Wednesday, 20 January 2010
Ceisteanna - Questions
Question 4: To ask the Taoiseach the extent to which decisions announced in Budget 2010 will impact on the operation of his Department or agencies for which his Department has overall responsibility; and if he will make a statement on the matter. [46962/09]
Question 5: To ask the Taoiseach the savings to his Department's payroll bill for 2010, arising from cuts in public sector pay announced in Budget 2010 on 9 December 2009; and if he will make a statement on the matter. [46963/09]
Question 6: To ask the Taoiseach the bodies or agencies, operating under the aegis of his Department, to which the terms of the Financial Emergency Measures in the Public Interest (No 2) Act will apply; the estimated reduction in the annual wage bill of each such body or agency; the average reduction in pay in each case; and if he will make a statement on the matter. [48422/09]
Question 7: To ask the Taoiseach the savings that will accrue to his Department arising from the public service pay cuts applied by the Financial Emergency Measures in the Public Interest (No 2) Act; the number of personnel whose pay has been cut; the average reduction in each case; and if he will make a statement on the matter. [1582/10]
Question 8: To ask the Taoiseach the number of personnel in his Department to whom the full public service pay cuts provided for by the Financial Emergency Measures in the Public Interest (No 2) Act will not apply by virtue of circular 28/2009 issued by the Department of Finance on 22 December 2009; and if he will make a statement on the matter. [1583/10]
I propose to take Questions Nos. 1 to 8, inclusive, together.
The total allocation for my Department in the Estimates set out in the budget book for 2010 is €28.818 million. This is an overall decrease of 11.8%, or €3.868 million, on the 2009 revised estimate allocation.
The estimate for 2010 contains a number of significant changes to the Vote of the Department of the Taoiseach. Of the nine programme subheads in the estimate for 2009, six have been discontinued for 2010. These are the McCracken tribunal, the Forum for Peace and Reconciliation, the National Forum on Europe, the Newfoundland and Labrador Business Partnerships, the MacEntee Commission of Investigation and the Active Citizenship Office. In several cases, the activities funded under these subheads have come to a natural conclusion. In other cases, the Government decided to cease the relevant activities or to continue to support them from within the existing resources of my Department. Of the remaining programme subheads, there has been a reduction of 24% in the funding allocated to the National Economic and Social Development Office, and of 41% in the allocation for commemoration initiatives. The allocation for the Moriarty tribunal, at €7.5 million, is unchanged.
On the administrative budget, the overall reduction in the estimate for 2010 is 5%. The administration subheads will be further adjusted in the revised estimate when the effect of the budget reductions in pay is applied. The reductions in public service pay announced by the Minister for Finance in the 2010 budget will naturally apply to all staff in my Department and in the National Economic and Social Development Office. As a result the overall payroll cost for my Department and the National Economic and Social Development Office will reduce by approximately €957,000, representing an average wage reduction of 6.5% for the total number of 233 staff involved. The budget did not contain any provisions in regard to staff numbers for my Department or its agencies and I do not expect any changes in existing service levels to occur.
I look forward to addressing specific issues relating to the Estimates provisions when they are considered in the usual way by the Select Committee on Finance and the Public Service. I also look forward to responding to questions which Deputies may wish to table separately on specific aspects of the work of my Department. It is envisaged that the Revised Estimates for 2010 will be published in February 2010.
Is the Taoiseach concerned about the effect on staff in his Department and across all Departments of the pay cuts imposed in the budget? Is he concerned about the disproportionate effect on lower paid public servants of the levies and pay cuts as against those falling within the higher income reaches?
Civil Service unions have announced their intention to undertake work to rule action. Has this commenced and if so, how is it affecting the workings of the Taoiseach's Department? Has his or other Departments received notice of intent to take industrial action to restore pay rates and if not, does he anticipate such notice?
In the period since the announcement of the budget each of us in our respective constituencies have been exposed to the daily reality of many people on the lower income levels in the public service. We are being asked what we can do and what answers have we got. What answers would the Taoiseach give in the case of a typical public servant? A clerical worker who earned approximately €21,000 per annum in 2009 lost almost €300 to the pension levy and €370 to the income levy. Following the budget she will take a pay cut of 5% or €1050, and will also lose €32 in child benefit a month. She cannot afford to make ends meet. That is the daily reality for many people of which the Taoiseach and other Deputies must be aware. That woman has two young children, a large mortgage and her husband has only part-time work and earns an income of only €245 per week. How do I respond to that woman when she puts it to me that she cannot understand why the lower paid public servants should be hit with a second pay cut within a ten month period and why the higher paid are again being protected?
We need some answers. What response is the Taoiseach giving in such instances? How has he addressed similar cases that must be reflected within his Department and others and some of the agencies working directly under his Department? There is little or no comprehension by the Taoiseach and other Ministers of the daily reality that low to middle income public servants have to face as a consequence of the measures introduced by his Government during 2009, which seriously impact on their lives as we face into 2010.
People must understand that if we are borrowing €400 million a week, that is an unsustainable position and we will put at risk jobs in all sectors of the economy, including the public service, unless we take remedial action.
On the question of pay rates, savings of €1 billion have to be applied for 2010 arising from decisions we had to make in the budget on the pay issue. I emphasise that the Government has applied the pay reductions in a progressive way, unlike what the Deputy said. As with all the adjustments to the cost of public service pay, it has meant that lower paid public servants have suffered less of a net loss proportionately than those on the higher paid grades. A Civil Service clerical officer on the mid-point of the scale will have suffered a net loss over the course of the three budgets since autumn 2008 of approximately 11.7% of pay. The loss is still significant but should be compared to the net loss of those on higher paid grades. In the same period an assistant secretary has suffered a net loss of more than 24% of pay and a deputy secretary a net loss of more than 27% of pay. The highest paid civil servants - level 1 Secretaries General - who volunteered to take an additional pay reduction have seen their net pay reduce by more than one third. Therefore, it is not correct to say that there has not been a progressive proportionate hit on pay, according as one goes up the scales of salaries and remuneration.
It must also be pointed out with regard to assistant secretaries and equivalent grades that their pay was found by the Review Body on Higher Remuneration in the Public Sector not to be out of line with comparable grades in the eurozone. Applying the full reduction recommended by the body would have meant an effective average reduction of 18% in the remuneration package of an assistant secretary and 22% in that of a deputy secretary, both of which are greater than the reductions applied to other public servants, including Secretaries General. The Minister for Finance considered this to be inappropriate and decided that a different arrangement should apply to certain Civil Service and related grades in which the scheme of performance-related awards has been terminated. In all, approximately 600 employees in the public service are affected. The Minister therefore decided that the reduction for the grades of assistant and deputy secretary and related grades should comprise both the reduction in the salary scale and the termination of the award scheme, which is an effective reduction of 11.8% for assistant secretaries and 14% for deputy secretaries. Those are the full facts.
Given that most public servants earn around €50,000 or less, in order to achieve the necessary savings it was not possible to exclude any group from the pay cut. However, the rates by which pay is being cut are progressive, with the lowest paid affected least. Reductions in remuneration range from 5% for the lower paid to 8% in the case of salaries up to €125,000. Salaries above that level are adjusted in line with the recommendations of the review body; in those cases the entire salary will be reduced by 8% for salaries of €125,000 to €165,000, 12% for salaries of €165,000 to €200,000, and 15% for salaries of €200,000 or more. The salary of the Secretary General of my Department has been reduced by 20%.
This pay cut applies to all public servants in every area of the public service, including the Civil Service, local government, the health and education sectors, the Garda Síochána, the Defence Forces, non-commercial semi-State bodies and political office holders. Exceptions are being considered in view of this. Those are the full facts. There is an idea that the cuts are not progressive, but when everything is taken into account they are progressive.
With regard to the possibility of industrial relations problems, I do not believe industrial action will serve any purpose. The response of the unions is a matter for the unions themselves. I would like to see them come back to the issues that need to be considered sooner rather than later. We need to consider non-pay issues as a means of ensuring that we are in a position, in due course, to maintain salary levels as they are at the moment. The decisions we had to take in December are in place and are now part of the situation.
Do I understand that notice of a work-to-rule action or intent to give effect to industrial action has not been served on the Department of the Taoiseach and other Departments by the representative trade unions? Can the Taoiseach clarify the facts in this regard?
With respect to the Taoiseach's claim that the cuts will affect people proportionately, he should make no mistake about it: a cut of €1,720 to an income of €21,000 is a devastating blow for a young woman with children whose husband is working part-time, with all the commitments they must face. In terms of a paper presentation of comparative percentage drops-----
That is what we are talking about - percentage this, percentage that across the different income levels. It does not translate into reality or illustrate what people are facing on a daily basis. Does the Taoiseach not accept that the impact on this woman's circumstances is much graver than is indicated by stating the percentage drop compared to the highest income earners within the public service? It is an indisputable fact and if the Taoiseach does not accept it he is far removed from the reality of ordinary people's lives. I can tell him it is a serious situation for them.
How can the Taoiseach justify these cuts for people at the lowest income level while at the same time setting aside from his Department's budget some €400,000 annually to support no less than three advisers for the Minister for Health and Children? He indicated that to us in response to parliamentary questions last year. A total of €400,000 is paid to three people for taking an advisory role to the Minister in a different Department. Does that cross-departmental arrangement apply in any other situation? Why should it apply in the case of the Minister for Health and Children, Deputy Harney? Why should the Taoiseach's Department be the bail-out Department, transferring funds to the Department of Health and Children? The income earnings of those people far exceed those of ordinary low- to middle-income earners in the Taoiseach's Department, yet he is quite happy to make a transfer of more than €400,000 annually to the Minister in order to ensure her goodwill and allow her to act, as she has done over a number of years, as the apron for the attacks on the health system, saving the face of the Taoiseach and Fianna Fáil.
I suppose Question Time gives the Deputy a chance to do what he is doing now. However, the fact is that the health service costs €15 billion. If the Deputy thinks the Minister should carry out her functions without independent advice, that is his opinion, but it is of no relevance to the pay cuts of more than €1 billion in the public service. Those employees are subject to the same cuts in remuneration as people in the public service. They are not being treated any differently.
The Deputy is suggesting that if we did not have advisers we would not have to implement measures such as pay cuts. That is nonsense. We have a serious budgetary crisis that must be dealt with on both the pay side and the non-pay side. It is unfortunate. I would rather we did not have to consider such proposals, but we did. Such measures had to be taken. I am simply telling the Deputy that they are progressive and that those on lower wages are being asked to pay less. Ideally, we would like to be in a position to exempt low-paid people, but it is not possible to obtain savings of that magnitude from the public service pay bill when so many public servants are on salaries of €50,000 or less. The idea that we could find the money somewhere else and make up €1 billion from the public service pay bill in some other way is not feasible.
The Deputy has had his day on that one. The Government had to take decisions to implement cuts of between 5% and 8% across the board in the public service. I have outlined the progressive nature of those decisions. If the Deputy considers the decisions we have taken since the crisis began he will see the percentages confirm that the cuts are progressive. They must be progressive in the interests of fairness all around. There are many other people outside the public sector who have unfortunately lost their jobs. The question of security of employment must also be taken into consideration. We must try to implement reforms in the public service and proceed in the years ahead on the basis of what is affordable and what is coming into the Exchequer, and that will involve much effort on everyone's part. The idea that there is a simple black-and-white solution is not correct.
The Deputy is aware that the public services committee of the Irish Congress of Trade Unions has been holding meetings. ICTU will meet again this week and it has indicated its position publicly. Some unions have corresponded with management in these matters. As Taoiseach, I do not believe industrial action will provide a solution to any of these problems. In fact, it would affect services, which we need to avoid, particularly at present.
I have some questions for the Taoiseach about the cuts in pay to staff of his Department. Have these pay cuts already commenced, and from what date did they commence?
Second, I refer to the decision that was taken subsequent to the Act being passed by the Houses of the Oireachtas to vary the manner in which it was to be applied to the grades of assistant and deputy secretary. Was that decision taken by the Government and was the Taoiseach personally involved in it? Third, the Taoiseach will recall that before Christmas, I asked him about the issue of staff who are employed by bodies which are funded by the public purse. I referred specifically to bodies such as charities and various non-governmental organisations and, in response, the Government introduced an amendment to the legislation to the effect that the pay cuts would apply only to those who enjoyed public sector pensions. I understand that the Health Service Executive has issued a circular to the bodies it funds directing them to cut the pay of the staffs concerned, many of which staffs are lowly paid, including those of various charities. What is the legal basis, if any, for such a circular and what is the position in this regard? Finally, when does the Taoiseach expect the Moriarty tribunal to report?
I do not have to hand the detail regarding the matter raised by the Deputy on the charity workers and the public service pension. While it is a matter that will be dealt with by the Department of Finance, I will convey the detail to the Deputy. I am not personally aware of the circular in question.
As the Deputy is aware, the legislation was enacted for the purpose of being introduced during the course of 2010 and it now is in place. People will see this in their salaries and monthly cheques when they come through this month. People will see the changes that must be imposed, as I have stated, for reasons of financial necessity from the Government's point of view.
The other matter raised by the Deputy pertained to the Moriarty tribunal. I received correspondence in this regard before Christmas and I believe a report is due next month. I will convey to the Deputy the precise information that was conveyed to me by the chairman. I believe it will be next month and certainly it will be soon.
I acknowledge the Taoiseach's response regarding the Moriarty tribunal and I will await the clarification he intends to send to me on the Health Service Executive circular and the position regarding the staffs of bodies that are funded by the public purse, rather than those who are directly employed in the public sector. I wish to pursue the other two matters I raised a little further. The Taoiseach did not respond to the question I asked about the decision that was taken to apply the cut to the salaries of assistant and deputy secretaries and similar grades on the basis of the consolidated pay plus bonus that had been removed previously. I asked the Taoiseach whether this was a decision taken by the Government and whether he was involved in that decision and I seek an answer in this regard.
I am unclear in respect of the application of the pay cuts. I appreciate that the legislation was passed and that it was to have applied to 2010. My question was whether the process of cutting pay has begun and from what date.
I cannot give the Deputy the exact information as I do not have it to hand. While this is an issue for the Department responsible for the public service, I will find out the precise date on which it began. However, it is in process and so undoubtedly is proceeding. I will check for the Deputy whether there was a specific date on which an order was signed to enable this to happen but offhand I do not know what it is.
I do not have such information to hand. It really is a question to be put to the Minister for Finance, who is responsible for the line Department. I do not have responsibility in respect of the technical details. However, the Deputy may take it that it is proceeding. To be of assistance to the Deputy, I will procure for him any further details he requires in addition to what he already knows.
On the Moriarty tribunal report, I have to hand a note stating that I was recently informed by Mr. Justice Moriarty that he intends to ensure that preparation for printing of the second and final part of the report will be completed by mid-February. That is the latest information I have.
Yes, I will come to that. My recollection is that this issue was mentioned by the Minister for Finance at Cabinet. Approximately one third of those covered by the review body have been affected by the termination of an applicable performance-related awards scheme. The pay to one group, assistant secretaries, was found by the review body not to be out of line, having regard to its comparators in the eurozone. On the other hand, applying the full reduction recommended by the body would have meant an effective reduction of an average of 18% and 22% in the remuneration packages of assistant secretaries and deputy secretaries, respectively, which would be higher than for other public servants, including Secretaries General. The Minister for Finance considered that this was not appropriate and decided that a different arrangement should apply to certain Civil Service and related grades where a scheme of performance-related awards has been terminated. In reply to Deputy Ó Caoláin, I made the point that approximately 600 employees in the public service would be affected. In those cases, the reduction comprises both the reduction in the salary scale and the termination of the awards scheme. I already have given the other information in reply to the previous question from Deputy Ó Caoláin. The Minister brought his obligation to consider the matter to the Government's attention and he subsequently made the decision.
Does the Taoiseach accept that much of the resentment arising from the Estimates and the budget is focused on the perception within the public service, which I consider to be supported by the facts, that the top levels of the Civil Service were able to look after themselves whereas this was not the case down the line? Does he accept that the reason cuts were avoided at the top level may have been because those involved have an influence in the final decisions that were made? This resentment is not simply felt by civil servants but also by the public. As for the top levels of the Civil Service, does he perceive a further problem regarding the position of Secretaries General? I refer to a supposed policy whereby they are meant to retire after seven years. However, this policy is not being adhered to and in many instances, they are staying on in the public service. Moreover, they are staying on at the same level of salary and no matter what their position, their salaries continue to be paid at Secretary General level.
I am talking about the Estimates, including one in particular which is the direct responsibility of the Taoiseach. I refer to the Office of the Parliamentary Draftsman, where the office is renewed after the seven-year period at the same salary. Moreover, the same principle applies even if those concerned are not renewed in the same office. Those who get another position within the Civil Service receive the same Secretary General salary right through to the end. Does the Taoiseach accept this hardly is an acceptable implementation of the policy that was introduced to put a term limit of seven years on the appointment of Secretaries General?
I would argue that the term limit has seen a high turnover at senior management level within the Civil Service. While I understand the thinking behind the reason it was introduced, people must consider whether it brings too great a turnover rate wherein people have been lost who one would have wished to stay on, if possible. There are pluses and minuses in respect of some of these matters. I accept that the position whereby a person who was appointed to such a position at a young age would remain there right up to retirement age, was not good either. It constitutes the other extreme to the argument. It is a question of trying to find the balance and reviewing how the policy has worked out in the light of experience. While there still are many benefits to the system, it is like every other issue, in that were one to go over it again, one should consider how one might tweak certain aspects.
The Deputy suggested that people looked after themselves. There are independent processes. The review group on higher remuneration dictated the outcomes in the context of the job given to it by the Minister for Finance to make comparisons with similar sized countries. The comparisons at assistant secretary grade were in sync with other countries, whereas other higher grades were not in sync with these countries and, therefore, reductions were recommended. If anomalies arise in respect of the grades the review body was asked to look at and other related grades, there is also provision for the Minister to deal with them and the review body report refers to that. It is not correct to say it is a ready up for higher grades to look after themselves.
It is for us in public office to dispel that notion where it is not well grounded. Pay is not determined by those who hold the grade. Pay levels are recommended by an outside body. If someone says to a Deputy it is done another way, it is our job to say that is not the case even though that person might not like the outcome and he or she might have views on this issue. This is not an arbitrary system because that would not help morale in any way. It is difficult enough for people to take pay cuts but the notion that it is a total ready up is not the situation.
One of the core objectives of the Taoiseach's Department is public service modernisation and he believes this is a key priority of the Department. With regard to the staff numbers in the public modernisation section of the Department, even though the issue has moved up the scale in priority within the Department in the past three years, staffing levels have not increased. Does the Taoiseach believe he can deliver on the objective of transforming the public service with the present staff complement?
I refer to the delivery of the modernisation programme. In the context of the changes that took place prior to Christmas regarding the pay cuts for senior management as a result of the order signed by the Minister for Finance, does the Taoiseach think it will be more difficult to deliver the programme? Many pubic servants are extremely hurt by the way they feel they have been hung out to dry by the Government while senior officials, who should have taken decisions to streamline the public service and to save taxpayers' money, turned a blind eye to the need to change and to restructure and were given bonuses, which have been credited against pay cuts.
My understanding is a bonus is not calculated as part of one's salary and it is paid on top of one's salary. Pay cuts should be applied to salaries and not bonuses. The structure adopted in the public service gives officials a double payment as a result of the initial bonus payment and the recent credit they have been given against pay cuts that everyone else has to take.
I do not agree with that argument because the introduction of the performance-related bonus system for these grades was taken into account in determining salary levels by review bodies in the past. In other words, the existence of the system was taken into account when the review body was deciding the salary levels because the system was based on a discretionary decision by senior management, year on year, depending on performance and that is the part of the balance between performance and bonus systems always. That the incentive exists for these grades and not for others was taken into account in determining salary levels.
That is borne out by the fact that when the comparison was made between the assistant secretary grade and its equivalent in other countries in the exercise the Minister for Finance asked the review body to conduct, it was shown it was more in line with foreign salary levels than was the case with other grades. That confirms that in determining salary levels in the past the existence of the performance-related bonus scheme was taken into account by the review body and, therefore, on the basis that we were terminating the scheme, had the proposed pay reductions been applied then to this grade, as recommended, these officials would have faced a higher reduction than officials in higher grades. We had to make an adjustment to maintain the principle of progressivity. One has to do what is fair in all circumstances but some people, perhaps representing lower grades, said these officials were taking a smaller pay cut than their members. That is not the case and if the Deputy examines the measures we have had to take since the crisis emerged, the percentage reduction for this grade is rightly well over double that of lower grades, which is what one would expect.
The imposition of pay cuts, as distinct from them being agreed, makes the industrial relations situation more fraught in the immediate term but people also have to accept and understand that we had to discharge our responsibility as a Government in terms of a budgetary policy that would take into account pay cuts given the adjustment we had to contemplate in the budget.
I refer again to the way in which the decision was made to vary the application of the pay cuts in the case of the higher grades because I am unclear. As I understand it, the decision was made by the Minister for Finance and the Government was informed. Had the Minister discretion in the way in which the pay cut was applied? The Taoiseach explained the rationale for changing the way it was applied to assistant secretaries. If, for example, low paid public servants demonstrated that the effect of the pay cut would leave them worse off than if they were on social welfare, would the Minister have discretion to similarly vary the way in which the pay cut is applied?
The Government obtained recommendations and it is a matter for the Government to implement them or not, as the case may be. In the case of pay issues, one would look to do that. If an objectively-based anomaly arose, which the review body acknowledges may have to be catered for because of the limited number of grades being examined for the purpose of the exercise in which it is engaged, the Minister for Finance would have to make technical adjustments to accommodate them. There is a reference in the body of the report to this fact
This issue arose and it had to be considered by the Minister, who felt, taking into account all the facts, that he would proceed as he did and there was an objective reason for that. It was not an attempt to show favouritism to one grade over another. The issue arose and there were good grounds for the decision, which I have set out.
Of course pay reductions impose a certain degree of hardship on people, who I understand have existing commitments, but if we had to make those reductions then last year was the year to do so because there were reductions in the cost of living of the order of 6.5%. The purchasing power of the salaries that were being adjusted was maintained and that makes last year unique compared to other years which have an inflationary effect. The overriding reason was that it was necessary to adjust the pay bill given its size in terms of overall Exchequer spend. One could not make a €4 billion adjustment, which I think everyone in the House accepted was necessary given the fiscal situation, without seeking a contribution of the order we sought on the pay side. Otherwise one would be asking the non-pay side and the delivery of services to take a hit that would greatly affect the level of service one could guarantee. In a difficult situation this was the best outcome that could be formulated by the Government, looking at the facts of the situation as they faced us at the time.