Dara Calleary (Mayo, Fianna Fail)

I welcome the opportunity to contribute to this Seanad debate on the draft Public Service Agreement 2010-2014, now colloquially known as the Croke Park agreement.

The making of this agreement between the public service committee of ICTU and the Government is a key step in addressing the immediate fiscal and economic challenges facing the country. A vote in its favour would show our European partners, and those watching around the world, that we are facing our problems and setting about putting our house in order. The Croke Park agreement is broader than this. It is a framework for changing how we deliver our public services to ensure they are delivered efficiently, with high productivity and the flexibility expected by the citizens of a modern state. Despite its origins during one of the most difficult times for Ireland since its independence, the agenda it sets for public servants is positive. As acknowledged by Senator O'Toole, it will ensure they are engaged in the design and delivery of the future public service.

The Senator also stated the agreement may not - I know it does not - live up to everyone's expectations but it is important that all public servants currently considering what way they will vote on this agreement stand back and coolly and calmly make that decision based on the merits of the agreement and the associated clarifications. The Croke Park agreement is shaped by current economic circumstances. Our public finances and tax receipts continue to be severely impacted by the sharp deterioration in the economic environment. Tax revenue in 2010 is expected to be in the region of €31 billion, back to 2003 levels. Since this time, gross voted current expenditure has grown by approximately 65%. Budget 2010 forecast the stabilisation of the deficit in 2010, notwithstanding declining economic activity, and set out a path to reduce that deficit to under 3% of GDP by 2014. During the period 2011-14 it is expected that growth will return to the economy on an annual basis and that growth in tax revenues will resume. While there continues to be a significant degree of uncertainty about economic developments, there is mounting evidence that the economy is beginning to stabilise. Consumer sentiment is improving, car sales have increased, while surveys of manufacturing and services firms confirm we are moving in the right direction. The expected pick-up in tax revenues based on existing policies would not bridge the significant gap that has emerged in the public finances and further adjustments in the fiscal position are required during the period to 2014 to restore the public finances to a sustainable position.

As a major element of public spending it was inevitable that the public service pay bill would be part of the far-reaching fiscal consolidation undertaken to date. I acknowledge that public servants have during the past two years made a significant contribution to the recovery of the economy. I also acknowledge the hardship placed on them. It is estimated that more than €3 billion has been saved from the potential pay and pensions bill through a combination of non-payment of the increases under the terms of the Towards 2016 Review and Transitional Agreement,the application of the general moratorium on recruitment and promotion along with the incentivised early retirement and career break schemes, the pensions related deduction which averaged almost 7% and the reductions in pay and allowances applied from January 2010. The Government, through the draft agreement, has acknowledged that substantial contribution and has given a commitment that there will be no further reductions in the pay rates of serving public servants during the lifetime of the agreement, if adopted. There will be a review of the pay of public servants in spring 2011 in advance of the statutory date of 30 June 2011 specified in the two Financial Emergency Measures in the Public Interest Actspassed in 2009, and annually thereafter. The Government has also given a commitment to use sustainable and verifiable savings generated from the implementation of the agreement to commence the process of addressing the effect of those Acts on pay rates. In the event of sufficient savings being identified in the spring 2011 review, priority will be given to lower paid public servants. In the event that sufficient savings are made, this does not prevent staff with salaries in excess of €35,000 from benefiting from this initial or subsequent yearly reviews.

I want to highlight the positive commitments on pay, in light, in particular, of the sacrifices made by public servants during the past 18 months. The application of the pension levy and the pay reductions have impacted on the daily lives of all public servants, including those in this House. The Croke Park agreement acknowledges those sacrifices and seeks to give to public servants a measure of security and reassurance in regard to their finances during the lifetime of the agreement. Public servants should pay careful attention to the reassurances on pension arrangements as given in the agreement. The agreement proposes to extend by one year the period for which the January 2010 pay reductions will be disregarded for the purposes of calculating public service pension entitlements. This extension is permitted under the financial emergency measures legislation passed by this House late last year, which effected the pay reductions.

A separate process of engagement between the Department of Finance and the trade union representatives is underway to discuss pension scheme arrangements for new public servants, which will be introduced before the end of 2010. This process is independent of the terms of the draft agreement and was in place prior to the engagements which produced the draft agreement. As an aside, I take this opportunity to set out the nature of the clarifications on the agreement issued by the Labour Relations Commission. I take this opportunity to thank once again Mr. Kevin Foley, Mr. Kieran Mulvey, their staff at the Labour Relations Commission and all of those officials from Government and the union side who engaged in the discussions which led to the agreement. In particular, I pay tribute to those trade union officials who have stuck to the agreement they negotiated and who despite difficulties within their organisations have continued to support and endorse it and to sell it to their members.