Brian Hayes (Dublin South West, Fine Gael)

The figure refers to pay. We will come to the Senator's contribution in a moment. Pensions must be paid in any case. A 20% reduction in the pay bill is a staggering fall in the cost of employing public servants to deliver public services. It is unprecedented in the history of the State and I suggest it is a larger reduction than those achieved in the majority of private enterprises with significant staff costs.

I will now address what has been achieved under the Croke Park agreement since 2010. Members will be aware that an implementation body was established in July 2010 to drive implementation of the agreement. The body comprises of representatives from public service management and members of the public services committee of the Irish Congress of Trade Unions. It is chaired by Mr. P. J. Fitzpatrick, a retired senior official with a track record of delivering change in public service bodies.

The body's key functions are to monitor and oversee progress on implementing the agreement, to cost and verify savings being achieved under the framework of the agreement and to deal with implementation issues that arise. To support its work the body has established a series of subgroups to oversee implementation within each sector. In addition, every sector and public service organisation is obliged to produce an action plan setting out in detail the specific change and reform measures to be taken forward under the Croke Park framework.

The agreement provides for a comprehensive review to be undertaken each year by the implementation body, focusing on assessing the sustainable savings achieved and progress on implementing the change and reform agenda in each sector. The first such review was carried out by the implementation body last May and culminated in the publication last June of the first annual progress report. In its report, the body found that sustainable savings in the Exchequer pay bill of €289 million had been achieved in the first year of the agreement, driven primarily by the decline in public service numbers but also by reduced overtime costs and other work practice changes. It also identified examples of some €308 million in non-pay savings through better use of resources, re-organisation of work and achievement of greater internal efficiencies.

Overall the implementation body found that "solid and measurable progress" had been made. It concluded that in the period under review staff numbers had fallen substantially and more quickly than previously estimated, services had been maintained and in some cases expanded and productivity had increased. Moreover, the cost of delivering public services had fallen in a sustainable way, primarily through reducing head count across the public service, enabling the State to meet its external economic and fiscal commitments; thousands of staff had been redeployed, including across functional boundaries. This helped to meet two challenges, namely, avoiding gaps in service as numbers reduced and changing the way in which public services are delivered to citizens and business. It also concluded that the reconfiguration of services had commenced in earnest.

Last November, the body produced an interim update which provided further evidence of ongoing progress on reducing the cost and size of the public service and reforms aimed at building a leaner, more integrated and streamlined public service. In terms of the progress to date public service staff numbers have fallen by more than 20,000 since 2008 and will fall further in the coming weeks as the 29 February deadline approaches. Despite this decline, services have by and large been maintained and in some cases improved. This is against the backdrop of increasing demands for services provided by the State. For example, more than 1 million medical card applications and reviews have been processed since July last year alone and volumes in the social welfare payments area have also increased considerably. Prisoner numbers have risen, as have the numbers of students in our universities and institutes of technology as staff numbers in these areas have fallen.

Redeployment is one of the key tools provided by the Croke Park agreement to help protect services as numbers fall. Under the agreement staff are being moved to areas of greatest need. For example, more than 1,000 staff of the community welfare service have been redeployed from the Health Service Executive to the Department of Social Protection. Further, in excess of 500 staff have been redeployed from Government Departments to the Department of Social Protection to meet increased demands on social welfare offices and services. Moreover, 700 staff from FÁS are in the process of being redeployed into the Department of Social Protection. In the education sector, new redeployment procedures for second level teachers were implemented in 2011, resulting in the elimination of a surplus of approximately 200 teachers, with a consequent full year saving of €10 million, and the redeployment of approximately 850 surplus primary school teachers has delivered further savings of €50 million. In the health sector, more than 750 staff were redeployed internally in the six months from April to September 2011 alone as services were reconfigured.

Measures are also being implemented under the agreement to increase productivity and efficiency. For example, additional working hours have been implemented in schools and universities. Parents will have noticed fewer in-house training days and so forth, which is a direct benefit of the agreement. New working arrangements are being implemented for radiographers and those working in medical laboratories in the health sector with accompanying savings in expenditure. Outmoded practices such as bank time and privilege days have been eliminated in the Civil Service.

Staff are also co-operating with efforts to rationalise and streamline the public service. For example, progress is being made on rationalising the number of vocational education committees from 33 to 16. In my Department the Office of Public Works is rationalising its office accommodation portfolio. In 2010, for instance, we surrendered 27,000 sq. m. of space, achieving savings of nearly €10 million. The Department of Agriculture, Food and the Marine, Teagasc, the Revenue Commissioners and the Courts Service are all engaged in rationalising their office space. A special delivery unit has been established to re-organise services in the health sector. Efficiency reviews of all prisons are continuing and are on track to deliver savings of €21 million. By late last year, the National Procurement Service, NPS, in the Office of Public Works had put in place 45 national framework agreements and contracts for high spend requirements which are helping to significantly reduce the cost of purchasing goods and services across the public service.

Two years ago, the State spent €16.5 billion per annum on the procurement of goods and services. While I do not have the full figure for 2011, I expect that it will have declined to approximately €14.5 billion, achieving a saving of roughly €2 billion for the State. While we are spending less on capital, the State is also radically reducing expenditure by achieving greater efficiencies. I can point to contracts arranged by the National Procurement Service last year which secured savings of €21 million in the area of energy and €80 million in group print management costs. We are, therefore, spending less, securing better value for money and achieving greater efficiencies. I do not make any apologies for eliminating local procurers by centralising the procurement process. We are doing exactly what the private sector has been doing in the past decade in the teeth of crises such as that which we currently face. We will continue to achieve substantial savings. We need the support of Members in these endeavours because procurement will be an essential part of public sector reform if we are to spend less and obtain greater efficiencies in expenditure.

Steps have also been taken to integrate the public service. For example, legislation has been published for a new single pension scheme for all new entrants to the public service and new standardised annual leave arrangements have been introduced. New standardised sick leave arrangements will be progressed during 2012. This week I sought and received from the Government a mandate to introduce shared services. To cite an example of the shared services approach, 810 people are working on human resources in Departments. By the end of 2014, a shared human resources service will be in place which will employ approximately 350 people. This will provide us with the capacity to redeploy hundreds of staff who will not join the shared service.

We also have the power under the Croke Park agreement to demand that staff move up to 45 km., regardless of whether they wish to do so. That concession was given under the agreement and we can also redeploy staff within and between Departments. Ultimately, we will be able to redeploy people from local authorities to central government and to see it as one seamless service of public servants, all of whom are paid by the State and prepared to work with us in a totally reconfigured public service. These are the changes which are happening despite the fantastic headlines one reads in some Sunday newspapers every so often as well as the frightening analysis and so on. These are the actual changes which are happening, namely, shared services, redeployment, better procurement, efficiency savings, doing things better and introducing technology where people were previously in place. We are following that model and we are succeeding. We want the support of people as we attempt to do that.

The Government's view is that the Croke Park agreement can be an important asset as we seek to put the economy on a more sustainable footing. The implementation body, to which I referred, under Mr. Fitzpatrick will conduct its next annual review of the agreement after Easter. It is critical that its report, which we expect by June, shows tangible evidence of further savings and reform being delivered.

Some weeks ago, I made a direct appeal to public sector unions to get on with the task of working with us on the sectoral plans which are now coming into our Department and which are being worked on. What are those sectoral plans about? They are about changes in rostering and effectively getting rid of some premium payments. If people worked on Saturdays and Sundays, they would get double time but that will change. That is the kind of approach of which we would like to see early delivery from the public sector unions this year. I think 2012 will be a critical year for the agreement, for public sector unions and to get some of these changes, which have been left to this year, over the line.

I use this Chamber to appeal directly to the public service unions to continue to travel the road with us. We have already demonstrated significant achievements to date. More needs to be done and 2012 is the time when additional change must occur.

It is clear a solid start has been made under Croke Park but there is no room whatsoever for complacency. The economic and fiscal environment is volatile and uncertain and we must respond accordingly. The evolving economic environment means we need to go much further under the agreement while the task of reforming the public service - of ensuring that each part of this incredibly complex system is working efficiently for its customers - is never-ending.

In this regard, each sector has been asked by the implementation body to revise its action plans under the agreement in order that they support the new Government targets on public service numbers and payroll reductions and take account of relevant decisions arising from the recent comprehensive review of expenditure in 2012. These plans must be ambitious in their scope and timeframe for delivery and they must seek to exploit the full potential of the agreement.

The priority for the Government will be to use the framework provided by the agreement to: maximise the productivity of the existing staff through, for example, the announced sick leave reform, redeployment, new rostering arrangements for gardaí and nurses, for example, and better performance management; extract additional costs wherever possible, for example, through the Government's comprehensive review of allowances and premia pay; and enable the ambitious public service reform programme, which we launched just before Christmas, to be fully implemented across the public service.

The Government expects hard won management agendas to be pursued by sectoral management even where that means some difficult negotiations. I must warn the House that some of the challenges facing both sides will push that forbearance to its limits. It may be that we will see a greater level of resistance than before. If that is case, those advocating it will be playing into the hands of those from various quarters calling for a renegotiated Croke Park agreement. Those calling for a renegotiation are very vague about what this means. They need to be explicit about the alternative strategy they put forward and be upfront about what that would mean for our teachers, gardaí, nurses and other ordinary public servants in terms of further cuts in pay and compulsory rather than voluntary redundancies. Importantly, they also must consider the potential wider impacts in terms of the inevitable severe disruption which would be caused by widespread industrial action across the public service. Those who argue for some alternative yet to be defined are effectively arguing for some kind of nuclear winter which this country would face by throwing the situation into crisis mode. I say that to people who speak freely about getting rid of the Croke Park agreement or about renegotiating it.