Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Question 46: To ask the Tánaiste and Minister for Finance his views on the affordability of public sector pay increases at this time; and if he will make a statement on the matter. [29716/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The public service pay bill is the biggest single element in public expenditure, accounting for approximately half of all current expenditure. Every 1% increase in the public service pay bill costs approximately €180 million. The total cost of meeting the public service pay commitments arising from the current pay agreement under Towards 2016 will come to approximately €1.7 billion. This pay agreement expires at the end of September 2008 in the public service, but at various earlier dates in the private sector.

In preparing for any forthcoming negotiations on arrangements to follow the current pay agreement under Towards 2016, it is important that expectations are kept in line with the economic realities we face. In particular, regard must be had to the need to maintain and improve our competitiveness and, in the case of the public service, of the need to maintain budgetary discipline. The national partnership agreements have served us well over the past decade and I hope that this well-tested approach can once again be relied upon in helping us to meet the emerging challenges we must face as a small open economy.

The more recent national partnership agreements, the Programme for Prosperity and Fairness, Sustaining Progress and Towards 2016, have put in place a better framework for dealing with public service pay. It provides a system under which the pay of public servants can be reviewed periodically on the basis of fair comparison with pay rates across the economy. There is an equal set of ground rules that apply to every public service union. As I said on many occasions, Government policy on public service pay is that the public service should be in a position to attract its fair share of good quality staff at all levels. It should neither lead the market nor trail it.

The other key feature of the framework which the agreements have put in place in respect of public service pay is the conditionality and verification provisions associated with pay increases. Payment of any pay increases in the public service is contingent on co-operation with a robust agenda of measures to improve the effectiveness, efficiency and user-friendliness of our public services and to the maintenance of industrial peace. Payment of any increase under the agreement is subject to verification of co-operation with flexibility and ongoing change, including co-operation with the implementation of the agenda for modernisation.

Additional information not given on the floor of the House.

The report of the public service benchmarking body on the second benchmarking review of the pay of most public service grades is expected to be received around the end of the year. The question of the implementation of the outcome of the benchmarking processes will be discussed by the parties in the context of discussions on whatever arrangements on pay and conditions are to be put in place on the expiry of the current pay agreement.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

I do not disagree with the Minister that expectations must be kept in line with realities, that we need to be conscious of competitiveness and that conditionality is vital in any public pay settlement. Against that background, how can he appeal for wage restraint from others when the Government will not apply it to itself? I cite the recent pay increase of 14% to the Taoiseach and similar increases to Ministers. If no demands for performance have been made of senior managers and Ministers, how can the Minister refer to conditionality of the pay settlements of others, reform and better delivery at the front line? Does the recent higher pay settlement repeat all the criticisms that were publicly made in the benchmarking process? There was no transparency in the evidence presented and no taxpayers representative to deal with issues from a taxpayer's point of view and this payment is made without any improved performance from those receiving it.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The situation that arose relates to the implementation of the independent review body on higher remuneration in the public sector. It was established in 1969 as an independent standing body, whose primary function was to advise the Government on the general levels of remuneration appropriate to higher public servants in the Civil Service, local authorities, former health boards, non-commercial State bodies, the Garda Síochána, the Defence Forces, hospital consultants, members of the Judiciary and holders of political office. It is established Government policy to accept the recommendations of this independent review body. It has been accepted by successive Governments.

In its report the review body set out the basis for its decisions. The Government has decided to phase in the increases over an 18-month period over three payments. The payments are based on comparing public sector posts to private sector posts where the duties and responsibilities are comparable. The recommendations are based on the lower quartile of the private sector rates and have been further reduced by 15% to allow for the superior value of public sector pensions relative to the private sector.

I am mindful of the fact that the findings of the review body will inevitably attract adverse criticism, in terms of public service and national pay policy. There is never a time when increases for top public service posts or the public service worker in general can be approved without attracting some adverse criticism.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

The Tánaiste set out two pillars of pay policy. One was that expectations should be in line with reality. How is an increase of €38,000 for the Taoiseach in line with reality that our economy is facing? The Tánaiste also referred to conditionality, value for money for the taxpayer or users of public services. Where is the value for money in the higher remuneration settlement? There is no demand for higher performance and no performance linkage and the Tánaiste is allowing these increases without them meeting his criteria.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

It is incorrect to state that the independent review body did not refer to performance pay. Those were in respect of further performance related payments they suggested should be paid. We have deferred consideration of these payments and they do not apply to the Judiciary or public office holders. The review body suggests it is much less than the proportion of the pay available as bonuses to many in the private sector. We were not prepared to go down that line.

The comparison with the private sector was modified by the review body. It was not a direct comparison with the private sector.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Everyone must tighten their belts except the Ministers. Where is the equity in that?

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

It has been the policy of successive Governments to accept the independent review body recommendations.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Not universally.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

It has been. In respect of report No. 37 and the fifth general review, received in January 1997, on 4 March 1997 the Government published a report stating that in line with the established Government policy of accepting the recommendations of this independent review body, the Government had decided to accept the recommendations of report No. 37 in principle. It went on to say, because there was an election coming up, that the question of implementation of the rates that would flow from the recommendation would be considered at a later date. When the new Government took office it deferred implementation of the report until March 1998. The Government then announced the implementation of the recommended increases, backdated to 1 April 1997. All Members in that outgoing Administration took up that increase.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

That is not the issue.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

It is the issue. There is a fair deal of political hypocrisy emanating from this House.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

That is not hypocrisy, the hypocrisy is the Government telling everyone to tighten their belts.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Top civil servants cannot negotiate with themselves on behalf of themselves. Since 1969 this independent review body has carried out that function. Successive Governments have adopted the recommendations.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Any independent person can see where the hypocrisy is.