Seanad debates
Tuesday, 11 July 2023
Nithe i dtosach suíonna - Commencement Matters
Local Government Reform
1:00 pm
Annie Hoey (Labour)
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I thank the Minister of State for coming in to respond to this Commencement matter, which comes on the back of a very fruitful meeting between the Association of Irish Local Government, AILG, and the Labour Party Seanad grouping last week. It is also an issue that has been articulated to us by many councillors. I am sure the same is true of the various party groupings, including my esteemed party colleague, Mary Freehill, and others in my own party. I refer to the gratuity payment, if that is the correct term, which is now to be calculated, based on the pre-2021 salary. My understanding is that this is pretty out of synch with how other gratuity payments are calculated. I think it is contrary to the normal terms and conditions that apply to public sector employees and other officeholders, such as indeed ourselves in both Houses. We know that the gratuity payment is capped at a maximum of 20 years' service, regardless of length of service, by councillors. It just seems unusual to me that it is calculated on the pre-July 2021 salary. I am interested to hear the reasoning for that.
I have spoken to many people in regard to it. When we sent this around to councillors I received pages upon pages of responses from them on how it affects them. There is great umbrage and annoyance evident. I will read some of them out in a moment. There is a sense that the gratuity calculations of elected members should be aligned to their final salary upon retirement rather than the current calculation, which is based on the pre-July 2021 salary. Some of the comments that I got include phrases like, "The prevailing circumstances are out of synch with public service national pay agreements." or "It is an issue of fairness." or "It is shocking to see how undervalued we treat the first port of call in our democracy here in Ireland." or "It is a shabby way to treat local councillors that are available 24-7 all year round."
As a lifelong trade unionist, my take on this is one of fairness.From my experience, for workers who are made redundant or who reach retirement age etc., the calculations of the payments are based on the current salary or the previous year's salary, which is fair and correct. However, when it comes to councillors, the calculations are from very outdated rates, which is inherently unfair. Also, one should not short-change councillors who give a lifetime of service to public life.
The Association of Irish Local Government, AILG, have been engaging with various Departments on this. They have been putting forward proposals and they have done a full costing on this. It has been suggested that the reason for this anomaly is a wording issue regarding the terms “remuneration payment” versus “representation payment”. If that is the case, is this just an issue of wording that needs to be changed? If that is the issue, when will that wording be changed? Or, is this a part of a bigger plan, which is to ascertain what it will cost and whether it will cost the council or the State? If it is an issue of cost, that strikes me as unusual. As I said and has been mentioned before, there are very few or no circumstances I can think of where people's final gratuity is placed on a different year to the one in which they leave the job - whatever that job may be. I therefore think it is unusual.
To conclude, this commencement matter raises the question as to why this calculation is based on the pre-2021 level. Is there a plan to change it? Is it taking a while to change it because of a wording issue, namely, the terms “remuneration payment” versus “representation payment”? If that is the case, when will the new wording be put forward to get this sorted?
Kieran O'Donnell (Limerick City, Fine Gael)
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I thank Senator Hoey for raising the important matter of the retirement gratuity payable to local authorities. It is a matter of which I am acutely aware. It came up when I was taking part in a session on local government on Wednesday, 28 June. More particularly, I have spoken at length with the AILG, the Local Authorities Members Association, LAMA, and councillors nationwide. I travel to all the local authorities, so I am very aware of it. I want to thank the Members for their consistently strong support for local government and councillors. It is important that the vital service given by councillors in their communities is appropriately recognised. I understand the phenomenal work councillors do. It is something about which I am acutely aware.
Unlike the Members of this House, councillors are not part of any single public service pension scheme. The current arrangements for the non-contributory lump sum are unusual in a public service context. I want to give a background to this, because we need to do a proper body of empirical work on this, and I am working with my officials on this. The terms for gratuity payments to councillors are set out in regulations. In essence, retired councillors receive a payment currently worth up to a maximum value of €76,664, subject to their period of service. The gratuity becomes payable once councillors reach the minimum age of retirement which, under the scheme, is 50 years. The calculation of the gratuity is based on the representational payment that was in place when the principal regulations were given effect in 2002, which at that time was worth €11,000 per annum.
Over the years, the representational payment has been adjusted in proportion to any adjustments made to the salary of a Senator. The adjusted representational payment is currently worth €19,166 and the maximum gratuity payment that is payable to a councillor after 20 years of service is worth 400% of that. This would give a maximum gratuity of €76,664.
Where persons cease to be councillors before the age of 50, the gratuity will be preserved until they turn 50, and will be calculated on the basis of the adjusted representational payment on that date. It is the case that the gratuity is not currently linked to the councillors’ current annual remuneration payment of €28,145 per annum, as Senator Hoey has noted. The Government's decision of 2021 to reform the financial support package payable to councillors did not provide for this. Neither did the Moorhead Report recommend any increase to the gratuity. This was before my time as a Minister of State. However, I am acutely aware of this situation, which has been raised with me by the representational bodies, the AILG and LAMA, as well as councillors across the length and breadth of Ireland.
I have instructed officials in the Department of Housing, Local Government and Heritage to review the situation, which we have been doing for a period of time, to set out how the councillors’ retirement gratuity may be more closely aligned with their current annual remuneration package. I have said this to both the AILG and LAMA. I want to do a proper body of empirical work that does justice to this request. It is something I take very seriously. I note that any adjustment to the existing terms of the retirement gratuity for councillors will require new regulations made with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform.My officials are currently liaising with officials in that Department in this regard and anything I bring forward will have to be agreed by it. I thank the Senator for raising this important matter. It is one of the overall issues for councillors to which I am giving serious attention.
Annie Hoey (Labour)
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I thank the Minister of State. My understanding, from the conversation I had with the Department of Public Expenditure, National Development Plan Delivery and Reform, is that it is waiting for the Minister of State to complete this work in order for this to proceed from the Department. Does he have any idea when that work will be completed? Is it planned to have it done ahead of the local elections in 2024?
As to the assertion that this is not being done because the Moorhead report did not recommend it, it is unusual to do something so out of sync with norms in terms of gratuity just because a report did not recommend it. That strikes me as an unusual reason to do it.
This is part of the bigger conversation. Among the AILG, the LAMA and councillors, there is much worry about what we want from local government and local democracy. It is time we had an honest conversation about our local government system and what we want from it. Do we want to continue the current system of administration or to move to one of true local democracy? This payment is only a small but important part of that because it demonstrates the Government's commitment to recognise the work councillors do, which, as somebody said, is done 24 hours a day for 365 days a year.
Kieran O'Donnell (Limerick City, Fine Gael)
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I again thank the Senator for raising the important matter of councillors' retirement gratuity. I will make a couple of points. I have been in this role for a relatively short time. I have given priority to councillors' security costs and there are also the issues of the gratuity for councillors and getting maternity leave for women councillors embedded.
The views Senator Hoey expressed will be given serious consideration. There are two aspects to the timing. We have to get this right. I want to ensure this stands up and that there is a logic to anything I take to the Department of Public Expenditure, National Development Plan Delivery and Reform. We must get this right out of respect to councillors. It does not need to be rushed but there is a timing aspect. It is my intention to make any adjustments that are required in a timely manner. I am acutely aware that local elections are coming up next year. I am firmly of the view that anyone thinking of running for election to local office should be able to know the conditions pertaining to his or her retirement gratuity. It is a priority for me in the context of the overall interests of councillors. We are doing a serious body of work on the review. I am looking to have this matter concluded as quickly as possible. It is vital that we get it correct.