Friday, 8 July 2016
Financial Emergency Measures in the Public Interest: Statements
No, I am fine. Thank you. I thank the Acting Chairman for the opportunity to discuss the financial emergency measures in the public interest, FEMPI, legislation that, understandably and correctly, has been the subject of much discussion in recent days and weeks.
As Deputies are aware, last week on 29 June, I laid the annual review of the operation and effectiveness of the FEMPI Acts before the Oireachtas. The report confirmed the continued necessity of those Acts. I would like to start by outlining some key facts that led me to make that important decision.
Taken together, the measures under these Acts have reduced the pay and pensions bill for public services by €2.2 billion. That has played a very considerable part in the stabilisation of the public finances. For this I thank our public servants for their contribution to the economic recovery. Without their contribution through that level of financial sacrifice and their continued dedication to providing public services, we simply would not have exited the bailout programme.
However, we are not clear of all danger. The economy, though growing strongly, is still vulnerable to economic shocks, particularly international shocks such as those that could be posed by Brexit. Since the beginning of the year, only seven months ago, sterling has dropped by 14%. Last April, as part of the stability programme update, SPU, the Department of Finance completed a detailed risk and sensitivity analysis for our economic and budgetary projections. It suggested that a five percentage point depreciation in sterling could be expected to reduce gross domestic product, GDP - our national income levels - in Ireland, by one percentage point by 2018 to 2019, with attendant impacts on our public finances. However, this is only one example of the challenge our economy and our society face.
At home, our public finances, though improving, are not yet fully repaired. Although much progress has been made, we are yet to close our headline deficit, in other words, reduce the gap between spending and taxation, and we are still borrowing €13 million every day to fund our day-to-day spending. Moreover, the high level of public debt, currently estimated at €201 billion or 93.8% of GDP at the end of 2015, means that Governments will find it difficult to respond adequately if we experience another downturn due to global economic developments.
We have to comply with our requirements under the Stability and Growth Pact which are designed to limit pro-cyclicality in fiscal policy, avoid unsustainable expenditure increases during economic upturns and allow scope to increase or maintain expenditure during downturns without engaging in the steep reductions in expenditure that were necessary during the crises. I would make the point that even without the rules we are bound by as part of the eurozone, there is a continued need to ensure we manage well and spend well the resources available to us.
I have been struck by the fact that some of those who are calling for the removal of FEMPI are also the ones calling for more funding and resources for housing, more funding for health and for a range of other social issues, challenges and opportunities that our country faces. In so doing, they forget or fail to acknowledge the political choices that I, as a Minister, must make. There is not a limitless pot of money from which I or the Government can draw. Decisions must be made. Priorities must be identified. The “one for everybody in the audience” approach to politics is an irresponsible luxury that only those involved in permanent protest can afford. While the outrage of some on the Opposition benches is seemingly limitless, I want to tell them that taxpayers’ money is not.
Within the resources that are available and mindful of the risks outlined, there is a long list of demands and legitimate needs for increased Government expenditure: the recruitment of more public servants, especially those needed to work in front-line services; investment in capital infrastructure in schools, hospitals and housing; the purchase of newly developed drugs for the health service; and enhanced funding for all involved in education, but with particular reference to meeting the needs of young people with special needs and how we better fund and equip the third level sector in the future.
It is my role as the Minister for Public Expenditure and Reform to balance these competing needs with the unwinding of the FEMPI legislation. Immediate repeal of the FEMPI legislation would be simply unaffordable. Consider pay alone which would cost an additional €1.8 billion above the 2016 allocation for pay restoration. This would violate the terms of the Stability and Growth Pact and leave nothing for the other priority areas for the people we represent.
The phased approach of the Lansdowne Road agreement provides the mechanism to deliver pay restoration over the next three years at a total cost of €844 million in 2018. By the end of 2016, we will have been able to hire an estimated additional 18,000 public servants to do the work needed in communities all over the State. This is at a cost of an extra €1.1 billion - spending that is absolutely necessary - to help those people who we represent every day.
It must be remembered that this agreement is less than a year old. The public service committee of the Irish Congress of Trade Unions only adopted the agreement nine months ago and the Teachers Union of Ireland voted to accept the agreement in May. The agreement has the support of the vast majority of public servants. In total, over 280,000 public servants and 23 unions are now working within the agreement.
The agreement provides a negotiated and agreed pathway to pay restoration. It gives real pay restoration to individuals progressively and fairly weighted to those who are on lower pay. Public servants whose annualised salary is below €24,001 benefited with an increase in gross pay of 2.5% from 1 January 2016. For those on annualised salaries between €24,001 and €31,000, they benefited from an increase in gross pay of 1% from 1 January 2016. For public servants who are on annualised salaries up to €65,000 there will be a flat rate increase in gross pay of €1,000 from 1 September 2017.
Additionally, all public servants will benefit from the pension related deduction, PRD. These measures contained in the Lansdowne Road agreement will benefit all affected public servants by up to €733 in 2016 and €1,000 in 2017. Crucially, through the operation of the tax code, lower paid public servants will benefit proportionately more from these PRD measures. The combined impact of these measures, for example, on a public servant on a salary of €25,000 will be an additional €1,875 over the duration of the agreement. This is an increase of 7.5%.
The agreement is also flexible enough to allow for the concerns of recent recruits to the public service to be addressed in a negotiated way and in return for workplace reform to drive greater productivity in the public service. Already this has been the framework agreed with representative bodies of one group of public servants representing fire fighters. Officials of my Department and the Department of Education and Skills agreed in recent days with the INTO and TUI - both unions which are inside the agreement - to have engagement later this month to begin to fully scope out all the issues involved regarding pay arrangements for newly qualified teachers. I urge those unions and representative associations who remain outside the agreement to reconsider their positions and to avail of the demonstrated flexibility afforded by the agreement to address their remaining concerns.
Looking to the future, the programme for Government commits to the establishment of a public service pay commission to examine pay levels across the public service including any issues relating to new entrants’ pay. The precise structure of such a commission and the technical aspects as to how it will operate have yet to be decided upon and will require broad consultation, including engagement with staff representatives as was committed to in the Lansdowne Road agreement.
I fully appreciate the impact of the pay reductions on individual public servants, but now is not the time to jeopardise our economic progress with the premature, and unaffordable, immediate repeal of the FEMPI legislation. This Government remains committed to the implementation of the Lansdowne Road agreement which has commenced the sustainable unwinding of the FEMPI legislation. I look forward to using this framework to further prioritise investment in our public services and our people.
I apologise in advance that I must leave the Chamber directly after speaking as I have another engagement.
As we are discussing the roles of public servants, I believe every Member will join me in sending our sympathy to the families and community of Dallas after the appalling tragedy this morning. I include all the victims of gun violence in the past few days in the United States in that sentiment. However, public servants working on the front line have once again paid the ultimate price.
The Fianna Fáil Party supports the gradual, negotiated unwinding of FEMPI as both a public policy and a legal imperative. Public servants, through FEMPI and the changes and practices in productivity since 2008, have contributed €2.2 billion per annum to the recovery of this State. This was at huge personal cost to them and their families and they deserve to be recognised for that contribution and for shoring up the public finances during an intensely difficult period for the State.
In the first instance, the Fianna Fáil Party wants to see the Lansdowne Road agreement public pay agreement fully implemented up to its September 2018 completion date. We also want to see the urgent establishment of a public pay commission as agreed in the facilitation document which allows this Government to do its business. The commission should provide a clear forum to deal with broader public sector pay claims and it should lay the ground work for a replacement to Lansdowne Road agreement and the full repeal of the FEMPI Act and its provisions.
We believe the following principles should be used in future pay negotiations. First, there is a need to improve public sector employees’ take home pay. The central issue is the level of take home pay for all taxpayers and not just for public servants. Improvements for public sector workers can be achieved through changes to pay levels, the pension levy, universal social charge, PRSI and PAYE taxes, or a combination of these. The commission must ensure there is a mix of measures to deliver a take home pay bonus for public servants.
Second, the commission should acknowledge the importance of public sector pay to the public finances and the contribution made to date by all public servants across so many genres. The third principle should be a particular focus on restoring the take home pay of low and middle income earners. Increases should be targeted progressively on low and middle income earners to begin with. The fourth principle involves reforming the pension levy while consistently favouring those on low and middle incomes. For them to achieve the greatest benefit of the reform of the levy, it should be done on a targeted basis.
With regard to the fifth principle, I welcome the Minister's announcement last Wednesday on the equality of treatment for newly recruited staff. Teachers, nurses and health professionals across the system who were recruited since 2012 do not have the same conditions or the same access to conditions afforded to those who were employed before that. However, we expect them to do the same job. For example, this week many teachers, who are thought to be on holidays, are actually attending courses all over the State. They are upgrading their skills and knowledge to deliver an ever changing curriculum, ensuring our education system contributes to Ireland being at the forefront of the world economy. We are asking our nurses, radiographers and health professionals to take on new technologies and new drugs, but the manner in which they are being encouraged to take on new education has been absolutely removed under the differences in treatment for newly recruited staff. We need to ensure that all our staff are treated equally and are given the same encouragement to upskill. This needs to be done in the knowledge that we are losing so many of our trained people to other countries and economies. Having learned their skills in Ireland, we need to allow them to have the choice, if they wish, to remain at home and use their skills here in health, education and in other sectors that need those kinds of services.
We require an external body to independently verify the costs contained in any new agreement and the achievement of targets included in it. That is good practice and should be achieved across many areas.
We also want to see public sector pensioners given proper and fair treatment. Until now they were not considered in any agreement because the agreement automatically impinged on them. However, under FEMPI, they were hit with pay reductions. Now that there is an amalgamation of public sector pensioner organisations, a way should be found to hear their views during the negotiation as opposed to after, and to represent those views around the table before the agreement is made.
There has been enormous progress in public sector reform over the past few years. The work done by the Department of Public Expenditure and Reform in driving that on is to be welcomed and encouraged. We need to ensure that best practice is shared across the public sector and that the silo way of governing is finally taken down for once and for all in an ambitious programme that will eventually benefit all citizens.
Finally, there is the ongoing issue of the restoration of front-line services, all of which have taken substantial cuts in their budgets recently and which are directly linked to how we unwind FEMPI. If we decide to take FEMPI out overnight, the budgets available for front-line services, for the capital programme and to ensure we have a recovery and an economy that is going somewhere will be absolutely destroyed. We will not have an economic recovery that allows us to realise this country's potential. That does not mean we should long-finger taking FEMPI out. It should go into a process and we should set targets that people can see are being measured and reached. The public service needs to have an idea that FEMPI is coming to an end but we need to know it is being done in a measured way. We will continue to work with the Minister on that, where possible, and will continue to call him out on if there are unnecessary delays.
I would like to see details of the process for new teachers and to see a similar process get under way for health care workers and other workers, particularly newly recruited staff who are affected. An overnight repeal of FEMPI, which would cost between €1.8 billion and €2.2 billion, is unsustainable, but putting it on the long finger will not suffice to build confidence and morale in a service that has been hit not just by pay cuts but by so many other issues in recent years. All public servants deliver massive services every day and massive sacrifices in the face of an ever-increasing challenge. It is time to call time on FEMPI, but we must do so in a manner that does not create the conditions that necessitated its creation.
I welcome the opportunity to have this debate today. The Minister laid his report on extending the FEMPI legislation before the House last week, which I have read in some detail. I have also juxtaposed that report with the summer economic statement. They make for very interesting reading. The language used in the summer economic statement contrasts very strongly with some of the language contained in the Minister's speech today, because he was speaking to two different audiences. The same is true of the language used by the Minister for Finance.
I have spoken directly to the Minister about public sector pay on several occasions. He knows I have a very real interest in the issue, as does Deputy Calleary and many in this House. I met with the Secretary General of the Department of Public Expenditure and Reform to discuss several issues with regard to public sector pay and I have spoken to some of the officials who are in the House today. They have all been very helpful. We are trying to cost a return to a single-tier pay structure in the public service. This week in the House the Minister said he would enter into discussions with some trade unions to try to bring about pay equalisation. I hope the information he gets can be given to us as well, because when we try to cost this we are told the data do not exist, it is impossible because of different systems used by Departments for pay and it is difficult to track where people would be if the changes were to be reversed. It is interesting that the Government is going to pursue this issue and I hope that we in opposition will get the same information the Minister gets when it becomes available.
The Minister for Finance said in his speech and his remarks about the summer economic statement that the recovery was bedded in. It is bedded in when it suits the Government. "We are in full recovery": that was the Government’s mantra before the election. Today, however, the Minister for Public Expenditure and Reform said our economy is growing but we are not clear of all danger. I accept that. I am not saying it is wrong, but the Minister is saying it only in the context of wanting to retain FEMPI for as long as possible.
My party is not in favour of the immediate scrapping of FEMPI because of the cost involved and because those at the top of the public sector would benefit substantially in a very real and unfair way. We want a fair and timely unwinding of FEMPI. If FEMPI was to be unwound here today, somebody on €25,000 a year would get €66 back; somebody on €30,000 would get €577; somebody on €35,000 would get €1,752; somebody on €185,000 would gain €53,000; and somebody on €150,000 would gain €35,000. I am not in favour of giving people who earn very large sums of money that level of pay restoration.
The pay cuts imposed on those earning over €65,000 under the Haddington Road agreement are being restored as part of the Lansdowne Road agreement. There was a separate registered agreement. Those who earn between €65,000 and €110,000 will have their pay restored in two parts: on 1 April 2017, April Fool's Day, and on 1 January 2018. That includes us Deputies, who will get an 8% pay restoration. Ministers of State will get more and the Taoiseach will get more again. Those on more than €110,000 will get restoration in three stages, but for those earning less than €65,000 who had their pay cut in 2010, there is no restoration. There is a €1,000 flat increase, which the Minister says is fair. The big winners, however, from the Lansdowne Road and Haddington Road agreements are those earning more than €65,000 and those earning over €110,000. That is one of the reasons I will not support the immediate scrapping of FEMPI. The emergency powers that the Minister and previous Ministers gave themselves in respect of public sector pay need to be repealed. The way forward is through negotiation. We want a negotiated unwinding of FEMPI, where the trade unions sit down with Government and others to create a fair and timely way to fully and faithfully unwind FEMPI. As part of that, for all the reasons the Minister mentioned about the problems in our public services and the need for money for health and housing, we cannot pay people earning over €100,000 or €150,000 more. We have to prioritise those on low and middle incomes. They have to be our absolute priority. Pay equalisation is a red-line issue for me. People need to understand, and some do not, that this is outside the terms of FEMPI. Even if FEMPI was scrapped it would not deal with that issue. That was brought in separately in 2010. There was no need to do it through emergency legislation because it affected new entrants who had no contracts.
This is the sorry list of FEMPI legislation and pay cuts brought in since 2008. First, in 2008, there was a pay freeze: workers were told their pay would be frozen for a year and that they would get an increase of 2.5% in September 2009. The 2.5% increase never came, but what followed crucified many public sector workers. There was the pension-related deduction, PRD, a pension levy on public servants in March 2009, and the comprehensive pay cuts for all public servants in January 2010.
That was followed by the Croke Park agreement, which introduced so-called productivity measures. The changes to the pay levels of new entrants were also made around this time. We had the Haddington Road agreement as well. The payments received by existing retired public servants were also cut. Then we had the Lansdowne Road agreement. We had five separate pieces of FEMPI and two pay agreements. All of that involved a lot of pain for those on low and middle incomes. Unfortunately, they have not benefited.
It was interesting to hear the Minister say that workers in the public service have to wait. I remind the House that I am talking about those on low and middle incomes. The Minister said we cannot afford to give them back money that was taken from them because of potential dangers and external shocks, etc. At the same time, he is saying the cuts of €5 billion that have been announced are safe. Maybe he is not saying that, and those cuts are now on the table. What about the €3 billion that the Government is putting away for a rainy day? Is that safe as well? It seems that the cuts and the rainy day fund are safe and cannot be touched. The Government intends to give taxes back to people at the top who may not need those additional moneys. The policy of making €5 billion in tax cuts is solid, as is the safeguarding of €3 billion for a rainy day. It seems that those funds will somehow be shielded from the external shocks and dangers mentioned by the Minister. At the same time, the Minister is using a set of different criteria when it comes to the unwinding of FEMPI.
I cannot get a sense of the Minister's plan. I told him during yesterday's discussion that I cannot understand his approach. He does not seem to have a plan beyond 2018. When the Government set out its net fiscal space in the summer economic statement, there was no provision for public sector pay in 2019, 2020 and 2021. I know the Government intends to enter into discussions and to establish a commission, etc. I ask the Minister to give us an indication of what he thinks will happen. Can he at least tell us he envisages that some sort of agreement involving the further unwinding of FEMPI will be in place for the three years in question? At least then we would know that progress is to be made. The Minister has not given us such an assurance up to now. I would like to know whether he will do so today.
Many people called for a debate on this issue. I do not see the spokesperson for the Labour Party here. Given the importance of the issue of public sector pay, I do not believe there are enough Deputies in the Chamber for this debate. People were jumping up and down about this last week.
I would like to begin by making a point about emergency legislation. After the 1998 Omagh bombing, which left 31 people dead and 220 people injured, the then Government introduced emergency amending legislation in the form of the Offences Against the State (Amendment) Act 1998. Every year since then, the Dáil comes back to debate the provisions of that Act and to vote on whether to renew them. Two or three weeks ago, Deputies trooped up and down these aisles and turned left or right to vote for or against the renewal of the emergency legislation in question. The rules are different with this emergency legislation, however. The Government is able to renew the FEMPI legislation without a vote and with a mere token debate. A vote of this House is needed to renew emergency legislation which we are told is aimed at terrorism, but no vote of this House is needed to renew emergency legislation which we know is aimed at those who teach our kids and police our streets. The ways of the parliamentary system are truly amazing.
The aspect of the FEMPI issue I want to highlight is the lower rate of pay for new entrants. As Deputy Cullinane explained, this policy was introduced before the FEMPI legislation. It was for new entrants, as opposed to public servants who were already in employment, but it is very much linked to this debate. The hands of trade unions are tied in a way that prevents them from fighting this rule within the terms of the agreements underpinned by FEMPI. New entrant rates were introduced in 2011 and again in 2012 without consultation and without the agreement of young workers, workers generally or their unions. It has been calculated that as a result of these rates, a primary school teacher with a 40-year career will lose out to the tune of €227,000 and a secondary school teacher with a 40-year career will lose out to the tune of €300,000. Young people who want to buy homes, get mortgages, start families and have ordinary decent lives are severely hampered by these cuts. If the amount of money involved in these cuts was a small fraction of what it is, this policy would still be wrong. A worker who does the exact same work as one of his or her colleagues should be on the same pay scale as that colleague. If a woman earned less than a man in a job, we would say it was wrong. If a person with black skin earned less than a person with white skin in a job, we would say it was wrong. If a person from the LGBT community was discriminated against and paid less than other workers in a job, we would say again that it was wrong. Why, therefore, does the State say that such a policy is fine in the case of a young person who is a new entrant? This is wrong right down the line. It must be changed and changed immediately.
I glimpsed the Minister of State, Deputy Finian McGrath, when he was in the Chamber a few moments ago. It is a case of "now you see me and now you don't". He is not here now, but he was here on 29 May 2013 when the Dáil was debating the FEMPI legislation. This is what he said that evening:
First, I thank the Acting Chairman for the opportunity to speak on this new legislation, the Financial Emergency Measures in the Public Interest Bill 2013. The Bill is an attack on all public servants and one should not beat around the bush, it will cause further hardship to all public servants and their families.
This Bill is disgraceful legislation and I will be voting against it. I will stand by our public servants, who do not deserve this injustice and this legislation is not in the public interest.
If I had been in the House in 2013, I would have voted against it too. If there was a vote on the FEMPI provisions today, I would vote against them again. At least I would be consistent in that respect.
What can we say about the bould Minister of State? He voted against it in 2013 when there was a financial emergency but lends his support to it in 2016 when the financial emergency has passed. Maybe the Minister of State will come back to the House to explain his position.
This Government is a right-wing, anti-worker Government, but it is clearly a weak Government too. It has been put very much on the back-foot by the anti-water charges campaign. It was bested by the anti-bin charge campaigners some weeks ago. It will be no match for organised workers who prepare a strong and vigorous campaign. We will give our full support to any group of workers or trade unions who take a stand on these matters.
I listened to the Minister's speech earlier. He implied that those of us looking to completely abolish FEMPI legislation essentially have no plan to finance such a move. He implied that we were reckless and that the calls amounted to the politics of permanent protest and so on.
First of all, let me state what we are talking about. We are talking about money that was stolen, mostly from low-paid public sector workers. I will underline the point that they were mostly low paid. In the disgusting demonisation and witch hunt that occurred at the time this legislation was brought in, public sector workers were made out to be public enemy No. 1 and the view was that they deserved to have their pay slashed. That was one narrative at the time. They were robbed with this narrative ringing in their ears. They were blamed for an economic crisis they had not created. It had been created by bankers and developers and the two major political parties in this State who cheered on those interests for many years.
The scale of the robbery was extraordinary. I will underline the point that the majority of these workers were underpaid. Fully 83% of public sector workers earn less than €60,000. Indeed, the vast majority earn less than €40,000. The scale of the robbery was extraordinary. If a worker earned €30,000 in 2009, his income dropped to €28,500 as a result of FEMPI legislation. Therefore, between 2009 and 2015 such a worker would have lost €16,000 or that amount was stolen from him. If a worker earned €40,000 in 2009, that worker had €27,000 taken off him cumulatively in subsequent years. If a worker earned €50,000, he had €38,000 taken off him in those years and so on.
They have been robbed since 2010. Under the Government's Lansdowne Road proposals, even by the end of 2017 they will still be earning less in take-home pay than they were getting in 2009 before this completely unjustified robbery of their income took place.
That is what we are talking about. We believe it was wrong to do it to them then. It was wrong to make them the scapegoats for the crimes of others year after year since 2010. There is absolutely no justification for continuing this theft of their income - we are not talking about pay increases, we are talking about giving them back what was taken from them wrongly.
Can we afford it? The Minister mentioned a figure of €1.8 billion as the cost. Let us bear in mind that approximately 30% will come straight back in tax. The Minister should factor that into his calculations and be honest about the figures. Furthermore, we know where the rest of their money would go. It would not into offshore tax havens. It would not go into the pockets of people who pretend they do not live here and act as tax refugees - some of the richest people in this country. It would be spent in the high street shops and businesses that are struggling at the moment and that have been struggling ever since we slaughtered the income of ordinary workers with devastating consequences for our economy. It would fuel economic growth and generate revenue, employment and so on. It amounts to sound economics to give these workers back what was stolen from them.
I also wish to mention new entrants because of the scale of the problem. The fact that this debate took place two hours sooner than it should have has meant 40 teachers who had planned to come to the Gallery to hear the debate will now be unable to hear it. To my mind, that is rather tragic, although perhaps the Government knew that. Anyway, I will tell the Minister about two of them.
The Government did not provide a quorum. Anyway, Joanne was in the House recently and was due back today. As a result of the pay apartheid and the two-tier pay structure for new entrants, over the course of 40 years she will lose €240,000 that she would have earned otherwise. That is the price of a house. Alison, who started in 2011, was hit by the earlier FEMPI legislation and will lose €100,000 on the same basis.
I was at the consultation provided by the Minister, Deputy Coveney, on how there was no investment in housing. The economist explained that one of the reasons is because no one believes that people have the money or can afford to buy houses. Why can they not afford to buy houses? It is because we have taken the equivalent of the price of a house out of the pockets of these young teachers, nurses and public servants and intend to continue to do so. That is wrong and it is also fuelling the ongoing housing and accommodation crisis. The Government should give them back their money. We can afford it and it would actually be good for the economy.
The key word in what we are discussing is "emergency". I have in mind another emergency when the Second World War broke out. A state of emergency was declared because there were fears regarding our neutrality. It was proclaimed on 2 September 1939 by the Dáil, with various powers going to the Government, including censorship, internment and economic powers. The powers lapsed in September 1946 although they were not actually rescinded until 1976, and in the intervening years the powers were not used. People may or may not have agreed with those measures. Indeed, there were criticisms relating to an over-liberal use of the emergency powers for various political reasons. Anyway, the point is that there was an emergency and measures were taken during the emergency and then they were eliminated.
Now, let us consider the FEMPI legislation. The acronym stands for "financial emergency measures in the public interest". We can accept that there was an emergency. Without going through the history of the recession, the arrival of the IMF and the ECB and bondholders, and regardless of the reasons for the financial crisis, we accept that there was a crisis and that drastic measures were required. We know the extent of the disagreement and what those measures should have been. However, public servants were one of the targets and I believe they were an easy target. There is no doubt about the hardship and distress these measures caused to those public servants, in particular, those not on especially high salaries. Another target was former public servants. It is unfortunate that the media always concentrates on those former public servants with high pensions. They forget about the other public servants on adequate pensions. They were cut as well.
Public servants reacted well to the cuts they had to live with. They continued with their high standards of work, whether in teaching, nursing, the Garda or the Civil Service. We know the work that went on regardless of the extraordinary cuts they took.
That was the emergency and now we are told the emergency is over. That was the slogan of the Government party during the election. If the emergency is over, then why are the emergency measures not over as well? It is extremely unfair to those starting out in teaching, nursing, the Garda and other aspects of the public service to have such an unequal playing field when it comes to salaries. Those most affected are the recently and newly-qualified teachers and gardaí. The reopening of Templemore was positive, a step forward. However, this is a further step backward on pay inequality.
If we are not in an emergency, how do we justify continuing to punish the workers on whom we depend for vital services? It seems there is a recovery for part of the population but not for everyone. I think about those who qualified two, three or four years ago and those who endured pay cuts for years. We know that inequality is making it difficult to recruit people with the necessary qualities motivation and enthusiasm for these jobs. It is not simply a question of qualification. I am a former teacher and I am still involved in schools. I chair the board of management of a primary school. I know the type of person is a more important consideration than the qualification. The letters after a person's name does not make him or her a good teacher or nurse. I realise we need accredited qualifications. When interviewing prospective employees we consider their qualifications and tick that box. However, after that we look at their other qualities and the other aspects to their personality to determine who will get the job.
We must encourage the best people coming out of third-level education to go into those jobs and professions which play such a major role in the lives of young people, in the lives of those who are ill or have disabilities and in our communities that want viable and effective community gardaí.
In my 36 years of teaching, I have never met anybody who went into it for the money. Back in the 1970s and 1980s, those going into teaching were at a considerable disadvantage because those with similar degrees coming out of third-level education and going into the private sector were certainly getting much better salaries than those who were teaching. It is like we are back in those days, except that the disparities are now within the profession between the recently qualified and those who qualified before FEMPI. The incentives offered by the last Government to public servants - teachers and gardaí - to retire early are part of the problem. Many fine and experienced people were lost in all of those professions.
Likewise, the supervision and substitution initiative is also part of the problem. Myself and many teachers saw that as a complete waste of much-needed resources that should have gone into other areas of greater need. The cost of it could have been put to better use. Schools had their own system of operating substitution and supervision. A grant of a fraction of the cost of supervision and substitution would have helped those schools to continue that and would have saved money that could have gone elsewhere.
We are told that we are the fastest growing economy in Europe, according to figures from the European Commission on how much we are expected to grow by and predictions of GDP. There are similar figures coming from the Economic and Social Research Institute, ESRI. There are signs of the recovery. After all, the slogan was "let's keep the recovery going". The recession is over. It is very difficult to expect teachers, nurses and gardaí to accept that inequality with no real end in sight. I was not here for the Minister's speech but I listened to it and read it. I was struck by two of the headlines. He said that the economy is growing but that we are not out of danger. He spoke about the €2.2 billion saving and how we are still vulnerable to economic stress and shocks etc. The other point he made was about sensible spending and careful allocation. Why is the burden on particular public servants disproportionate to the burden on other sectors that could shoulder that burden much more easily? The most affected are those on low wages. There is inequality in wages for front-line workers.
The Minister said that by the end of 2016 there will be an additional 18,000 public servants to teach and to nurse. Where is the incentive for our brightest graduates to stay here when they are being offered not just better payscales abroad, but also better conditions and prospects of advancement and promotion in other countries? We have excellent training here in our universities, at third level and in the training colleges. However, so much of it in recent years has been for the benefit of other countries. We need to look at what the Minister is addressing here much more quickly. Again, I ask the Minister about the impact analysis and the equality-proofing of financial measures that are taken. There are civil servants and public sector employees who are in receipt of family income supplement. I believe that says a lot.
The Minister talked about increases of 2.5% on salaries below €24,000. That is not going to make much of a difference. There are alternatives. I will not go back over them. The Minister knows them. Corporate tax is just one such alternative. We are told the rate is 12.5%. Social Justice Ireland has done interesting studies on Ireland having an effective corporate tax rate of 6.5%. We must think of what could be done with that for the people who most need it.
I am grateful for the opportunity to contribute to this debate. FEMPI was introduced in 2009 during our financial crisis. Yes, it was an emergency. However, the FEMPI legislation was so harsh that it was similar to legislation which would have been introduced during war times. It is now seven years later and we still have FEMPI. It is a pity that we did not have this debate prior to the end of June when the FEMPI legislation was signed again for another year. I agree with many of the other speakers that there needs to be an unwinding of FEMPI. It needs to happen very quickly because it has led to a large inequality in our public service and certainly in the payments to our public servants.
We know about teachers. They have lobbied us extensively over the past month. The figure of €240,000 over the lifetime of a teacher has been mentioned here. Not only that, but there are teachers doing the same job and working beside colleagues who are being paid 20% extra. That is completely unacceptable. It also applies to nurses and gardaí as well as pharmacists and doctors. There is a huge range of public servants who are subject to FEMPI. It is quite intolerable that this financial emergency measure is still in place in 2016 when we are told that the recovery is here and is spreading across the country. Unfortunately, it is not here and it is not spreading to our public servants.
In relation to doctors and to general practice in particular, FEMPI has been very harsh. It has been harsh on general practice because of the method that GPs are paid by. GPs are paid a global fee which includes their income as well as the support structures for general practice. We have suffered a cut of 38% under FEMPI. That is a cut of 38% to our income, to our ability to supply services and to the support structures that supply services. If one was to go through the figures, one would clearly find that the cuts to supports for services are even greater than 38%.
What has this meant for general practice? It has meant that general practice is now on the brink of going into decline. It is facing such a financial crisis that many GPs are finding it very difficult to make an income. Practices are ceasing to function. There are GPs who have left with their families and gone to Australia, Canada and the Middle East to try to make an income. Income which they can generate from general practice with FEMPI still in place is not sufficient to make a decent standard of living. GPs have absorbed the FEMPI cuts. Very few people will have seen a decrease in the service they get from their GP. The GP is the last person to be paid in a practice. Everyone gets paid, including the nurse and the secretary. Quite often, the income to general practice does not make general practice sustainable. I know that doctors do not have much sympathy in Ireland because we are seen to be making a very good living. Since FEMPI has come in, that has changed. Practices are ceasing to function, GPs are emigrating and there is a huge manpower crisis which is coming down the road in general practice.
We hear that the new ten-year vision for health is going to place a great emphasis on primary care and general practice. The manpower crisis in general practice will mean that the manpower will not be there to supply that expansion of service into primary care because GPs are finding it extremely difficult to continue under our present payment system. We have been asking and asking for the last number of years for a new GP contract, which will hopefully come within the next year and will help to unwind FEMPI for GPs. The effects of a declining general practice on our health system is quite extraordinary. If most chronic illnesses are going to be transferred into general practice and primary care, the GPs are not going to be there. We have a problem with emigration, as I mentioned. Established practices are closing and those doctors are moving to other jurisdictions where the health service is much more user-friendly, friendly to those who participate in it and friendly to those who supply the service.
In Ireland, we have an extraordinary number of medical schools which produce a huge number of graduates every year. Our GP training schemes, which had been oversubscribed, are now barely able to recruit those sufficient numbers for training. The GPs who do come out are looking at general practice and because of FEMPI are saying that they are not going to enter into a contract which commits them to working 24 hours a day, seven days a week, 365 days a year, in which they have all of the expenses and commitments that go with running a practice. They are leaving and going to Australia, New Zealand and Canada. They are deciding not to take up general medical services, GMS, contracts and are instead working as sessional GPs or locum GPs.
The reason why we still have a GP service in this country is because so many GPs are embedded in their practices and have nowhere to go.
They cannot leave their practice, it is their way of life. Some 33% of GPs will reach retiring age in the next ten years. As those GPs come to retire, however, there are no entrants coming in to replace them, or certainly very few. There is therefore a huge GP crisis coming down the road and it has been accelerated and exacerbated by the introduction of FEMPI. FEMPI will have to be unwound, although I know it has become tied up with the Lansdowne Road and Haddington Road agreements. It is a matter of extreme urgency that FEMPI is unwound so public servants can have equal and decent pay.
All legislation has unintended consequences. One of the great unintended consequences of FEMPI is that it has made general practice completely unworkable. That matter should be addressed soon. I urge the Minister and the Government generally seriously to examine FEMPI. If our financial emergency is over then the legislation which underpinned it should come to an end also.
It is unfortunate that this debate is happening after the FEMPI legislation has been renewed for another year. When it comes up for renewal next year, I hope the Minister will contemplate its unintended consequences which have been disproportionate to general practice. The legislation has also been disproportionate to many other public servants such as teachers, doctors and nurses.
I am glad to have a chance to speak in this debate. The backdrop to the debate is the question of who in Ireland has taken the brunt of austerity. While there was a recognition that the country was in a very bad place a number of years ago and cutbacks had to be made in certain areas, the burden of that austerity fell disproportionately on those on low and modest incomes. One would have to say also that the burden of austerity has fallen disproportionately on public servants.
The FEMPI legislation is now effectively illegal. It was introduced at a time when there was a financial emergency here but, by any standards, that has eased substantially. Nobody could claim that the economy is in an emergency at the moment. That does not mean that we have gone back to pre-recession times or anything like it, or that there are not still threats, but we are not in a financial emergency. It is impossible for the Government to claim that we are. For that reason, there is an onus on the Government to phase out FEMPI in as short a timescale as possible. Unfortunately, however, that is not happening.
I imagined that FEMPI's illegality would be of serious concern to Government Ministers. There is no shortage of Ministers trumpeting the rule of law to delay legislation in other areas. We had it just recently in the case of allowing terminations in the case of fatal foetal abnormality, for example. We had it two weeks ago in defence of the continuing discrimination on religious grounds for children seeking to attend their local school. Where are those Ministers now when the rule of law is clearly not being applied in respect of public sector pay? Some laws are evidently more legal than others in the Government's mind.
Together with other Members, I raised this issue with the Minister on Wednesday during oral questions when we were met with a list of excuses. Even Brexit was used as a reason not to phase out FEMPI at a much quicker pace. The Minister keeps hiding behind the fact that unions signed up to the Lansdowne Road agreement, but there is nothing stopping him from improving that agreement. It is hardly as if unions are going to say no to a better deal for their members. We now have a situation where the unwinding of FEMPI is tied up with the Lansdowne Road agreement. There is a lack of clarity about the element that is Lansdowne Road and the element that is the unwinding of FEMPI. It has been kicked into Lansdowne Road while FEMPI should really be dealt with as a separate issue.
In addition, the Lansdowne Road agreement does not provide for full restoration of pay cuts. I would like to know what the Minister's plan is beyond the three years of the Lansdowne Road agreement. How long more does he think the so-called financial emergency will last? I ask the Minister to spell out when, within his plans, he intends to complete the full unwinding of FEMPI.
Several things have changed since the Lansdowne Road agreement. The economy has vastly improved, thankfully, beyond what was expected prior to the agreement being signed. We are no longer in an emergency. A new Dáil has been elected with a majority in favour of improving the terms. Three Ministers or Ministers of State who voted against the 2015 FEMPI Act are now in government.
There is a lot of talk about how that vote went last year. I remember the then Minister coming into the House and talking about the real danger of legal action being taken against the Government. If that danger was present last year, surely it is present to an even greater extent this year. At the time, however, people took different views about that legislation. Some people voted against it because it did not go far enough. Others voted for it because some start of rewinding was better than none. By any standards, we are surely in a situation where there is majority agreement in this House to accelerate the unwinding of FEMPI. I wonder what are the views of those Independent Ministers now. It would be interesting to hear their views but I do not think any of them has turned up for this debate today.
Three representative bodies are outside the Lansdowne Road agreement. The Minister's attitude to these bodies has only served to antagonise the situation and delay a resolution of this issue. Public servants need more than just a pat on the back telling them, "Well done, you've made a great contribution". We need to recognise the reality of life for public servants. There was a time when if somebody got a permanent pensionable job as a teacher, garda, nurse or in the civil service, they had a reasonable expectation of a fair standard of living. If they were in a relationship with another public servant there was a fair expectation that they could afford to buy a three-bedroom house and be reasonably financially secure for their lives. That expectation no longer exists.
Public servants are faced with a double-whammy as a result of the recession. Their pay was cut substantially and pensioners were also included. At a time in their lives when they expected some easing of financial pressure, they had huge cuts to their pensions. This happened at the same time as a raft of new charges and taxes were introduced, so people saw huge reductions in their disposable income. A major adjustment was required to their standard of living, including spending on holidays and looking after their children or grandchildren.
The Minister needs to recognise that what people were put through was fairly horrendous. Given that the country is now coming out of recession and all the headline figures are in a reasonably healthy state, serious consideration should be given to accelerating the unwinding of FEMPI. The Minister has not indicated any rethink of the situation over the last couple of years. Neither today nor in his response last Wednesday did the Minister indicate a recognition of what people have been put through. The impact on people has been severe. We are going to pay a big price for that in future in terms of people's attitude to the public service and morale within it.
These deep cuts have hit people's morale, which is evident in terms of the impacts we are seeing in how services are being provided. The most notable of these cuts, namely, the reduction in pay for new entrants, is having a devastating effect on teachers, gardaí and nurses. They are finding it hard to survive, financially. Not to mind buying a house or having a family, they cannot survive financially in terms of paying rent and normal overheads on the level of salaries that are available. This is why, on a large-scale basis, young entrants to teaching and nursing who cannot survive here are emigrating to places like Dubai and Abu Dhabi for five years to try to make some money so that on their return they can live and have a normal quality of life in this country. It is appalling that professional public servants working to provide important services in our country are being treated like this and are being forced out of this country. According to the principals of our schools all over the country, up to seven teachers a year are seeking career breaks solely for that reason. That is not a sustainable situation. The Government must address this matter urgently because ultimately we will pay a huge price in terms of the quality of our public services. Public servants deserve better.
We all know why FEMPI was introduced and we all know when. However, that was then and this is now. For the past seven years, we have been asking our public servants to take a huge hit. Seven years is a long time in family life, when the number of increasing bills have reduced every aspect of one's standard of living and one is left with the feeling that nothing or very little has been given in return. The financial and emotional strain that has been put on individuals and families during this time has been immeasurable. Marriages have failed, houses have been repossessed, educational opportunities have been missed and families have watched as their loved ones emigrated to countries where front-line services are appreciated.
Over the past few weeks, I have taken part in many debates in this House centred around our health, justice and education systems. These systems are floundering for many reasons, not least because of morale. We cannot continue to expect our nurses, teachers, gardaí, doctors and soldiers to take punishment for a crime they believe they did not commit. I could speak for hours about the circumstances of many different individuals that I know but I will instead focus on a married couple who are neighbours of mine. Both of them are employed as teachers, living in Kildare but working in Dublin. Like 50% of the working population in Kildare, they must commute to Dublin as rents there are way too high. They are struggling to save for a deposit for a house, which is difficult while paying exorbitant rent. They have a baby on the way and would like to have some certainty in terms of their future and accommodation. They cannot afford any more pay cuts, nor can they afford to pay for the 33 extra hours of child care needed for them to engage in Croke Park hours. Between last August and December, the woman in this marriage had already worked an extra 150 hours outside of the 22 hours teaching between year head work - unpaid because there is no A post - teaching preparation and planning, as well as teams and committees. Since both are teachers, they have both lost supervision and substitution money and both pay the extra public sector tax, namely, the pension levy. They are struggling to exist even before their child is born, subsequent to which they will have to make provision for child care costs. They need to know that their quality of life will improve immediately and will continue to do so. They need to see a light at the end of the tunnel.
The FEMPI measures played a central role in meeting critical financial targets. Many would argue that while FEMPI was a necessary evil, it was imposed on the easy targets, those in front line services. In most cases, these are the people occupying roles that are often described as vocations or groups that cannot engage in collective bargaining, professions that inculcate a sense of duty in their members and that carry out a job irrespective of pay and conditions in order to serve the public. Public servants are at breaking point. It is not in the public or national interest to have these professionals operating as under-paid government employees, who in many cases no longer have a sense of duty or appreciation and have certainly lost morale.
Realistically, FEMPI cannot be repealed overnight with the stroke of a pen. However, it must be withdrawn soon if, as a country, we are to hold on to the loyalty of our public servants. If we are to recruit new public servants, pay parity must be restored. Pay and conditions for public servants have been allowed to deteriorate to the point where these valuable workers are barely able to survive. They are certainly not in a position to put money back into the economy. Future pay agreements should focus on low and middle income earners and equality of treatment for new entrants.
Unequal pay in teaching and all front-line public services is a stain on the equality values of this country. We must put equity back in the conversation with equality. While front-line public sector workers had nothing to do with the economic crisis, they have done more than their fair share of the recovery. I understand that under the circumstances the FEMPI measures needed to be put in place for public servants but, as previously stated by the Minister for Finance, Deputy Noonan, "the emergency is over", with evidence to back this up from a variety of recent growth statistics. The Government cannot now treat these temporary emergency pay levels as new norms to be bartered up from. There is something radically wrong when a couple living together, both working in supposedly good jobs, are struggling to pay their bills every Friday. As a society, we have much to gain from putting in place proper pay and conditions and resources to the people who care for and nurture our sick, our students and who keep us safe in our homes and communities, often putting their own lives at risk. We need to attract and retain the very best of people in these jobs.
Many years ago, a wise man said to me in relation to appreciation: "Soldiers die for it and babies cry for it." We need to appreciate the people at the coalface of our services and to do so in a proper way by restoring pay and conditions, giving them adequate resources and restoring pay parity.
I wanted to contribute to this debate because, obviously, I was a public servant, a teacher, at the time the FEMPI measures were enforced. There are many public servants and teachers following this debate with interest. There would have more of them in the Gallery had the debate not commenced earlier than scheduled.
Statistics published last night show that the rent situation in this country has rocketed beyond belief, with a couple, two people on an average wage, now paying 40% of their income on rent and mortgages here being the third highest in Europe after London and Amsterdam. The Government wonders then why young teachers, nurses and other public servants cannot wait until 2018 for full pay restoration. The landlord will not wait for his or her rent until 2018. That is the reality, yet young workers are expected to abide by this situation.
As has been said already, a person with a 40 year career can expect to lose approximately €250,000 throughout the course of his or her lifetime, which is an absolute outrage. It was not justified that ordinary working people were made to pay for the crisis that they did not create in 2011 and it is certainly not justified now when we are told we are in recovery and growth rates are expected. It is clear what is happening and workers should take note. This Government, and capitalism in general, intends to maintain austerity even though there is not the same justification that they can make for it. They have used the crisis - one should never waste a good crisis - to drive down pay and conditions in the public sector and then to carry that through into the private sector.
Of course, we had the division between public and private sector throughout the crisis which was cleverly stoked up by Fianna Fáil and its partners in Government at the time and carried on today.
Where does Fianna Fáil stand on FEMPI because it is carrying and maintaining this Government? It has done something really sly here, namely, renewing it without any debate in the Dáil. Fianna Fáil Deputies in here offer tea and sympathy for those affected by it. Are they in favour of full restoration of pay and the end of pay apartheid in the public sector and are they going to make it a key issue with the Government? Clearly, they are not going to do so. They will go after public sector votes but they will let this continue.
We constantly hear the mantra that the ASTI is the odd one out and everyone else has signed up. Is it not possible to exit something? Does someone need to be forced to take part in it? It seems as though they do not have a right to opt out. FEMPI was used as the threat to force teachers, nurses and others to vote for this agreement because FEMPI was held over their heads like an axe. It was a case that if they did not agree with it, the Government would cut their pay and freeze their increments. If the Minister seriously intends to freeze the pay or increments of teachers, I sincerely hope they take a stand.
I commend the ASTI because we would not be talking about the two-tier pay system if it had not taken a stand. It would be game over, ball burst and move on, but because the ASTI took the stance it took, which unfortunately was not taken by the other two teachers' unions, we are now having a discussion and the ASTI has made this an issue. I believe the reason the ASTI is making this an issue is because unions can no longer pretend to represent workers if they are willing to stand over something like this. It is not possible for someone to look young teachers in the eye if they go into the staffroom knowing that they earn more money than young teachers for doing exactly the same work. It is called apartheid and inequality.
The Luas workers were slammed for taking such a stand, yet when we appear on a panel in the media, we hear the statement, "Didn't the unions sell out young workers?" Yes, they did and now we have a union taking a stand and saying "No" and being blackguarded and threatened with its members' pay being cut. All the unions should have taken a stand and they should follow and support the ASTI.
I read that the firefighters are to get a rent allowance of €4,500. Is the Minister offering that to teachers or nurses or is it just a case of buying people off individually? I fully support the firefighters, by the way, but I want the same thing extended to all workers. We are going to have a brain drain in this country. It is already the case that we are unable to keep nurses in this country, yet the Government is continuing this. I cannot help but feel that it suits it because it justifies keeping people in horrific conditions imposed during the austerity regime and it is now maintaining it despite the fact there is not the same economic justification. I offer my full support to the ASTI. It is hoped the gardaí will also maintain their opposition to it. Unfortunately, they are not in the same position as other workers to take industrial action but the Anti-Austerity Alliance will back any public sector workers on this.
It is very important that this debate takes place and that everybody who has spoken here today has paid tribute to the tremendous and essential work of the public services. My wife is a nurse and the work she does and is expected to do is incredible and, at times, unbearable, particularly if there is a problem and somebody on the night shift is sick. Somebody on the day shift then has to stay there. This happens regularly in nursing and that is only one example. There are many other examples of the supreme sacrifices people make because if our public servants, especially those in front-line, essential services, did not do what they do, many other people would suffer.
Public servants have suffered hugely in terms of their pay since 2009. Those cuts were brought in with the highest paid public servants taking the biggest percentage cut. This is a fact. The contribution the public servants have made has been astronomical and has played a key role in keeping this State on track. That must be remembered forever more because they have made a contribution above and beyond pretty much everybody except for those who lost their jobs, who paid the ultimate price. Thankfully, many of them are again working.
The mantra "repeal FEMPI" is going around at the moment. I would rather unwind FEMPI because if we simply repealed it, we would face a €2 billion-odd bill. What is more, the disproportionate benefit would to be to the higher paid public servants because they took bigger cuts, so we would be giving a massive boost to higher paid public servants. The idea of repealing FEMPI is not a refined idea and I urge those who use this slogan to think about it. We need to plan it properly to ensure the people who benefit from any unwinding of it are the lower to middle income workers, the newly qualified and new entrants to the public sector. This has been highlighted most vociferously in recent weeks and months by the teachers, particularly young teachers. Their unions have been on board but the young teachers have driven it massively and have driven it on behalf of An Garda Síochána and other young public servants. It just so happens that teachers were recruited throughout the crisis while people were not recruited in many other areas. We want to see the unwinding of it in a orderly process that protects the State, looks for equality for new entrants to the public sector and targets low and middle-income workers.
Fianna Fáil does want to see equality in the pay scales. The situation as it stands is wrong and must be unwound. The changes to bring about that equality must be delivered.
I welcome what the Minister has initiated this week in terms of the allowances. I think this was a key demand of the young teachers in particular. The Minister is meeting the TUI and the INTO about that, which I welcome. I want the Minister to explain to me the timescale for that is and when it will happen. I hope it is not just a smokescreen. Deputy Calleary and I, along with many Fianna Fáil colleagues, have been pushing the Government hard on this because we know it is wrong and want to see it changed. However, we are also aware of the financial situation of the State and we want to protect that. I hope there is some sort of deadline for this and that it is a real process. I hope it is not just being done to annoy another trade union. That may well be the result but I hope it is not the intention. I hope the intention is just to deal with that issue and get those allowances restored. The precedent is there. I have spoken about this and have called on the Minister for Education and Skills in this House to be an advocate for teachers, including the young teachers on those unequal pay scales. Will the Minister explain a bit more about how this process will work and tell us what the end point and costs are? They are not hugely substantial in terms of the State's finances.
We want that equality and we want to see FEMPI unwound but we want it done in an orderly process that does not give a huge and undeserved benefit to higher paid public servants. The Ceann Comhairle knows that if we simply repealed it tomorrow, we would put a huge and unsustainable financial burden on the State and make a lot of very highly paid people even more highly paid, and that is wrong. Let us think about how we describe these things. Targeting it at those who need it most is the best way to do it.
I am pleased to be able to speak on this issue today. As the youngest Deputy in the House, I will focus on the impact of the FEMPI legislation on young people - school and college leavers - entering the Civil Service. The legislation was brought in six years ago to curtail expenditure on public pay. Unfortunately, the measures were necessary at the time and the economic recession illustrated that. Enormous credit is due to public sector workers who had to swallow this very hard medicine. During this time, their workload increased due to the numbers who retired and the recruitment embargo, and yet the money they were taking home at the end of the month fell. We owe a huge debt of gratitude to all those who continued to work diligently and who still do so for the good of the country in trying circumstances. The legislation has helped put us back on the right course and I am very grateful that Ireland in 2016 is a very different place from Ireland in 2009 when FEMPI was introduced. This is why we are able to have this conversation today.
Fianna Fáil supports the gradual unwinding of the FEMPI legislation and a return to normal industrial relations mechanisms. I would love to be able to do what Deputy Coppinger says and make the magic bullet response and restore public sector pay fully. As Deputy Thomas Byrne has mentioned, we have to be responsible and target those low and middle-income earners in the public sector who should have their pay restored. If we were to remove FEMPI today, those at the higher end of the payscale-----
Such a move is not sustainable and would cost us in the region of €2 billion. The impact would instantly wipe out the available fiscal space at the expense of investment in front-line services. We are also in uncertain times following the Brexit referendum. Ultimately, people have worked too hard, sacrificed too much and the country has come too far to jeopardise our economic recovery by performing such a reckless move.
Instead, we need to have a sensible and realistic conversation where we set out exactly how we will go about unwinding FEMPI in the fairest way. Fianna Fáil believes the setting up of a public pay commission is the best way to do this. This has been agreed in a minority Government facilitation document. The question we must consider in the House is where we begin. The negotiated dissolution of FEMPI should be targeted first at low and middle-income earners and in particular at ensuring new entrants are treated fairly. A priority of the House must be to make a career in the public sector an enticing and exciting option for our youngest and brightest to consider as they complete their education. At the moment, this is not the case. For most young people, the idea of the public sector does not enter their thoughts after school or college. Why should they when they see how poorly they will be treated in the two-tier sector that has been allowed to develop?
A week has not gone by since I was elected without a young teacher, garda or nurse contacting me about their situation. These bright, talented, ambitious young people are struggling to survive because of the poor pay and conditions of their work. If we take teachers for example, those who entered the profession after 2010 are on significantly lower pay scales than their colleagues, even though they have precisely the same responsibilities. It means that over a 40-year career, new teachers will earn some €250,000 less than the colleagues they are working beside. Many new teachers are now thinking long and hard if it is all worth it. There is no shortage of first-hand accounts of young people in the industry struggling to meet the cost of rent, food, transport or keeping a car on the road. Thoughts of mortgages or paying off a loan are but a pipe dream for many.
We have seen how gardaí are in the same situation. The starting salary of €23,000 is an insult and pathetic remuneration for the men and women putting their lives on the line to keep us safe. The commitment and dedication required in this regard is not easily found. These people's talents should be nurtured and honed. A €23,000 salary does not do this and will never do this. With the ongoing criminal feuds gripping many parts of this city, the need to develop An Garda Síochána is more important than ever. The Government wants to expand the force to 15,000. This will not happen if we do not provide a proper salary. The situation is the exact same for nurses and all the young people on the front line trying to deliver services in the most difficult of scenarios. Changes to this legislation should start here and with the low earners who bore the brunt of the pain. It is time they were rewarded.
We emerged from Government Buildings to be told there was new legislation to be brought in to be known as the Financial Emergency Measures in the Public Interest Bill. We did not know it would be shortened to FEMPI and become shorthand and common currency within the public service and public lexicon. It was one of the greatest travesties perpetrated on public servants because it was called a pension levy by Fianna Fáil. It could not have been a pension levy because it was applied to the people I was representing at the time who were paid on an hourly rate as home helps. It could not have been a pension levy because it was applied to people who will never benefit from a public service pension scheme and yet they were expected to pay for the mistakes made by the Government at the time. Those people were the first ones in the firing line when Fianna Fáil decided to drive our economy off the edge of a cliff.
Those people could not understand it as ICTU had made an offer to the Government of a scheme that would have ensured similar, if not more or less the same, savings. It would have protected the rate and made it easier for those people to get it back. They did not know what the Government had in store for them. They were very hopeful that with a new Government in place and the Labour Party in Government something would be done for public servants and they would not be expected unfairly to shoulder further burdens. They were wrong. We would have negotiated and balloted but those public and civil servants knew the Government had within its arsenal legislation with the capacity to punish them. It was unfair to those public servants and it is a bit rich to have people who started it now suddenly finding some sympathy, although it is welcome.
We discussed this issue at our Ard-Fheis and recognised the role played by public servants. They are the people who turn up when a house is on fire and when someone has been the victim of a crime. They are the people who used to collect our bins and we all dearly wish they still did, and they are the men and women who work as porters. Those people have been unfairly and systematically targeted since the first FEMPI legislation was put on the Statute Book. Those people are the ones who have had to carry the can and are the ones who least deserve it.
It is unfortunately a fact that if FEMPI were scrapped in the morning, the biggest beneficiaries would be the civil and public servants earning over €100,000. I certainly did not put myself before the electorate to assist those people because they can do quite well for themselves. I am here to represent workers on low and middle incomes - the fellows who turn up when a house goes on fire or the porter who pushes people down to theatre - who look at this legislation and know it is still there hanging over their heads. It is unfair, and any unwinding of this legislation must prioritise the low to middle-income earners who were the first in the firing line and the first to be targeted by the people sitting to my left in the Chamber.
I welcome the opportunity to speak, and I apologise for shouting in the Chamber and causing disrespect. I mean that honestly and I will use my time to address comments properly. I sincerely hold the view that for Sinn Féin to speak about public servants, in particular the Garda Síochána, is the height of hypocrisy, given Deputy O'Reilly's failure to condemn the killing of members of the Garda Síochána and given that members of her parliamentary party turned up in the middle of the night in Hiace vans to collect those released from prison. I will use my time to address that.
I will use my time to address that, given the impact on members of the force. They have been pretty firm in reminding those members of Sinn Féin as well of their lasting impact and legacy on the Defence Forces.
Whatever the need in the past, the circumstances have now changed and, as a new TD, I want to address the FEMPI legislation. It is something that many teachers spoke to me about during the course of the campaign and since I have been elected as well. The Government has dipped into the pockets of serving and retired public servants and imposed discriminatory cuts to pay and pension. No other group was targeted in such a shameful and discriminatory fashion.
The average public sector pension is approximately €20,000 per annum. This amount is not excessive. Nor is this amount highlighted in any debate on public sector pensions, and these pensions are subject to income tax and USC charges. Pensions form part of the employment contract that the workers signed and as one retired worker said to me, he would expect a sovereign government to honour its agreements and contracts.
I agree with what Deputy Thomas Byrne, my party's education spokesperson, and Deputy Jack Chambers said on the timely unwinding of FEMPI and about the need to ensure that those at the lower scale, not those at the upper scale, benefit the most. I would press the Minister and the Minister of State to indicate that timeframe so those listening to the debate can know when they will see a rise in their incomes and a tangible benefit.
Before I call on the Minister to respond to the debate, I point out that the House had ordered that this debate might continue until 5.30 p.m. and be further continued at another date in that the House envisaged an adjournment. I regret that there are no further Deputies present to contribute and therefore, I call on the Minister to respond to the debate. This will bring this important debate to a conclusion.
My colleague, the Minister, Deputy Donohoe, clearly outlined the international headwinds our economy is facing into and how it is necessary to take tough decisions, such as the continuation of the FEMPI legislation, so that we do not gamble with our economic recovery. In closing this debate, I want to firmly link international and national developments to show that our stance on FEMPI is reasoned and informed by our experience of the twin crises in the recent past.
Ultimately, it was not the banking crisis that collapsed the Irish public finances in 2010. It was the combination of the banking crises and a fiscal crises that brought the troika to our door. Each on its own could have been manageable, given our low debt and National Pension Reserve Fund, but together they were impossible to navigate. As the Oireachtas banking inquiry found:
The Government's fiscal policy resulted in significant, long-term expenditure commitments being made on the back of cyclical, transaction-based revenue streams that ultimately proved to be unsustainable...
The oversight, challenge and effective scrutiny by the Oireachtas of the Government and its policy decisions in relation to fiscal policy, financial stability and the system of financial regulation was inadequate in the pre-crisis years...
All the main political parties, whether in opposition or in government, advocated pro-cyclical fiscal policies, including increasing expenditure and reducing taxation, in the years leading up to the crisis...
As the former Minister, Mr. Charlie McCreevy, stated in his testimony to the inquiry, "It is difficult to run a surplus in a democracy." We are not running a surplus; we are running a deficit. As the annual review of the FEMPI legislation notes, the headline general Government deficit in 2015 was 2.3% of GDP, or €4.9 billion, and yet some here would put the €2.2 billion savings made as a result of the FEMPI measures straight on to this deficit in one budget year. If we did that, we would be repeating the mistakes of our recent past, loading permanent expenditure onto an economy and tax base that is not yet able to sustain them. This would violate the terms of the Stability and Growth Pact and send a signal to international debt markets that their expectations of continued sound financial management were false. The cost of Government borrowing to meet this deficit would soar. Inevitably, as the Minister, Deputy Donohoe, explained, this would also mean no spending for other priority areas - no targeted recruitment of front-line staff, no capital investment in our schools and hospitals and no relief from USC for low paid workers, including public servants.
Instead of this unaffordable and fiscally dangerous scenario, we have in place a negotiated and agreed pathway to pay restoration. Some 280,000 public servants out of 300,000 are working within the Lansdowne Road agreement, LRA, and enjoying sustainable pay restoration on the back of our continuing recovery. Twenty-three out of 26 public service unions and representative bodies have signed up to the agreement.
The Government has to, and will, respect and keep faith with the decisions of the vast majority of public servants to come within the Lansdowne Road agreement. The benefits of and the protections afforded by being within the agreement will therefore apply to them.
The Government does not want to be in dispute with any group of people working for it. Those not represented by a body which is within the agreement cannot expect to benefit from the terms of that agreement. For those representative bodies which remain outside the terms of the Lansdowne Road agreement, it is they who are choosing to set themselves apart from their public service colleagues, it is they who are seeking to obtain the benefits of an agreement to which they seek to resile from the obligations of their colleagues under that agreement and it is they who wish to obtain preferential treatment over and above that available to their colleagues under the LRA.
The recent decisions by the TUI and AGSI to sign-up to the Lansdowne Road agreement is a sign of the progress that can be made when parties work together under the terms of the LRA. The agreement is also flexible enough to allow for the concerns of recent recruits to the public service to be addressed in a negotiated way.
In that context, officials of my Department and the Department of Education and Skills agreed on Tuesday last with the INTO and TUl, both unions inside the agreement, to have engagement later this month to begin to scope out the issues involved fully regarding pay arrangements for newly qualified teachers. This represents a sensible and sustainable mechanism for pay restoration in the public service. It allows for careful fiscal planning, with public service wages growing at a pace that the economy and our tax base can support, now and in the future. I urge those unions and representative bodies not signed up to the LRA to engage with the Government and follow their colleagues and friends into the agreement.