Tuesday, 31 March 2009
Dáil Eireann Debate
4. Deputy Caoimhghín Ó Caoláin asked the Taoiseach if he has responded to the request of the general secretary of the Irish Congress of Trade Unions for a resumption of social partnership talks; and if he will make a statement on the matter. [8619/09]
5. Deputy Eamon Gilmore asked the Taoiseach when he next plans to meet the social partners; when the steering group referred to in section 7 of Towards 2016, Review and Transitional Agreement, 2008 to 2009, is expected to hold its next meeting; and if he will make a statement on the matter. [9621/09]
7. Deputy Eamon Gilmore asked the Taoiseach if he has received a response to the invitation he issued to the Irish Congress of Trade Unions on 24 March 2009 to engage in talks; the issues he plans to have on the agenda; and if he will make a statement on the matter. [13024/09]
In January, the Government and social partners agreed on a framework for a pact for stabilisation, social solidarity and economic renewal. That framework acknowledged that urgent and radical action was required to restore stability to the public finances; maximise short-term economic activity and employment; and improve competitiveness. Intensive discussions followed between the Government and social partners to attempt to agree, within that framework, the key elements of the fiscal adjustment required.
In the context of the discussions, the Government tabled proposals to achieve a saving of €1.4 billion through the introduction of a pension levy in the public service. The unions were not in a position to agree to that proposal. The Government’s consequent decisions on achieving the €2 billion adjustment were taken within these parameters and in accordance with principles agreed with the social partners.
The challenge now faced by the country is immense and this is already evident from the very significant reduction in economic activity and the associated sharp rise in unemployment. It is in turn reflected in the very serious fiscal position. The Government is preparing to announce further measures on 7 April to address the deteriorating situation.
In that context, and having regard to the potential for further severe impacts on jobs and living standards, I am convinced that there is a case for the development of what the National Economic and Social Council, NESC, called an integrated national response to the complex interplay of domestic and global forces which must be confronted, and for this response to be effective by commanding wider societal ownership.
For that reason, last week I invited the social partners to engage as a matter of urgency with the Government in seeking to develop and conclude a national agreement building on the shared perspectives which emerged in our discussion in January and in the recent NESC report. I welcome the decisions taken by the social partners last week to accept that invitation and, in particular, the ICTU decision to call off the planned industrial action.
Deputy Caoimhghín Ó Caoláin: It has been broadly noted that the Taoiseach has indicated a broad welcome for the ten-point plan put forward by the Irish Congress of Trade Unions. His statement was in the context of workers right across the board having voted for industrial action yesterday. That action was deferred because of the commencement of new talks, which are most welcome.
Will the Taoiseach be specific with regard to the elements within the ten-point plan where he sees the potential for real progress in the course of this engagement? It is broadly seen that the Taoiseach is making a pitch, most particularly to the trade union movement, and making the case that real progress can be made in negotiations. If that is the case, will the Taoiseach be specific in addressing the ten points put forward by ICTU and give us an idea of his thoughts? We can, for example, deal with four of them.
Will the Taoiseach ditch the so-called public service pension levy, which the ICTU has correctly described as crude and unfair? With regard to those who have been made unemployed as a result of the contraction in the labour market, is the Taoiseach prepared to guarantee incomes of 80% of salary in order to allow workers to participate in extensive training and upskilling? Will he introduce a three-year moratorium on house repossessions and replace all the bank executives who played a direct role in the collapse of the banking system in this jurisdiction?
What does the Taoiseach propose to do in the context of restoring the crucial pay elements that were negotiated as part of the social partnership agreement? He must have noted that significant numbers of private sector companies have already paid the first tranche of increases that were committed to as part of that agreement. However, the Government, the Construction Industry Federation and IBEC are rowing back in this regard and are refusing to pay the increases that are due. The ICTU has described what is taking place as a campaign against wages.
Will the Taoiseach indicate where he stands in respect of these four aspects of the ten-point plan, particularly if he remains of the view that they offer the merit he indicated when commenting on the plan on its initial publication? If not in respect of these matters, in which areas can progress be made?
The Taoiseach: In welcoming contributions to a process of discussion, one does not, by that token, provide prior agreement. There are a number of principles contained in the framework that are central to trying to devise a way forward. One of these principles is that which relates to stabilising the public finances. An issue that has arisen is the ongoing question of how to deal with this matter. In the absence of stabilising the public finances and working towards a process of dealing with the structural deficit that has arisen, the prospect of economic recovery will be deferred. We must, therefore, consider these issues in the context of priorities of this nature.
There is an acknowledgement in the framework up to which the parties signed on 28 January last that the Government and the social partners agree on the necessity to deal with the deficit through an appropriate combination of expenditure and taxation adjustments. In the interim, the NESC report has deepened the shared analysis within society regarding the nature of the problems with which we are confronted and the approaches we must consider if we are to provide a degree of stabilisation for the economy in the short term and, subsequently, to plan for recovery.
The Government and the unions disagreed in respect of the pensions levy. The latter was a necessary part of an adjustment introduced by the Government earlier in the year. That adjustment, which was necessary, was designed to bring in €2 billion in an effort to ensure that international markets and people at home would recognise the Government’s determination to make decisions that would address what was then a deteriorating position vis-à-vis the public finances.
The terms and conditions of public service workers and the question of job security are important considerations. The value of public service pensions as against depleted pensions in the private sector, which have been adversely affected by the financial crisis, must be seen in the context of fairness. From my point of view, the proposal in this regard was in keeping with the requirements of the situation and the principles we outlined in the framework document.
The Minister for Finance has continually outlined to the House Government policy on the banking sector. He has not attained unanimous or consistent support for those measures but his measures regarding the State guarantee and recapitalisation were the right decisions. He is now examining the position regarding risk management and how we deal with issues arising in our own system, which are not unique to us, but the question of impaired access etc. is an issue that must be examined carefully.
On the question of pay, the Irish Business and Employers Confederation has re-engaged with the Irish Congress of Trade Unions in regard to examining the current pay agreement agreed last year. Those discussions are bilateral between IBEC and the Irish Congress of Trade Unions and to what extent any progress will be made in that area is a matter for the parties directly concerned. For our part as a public sector employer, we have indicated our position on pay for this year and next year.
On the question of home repossession, we insist that the code of conduct drawn up by the Irish Banking Federation now be put on a statutory basis and include all providers of mortgage finance and not simply those who are members of that federation to ensure that the code of conduct, by being put on a statutory basis, will greatly assist in ensuring that precipitative action is not taken against those who fall into arrears in the immediate term.
Deputy Joan Burton: The Labour Party has already welcomed the Taoiseach’s rather belated decision to write to the unions inviting them to re-enter talks with Government. However, would the Taoiseach acknowledge that it is not acceptable for Government to arbitrarily breach an agreement that it had freely entered into only a few months earlier? In particular, does the Taoiseach understand the anger of many ordinary public servants — teachers, nurses and gardaí— in respect of the arbitrary way the pension levy was imposed at the 11th hour in the talks compared to what they see as the treatment of the chief executive of Irish Nationwide, Mr. Fingleton in terms of his extraordinary bonus, his even more extraordinary pension and the fact that one quarter of that pension, which could be as much as €5 million, will be paid to him entirely tax free? Also, we had the case of Mr. McCaughey and two other people who made very large capital profits on the sale of their business. They sent their wives, perfectly legitimately, offshore to Italy. Who would not like to go to San Remo in Italy for 183 days and immerse oneself in Italian culture? We would all like to spend 183 days in San Remo at the end of which, instead of having to pay the cost of a sojourn abroad in Italy, we would make a handy €5 million profit. Does the Taoiseach understand that ordinary civil servants who give fantastic service to this country are understandably angry that there is, as it were, one treatment for them, which is the imposition of a severe levy, and another for others? The details of the levy are unfair in that in some cases people on lower income are paying more levy than people at the top echelons, particularly the top administrators in the public service. Does the Taoiseach acknowledge that that is an enormous difficulty? Does he propose to address that when he goes back into talks?
Also, does the Taoiseach have a timeframe for when the talks will recommence? Is there a deadline? Is he having discussions about discussions? The unions have laid out their stall, indicating that they want a three-year moratorium on home repossessions and the use of mediation instead of the courts. They have also indicated that pension funds which might be suffering solvency problems should be examined in the context of the National Pensions Reserve Fund. The unions have pointed out that the National Pensions Reserve Fund is being allocated to rescuing the banks but the Government has no plan to address pension funds such as that in Waterford Crystal or in other companies which have gone into liquidation and which may have solvency difficulties.
Does the Taoiseach accept that the Government must give a strong commitment on fairness, where people in the public service, particularly teachers and nurses and the like, get a fair deal? We all know these are difficult times, but measures must be applied fairly. The Fingleton and McCaughey examples are like a bone in the throat for many public servants when they compare such treatment to their own.
The Taoiseach: The talks will proceed and their length will depend on the progress that can be made on the issues that arise. On the levy, there is a subjective perspective — people see it in a certain way. The wider context in which the pension levy had to be considered was the need for a €2 billion adjustment to be made as a credible response to the fiscal situation at that time. This was agreed with the social partners. I have not heard from anyone what area of services should have had money deducted if the levy was not to be imposed. If €2 billion was the figure to be obtained, the levy represented €1.4 billion and I have not heard from people on the opposite side where they feel it should have been borne if it was not to be borne there. Where in the services should it have been borne? Should it have been in the health area, for example?
The levy as introduced did not affect existing pensioners. It was a question of the public service employer looking at the financial situation and finding savings to meet the requirements of that situation. One would like to think it would not have been necessary to impose such a levy but it was necessary. I have not heard alternatives in terms of economies that were to be outlined that would make up for the difference, since €2 billion was the figure to be obtained.
The money that has been used to recapitalise the banks will get a coupon. There will be a return for that money, probably a higher return than is available from other avenues of investment at present. It is not a question of being used other than in a way to assist the economy. We need a functioning bank system if we are to have economic recovery and there is more work to be done in that respect. It is also important that the proposals formulated by Government are on the basis of a return being provided for the taxpayer and as an investment by Government in the same way as these pension funds have been invested elsewhere in the past. We have ensured that those funds are available for investment in Ireland in the banking system at a time when it is needed and when a return is being sought by Government on behalf the taxpayer in respect of them.
On the issues raised by the Deputy about individual cases, I introduced the change in the Finance Act 2006 to cover that situation. I also introduced changes in the pension system generally and I would point out there has been a return of the bonus that was paid to the chief executive of the Irish Nationwide Building Society by agreement.
Deputy Enda Kenny: In February the Taoiseach said he would listen attentively if there were proposals to tweak the pension levy that would bring the unions back on side. Has there been a tweaking of the levy? I welcome the unions’ response to the Government’s invitation to talks and their calling off of the day of national industrial action. However, the discussions must, to some extent, be meaningful. Will the Taoiseach tell the social partners he is in a position or intends to address the unfairness of the levy, which was a central issue to the unions, in the emergency budget?
The Dáil never gets any of the information discussed between the social partners and the Government, which is a shame. Last week, Fine Gael put together a detailed document, broadly welcomed by the Government Chief Whip, which outlined how we believe 100,000 jobs can be created in four years. It deals with the leveraging of money which would not pile more on the national debt and which could create hope and confidence for people. It also would be a help to the Government in the difficulties it faces in drafting a budget for next week. Will the Taoiseach respond to our invitation that he, and the Minister for Finance, Deputy Brian Lenihan, discuss Fine Gael’s proposals with myself and Deputy Bruton? Will he respond, in a positive and constructive fashion, if the Government wishes to adopt these proposals, which we consider well-costed, relevant and capable of creating 100,000 jobs?
The Taoiseach: While the Chief Whip welcomed Fine Gael’s proposals, they will have to be examined in detail. I do not wish to throw cold water on the initiative the Deputy took on behalf of his party but we would not necessarily agree with the approach. We are in an advanced stage of the budgetary process and it needs to be finalised over the next several days. These matters put in the public realm by Deputy Kenny can be debated on the floor of the House in due course when we can give our considered views on them.
There is nothing under discussion in social partnership that is not already in the public domain. The framework has been published, people are aware of its contents, the principles that inform it and the discussions taking place. The Government, as a public sector employer with a difficult financial situation with which to contend, can only examine proposals or submissions made by any of the parties to these discussions in the context of their overall contribution to maintaining the public finances in good order. There is very little room to manoeuvre in many of these areas, unless an alternative proposal is made which keeps the Government in a position in which it can obtain savings of the order required. I do not see how the basic proposal of the levy can be withdrawn. It is not possible with the financial situation we face. We will examine all proposals in good faith.
The Taoiseach: I am trying to explain the situation. Deputy McCormack opposed the levy by not voting for it. Now he is wondering if I will take it back. In his next breath he is telling me not to borrow any more and to save more money. He cannot have it every way. If he wants to play games, he can play games; he is good at it. It is about the only contribution he makes anyway.
What I have to do in terms of the finances is to say to people that we had to take up €2 billion at that time. This levy formed part of that and it resulted in a saving of €1.4 billion. We have heard no alternative from anyone else as to where €1.4 billion of that €2 billion was to be obtained. People talk around and about it. They do not agree with it but they cannot tell us where else we are supposed to find it. That is in this House. On the constructive proposals coming from anyone else, I will examine them, but I cannot give any commitment whatever, other than to say this Government will have to find savings of at least equal and probably greater measure in order to consider anything from there.
Deputy Caoimhghín Ó Caoláin: On the resumption of talks, which we have all welcomed, what measures or indications has the Taoiseach either taken or given to merit confidence within the trade union movement that the Government is serious about addressing the ten-point economic recovery plan put forward by the Irish Congress of Trade Unions? We all recognise that the facilitating legislation is now an Act in terms of the public service pension levy. Has the Taoiseach even considered suspending the implementation of that element of that particular piece of legislation in order to show good faith entering into these negotiations given that congress has very clearly stated that this is a matter that must be addressed substantively in the course of any resumed talks?
What steps has the Taoiseach taken to address what is now a growing resource within our economy, that is, the some 100,000 additional people out of work, many of whom are qualified in the professions, who are highly trained in their respective trade or in employment over many years and are now in receipt of jobseeker’s allowance? Surely those people are one of the greatest resources we have? What steps does the Government propose to take to reactivate that tremendous resource that currently is not making a direct contribution in terms of productivity and the overall take of the Exchequer? Can the Government seriously continue to ignore that huge well of skill——
Deputy Caoimhghín Ó Caoláin: ——that needs to be put to work in this country, given the opportunity of the dignity of work and the opportunity and the chance to make a direct contribution? Those are the questions that people are asking the Taoiseach to answer.
Deputy Seán Barrett: When we were talking about tweaking the pension levy I presume the Taoiseach’s criticism was not intended for this side of the House. He may not be aware that an amendment was tabled by the Fine Gael Party through Deputy Bruton, on which I spoke, seeking to tweak the pension levy in favour of the lower paid and that the loss of revenue would be made up by increasing the top rate by a small amount.
The criticism that has been levied about people putting forward proposals, taking away money that he is trying to raise, is unfair. It begs the question as to the role of an Opposition in a democracy — when people cannot accept good amendments, meant in good faith and tabled in response to a Government proposal, which it now appears the Government is prepared to discuss with bodies outside this House.
The Taoiseach: I wish to make it clear that we introduced a pension levy, with which the unions could not agree and so disengaged from the talks process. Re-engagement has only commenced. It was agreed at the time that we needed to raise €2 billion, €1.4 billion of which was from a pension levy.
The Taoiseach: I know that, but Deputy Ó Caoláin has suggested that I should defer its implementation. That seems to suggest to me that he has not yet grasped the seriousness of the position in regard to the public finances or the fact we are not in a position to defer its implementation. It is being implemented. If any proposal comes up for discussion, I will look at it and act in good faith with regard to any tweaking or whatever is suggested. I made that point when the measure was introduced. However, I want to make it clear that the €1.4 billion we required is a requirement that has not gone away. In fact, the requirement for further funds has emerged and that is the reason we have a supplementary budget to consider for next week. If people suggest the possibility of tweaking, they must also understand that, from the Government’s point of view, the overall financial position of the country and Government, in terms of the wider public sector pay bill, must also be addressed. We must not end up with a worse situation, without the imposition of the levy.
Deputy Barrett can table amendments if he wishes. We were in a position where we had to proceed with obtaining the €1.4 billion as we outlined. I am not aware that Fine Gael Members have been going around the country, saying they support the pension levy. If that is now their position and they just have a problem with some detail of it, that is fine, but that is not what I hear in my area.
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