Brendan Howlin (Wexford, Labour) | Oireachtas source

The Deputy will be aware that there are two measures that currently underpin public service pay and pensions policy: the Financial Emergency Measures in the Public Interest, FEMPI, Acts and the Haddington Road agreement. The nature of the financial emergency measures is that the powers granted by the Oireachtas under the legislation are temporary in nature and predicated on the continuing financial emergency in the State. The Haddington Road agreement is due to last for three years from 1 July 2013.

As provided for under section 12 of the FEMPI Act 2013, I am required to annually review the Acts, and a written report of my findings is laid before each House of the Oireachtas. My last review was laid before the Houses of the Oireachtas on 29 June 2014. In that review I concluded that there is still a need to continue to apply the relevant provisions of the legislation controlling the cost of remuneration of public servants and the other measures controlling the cost of the public service pay and pensions bill. It is worth restating that the expenditure proposals as set out in budget 2015 are based, in part, on the reduced public service pay bill, as well as on the revenue accruing from the pension-related deduction and public service pension reduction as provided for under the FEMPI Acts.

As well as the statutory requirement for an annual report to be made by me as Minister on the operation of the Acts, the legislation is maintained under constant review. The Deputy will be aware that the Government has recently accepted my proposal for the deletion of section 2B of the 2013 Act. As the powers provided to me under that Act have not been exercised to date and are not now necessary, I have proposed that they should be deleted from the legislation, and proposals on that matter will be before this House shortly.

The Haddington Road agreement, in the Government's view, sets the parameters for pay policy in the public service for a three-year time horizon. The agreement has enabled a key reduction in public service pay and pensions. The cost reductions and productivity increases - the reform dividend that we discussed on the last occasion - has allowed the Government the scope to recruit additional staff to key front-line services. This demonstrates that the agreement is delivering, that it has achieved its negotiated purpose and that it continues to be of value.

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As the country moves, thankfully, into a more normal pay-setting environment, a change we can already see is under way in the private sector, I believe it is important that I, as Minister for Public Expenditure and Reform, give consideration to how, over the medium term, pay policy needs to develop in the public service to help ensure that overall fiscal targets, including the achievement of a deficit of less than 3% of GDP by the end of 2015, will be met. In addition, the public service unions have indicated their intention, should the State's financial circumstances permit, to lodge a pay claim next year. If such a claim is made, the Government will of course have to consider it in line with the prevailing fiscal position. The legal position concerning the financial emergency legislation, which has underpinned the reductions to date, will also have to be addressed as part of the establishment of more normal pay-setting arrangements in the public service for the future.

When my consideration is more advanced, I will bring proposals to the Government in the first instance. Any proposals to amend the FEMPI Acts will require primary legislation to be brought before the Oireachtas.

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