John Moloney (Laois-Offaly, Fianna Fail)

I am taking this matter on behalf of my colleague, the Minister for Finance, Deputy Brian Lenihan. I thank Deputy Michael McGrath for his contribution to this debate. There is considerable variation in the size and capacity of State commercial companies. They include large companies such as ESB, CIE, the Dublin Airport Authority and Bord na Móna which play a critical role in national productivity. State commercial companies have been central to the development and modernisation of our economy. They also provide many of our essential infrastructural needs.

In the past, recommendations regarding the remuneration of chief executive officers of commercial State bodies came within the remit of the Review Body on Higher Remuneration in the Public Sector. Following recommendations by the review body in 1996, the Government adopted new arrangements for the system of determining the remuneration of these chief executive officers. Under this system, management consultants review the pay of these posts from time to time based on comparison with posts in the private sector.

Pay ranges recommended through this system were approved by the Government in 1999 and 2007. Currently, the remuneration of chief executive officers of commercial State bodies is set within the range of 80% to 100% of the median of private sector rates. In addition, chief executive officers are eligible to take part in performance-related pay schemes which, since 2008, provide for a possible annual performance bonus of up to 35% of salary, 10% of which must be based on achieving rigorous measurable targets at the end of three to four-year periods.

The Financial Emergency Measures in the Public Interest (No. 2) Act 2009 provides for reductions in the pay of public servants including staff of non-commercial State-sponsored bodies. The Act does not, however, cover commercial State-sponsored bodies. As the Minister explained during the debate on this legislation, pay cuts in commercial State-sponsored bodies such as Bord Gáis and the ESB would have no impact on the public service pay bill because the pay of the employees of those bodies is funded through their own commercial efforts. Historically, these bodies have not been covered by the public service element of pay rounds and have taken an independent approach to controlling their pay bills. RTE, for example, achieved voluntary pay reductions in recent months by agreement of its staff. Similarly, there have been a number of voluntary redundancy schemes in the ESB. While these companies must be allowed to act commercially and in accordance with the normal industrial relations process, the Government believes they should be subject to pay restraint in the interests of fulfilling the long-term national goal of ensuring competitive pricing for energy and other goods. The Minister for Finance has indicated that he is concerned about top-level pay across the economy. He has said he will bring proposals to the Government to review the arrangements governing the pay of chief executives of commercial State-sponsored bodies. Accordingly, the issue under debate is being addressed. The nature and extent of the proposed review is under consideration by the Minister for Finance. I can confirm that the Minister will bring proposals to the Government shortly.

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