Mary Lou McDonald (Dublin Central, Sinn Fein)
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To ask the Minister for Public Expenditure and Reform if he will make a statement on his recent review of public service allowances and premium payments; if he intends to make public all data relating to the allowances including the grade and pay level of recipients; and the way in which he intends to deal with these allowances and premium payments into the future. [43502/12]

Mattie McGrath (Tipperary South, Independent)
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To ask the Minister for Public Expenditure and Reform the steps that he will take to ensure greater accuracy in the targets that he sets in view of the failure to reach the target set in respect of public sector allowances; and if he will make a statement on the matter. [43586/12]

Brendan Howlin (Wexford, Labour)
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I propose to take Questions Nos. 2 and 3 together.

This Government is committed to securing sustainable reductions in the cost of the public service pay and pensions bill. The aim is to reduce the total cost of the Exchequer pay bill by some €3.8 billion in the period from 2009 to 2015, a large and sustainable fall in the cost of employing people to deliver public services by 2015. The reform of allowances is just one element of a sustained programme of cost reduction across the public service.

It is worth repeating that allowances are, and will continue to be, a normal part of the pay structure in the public service. However, allowances should only be payable in circumstances that meet the criteria set out for the review. Those criteria were that they should reflect the arduous nature or unsocial hours, including the need to remain on call at weekends and other times, clearly associated with the duties of posts; they should ensure work of additional value is actually received by an employer; or they should cover an actual cost accruing to the employee derived from their employment.

The allowances review conducted by my Department was the first comprehensive, public-service wide attempt to address outdated allowance-based pay structures across the public service.

There will be two consequences of the decisions taken by the Government on foot of the review. The cost of employing new public servants to deliver public services will continue to fall because we will no longer be paying them outdated allowances. The allowances review also showed structural weaknesses and a lack of transparency in the way in which certain public servants are paid. Pay structures across the public service will be radically reformed through the elimination or modification of certain allowances and the restructuring of pay scales. As well as structural improvements and greater transparency, these measures will generate substantial, sustainable savings in future years as well.

To assist people in understanding the basis of the review, details of business cases together with the outcome of the review have been published on my Department’s website. Details of salary scales in respect of all public service grades and details of allowances payable to those grades are retained at sectoral level and can readily be supplied in respect of each sector by the Department in question.

The review done to date is just the first step in what will be an ongoing process.

My Department has written to sectoral managers instructing them to engage immediately with staff interests with a view to securing their early agreement to the elimination of departmental allowances to current incumbents where no business case exists to pay those allowances to new beneficiaries. Departments have also been asked to identify other allowances, including legacy allowances, for elimination from current beneficiaries. Departments were requested to submit detailed proposals, including setting priorities and indicating timeframes for completion of this process, to my Department. This process will enable further savings to the Exchequer to be quantified.

With regard to the indicative savings target of €75 million for 2012, it was never the case that the allowances review targets was included in the budgetary provision. The intention was that any moneys saved would be available to offset against unallocated savings in the overall spending ceiling. The size and duration of the review could not have been anticipated and I accepted earlier this year that the specific savings targets for 2012 would not be realised. This does not impact on the achievement of the pay bill budget for the year, which will be fully realised.

I am confident that the decisions taken by the Government on foot of the review will go a long way towards making our public service leaner and more efficient, as well as delivering services on a cost effective and value-for-money basis.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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The business cases to which the Minister referred were flimsy to say the least. In many instances they were simply reiterations of a status quo which was not to be disturbed and there was little substantive analysis. He has made a dog's ear of the matter. He backed away from his own estimate of €75 million but, worse, he deliberately targeted new entrants, just as he did in respect of the new pension regime for the public sector. It is acceptable on his watch that a young teacher who starts this month will earn €11,000 less than somebody who commenced two years ago.

Brendan Howlin (Wexford, Labour)
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Does the Deputy know how much teachers are paid?

Mary Lou McDonald (Dublin Central, Sinn Fein)
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It is completely unfair.

Brendan Howlin (Wexford, Labour)
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It is not true.

Michael Kitt (Galway East, Fianna Fail)
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I ask the Deputy to put a question.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I ask the Minister to hold his horses. A number of issues have to be factored in if we are to get to the bottom of the question of allowances. One of the core considerations has to be pay equity in the system. A small group of individuals enjoy very high incomes, whereas the mass of public and civil servants are on modest wages. When one makes a calculation on premium payments and allowances, one must not only look to the public purse and the overall pay bill but also to the sustainability and spending power of workers in these categories. There are no prizes for driving those who are struggling to get by into poverty. I ask the Minister why he has not taken that into account in his analysis and ask him to do so when he deliberates further.

Brendan Howlin (Wexford, Labour)
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Not for the first time, I am bemused by Deputy McDonald. She is arguing that we did not go far enough while at the same time accusing us of failing to take account of spending power. I do not doubt that we would be having a different dialogue if we had taken the decision to eliminate all the allowances I have identified in the first annexe to the report, which would have taken €4,000 out of the pocket of every garda and thousands of euro from teachers and firefighters. I am not sure the Deputy is in favour of that.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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The Minister knows full well I am not.

Brendan Howlin (Wexford, Labour)
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We have analysed the impact of the spending power of public servants and social welfare recipients on large parts of the economy. These factors are taken into account. This the first time we have drilled down into the composition of pay. I have been honest in acknowledging that it is much more complicated than I first envisaged. Under the pay regime that has built up over decades, allowances were subsumed into core pay across swathes of the public service to meet various sectoral agreements at different times. Relativities, in terms of people in different categories of employment, were part of the pay structure. It is an extraordinarily complicated task to disaggregate that system.

Now that we have seen the picture we have set about eliminating those allowances which are not justified by using the mechanisms of Croke Park to buy them out, except for those which are such important parts of core pay that it would be unacceptable to force the sector of our community which receives them to carry an inordinate burden. We are going to create new pay structures across the public service so that the allowances are subsumed into normal pay structures. These are complicated issues but my Department and I are determined to address them. People sometimes view these matters at a surface level but true reform is much more complicated and demanding. I am determined to deliver a truly reformed public service at the end of the day.

Mattie McGrath (Tipperary South, Independent)
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I acknowledge that the Minister does a difficult job and I wish him well in it. I do not want to knock public servants, particularly those on lower pay grades. I do not want to take money from the pockets of gardaí, nurses or other front line workers. However, the Minister or his Department fostered the expectation that €75 million could be saved and the public were left with the impression that a lot of fat could be trimmed. I am disappointed that somebody gave him those figures - I do not think he came up with them himself - when the actual amount was a paltry €3 million. Would it not have been better to impose a percentage cut across the board? We will have to improve our ability to make projections because the performance in this instance was very poor.

Brendan Howlin (Wexford, Labour)
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I am not sure whether Deputy Mattie McGrath asked a question but I will respond in any event. I do not think he wants to pick on any category of public servant, whether teachers, nurses or gardaí, simply because of the way in which their wages were historically constituted. I do not think any Deputy would have been happy if I had taken that route, other than, perhaps, one or two.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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He took that route with new entrants.

Brendan Howlin (Wexford, Labour)
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I have stated publicly that if I was starting again I would not set out the estimate of €75 million. The genesis of the figure is simple, however. The total for all allowances, including the big chunk that is core pay, is €1.5 billion and 5% of this total is €75 million. I believed we could set out a target of this nature. I did not put it into the budget arithmetic and it was not included in the pay targets but sometimes it is important to set an objective. I will not be enthusiastic about setting further objectives because apparently it is a mortal sin to drill down and discover that a target is not achievable. It is more honest to admit the truth.

My overall target is not €75 million; it is €3.8 billion. I am required to achieve a reduction in pay of €3.8 billion in gross terms, or €3.3 billion in net terms. A dialogue will be required on how we are going to achieve these targets. However, alongside reducing numbers and the pay bill I also want to develop a more efficient public service which offers relative security to those who work in it so they can plan and spend in our economy once again. I have heard shrill voices from those who argue that low paid public servants are somehow responsible for our economic woes. That is not true but certain people want to peddle that claim and we read about it far too often. Public servants have taken two pay cuts. They have taken a pay cut of 7% on average and also pay a levy of 7% on average. They are working harder and doing more.

However, we need to do more and I am asking for more. Tomorrow with the Taoiseach I will meet the implementation body to set a new agenda. We are driving change and reform. This issue should not be looked in a narrow sectoral way but in the round. The Department intends at the end of its five year mandate to have in place a much more efficient modern public service of which we can all be proud and which will be cost effective, efficient and deliver the services people need.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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The Minister knows full well that I am asking him to ensure he does not take another red cent from the pockets of the average garda on the beat, firefighter or clerical officer. We have had this discussion.

Brendan Howlin (Wexford, Labour)
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From whom does the Deputy want me to take money?

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I want the Minister to deal with the issue of high pay rates in the public service and impose a cap. We have had this discussion time and again. The Minister has claimed he is the defender of public servants on low and middle incomes.

Brendan Howlin (Wexford, Labour)
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I am doing that.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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The evidence is that the Minister has deliberately targeted new entrants to these jobs, running through their pension entitlements and allowances. That is what he has done rather than target his efforts. He must recognise the pay inequity in the system and target his efforts at those areas in which there is scope for savings. Undoubtedly, there is scope at the top. The Minister mentioned using the Croke Park mechanisms to buy out allowances. Will he set out for us what this means? Will he set out the scale and indicative costings?

Mattie McGrath (Tipperary South, Independent)
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I too thank the Minister for his efforts and honesty in admitting the figure was 5% and that the savings achieved did not come to the €75 million ingrained among the public, leaving egg on everyone's face when only €2.5 million or €3 million was saved. The Taoiseach said he was writing to all line Ministers asking them to come up with savings. Like Deputy Mary Lou McDonald, I do not want another cent to be taken from lower paid workers. I am also concerned about new entrants being penalised, particularly in their starting pay. Pension entitlements are a different matter, as we have seen some exorbitant pensions being paid to senior civil servants and former politicians, which is morally wrong.

I am glad the Minister of State, Deputy Brian Hayes, is with the Minister. With reference to a contribution I made earlier today, the Minister of State denied a cohort of well paid and cosseted individuals close to the centre of power had escaped the pension levy under the watch of the previous Government. The Minister should inform his colleague of the truth of this. It was appalling and sent the wrong message to every public servant and everybody else. The people concerned are still getting away with it. It is the people close to power who are protecting themselves who must be targeted.

Brendan Howlin (Wexford, Labour)
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There are a number of questions to deal with. I will deal, first, with the issue of high earners. The Sinn Féin position has always been very clear. It suggests some nebulous rich tax could be imposed that would solve all of our problems, that no general tax need be levied and that there is no need to cut any service. The number of high earners in the public service who earn more than €100,000 is less than 2%.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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It is almost 7,000.

Brendan Howlin (Wexford, Labour)
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It is, in fact, less than 6,000.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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The figure is 6,791.

Brendan Howlin (Wexford, Labour)
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I will give the Deputy the exact figures when we reach that question. She spoke about the targeting of young teachers. I do not have the exact figure, but a young teacher starting off is on a salary of approximately €32,000. In order to not double the impact on teachers whose starting pay is now 10% lower than it was and whose allowance for obtaining a degree has been removed, we have abolished the first three steps in the incremental scale. This gives them a fair start. We looked at the graduate entrance rate in the private sector and the figure mentioned is well up with it. To be honest, if I was asked who was damaged or hurt the most in the economy, I would not say it was the ones starting out now but those who bought a house at the peak of the boom - those between the ages of 35 and 45 years - and who are now in negative equity. A teacher starting today will buy a house at a figure 60% lower than the cost five or six years ago. There are inequities in society that we must address over time. The insolvency legislation and all of the other measures the Government needs to introduce will help to address them.

With regard to the Croke Park mechanisms, we may have a chance sometime to deal with this issue in committee, as I do not have time to explain now what I have written in a letter to line Departments. However, I will be happy to give the information to the Deputy which we may discuss in committee.

Deputy Mattie McGrath mentioned pensions. He is right in what he says. I have looked at ways to take back some of the pensions. Under the financial measures in the public interest legislation I introduced last year, I provided for a take-back of an additional 20%. That was as much as I was advised I could do with that category. The Deputy is aware of what is contained in the programme for Government with regard to pensions which is something on which we have worked also.