Seanad debates

Thursday, 17 December 2009

Financial Emergency Measures in the Public Interest (No. 2) Bill 2009: Second Stage

 

12:00 pm

Photo of Liam TwomeyLiam Twomey (Fine Gael)

I do not know if it has dawned on Members how serious is the issue raised by Senator O'Toole. If what he is saying is true, I ask the Minister of State to ask the Taoiseach to clarify some of the remarks made by the Senator. He is suggesting that essentially the Government collapsed the partnership talks because it would not be able to sell what was being negotiated by the Secretaries General of the major Departments. I assume the Secretaries General were carrying out the negotiations on behalf of the relevant Ministers and had their full authority. The talks were collapsed because it had all become a little too complex for the Taoiseach and was beginning to turn into a public relations nightmare for him. Therefore, the issue was just cast aside because it was too complex. We are now facing the worst industrial relations disaster we have seen in years, with the leadership of the public sector unions and even some private sector unions threatening to go on strike and engage in major industrial action next year because of what seems to be an issue of trust and a view that they were let down by the Taoiseach - I do not know if other Ministers were involved. Whatever I had planned to say has been completely altered by that statement by Senator O'Toole which changes the situation dramatically. It means there is a complete breakdown of trust between the leaders of the public sector unions and the Government. The collapse was orchestrated on the Government side, although I am not sure if it happened by accident or design. It seems to have happened because the Government was unable to sell to the general public what was going to be agreed.

This is incredibly important because the pay cuts and alterations to the way the public sector works are only beginning. What happened in the budget was not the end. It does not take a genius to work out that there must be a massive alteration to work practices, efficiencies and reforms, as Senator O'Toole pointed out, within the public sector. There will be a need for a reduction in the number working in the sector and a change in the way public servants work. As Senator O'Toole said, staff will have to work longer for no extra pay and will have to do other jobs which they have not done heretofore. How can this reform process move forward if the public sector does not trust the Taoiseach, if there are mixed messages from Ministers and if the Secretaries General of the relevant Departments consider they do not carry the authority of their Ministers when they enter into negotiations with public sector unions? That is dramatic, no matter how we look at it, whether one thinks public sector pay should be slashed. This is the failure to carry out negotiations and adhere to normal management practices in the manner expected of someone in that position. It is unbelievable and a clear statement should be made on the issue.

The Minister of State spoke about tax revenues at 2003 levels, while current expenditure is 70% above 2003 levels. He has pointed out that we will be borrowing between €17 billion and €20 billion every year for the next five years. From the same budget projections, GDP growth will be minimal, if it grows at all in the next couple of years. Where does that leave us?

We used to talk about the pensions time bomb but now there are a number of time bombs ticking away. There is a borrowing time bomb. If these figures are correct, we will have borrowed €100 billion more by 2014, even without taking into account those issues about which we do not know such as recapitalisation of the banks and giving money to Anglo Irish Bank.

We also have a GDP time bomb because, no matter what improvements we make in the next couple of years, if the economy is to grow and people are to go back to work, we must focus on growth in the export sector which will not cause GDP to increase to the levels seen during the property bubble.

There is also the pay time bomb. The Minister of State knows from looking at the figures that the issue public sector pay has not gone away. There must be dramatic movement in the next 12 to 18 months. The Minister might have been in bad form when he said that if there were not efficiencies, there would be more savage pay cuts. We may have a difficulty using any other mechanism to deal with public sector pay in the next 18 months.

That leaves us with the pension time bomb about which we spoke during the years of plenty. It has gone off. Private sector pensions have been destroyed and the issue of public sector pensions has come to the fore. The Government is now talking about radically changing pension entitlements for new entrants into the public sector.

I was going to talk about other issues such as the craziness where CEOs of semi-State companies are paid in excess of €400,000 and county managers on seven year contracts receive two and a half years salary in severance pay when their contracts expire, with an extra ten years added to their pensions if they have previously worked in the public sector. A person who is a county manager for seven years can receive a severance payment of almost €500,000. At the same, looking at the budget printed by the Department of Social and Family Affairs, we see single pensioners on a State contributory pension will receive €12,080.60. We can see some individuals for whom the State is responsible are just about kept going, but a sizeable percentage of people have terms and conditions that are out of control.

These issues must be dealt with in the next couple of years. There is a need for us to see significant reform of what went on in the public sector in recent years. There is an acceptance on the part of many public servants that something must be done, but it must be done fairly.

We must act regarding the Judiciary. The Minister of State is wrong. Judges are being set up to be the next group to be abused by the public because the Government claims they are constitutionally protected from pay cuts. That would only apply if individual judges were being singled out. They are part of the overall public sector and must have pay cuts applied to them in the same way.

It is very serious that there has been such a breakdown in trust, where people feel they were wronged, that they have been shafted, because it will be hard to get them back to the negotiating table. That concerns me because we never achieved the efficiencies and the changes to work practices required in the benchmarking process. We saw some changes but not to the extent necessary. Some of the Secretaries General thought they would get a great deal from the reforms proposed until the talks collapsed.

On the basis of what has been said here, I doubt whether the Minister of State can address all of the issues raised. The Taoiseach must deal with this issue. This is not just about what happened two weeks ago and ensuring it will never again crop up. This is something we must deal with in the next three to four years to get the public finances right. I will be tabling amendments to the Bill tomorrow to look at this issue.

The Minister of State has mentioned that the Government has penalised even the lowest paid workers in the public service. That will cause resentment. One of the most important factors in these hairshirt budgets, when we are doing what we tried to do in the early 1990s to pull the country out of the mess it was in, is that we try to hit everyone equally and single no one out for special treatment. The Government is failing in that respect, people do not consider they are in this together. If the Government fails in the most basic aspect of the negotiations, however, we do not have much hope it can achieve the necessary objectives.

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