Sean Barrett (Independent) | Oireachtas source

Senator Norris will be voting against the Bill. I would like to welcome the Minister of State, Deputy Alex White.

In the Report of Review Group on State Assets and Liabilities published in April 2011, the national development plan forecast that real GDP would be 42% higher in 2013 than is now expected. We have a political culture to spend the 42% we do not have. Nobody wants to be in this position but we must face up to the situation. I was saying to the Minister, Deputy Howlin, that this is what the Members of both Houses were elected to do. We would have wished for a different starting point but that was not the situation.

In the OECD-IMF staff estimates published in the autumn, our tax bill at 44% of GNP is about five percentage points above the OECD average of 41.9%. We cannot solve this problem by increasing taxation. In fact, in the two years we have been confronting this problem, taxation has risen far more rapidly than people intended or noted by the media. Public expenditure, in spite of headlines saying it has been cut, is in fact still increasing. The adjustment burden which will continue during the programme will be borne on the tax side. It might be a very nice low tax country for some people but, on average, it is not. I am sure the Minister of State's constituents confirm this to him.

The international comparisons on pay in that report show that Ireland has a high public pay bill. The OECD average for compensation of employees is 10.8% of GNP and in Ireland that figure is 14.1%, which is about 35% more than our competitor countries. We must compare ourselves with that. Part of the problem we are addressing is that in the era of benchmarking, public sector pay, at the top level in particular, was determined by people from the law and banks, who were totally out of touch with the international situation. We know from the books written at the time, that when the then Government went to seek assistance from our allies in Europe and abroad, the senior people on those delegations were paid far more than the President of the United States, the Prime Minister of the United Kingdom and indeed Chancellor Merkel. It was not that the delegates were particularly avaricious but were part of a system that generated pay rises which were way out of line with those in competitor countries. Now that we have asked people to rescue us, we must take notice of that.

A problem identified in the report of an bord snip nua, is that the numbers of higher management levels in the Civil Service grew by some 82% in the period 1997 to 2009, at a time when Civil Service numbers as a whole increased by 27%. Not only was the bill increasing, we were promoting people much more rapidly. It was praised at the time but in retrospect, at this juncture one would question the whole basis of social partnership. People were in a room awarding themselves pay rises and not taking much notice of the people who were outside the room. That is what we have inherited. A large part is public pay and the Government has tried to make greater adjustments to pay at the top than at the bottom level.
There is a problem. There is a culture that wants to spend money that we do not have. One exhausts the taxable capacity and the borrowing capacity of country. Eventually that type of party has to end. I know the Secretary General of the Department of Public Expenditure and Reform has been talking about a new economic service. I think of the old system in which the job of the Minister, for example, the Minister for Transport, Tourism and Sport, is to get the biggest possible budget regardless of the consequences for the country. Each Minister fights for expenditure and when one adds up the cost, one ends up with the type of situation we are in today.

The proposal for a Government economic service, to have proper economic evaluation in every Department linked to the Department of Public Expenditure and Reform is absolutely essential. The growth of bureaucracy has been a problem in Ireland. William A. Niskanen has written The Budget-Maximizing Bureaucrat which deals with this problem
The lobbying culture is another factor. If one robs Peter to pay Paul, one will get the support of Paul, his lobbyist and his accountant. We must ask whether it is worthwhile from the point of view of society as whole. The Department of Public Expenditure and Reform has to strengthen itself against Departments which maximise their budgets and try to solve problems by throwing money at them.
The complexity of taxation is that people ask for public expenditure on the one hand and then design loopholes not to pay for it by taxation. That must be addressed as well. Many of the advocates of extra public spending do not intend to make any contribution. There is a culture of entitlement, clientelism and lobbying. I hope legislation on lobbying is brought forth. Weak scrutiny in Parliament is an issue. The Minister knows I will raise the need for more checks and balances and scrutiny. We need a Parliament with two Houses. The Seanad, which has 42 new Members, has been trying to do that.
We do have public compensation problems at 14.1% of GNP compared with OECD average of 10.8%, which is 31% more. We have a weak appraisal of capital expenditure. Our expenditure on welfare is 29% above the average and our public expenditure is 23% above the average. We have to tackle this expenditure on multiple fronts.
Current expenditure is €51.5 billion from which the Government is looking for €300 million in savings. These savings targets could also have been met had we made across the board cuts of 0.58%. The pressure must be kept on right across the board for proper economic assessment of spending. Public pay is part of the problem and must be confronted. It is part of the reason the Irish economy is on the rocks. I will speak in detail on the amendments during the Committee Stage debate.
One wishes that we were not starting from this point, but we must get back into line with the countries with whom we compete. Much reform is needed. I think we are slow in implementing reforms. I hope that measures, such as better value for money, assessment of projects, control of lobbyist and clientelism, and assessment of spending are tackled but one could not succeed without measures on public sector pay because that dominates current expenditure.