Dáil debates

Thursday, 9 October 2014

Ceisteanna - Questions - Priority Questions

Public Sector Pay

9:45 am

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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3. To ask the Minister for Public Expenditure and Reform his views on a reversal of the reductions in public sector pay; and if he will make a statement on the matter. [38320/14]

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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I want to know when the Minister will reverse the savage cuts to the pay of middle and low income public sector workers in particular.

Photo of Brendan HowlinBrendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
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The scale of the fiscal crisis that began in 2008 led to the first permanent cut in public service pay rates in the history of the State. In total, the Exchequer pay bill has been reduced from a peak of €17.5 billion gross at the onset of the recession to €14.2 billion net of the pension-related deduction in 2013, with a further substantial reduction this year. Given the scale of the fiscal crisis facing the country and the fiscal consolidation measures required to restore our finances, and to achieve the deficit target of below 3% next year, the contributions made by public servants were essential. I explained that to them and all their unions, and they voted on it.

I acknowledge that the absolute requirement to reduce public expenditure, including in part through pay and pension reductions, does not lessen the impact on the daily lives of hard-working public servants who are also subject to the tax and other revenue raising measures that were necessary to fix this broken economy.

Pay and pension reductions, together with substantial productivity improvements, have been facilitated by a series of legislative enactments by this Government and its predecessor - the Financial Emergency Measures in the Public Interest Acts 2009-2013. They have been supported by two significant collective agreements: the Croke Park agreement negotiated by the previous Government and, more importantly, the Haddington Road agreement negotiated by this Government.

As provided for under section 12 of the FEMPI Act 2013, I am required to review annually the Financial Emergency Measures in the Public Interest Acts 2009-2013, which gave effect to these reductions. The Act requires me to provide a written report to the Houses of the Oireachtas. My last review was laid before both Houses in June. In that review, I concluded that there is a need to continue to apply the relevant provisions as we work our way through recovery.

The nature of the financial emergency measures legislation is that the powers granted by the Oireachtas under the legislation are temporary in nature and are predicated on the presence of the financial emergency. While we have clear signs of recovery, we still obviously cannot undo all of them immediately. I hope, however, to open negotiations next year to have an orderly unwinding of these provisions as we now work our way into recovery.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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The Minister continued the Fianna Fáil-Green Party policy of transferring billions from the public sector and from the income of middle and low income public sector workers to pay off the European financial markets, bondholders and bankers. The measures that he says were facilitated by the financial emergency measures in the public interest were of course measures that dragooned further cuts in public sector workers' pay and conditions.

In May, the Minister's former leader and then Tánaiste, Deputy Gilmore, was talking up the idea that the next time the Government met the public sector unions they would be talking about increasing pay, not cutting it. Considering that 15% to 20% cuts, which is savage austerity, were implemented for many low paid workers among others, can the Minister give us a precise deadline or timescale in which these hard-pressed workers can look for a reversal of those cuts?

Photo of Brendan HowlinBrendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
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The Deputy is quite wrong when he says that all the borrowings we have had are to pay back banks. The vast bulk of the borrowings are to maintain social provision in this State - to pay for doctors, nurses and so on.

It is a small cohort that is actually paying back the debt.

If one disaggregates the banking debt, it is our expectation to get the significant sum of money put into the pillar banks, Bank of Ireland and AIB, back in full. As for the other black hole of what was Anglo Irish Bank or the Irish Bank Resolution Corporation, the decision to recapitalise that bank was made by the former Administration. I, among others in my party, voted against that. I cannot remember if Deputy Joe Higgins did on the night or if he was here at that stage.

The Government was stuck with that decision. We liquidated IBRC and will get a significant return from that, the details of which will be known by the end of the year. We have re-profiled the loan to sustain that from the disastrous bullet payments negotiated by the former Administration into a 44-year series of loans at a very low interest rate.

9:55 am

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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This year alone the Government will pay €8 billion in interest alone on the national debt. A significant portion of this is for the bad debts that were made good for speculators, bankers and bondholders.

Photo of Brendan HowlinBrendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
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That is a small portion, however.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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A significant other part is on the loans taken in as a result of the crash caused by the bankers and bondholders. In effect, a significant amount of this €8 billion payment is directly attributable to those who crashed the economy. The same bondholders speculating in property are again taking from the taxpayer. That is a direct transfer from working people - in this case low-paid and middle income public sector workers - to the financial markets in Europe. Will the Minister give me an indication of timescales and figures which I asked him already?

Photo of Brendan HowlinBrendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
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I am glad the Deputy has accepted the vast bulk of the interest rate repayments are to sustain public services. Whoever caused the crash is a matter for debate and, it is hoped, will be elucidated upon by the inquiries undertaken by this House. I do not believe the Deputy would want it any other way, that we did not borrow the money to maintain health, social welfare and education services over the years. It would be unconscionable to collapse our social provision. We are required to borrow this money because the State’s income collapsed by 30%. We need to maintain decent social provision, something we have strived to do for several years.

On the unwinding, as I indicated publicly during the summer, I intend to start negotiations with public sector unions with the books opened in the same way during the Haddington Road agreement negotiations. It is hoped we will come to an orderly and fair mechanism for unwinding the emergency provisions that were necessitated by the economic collapse.