Wednesday, 21 May 2003
Dáil Eireann Debate
1. Mr. Kenny asked the Taoiseach the procedures of his Department for monitoring the implementation of the new partnership agreement, Sustaining Progress; and if he will make a statement on the matter. [11452/03]
8. Mr. Rabbitte asked the Taoiseach if the steering group for Sustaining Progress has been established; the membership of the group; if it has met; and if he will make a statement on the matter. [12779/03]
10. Mr. Rabbitte asked the Taoiseach the procedures which have been put in place to meet the commitment given in Sustaining Progress that the Government would consult the social partners as appropriate on policy proposals and the design of implementation arrangements in respect of matters covered by the agreement; and if he will make a statement on the matter. [12781/03]
18. Mr. Rabbitte asked the Taoiseach the matters discussed at the recent meeting between officials of his Department and the members of the community and voluntary pillar regarding new structures for social partnership engagement; the relationship he envisages between his Department and member organisations of the pillar that did not endorse Sustaining Progress; and if he will make a statement on the matter. [13535/03]
Following from the completion of the ratification process for the new agreement, Sustaining Progress, the mechanisms for monitoring and overseeing its implementation are now being put in place. The mechanisms for implementation and monitoring of the agreement are provided for in the agreement itself and they are set out in paragraph 1.9, as follows:
a Steering Group for the Agreement representing Government and four representatives from each of the social partner pillars, will be established with overall responsibility for management of the implementation of the Agreement;
any issues or difficulties in relation to engagement on issues covered by these chapters can be raised with the Steering Group. The Steering Group may make recommendations as appropriate to ensure the effective delivery of the spirit and intent of the Agreement; and
the Steering Group will also identify, prioritise,timescale and agree those issues which require further study or examination within any of the relevant Institutional Arrangements identified in the Agreement.
As Deputies will be aware, my Department exercises the main co-ordinating role for the overall implementation of the Agreement in this respect. In this context, my Department has written to each of the social partner pillars inviting them to put forward their nominees for the steering group, as proposed under Sustaining Progress. The steering group, which is chaired by my Department, has overall responsibility for the management of the implementation of the programme. I attended the inaugural meeting of the steering group on Monday, 12 May, where the  approach to its challenging work programme was discussed and agreed.
Ongoing quarterly reviews are also provided for at the Sustaining Progress plenary meetings. The inaugural plenary meeting, which I will be attending with the Minister for Enterprise, Trade and Employment and the Minister for Finance will take place in July. A particularly significant review will take place when the terms of the pay agreement fall due for consideration in 18 months. This will provide an opportunity to take stock of the environment and of progress achieved in relation to the overall goals of the agreement and to consider any opportunities arising to refocus and reprioritise action as improvements in the overall economic climate and the availability of resources might allow.
In addition to the annual plenary meeting, I also meet representatives of individual social partner organisations on a regular basis. In this context, I met representatives of the Irish Congress of Trade Unions at their request, together with my colleague the Minister for Transport, on Thursday last to hear at first hand their concerns regarding the development of transport policy. The meeting provided an opportunity for a full and frank exchange of views and the discussions will be continued at official level.
The pay agreement that forms part of Sustaining Progress provides for the continuation, with an enhanced role, of the National Implementation Body, which was established under the PPF to ensure the delivery of the industrial relations stability and peace provisions of the new agreement. The body, which is chaired by my Department and represents Government, IBEC, CIF and ICTU, meets as necessary to review ongoing disputes of major national importance. Meetings of the body also provide an opportunity for informal discussions of the broader issues around the social partnership process for the employer and trade union representatives. The NIB has met on a number of occasions recently in the context of industrial action being taken in a number of areas of employment.
Liaison officers have also been nominated by all relevant Departments and they will have particular responsibility for supporting the implementation of the terms of Sustaining Progress, and implementing the consultation arrangements appropriate to their Departments. In the case of the community and voluntary pillar of social partnership, the member organisations are those that have endorsed Sustaining Progress. The membership of this pillar has changed as a result of members' views of participation in social partnership under the commitment in An Agreed Programme for Government and the decision of two organisations not to accept Sustaining Progress. The community and voluntary pillar now has 15 member organisations which have endorsed Sustaining Progress, part 6, on an individual basis, and nine organisations representing the areas of older people, disability, housing, children, rural,  local, voluntary and care. My Department met the pillar to explain the arrangement to support the Sustaining Progress agreement and the social partnership process more generally. This gave me an opportunity to meet the new member organisations of the pillar. The organisations which did not endorse Sustaining Progress are not members of the community and voluntary pillar and will not participate with social partners in the various mechanisms set out in the agreement. However, they will have the opportunity to contribute to policy development as part of the consultation process with the voluntary sector, as is the norm in areas of concern to them. Their views will be taken into account in that context.
Finally, in response to Deputy Joe Higgins's question about the National Social and Economic Council, the council has completed its term of office and a new council will be appointed soon. The previous council agreed to undertake a study of housing policy and the secretariat is progressing this pending the appointment of a new council for which nominees have been sought from the social partners.
Mr. Kenny: Is the Taoiseach not concerned that Government actions are responsible for at least half of the serious increase in inflation? Is he not concerned that under the benchmarking agreement this money is channelled into public service pay resulting in the withdrawal of public services in hospitals, the non-implementation of schools programmes, and a complete slow down in the provision of public services? Does that not cast serious doubt upon the State's ability to deliver in respect of the promises and commitments which this Government has given?
The Taoiseach: The benchmarking process which followed from the PPF ensured that there would be no special increases in that period and that an independent review would examine public service pay against equivalent sectors outside the public service. That process went on for almost two years and was reported on. The matter was discussed and came into the partnership talks. Deputy Kenny suggests that we should not have used our resources to pay the individuals concerned in this costly process. However, this was an accumulation of a three year period during which they did not receive special payments as would have happened under the old arrangement. The categories were independently verified. Benchmarking is not linked to pay alone, it is linked to the verification process which is operating, as agreed, a new stringent mechanism whereby change, in some cases substantive, is provided for across a range of areas that have been identified. Part of that mechanism operated in the PPF but this is a far more rigorous assessment.
On the inflation issues, some Government decisions led to a part – not half or anything close to that – of the inflation mechanisms.  Under the social partnership process, and generally, the Government is engaged in a campaign to deal with inflationary pressures as far as possible across all areas and, hopefully, it will be successful. The first two meetings of the group on inflation focused on the factors underlining inflation and existing programmes and policies designed to reduce it. The group has also held meetings with representatives of the CSO, the Competition Authority and the Office of the Director of Consumer Affairs. The group will be developing proposals to bring to Government to provide for sustaining progress and inflationary measures. Apart from those suggestions, the Government is involved in an anti-inflationary package.
Mr. Kenny: The CSO figures indicate that indirect taxes contributed directly to 1.4% of an increase in inflation and other charges levied by the Government brought about an increase of 0.8% in inflation, which is over 2.3%, approximately, of an increase directly attributable to a Government action. I did not say that payments should not be made. Is it not a fact that we do not know the basis upon which benchmarking was introduced? We do not know what the evidence was. How can the Taoiseach monitor changes if we do not have confirmation of what was to be changed? Is it not a fact that having had these discussions and introduced benchmarking, money is now being sucked into the public pay domain to the detriment of the delivery of effective public services, frustrating members of the public when services they should receive are not being delivered?
In respect of the national implementation body, could the Taoiseach give an update on the introductory meeting in respect of the settlement of the public health doctors dispute, now in its fifth week? Will he ask the national implementation body to intervene in the long running industrial dispute which affects the operation of agricultural offices at Tralee, Limerick, Galway, Castlebar and in Clonakilty, the hometown of the Minister for Agriculture and Food?
The Taoiseach: The cost of benchmarking, as I have said previously, is substantial. I disagree with Deputy Kenny when he says that the basis for, or the analysis of the cost was not authoritat ive. Individual unions put a great deal of work into their submissions.
The Taoiseach: I totally disagree with the Deputy's assertion. The representatives of organised labour put forward detailed cases. The benchmarking group, which worked practically full time on this, comprised eminent people with experience as employers, academics and trade Unionists. They went through the case studies and benchmarked using some of the most modern methods available, mainly the Hay consultants' report.
The Taoiseach: There is no point in my saying it is and the Deputy saying it is not. The reality is that most of that information is in the public domain. The benchmarking report was published. It was debated last year at every congress in the country. Every union group outlined its submissions in the public domain. The analyses were published in every newspaper. The matter has been a source of debate and discussion all over the country. To say that nobody knows what the body benchmarked against is simply untrue. Regarding the verification process, the performance verification groups will differ in several ways. Deputy Kenny made a point about the Programme for Prosperity and Fairness, and the groups will be far stronger than they were under that. It was necessary that they had what were dubbed “policy assurance groups”. They will contain more independent representatives and monitor the implications of modernisation initiatives more closely and robustly. The chairs of the  groups of the sectors and the representatives of the management and unions will meet to ensure a consistent approach across all sectors. Adherence to agreed procedures and industrial peace is required, and that is set out in the performance verification groups. Members do not need me to go through it all again, for it is in the public domain, but I can do so if people wish me to.
On the disputes mechanisms, the national implementation group has examined the public doctors' dispute and made its views public. It asked the public doctors to go to the Labour Relations Commission. I understand the final session regarding that dispute is to take place at the Labour Relations Commission tomorrow. It is true to say that they have not had much progress or success in it. I do not want to pre-empt tomorrow's discussions, but discussions have not gone particularly well to date. One hopes that tomorrow might be better. The other dispute has been a subject for the Minister for Agriculture and Food. The national implementation body has not been involved in it.
Mr. Rabbitte: I wish to clarify a point about benchmarking. Not many of the data on which assumptions were made have been put into the public domain. The report has been made public, but the basis of some of the calculations – the comparitors and all the rest – has not been put into the public domain, and the surviving members of the benchmarking body made the point on the day of publication that they would not make it available. Was the Government or the Department of the Taoiseach consulted about that, and did they agree with the decision?
The Taoiseach: The Deputy is right that the benchmarking group, in its final report, said that it would not include all the assessments, calculations and work that it had carried out. However, it put a very substantial part of the basis for its work, report and thinking into the public domain. The cases that were put forward and the analogues and comparisons that were being used are fairly clear.
If I recall correctly – and I am relying on memory here – only two relatively small issues were disputed regarding individual grades which had difficulties with the comparative analysis. All the other data were resolved satisfactorily between negotiators from the report published. It was not a source of dispute except for those two areas, where the benchmarking body had said that it would not put its working papers in the public domain. However, it published a considerable amount. I cannot recall the two grades, but I remember that there were disputes on two specific issues.
The body dealt with the issues comprehensively. From the report and the cases put forward, it is not difficult, except in those two cases, to understand the logic it followed. I do not feel there were any outstanding difficulties.
Mr. Rabbitte: The question is not whether only two grades took issue with the matter but whether the public is not entitled, in the devising of what is effectively a new pay determination system for the public service, to know the basis on which certain calculations and assumptions were made. Does the Taoiseach think it is satisfactory that there is no body of work that people concerned with these matters can analyse to their own satisfaction? Were he, his Department or any of his Ministers advised in advance that it was the benchmarking body's intention to immolate itself immediately after the report's publication?
The Taoiseach: The benchmarking body had a job to do, and it did that. We did not ask it not to give out information, nor did we argue with it about not doing so. It put in an extraordinary amount of effort and time and did a good job. It felt that it should not publish all its calculations, background work and papers. It had shown the comparitor grades, the analogue cases and the basis of its work and felt that it had done enough. In reply to Deputy Rabbitte's second question, I have been through the six months of discussions on the pay talks, and there was no objection from any of the bodies about their not having got satisfactory information, except a reference to two grades that came out at the start. There was no demand for the benchmarking body to give out any other additional information. All I can tell the Deputy is that it was not an issue.
Mr. Rabbitte: I am entirely inclined to accept the Taoiseach's word that there were no objections other than concerning those two grades. I know that he is right to say that the benchmarking body felt that it should not make the data available. However, I am asking the Taoiseach what he thinks, not what the benchmarking body thought. Is he satisfied that those data should not be available, and did he, his Department or his Government have any advance notice that it was the intention of the persons sitting on the benchmarking body not to make that information available? The time will come when academics and others will go back over this issue and examine it.
The Taoiseach: I will give the Deputy my views. I am afraid that I cannot give him an answer as to whether my officials were informed about what the benchmarking body was going to write in its draft report, since I cannot recall anyone informing me. I doubt that it happened, but I was not privy to the discussions regarding the report.
The Taoiseach: I am happy. The report is very detailed. Taken against what is in the public domain, and about the cases that were made, it is not too difficult – I looked back over only a few areas – to work out how it did the work. It did not move that far off the old analogue systems of comparison. Where it did, examining the private sector using the Hay mechanism, one can see the structure there that it followed. If one follows the logic, one will see that it is not the position that it came up with figures and that we cannot track where they came from.
Mr. Rabbitte: Is the Taoiseach satisfied that the information on which the report was based is not available to those of us who would like to study  it, and did he or his Department have any advance notice that the body would eliminate those data?
The Taoiseach: I did not have any advance notice and I do not think that anyone had advance notice. I am happy because I can see the mechanism the body used. I am not in the dark, and anyone who examines the report and the equivalent data that went into the submission can see what the body did. Where one does not have those data, one can see the structure which it used, which I believe to be the Hay structure. That is a fair answer to the Deputy's question.
Caoimhghín Ó Caoláin: Does the Taoiseach acknowledge that over the period of social partnerships, profits have increased much more rapidly than wages? Internationally, Ireland experienced the largest growth in profits since 1987 among all of the European member states, and greater than Japan and United States. Does the Taoiseach acknowledge that during the 1990s, output per head almost doubled while, between 1985 and 1999, unit labour costs fell by about 20%?
In that context, does the Taoiseach recognise that the percentage wage increases in Sustaining Progress cannot and will not keep pace with inflation? Does he recognise that the increases already provided for are being wiped out by inflation created as a direct result of the Government's policies regarding VAT increases, the increased cost of medicines, outrageous insurance costs, transport costs and spiralling rents and mortgages which are leaving workers and their families unable to meet the costs of day to day life?
The Taoiseach: No, I do not agree. We have just been talking about increases under benchmarking which are far in excess of inflation. The estimated cost of implementing benchmarking increases is somewhere in the order of €565 million for the first year and €825 million for next year. The percentages are quite substantial as there is about €1.5 billion tied up in regard to the public service alone. The rate of increase across all sectors is such that if inflation had not been so high, the House would not have agreed to these increases, which relates to the point made by Deputy Kenny.
Benchmarking is a separate issue in the context of some people having fallen behind over several years. If anything, we are trying to maintain our competitive position. There are no circumstances in which pay rates could be higher as that would be extremely damaging to the economy, and I hope we will reach a position where they will be lower. Otherwise, competitiveness will be lost, which causes the loss of jobs and activity.
As we know, profits will be down this year because economic growth is down in Ireland as it is in every country. The type of wealth generating activity of recent years is no longer evident. I  reiterate that the Government, with the social partners, will do all it can in a number of ways to drive down inflationary pressures in the economy, including in the professional and retail sectors and any other area where it is possible.
Mr. Sargent: Does the Taoiseach agree that the cost of benchmarking would be severely jeopardised if €1.3 billion was taken out of State coffers, which is the cost estimated by the Department of the Environment and Local Government resulting from emissions trading in regard to CO2? Does he agree that this cost was not factored in, whatever he knows about the mechanisms which went into arriving at benchmarking? Accordingly, does the Taoiseach agree that it is time to look again at the make-up of the membership of social partnership, and that the social, environmental and sustainability expert bodies would be considered part of it rather than hiving them off under the title of Comhar, which is not involved at the talks? Will the Taoiseach seriously take this on board, given the enormity of the financial burden on the horizon and considering the record of the country overall and the Government in particular?
Given that food prices in Ireland are considered to be higher than anywhere else in the EU, will the Government accept responsibility for taking action on that issue? Farmers are getting less and less for their produce while consumers are being asked to pay more. Does the Taoiseach accept that the Government has some responsibility in this regard? A Cheann Comhairle, you sent a Parliamentary Question back to me stating that the Minister for Agriculture and Food has no responsibility for the price of food. Does the Taoiseach accept that he should co-ordinate some response to that issue as it cannot be left hanging in the air for consumers to deal with?
The Taoiseach: Some time ago, Deputy Sargent raised with me the issue of bringing environmental issues into the social partnership process and I replied to him at that time. I had asked the NESC, in its preparation of the last document of that round, to consider these matters because it had done considerable research on the energy industry and related industries, and my request was taken into account. While I do not know if its latest report on the electricity and gas industries – Professor Fitzgerald's report – has yet been published, if it is not, it will be shortly. While they were not there as individuals—
The Taoiseach: I will raise that issue but I am not against it. We made a number of changes to the process. I asked that this be taken into account in the analysis to open the round, and it  was. The NESC has carried out a considerable amount of work in that area and some very useful work on the gas and energy industries, which has fed into the social partnership process.
The Taoiseach: That might be a little unfair. On inflation, I have seen the reports and, even though it is not agreed by the retail bodies, producers or employers that Ireland is the most expensive country, with the Competition Authority, the CSO and the social partners working together to analyse and make decisions, we can implement measures to try to force prices down. While there are issues on which different sectors do not agree, they are all committed to do what they can to drive down prices. Comparative analysis has been carried out, which is why the CSO is on the working group on prices.
Mr. Allen: On page 70 of the Sustaining Progress document, there is a Government commitment to provide 10,000 affordable houses. What steps have so far been taken to meet that target? How many of the 10,000 houses does the Government propose to provide this year? Is the Taoiseach aware that for the first nine months of this year, only 260 affordable houses will have been built in counties Dublin, Kildare, Wicklow and Meath, about 1.7% of—
The Taoiseach: The Government is committed to an ambitious scale of delivery of affordable  housing. A number of initiatives have been outlined, including Part V of the Planning and Development Act, an agreement that we will work with the parties to ensure the maximisation of the output from the affordable housing schemes and consideration of issues regarding the CPO rules, how the arbitration process works, the Kenny report, rezoning and the use of State lands. That is on the social side but there is a knock-on effect both under local authority schemes and the Part V changes for this year which will help in terms of social housing.
My view is that it will take a number of years to work up the affordable housing element of it. There will have to be intervention in a number of ways; it will not happen easily. It will take some time to pull through a number of the issues listed in Sustaining Progress.
On the simplification of the CPO rule regarding rezoning issues and some of the issues surrounding land on the State register, a number of those issues will need to work before we will get more affordable housing. By affordable housing I mean housing we can try to target towards young people, and those not so young, who are trying to get on to the first step of the housing ladder. The real benefit for them is to deal with the land issue. Not much can be done in other areas.
Many examinations are ongoing but my own view is that the only way to get this done is by trying to provide land at a cheaper price to the construction industry to allow people buy houses at a lower price that reflects the value of the land. Many studies have been done in that regard and it will mean the State having to help, directly or indirectly, in the supply of that land. It will not happen any other way. It will not be easy to do but people working together can find ways of doing it. It will not affect the upper end of the market but it can dramatically affect the lower end of the market for people who are trying to come into the housing net for the first time.
The Taoiseach: No, I believe it is workable but it will not be easy to get large amounts of land. I think the Office of Public Works has finished the preparation of the State register of lands. We can talk all we like about construction costs but in my view it is a land issue.
Mr. Rabbitte: I refer specifically to my Question No. 16 about the Taoiseach's meeting with the secretary general of congress, Mr. David Begg. What transpired from the Taoiseach's discussions with Mr. Begg on the health services? Did the Taoiseach know at the time there would be job implications like the 161 jobs that will go at the Mater? Was that issue discussed with Mr. David Begg?
In terms of the discussions with congress about the 10,000 houses to which Deputy Allen referred, is there is any clarity in terms of the provision of those houses? What did the Minister of  State, Deputy Noel Ahern, mean when he said that we would be selling off State property to private developers? If we have State property to sell off, why do we not give it to local authorities? Why are we selling it off to private developers? What is the thinking behind that?
The Taoiseach: My meeting with David Begg was to do with transport-related issues. Congress and the affiliate unions had asked for a meeting on transport issues so we discussed transport-related areas. That is not to say we will not have meetings about other issues but the one I mentioned last week was on transport issues.
On the question of affordable housing, as I just said in reply to Deputy Allen, we are talking about affordable housing as distinct from social housing. The affordable housing initiative in Sustaining Progress is geared at individuals who would, in the normal course of events, purchase their own houses but who are having difficulty because of the price of houses. They are not like those on the social housing waiting list who it is hoped will benefit from the successful initiatives under the 1999 local authority scheme. All planning permissions now have to comply with Part V but that is in respect of social housing.
One of the issues being examined as regards affordable housing is making available or selling the State landbank to developers at more attractive rates so that we could have control over the price of land for each unit of housing which would reduce the overall pricing. That is what they are examining. That would be done in an effort to take some of the State landbank, land that would be held—
The Taoiseach: If it was a joint venture there would be no difficulty but I am drawing the distinction of where it was not a joint venture. If it was a joint venture under Part V, with some lands for local authority housing and some for affordable housing, it also could be sold. However, in particular they were looking at trying to drive down prices for people who want to buy their own house, which is classified as affordable, and to try to influence the market for first-time buyers. That is the initiative they are examining. The register of all State lands has just been completed by the Office of Public Works through the  Department of Finance. That is what the Minister of State was referring to – rather than each Department and agency selling off land.
Caoimhghín Ó Caoláin: Despite the Taoiseach's dismissal of the points I made in my earlier question, I assure him that statistically and factually each point I made was correct. Is the Taoiseach aware that this is the first pay agreement in over a decade in which there is no provision for a reduction in tax for lower paid workers? Is he also aware that one in three PAYE workers are paying tax at the higher rate of tax and yet 25% of the highest earners pay no tax at all? The pattern appears to be that the Taoiseach does not agree with me on these questions but I will ask it once again. Will he agree that this new pay agreement can only fail in the absence of a fair and equitable tax system?
Mr. Sargent: Will the Taoiseach confirm, as I suspect, that the €1.3 billion is not being considered as a real fine on this country by the benchmarking report? Will he confirm also that the benchmarking report depends on EU farm support payments to the tune of €500 million on the basis of compliance with a number of environmental conditions? Is the Taoiseach convinced that the Government will comply with those issues so that the money will not be lost?
Ms McManus: The Taoiseach mentioned the public health doctors dispute earlier and I am sure he welcomes the moves to go back into the Labour Relations Commission. In view of the fact that partnership is all about managing change, and looking to this particular dispute, will the Taoiseach recognise that there have been problems surrounding this issue going back to 1994 and that the role of the Department of Health and Children has been grossly deficient? The approach taken by the employers has created a lot of bad faith. Will the Taoiseach agree it is vital to provide the reforms in the Department of Health and Children, and in other Departments also, if partnership agreements are to be sustained into the future? What kind of reforms does the Taoiseach intend to institute in the Department of Health and Children?
The Taoiseach: On the tax issue, it is correct that the normal, very generous tax packages in previous agreements are not in this one because with the current level of economic growth and the international position we are not able to do that. However, as happened in the previous budget, the policy is to try to continue to take people on a minimum wage out of the tax net. Whatever resources are available will go to the people at the bottom.
The Taoiseach: The analysis also shows that a small number of people are involved in that, which is the reason the capital allowances on property and other areas were changed and caps imposed in the past few years.
On Deputy Sargent's question, Exchequer funds, taxpayers' money, will pay the costs of benchmarking, rather than moneys from any scheme. Of course, there are regulations with which the Ministers for Agriculture and Food and the Environment and Local Government have to comply.
On Deputy McManus's question, of course I would like to see the public health doctors' dispute resolved. I am aware that there are disputes concerning issues which go back to 1994. A review which was supposed to take two years was not completed until 1999. I know there is ill feeling on both sides about that issue. On the other hand, I do not wish to say anything which would make matters worse. I told the management side several weeks ago, a message I repeated at a meeting earlier today, that it should try to address the various anomalies, particularly the out-of-hours issue which is a major point of contention in this dispute, and make reasonable offers. Without wishing to be difficult, I repeat that substantial sums of money are involved in the dispute. The current offer would mean raising salaries from €82,000 to €111,000, with increases ranging from €11,000 to €29,000, which are substantial sums of money. While I am not trying to simplify the matter, a substantial offer is on the table.
The Taoiseach: I accept there has to be reform as part of the process. While I have not received a blow by blow account of the matter, the review went on for much longer than expected. It was meant to take two years and I am not in any way condoning the fact that, instead of being completed in 1996, it was not completed until 1999. The reason lay on the management side. I do not think there were difficulties at political level during that period. However, both sides are involved. I would not have a difficulty if, as part of the package, they also tried to deal with reform issues. They are important people and I hope they will be able to make some progress tomorrow.
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