Closing Statement by Minister of State, Ann Phelan T.D.

I thank the Deputies for their contributions and their support for this legislation.

The Bill before you is not a lengthy one, but it has important consequences, and to conclude this discussion I will briefly summarise three of the main issues it addresses regarding the pay and pensions of serving and retired public servants, before dealing with the points you have raised.

Firstly, the pay restoration. All serving public servants stand to benefit from these reductions in the cuts from the FEMPI 2009 (No. 2) and 2013 Acts, but importantly, the lower paid stand to benefit more, proportionally speaking.

Secondly, the Pension Related Deduction. This additional levy on the wages of public servants has been in place for six years and this Bill reduces the amount payable for the first time. Just as the levy itself was applicable across the board, so too is this new measure – this is in keeping with the Government’s emphasis on fair and equitable treatment for all, both in terms of reductions and of restoration.

Finally, the Public Service Pension Reduction. This has been applied to the majority of public servants, at varying rates, since 2011. Again, the amelioration of this measure by the Bill is done in such a way that not only do all benefit from the restoration but also so as to ensure that through appropriate calibration of rates, all benefit proportionally; thus no one group is singled out for either preferential or prejudicial treatment.
I will now address some of the specific issues raised by the Deputies.

I thank Deputy Fleming for his support and welcome his contribution to the discussion. I will address the main issues he raised, leaving the remainder for Committee Stage.

First of all, regarding the lower incremental scales for new entrants to public servants, introduced at the beginning of 2012, the Deputy enquires whether these cannot be adjusted. The answer is simple: they already have been. As part of the Haddington Road Agreement, public servants had the 10% reduced scales merged into pre-existing scales in November 2013, so all new entrants could gradually achieve parity with existing Gardaí, nurses, teachers, civil servants and so forth.

Public Service Pensioners
Deputy Fleming also referred to the concerns of the Association of Retired Public Servants. I can assure him that the Government is fully aware of their concerns and indeed Officials from the Department of Public Expenditure and Reform have continually maintained an open dialogue with them throughout this process.

The approach adopted in ameliorating the PSPR focused the majority of relief to impacted public servants in receipt of relatively lower pensions. This approach will achieve a result whereby the significant majority of retired public servants will be exempt from the PSPR from 2018 onwards.

Having noted this, the required fiscal recovery is not complete and we are not yet at a stage where we can remove the financial emergency measures for all public service pensioners. It is estimated that from 1 January 2018 in the region of 25,000 retired public servants who are in receipt of pensions substantially higher than the average public servant’s, will continue to be subject to pension reductions. Quite properly, the pension reductions imposed remain larger for public service pensions of higher value.

Emergency Over?
Finally, there is the more general question of this country’s financial status and whether the word ‘emergency’, as used in the title of this Bill is still relevant or apt. The fact of the matter is that the Bill has this title because it is mainly concerned with amending the previous FEMPI Acts. Given the extremely promising signs of economic recovery that we are seeing, the Deputy wishes the Government to declare the emergency over: that we cannot do. Certainly, the end is in sight and we have come a very far way from where the last Government had landed us; but that is all the more reason to remain cautious and not jeopardise the recovery we have all worked so hard for. As was outlined yesterday, this is restoration done responsibly – and part of that responsibility is to not rush and declare the job done. Instead, this Government is patiently staying the course.
Doing more for the Lower Paid
Several Deputies have suggested that more should have been done for lower paid public servants.

The position is that The Bill gives effect to the provisions of the Lansdowne Road Agreement. The Lansdowne Road Agreement was reached following extensive consultation with trade unions representing all public servants, including lower paid public servants. The Public Service Committee of the Irish Congress of Trade Unions accepted the terms of the agreement on 16 September 2015. Any deviation from the agreement, at this juncture, would seriously undermine the agreement and potentially cause significant industrial relations difficulties.

The agreement has been crafted in such a fashion so as to ensure that lower paid public servants gain most from the application of the terms of the agreement.

Deputies will be aware that these measures are being introduced at a time when the country is emerging from the economic crisis, but the Government is clear that it must continue to be prudent with budget expenditure. Notwithstanding this the Bill contains specific measures to address those on annualised salaries of less than €24,000, who will receive a 2.5% increase in addition to a flat €1000 increase and those on annualised salaries between €24,001 and €31,000 will receive a 1% increase in addition to the €1000 flat rate increase. Moreover lower paid public servants will benefit from the reduced Pension Related Deduction rates.

The issue of additional working hours has also been raised. While not a matter that is addressed in this Bill, it is the case that this measure brought public servants into line with industry norms in the context of working hours. Even with this measure the public service continues to offer a wide range of family friendly schemes to its staff.

Teachers/Sections 4 & 10

Deputy Daly has made a point regarding the situation of teachers, specifically in relation to statements by the ASTI and/or TUI regarding the Lansdowne Road Agreement regarding accusations of bullying by the Government.

Firstly, it must be made clear that sections 4 and 10 of this Act, which deal with the increment freeze and the ability to increase pay in certain circumstances respectively, are by no means targeted at teachers – rather they are general provisions dealing with non-compliance with the terms of collective agreements and represent measures included in the FEMPI 2013 Act, which are now being amended to accommodate the extension of the Haddington Road Agreement through the Lansdowne Road Agreement.

The Government’s position on this matter is very straightforward. It is as follows: all unions abiding by the terms of the Haddington Road Agreement, and the Lansdowne Road Agreement which extends it, regarding workplace reform and so forth, will continue to enjoy the protections and benefits of those Agreements. These would include such things as being excluded from the more severe increment freeze and the payment of allowances where they have been previously agreed.
Obviously, should any union not comply with the terms of the Agreement, it would be extremely difficult to justify their gaining from it – particularly in light of the sacrifices made by their fellow public servants.

All unions and associations were invited into these discussions with those in ICTU operating under the auspices of the Public Services Committee of the ITCU and its processes. The Government took part in them in good faith on that basis. The vast majority of public servants have accepted this agreement by aggregate vote and that was confirmed by the Public Services Committee on 16 September 2015.

Higher paid

Deputy McDonald has argued that the Bill is too generous to higher paid public servants.

I have three points to make by way of answer to this.

The Lansdowne Road Agreement, and this Bill, which gives effect to it, are very much geared towards benefitting the lower paid more, proportionally speaking. It should be noted by the House that those public servants earning over 65,000 Euro will not receive the extra 1000 Euro in September 2017 and that those very few earning over 110,000 Euro will not receive the full restoration of the cuts imposed on them in 2013 until 2019.

All of that being said however, it is the view of this Government that since all public servants have endured the measures imposed by the previous 5 FEMPI Acts it is only right and equitable that all should now stand to benefit from the partial and phased restoration that this Bill will bring about.

To be clear, while the 2013 higher pay cuts are being restored over time in these measures the full effect of the 2009 and 2010 reductions will still remain in place in 2019. To give an example the pay of An Taoiseach was some €285,000 in 2008. It is currently just over a net €168,000. When the restoration measures contained in this bill are completed in 2019 that pay will then a net €182,175, still well below the 2008 level.

Finally, and in support of what I have just said, the FEMPI Acts are predicated on the sharing of the burden across all levels; if this Bill were to exclude the higher paid, the Government would surely be opening itself to a legal challenge regarding the equitability of its measures.

No Pay Increase
Deputy Creighton argued that we should not give any pay increase to public servants and instead put the money into increasing services. The only way to do this would be to put money into significantly increasing the numbers employed in public service. She then went on to argue that we should do away with blanket increases for all public servants and instead switch to a model of paying by performance payments and bonuses. She maintained that the vast majority of public servants would welcome such a move because they would fare better under such a system with better payments.

However if you increase your numbers employed and you change your pay model to give the majority of staff more money, you will actually once again have a runaway pay-bill. It is not so much the political philosophy as the arithmetic which is clearly suspect.
Conclusion
I believe that I have now substantively covered the points raised by the Deputies.
This Bill gives the Government the statutory basis to make good on the commitments made under the Haddington Road and Lansdowne Road Agreements, both of which are vital components in the reform and renewal of our public services. I believe it is right and fair that we honour those Agreements, and that we give something back to those public servants, serving and retired, who contributed so much during our country’s financial emergency.

The crisis Ireland has endured has made us wary as a nation; wary of give-aways and poor planning. This is why the Government has been so careful to ensure that the reductions effected by this Bill are done in a way that is fully sustainable going forward. We believe that restoration must be accompanied by responsibility.

I thank the House for its support and initial comments and look forward to detailed discussion at Committee Stage.