Dara Calleary (Mayo, Fianna Fail)

I wish to update it on the implementation of the agreement. I apologise that I will not be able to remain for the full debate, as I am due to attend the other House later. I last spoke to Members on this topic on 13 October. The country has since been through a traumatic period.

I want to put in context the role public service transformation and reform of public administration can play in national recovery. I will outline how public service management, staff and representatives work together under the terms of the Croke Park agreement and why the Government decided to stand by commitments made in the agreement. The national recovery plan published by the Government in November sets out a significant programme for change in the public service. It outlines the maximum ceilings on employment and public service numbers that will apply in each sector of public administration.

Public service numbers will be reduced by 24,750 from an end of 2008 base to under 295,000 by the end of 2014, a reduction of some 8%. This will return the public service to numbers last seen in early 2006 and the overall pay bill to a level last seen in 2005. The Government, however, has applied different ceiling targets between the various sectors of the public service, with front-line staff numbers protected as far as possible and consistent with more efficient public service delivery. Numbers will have to fall more quickly in back office activities and administration to allow front-line services to be protected. The redeployment arrangements in the Croke Park agreement will be used to ensure flexibility in the deployment of staff in the light of the reduced numbers. Were it not for the existence of the agreement and its operation, we would not have that redeployment arrangement available to us.

The numbers appear challenging and equate to an annual average reduction of approximately 3,300 in the number of public servants or around 1% a year. This can comfortably be accommodated through that unlovely phrase "natural wastage". The predicted rate of retirements should exceed the required reduction sought by the Government. In human terms, it means numbers will fall as people retire or leave for other reasons and their posts are not filled through a strict application of the moratorium on recruitment.

Public service management and the Government will have to be very disciplined in the coming years to meet the numbers targets. There will be some scope to prioritise limited recruitment in particular areas to meet a need for social workers or recruit specific ICT or economic modelling skills. It will not be possible to respond to special pleading on the part of any group that its case is a special one. It will not be possible for public service management to recruit its way out of an administration problem; rather the problem must be solved using better management of existing resources and better administrative solutions. Where unavoidable priorities for extra staff have to be met, this must be done to the maximum extent possible by redeployment.

Inevitably, there will be a significant saving to the Exchequer from this reduction in numbers. The Government has indicated that, when coupled with the pay savings from a range of reforms and efficiencies and other changes such as the reduction in pay rates for new recruits, it wants to save some €1.2 billion in the public service pay bill by 2014. That means substantial changes in the way public servants work are inevitable to increase productivity and sustain necessary public services.

Many have argued the targets are not challenging enough and that there should be deeper cuts to reduce numbers still further. However, the OECD has indicated that the Irish public service is relatively small in comparison to those in other OECD member states and that this is a significant move that will require big efforts on the part of management to ensure greater efficiencies. When I hear calls for faster reductions and compulsory redundancies, I ask myself whether those calling for extensive redundancies have worked out how to pay for them. As well as being very tough on the individuals affected by redundancy programmes, accelerated reductions in numbers cause what is known in the private sector as restructuring costs which must be paid upfront. Such costs are very large. The Government put aside hundreds of million euro to achieve a voluntary fall of a number of thousands through early retirements and redundancies in the HSE. Although not all of that money will be used, it gives us an idea of the potential costs if an accelerated fall of, say, an additional 10,000 was to be sought.

The targets brought forward by the Government are realistic and achievable within current resources and, crucially, will help to protect critical public services, with all sides co-operating, as they are committed to do and as they are doing under the Croke Park agreement. It is important that the proposals are realistic because, as the House is aware, our progress towards the savings targets that the Government decided upon will be the subject of ongoing reporting in the context of drawing down the agreed funding from the IMF and the European Union. The EU-IMF programme of financial support for Ireland which is based on the targets the Government has set states that, by the end of the third quarter in 2011, "the Government will consider an appropriate adjustment, including in the overall Public Service wage bill, to compensate for potential shortfalls in the projected savings arising from administrative efficiencies and public service number reductions".

The Government's position on the Croke Park agreement has not changed since I was in the House in October. We have always said that we want to see full implementation of the agreement as soon as possible. There is now a synergy between the plan and the agreement. It was already the case that the Croke Park agreement, and the financial emergency legislation that preceded it, included a requirement to review the position concerning public service pay on an annual basis prior to 30 June. These reviews will take account of sustainable savings arising from the implementation of the agreement.

The reviews under the agreement will transparently show whether the agreement is delivering savings in the costs of public service delivery, through reductions in public service numbers, use of different delivery options, changes in working practices and so on. It will therefore be clear from each mid-year review whether sustainable savings are being achieved under the auspices of the Croke Park agreement. Under the EU and IMF programme of financial support, the Department of Finance will provide quarterly data on the public service wage bill, the number of employees and the average wage. This is the same data on which the review under the Croke Park agreement will be based. The targets we have set ourselves make the challenge even more real for all sides. We know now what we have to do. What remains is tackling all obstacles to achieving it. This is where management delivering on their action plans for change and the commitments given by both sides under the agreement to co-operate with drives to secure greater efficiencies across the board come into play.

It was always the case that the action plans drawn up this summer would have to be re-examined in light of the Estimates process. The implementation body, under the chairmanship of P.J. Fitzpatrick, triggered that process by requiring all Departments to examine their action plans and submit revised plans in January. Those revised plans will have to be more ambitious than those already produced because they will have to meet the revised ceilings on resources and pay that each Department has been set as part of the national recovery plan. I want to state clearly that I will not stand for any delay in the implementation of these plans, such as those which accompanied the original plans.