error in the context of the overall pay bill.
I told Mr. Watt that I was not referring to amounts and that I wanted to discuss the principle and what had been achieved under the agreement. According to Mr. Watt, he does not want to go after those on lower pay, but he clearly does not want to go after those on higher pay either. This is the issue I am trying to examine.
Mr. Robert Watt:
I do not wish to get into a discussion with the Deputy about the Croke Park agreement. We have done so before and can return to it again, but the facts have been laid out clearly. The Deputy may be entitled to his opinion, but he is not entitled to his own facts. If there is any dispute about the savings under the agreement or what we have stated, we are happy to hear about it.
I was not discussing the agreement. Mr. Watt raised it. I was asking about particular allowances approved for people working in the public sector since the Croke Park agreement, namely, allowances for flexibilities in the workplace that people believed the agreement was to introduce. Now Mr. Watt has reverted to the issue of the methodology.
I thank Mr. Watt. Is it possible for someone to be in receipt of the franking machine allowance as well as the machine duties allowance? Can someone be entitled to one or more of the allowances listed?
I understand that, but I wrote to this committee on 10 September asking that we review the business cases for the allowances. As the information had been compiled, it would have been an interesting exercise to undertake and the committee would have learned a great deal. Such a review had not been performed previously. The information would have provided transparency as to how such matters operate in the public sector.
The explanation for the forklift allowance might be the best in the world and retaining it might be justified. As it dates back to the 1950s, I am sure that Mr. Watt will find something in the file explaining why it was granted. However, a thorough business case for retaining it was requested. In answer to the first paragraph, which asks what the employer receives in return for the allowance, the answer is "Driving a forklift". The other questions of whether the allowance is cost effective and represents value for money are not answered. This is not a business case. I have made this point previously. Like Mr. Watt, I am interested in the details. The Minister is also interested, as we have discussed the issue.
Mr. Robert Watt:
We have reviewed 1,100 allowances and received 800 business cases, which are available to the committee. We would welcome the committee's opinions on the allowances. If members have a different opinion on the forklift allowance or any other allowance or if they do not agree with business cases and wish to get into the minutiae, by all means they should do so and we will look forward to reading the committee's report on the matter. We have set out our views on how to rationalise this situation and how to have a more sensible way of paying people across the system. We welcome the committee's assistance in this task, as that is what it has been asked to do.
Where the forklift allowance is concerned, "Driving a forklift" is an excellent case to make. I would be more worried if the forklift was not being driven. Are these drivers in question in Customs and Excise?
They do outstanding work for the most part and must be commended. Mr. Watt correctly pointed out that the total spend in question is €4.7 million, with the numbers employed in the Civil Service at 35,000. On this basis, it is small beans. None the less, I will make a point about the work that is under way. A system such as this does civil servants a great disservice. Open to scrutiny as it is, in many cases it is subject to ridicule simply because the naming of the allowances is outdated.
I recommend that the system of rationalising pay, be it via pay bands or another agreed method, protect the earning power of people on the lowest rungs and in the middle ranks of the Civil Service. Previously, I told Mr. Watt and the Minister that any reform must have a keen eye towards equity within the system. There are significant disparities.
We can pick through each of the allowances. The delegates allowance is gone, but while the allowances for unsocial hours, watchmen, office accommodation, uniforms and so on are worthy, we must see the wood from the trees. The reformed payment system is the bigger picture.
Mr. Watt stated: "No duty-based allowance is payable to senior management such as Secretaries General or assistant secretaries".
Do we take from this that Secretaries General and assistant secretaries are not in receipt of any allowances?
Annex 2 refers to the common additional hours allowances, which are premium payments. They put the €4.7 million allowance figure into perspective, as we are looking at just over €7.4 million collected by 2,373 individuals for Saturday or Sunday work, on-call or call-out work. Will Mr. Watt give us a sense of who is in receipt of these payments, especially up along the ranks?
Mr. Robert Watt:
It takes in people working on Saturdays, Sundays and on call. For example, these people would look after the server system across the Civil Service. It would include individuals with shift allowances and so on. We can provide a detailed breakdown. We did not set out the grades that benefit.
I will be brief. I apologise for being late as I was in another meeting. The point made by Deputy McDonald is very fair. Many of these allowances are doing a disservice to people in the public service, and a number of people I have met who are civil and public servants are nearly embarrassed by the legacy system that exists. They want to see it reformed. Where an allowance is pay for additional responsibilities, such a system also exists in the private sector. People doing a different job would get additional pay, and calling it an allowance is a bit of a misnomer. Such payments are grouped with allowances that are indefensible and outdated.
If the witness has answered any of my questions, he should feel free to tell me. I will certainly make my contribution to the committee's report on the business cases. The phrase "business cases" leaves much to be desired. I have read many of these and they are not really business cases because they are very sparse on detail. In some cases they do not answer all the questions that have been put. I take the point that resources are deployed to where the most savings can be made for the taxpayer but this committee will have quite a bit to say about the issue of business cases.
We spoke about the 1,100 allowances but where do we want to get to in terms of numbers? How far are we down the road? I presume that even after we have carried out wonderful reforms and streamlined elements into core pay, there will be a number of remaining allowances.
Mr. Robert Watt:
I agree with the Deputy about the legacy. Within the Department we are trying to deal with a variety of legacy issues across the public service in this and other areas. There must be a sense of realism in that even with the burning platform of our current fiscal deficit, there is the issue of the system's capacity to address these within a timeframe. I share the Deputy's views about allowances, and the way this has been portrayed has not been very good for the public service, with much misinformation in the public domain. We must move on to modernise the structures, ensuring that pay reflects higher duties.
With regard to the business cases, perhaps that was not the best way to describe many of the submissions, although some are better than others. We welcome the views of the Deputy and the committee in that regard. We initiated this process, which had never been done before, and colleagues deserve credit for providing enormous amounts of information and getting to the bottom of an element of the pay bill which was very unclear. People did not previously have good sight on this but that has been remedied. The Minister and colleagues should be commended on starting the review, although there has not been much credit because of how it worked out. I accept the point about the business cases.
From the 1,100 allowances, I suspect that after a certain period we will have a good deal fewer. The best way to view this may be through the value of the allowances. The main elements that formulate the largest part of the pay bill will be in some way incorporated into pay and there will be clearer pay scales and structures. We wish for the qualifications and principal allowance for teachers, or the rent allowance for gardaí, for example, which make up the largest portion of the pay bill, to be subsumed - as the Minister noted - into a sensible pay structure. I imagine there will be fewer allowances and people will not have as much fun as we have had going through them all.
Mr. Robert Watt:
We are engaging on 88 allowances with staff representative bodies. We will see how we go on that. We indicated the end of February for the completion of that process. There are other key issues in modifying pay structures in the medium term - it depends on different issues in other sectors - but the Minister has set out an ambition to modernise the process as quickly as possible.
This exercise by the Committee of Public Accounts has been quite useful. Representatives of the Defence Forces and the Department of Defence were before us last week, as the witness is probably aware. I have been critical of the Croke Park agreement for adopting what I see as a catch-all way of treating everyone, regardless of income, the same. It has created a two-tier process in how we view different people in the public sector.
When we had representatives of the Defence Forces before us last week, it was nearly embarrassing to be an Irish citizen, let alone a public representative, when we saw the measly salaries that some privates in the Defence Forces earn. From what I can see, when the nation had money, rather than addressing the fact that some privates in the Army earned in and around the minimum wage, if not less, we threw them a few allowances. Rather than grappling with the fact that these people were grossly underpaid and earning less than the minimum wage, we gave out the allowances. As a result, we have created a system of allowances, some of which sound ridiculous.
Mr. Robert Watt:
I agree. The average pay across the Defence Forces is €47,000. For the average private, the basic pay is very low and just above the minimum wage. For whatever reason, it does not seem possible to have a sensible and rational discussion about the pay bill or the public sector. I will not mention the Croke Park agreement because Deputy Murphy might get upset again. We do not seem to be able to have a rational discussion.
The average pay in the public sector is €54,000, with 80% of people being paid less than €60,000. That is not what I hear when I read the discourse and coverage. We must continue to get the facts out there and have a debate in order that people understand that the majority of public servants are teachers, gardaí, nurses, local authority employees and civil servants who collect taxes and make social welfare payments. They are not the small number of so-called bureaucrats sitting behind desks on Merrion Street. There are a few of us but not many.
We need time to get across what a public service of 290,000 people is about. We must detail what and who they are, the service they provide and their pay. As Deputy McDonald noted, the majority do a great job and provide a great service to people. We just do not hear that out there anymore and we do not hear the other side of the story.
I have some final comments.
I presume we are not doing this in a vacuum, that we are learning from international best practice and that there are ongoing political discussions with the troika, our international friends, for the want of a better phrase. Have we done an analysis of how other countries, including other OECD countries, measure up?
I want to make a brief point following on from our discussion earlier. It is an observation to think about more than a direct question. We speak about office accommodation being provided in Leinster House for Deputies whose staff are based here. That is fine and I have no issue with that. I am just trying to separate them from those who are claiming. I am also following on from questions asked by the Chairman. He asked if anybody had checked out the cost of running a constituency operation, whether in Dublin 4 or west Cork. The cost might be different. I would link that to the remarks made by Mr. Watt.
There has been about a 10% reduction in public service numbers in recent years. Even in the Civil Service, the numbers have dropped by about 3,000. Let me make a suggestion as a cost saving measure in regard to expenses for Deputies. It is something I have suggested publicly on a number of occasions previously. If Deputies choose to have their staff based in Leinster House, that is fine but if Deputies do not, they should be allocated space in government or a local government office in their constituency.
Some 3,000 staff have left the Civil Service. It was said that 127 of us have claimed a grant for setting up a constituency office. I can think of no constituency where there would not be space in a government office, a Department which has been decentralised or a local council office. We might not even need to go to the HSE. A formula could be worked out that a Deputy is entitled to 1,200 sq. ft of office space to cover staff and meet members of the public. That could be allocated to a Deputy. I believe there is excess space and probably excess furniture as a result of the 3,000 staff who have left.
Some people might resist this and say the Deputy must be independent of the public service because sometimes we must battle with public servants and we do not want to meet them in the canteen at lunch time. However, there is an opportunity, if people think outside the box, to provide space in public buildings. There would be no basis whatsoever for Deputies to submit any expenses, vouched or unvouched, for constituency offices. It would result in a major saving and a rationalisation of locations. It could be done at minimal cost and it would remove Deputies from the process entirely. People would see one's office in a government building in a town. I am sure the OPW could offer a suite of facilities with the required space and suitable for any Deputy.
We are in an unusual position. To do our job as semi-public servants, we have to source and pay for our own office accommodation, desks and telephones and then put in a claim. No one else in the public service is expected to provide their own accommodation and seek reimbursement for the cost of providing their own telephone and photocopier. We should be offered facilities in a government office in our constituencies. It would remove this item from the debate. I ask Mr. Watt to think about that.