Brendan Howlin (Wexford, Labour)

I thank the Deputies opposite. Deputy Fleming made a number of points. To answer his first, which is probably most important, on how we determine that the highest paid should be the chief executive officer of the ESB, the Deputy will be aware that there was a process done when his party was in Government called the Hay process. It looked at setting pay levels for the commercial semi-State sector, but also at determining the relativities between the chief executive officers because, as my colleague, the Minister, Deputy Rabbitte, stated, I think to the annoyance of the greyhound community, the chief executive officer of Bord na gCon should not be paid the same as the chief executive officer of the ESB. There are relativities. In the list published yesterday, one can see that these run from the ESB at the top to the chief executive officers of some of the smaller port companies at the bottom, and there are significant differentials in pay. That is for a good reason, because the complexity, size and scale of responsibility is different.

I wanted to shy away from a crude instrument of putting a general cap that would flatten that differential and we applied the Hay reductions on a percentage basis to everyone. That is where we came up with the cascading list. The percentage take we took was the aggregate cuts that had been inflicted generally under the financial measures in the public interest scheme plus 10%. That brought everyone except for the chief executive officer of the ESB below the €250,000 threshold. It is a very significant reduction, from the incumbent's salary to what will be paid to the next chief executive officer appointed. Unless one wanted to make an additional cut to the chief executive officer of the ESB, he would not have come below the threshold. Having discussed it with colleagues at Cabinet, the Minister for Communications, Energy and Natural Resources, in particular, it was felt that such was an appropriate level of pay. As Deputy Fleming will be aware, I have asked the incumbents who currently breach the €250,000 threshold to take a voluntary reduction of 15% or to reach the €250,000 threshold, whichever has the least impact on their wages.

Deputy Fleming makes a good case about the chief executive officer of AIB. I am sure that if I was sitting on the opposite side of the House, it would be a case I myself would be happy to make. It is not a commercial semi-State company. Currently, the State has a majority shareholding in AIB and there is a case to be made that some level of public service norms should be applicable. These are not legally applicable now. It is a source of aggravation to the public to see with the banks generally the pay rates of those who were in charge of them and who made those decisions that brought such economic devastation to the country, and the pensions with which they have walked away. As Deputy Fleming knows full well, however, it is difficult to do any of this retrospectively under our constitutional provisions.

The NTMA was raised by both Deputies. The NTMA's staff are contracted on individual contracts, which means the NTMA determines the skills it wants, identifies the holders of those skills, wherever those people might be, at home or abroad, and negotiates contracts with them. As I indicated, I am not happy with the degree of secrecy that surrounds that. I do not know the pay rates in the NTMA. I know the chief executive's pay, because he disclosed it to the Committee of Public Accounts, and the number who breach the €200,000 threshold, because that was indicated to that committee as well. The Minister in charge of public expenditure does not know these sums as of right, which is not good. I certainly will be taking that matter up with the Minister, Deputy Noonan, who has directly responsibility.

Deputy McDonald is correct when she states that the issue is amplified when one has the placement of NTMA officials in the Department of Finance, as is envisaged. The reason for this, which I had not much chance to explain in the previous debate, is to comply with the determination of Government to have a robust banking division which carries a proper scrutiny. The Minister, Deputy Noonan, has overseen fundamental restructuring of the banking division. Deputies will be aware of the Nyberg report, which contains a detailed analysis and pointed out many weaknesses. These are weaknesses which, by and large, have been dealt with already but there are some things we need to do further. This process will ensure that areas can be transferred under a memorandum of understanding from the NTMA into the Department of Finance. The issue raised in the previous debate was to ensure there would be legal certainty in respect of their status.

One thing I discovered when I was writing the reform document for the Labour Party last year was the Carltona principle. Apparently this comes from a 1940s case in the United Kingdom in which the authority of a civil servants to act on a legal or a constitutional basis on behalf of the Minister was challenged. The principle was established that civil servants acting bona fides had the legal authority of the Minister. The issue was to transfer that legal authority to these new personnel with certainty so that when they sign affidavits or appear before the courts they could have legal certainty in their legal personae. This is what that is about.

The issue of hospital consultants was raised. From 1 January, the 10% pay reduction for all new entrants into the public service has been applied to everyone. All newly appointed consultants are already below the €200,000 threshold. They were not specifically mentioned in the announcement I made yesterday because the Minister for Health is already in negotiations on work practices. I am keen for that work to be concluded before we specifically consider the issue of hospital consultants. The Deputy will be aware that some people have particular additional responsibilities, for example, the Masters of the maternity hospitals or the clinical directors in hospitals. Under the Financial Emergency Measures in the Public Interest legislation, the allowance element or portion of salary for the post or responsibility was treated differently than basic pay. That principle is replicated here.

The issues of performance related pay and bonuses were raised as well as the general principle. At this stage, all line Ministers have written to the semi-State bodies under their aegis to outline that the Government is against bonuses and that no bonuses should be paid to anyone in the current economic climate. Performance related pay is contractually part of some chief executive officers' basic pay packages and cannot be dislodged arbitrarily. They have legal comfort in the contractual arrangements. One of the decisions the Government made on Tuesday is to request me to examine fundamentally performance related pay as an issue. I intend to do this. In the past, there have been instances where performance related pay was simply taken as part of basic salary and it was rubber-stamped by a board. That must stop. I have not been convinced yet but there are arguments which hold that there should be an incentive to achieve set goals and that there should be a financial reward for certain chief executives. There must be some mechanism to set goals and to validate their achievements. It should not be automatic. This is something to which we can return.

Issues relating to the reform agenda and procurement were raised. The Minister of State, Deputy Hayes, has embarked on a robust review of procurement in the public sector. He has already been to London to meet his British counterpart who has achieved significant savings in their procurement agenda. None of these things are simple because, as in the case of roads projects, we do not seek a situation where everything one buys is cheaper but it is all manufactured outside the State. There must be some focus that Irish money being spent is sustaining Irish jobs, even if it is marginally more expensive than procuring goods or services with foreign product. Within procurement law we are captured by our treaty obligations as well. These are matters the Minister of State, Deputy Hayes, is very seized of. When the committee is up and running it would be useful to hold a real, open debate on procurement policy, how we do things and so on.

Deputy MacDonald referred to my role in terms of the commercial semi-State bodies. The commercial semi-State bodies are independent of Government in their normal business transactions. This is the statue basis of virtually all of the organisations. My role is to ensure that general Government policy on remuneration is applied. Borrowing for semi-State bodies will involve the joint action of the Minister, Deputy Noonan, and me. The amendment provides for a transfer to the Minister, that is to say, me, of shares or stocks issued to the Minister for Finance by a public body and registered in the name or held in trust on behalf of a person. The list to which the subsection of the legislation refers is in the amendment.

I am unsure what specific information the Deputy sought because I have not seen her letter. I presume it is in transit to me and I will check out the matter as soon as I get back. Deputy McDonald raised the specific issue of the Cahill report. There are two issues of note with regard to my role. Borrowing will be an action performed by the Minister, Deputy Noonan, and me.

I refer to the implementation of the McCarthy report in general terms. I am responsible to Government to receive from each line Department its reaction to the McCarthy report and to co-ordinate a set of proposals which I will then send to Government. To date, we have received from each line Minister his or her initial consideration of the McCarthy report and my officials are working on this. I hope to have proposals to Government before the summer recess. This is the intention. If there is any matter I have missed I would be pleased to refer to it again.

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