Croke Park Agreement: Statements

Thursday, 9 February 2012

Seanad Éireann Debate
Vol. 213 No. 6

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Minister of State at the Department of Finance (Deputy Brian Hayes): Information on Brian Hayes  Zoom on Brian Hayes  I thank the House for the opportunity to speak on this important matter. I am aware that a number of Senators have been seeking a debate of this nature for some time. I am delighted to be here. The Croke Park agreement was put in place as part of a strategic response to an unprecedented economic crisis. Since 2008, this country has been struggling to bridge an enormous and unsustainable fiscal deficit. I do not intend to go into detail on the origins of this crisis and who is to blame for it. Opinions on such issues have been put on the record many times before. The significant gap between what we are spending as a nation and the revenues we are raising to pay for that spending needs to be closed. We are bound by our commitments to our international partners because we depend on them to pay our way, particularly between now and 2013. The Government’s overriding priority is for this country to regain full control of its own affairs as quickly as possible. To that end, we will continue to take difficult but necessary decisions to put our house in order. We understand that future economic growth will come from a solid and sustainable fiscal position. Fortunately, the 2011 Exchequer returns confirmed that we are comfortably meeting the deficit targets under the EU-IMF programme. The budget we introduced in December continues this sustainable path for our deficit.

Senator Jim Walsh: Information on Jim Walsh  Zoom on Jim Walsh  I apologise for interrupting the Minister of State, but I would like to know if a copy of his speech is available.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  We will get a copy of it as soon as possible. The difficulty is that at a time when we have to reduce costs significantly, the demands on public services are greater than ever. This creates a real challenge. We are delivering considerably more financial supports and services to our people with fewer resources. The cost of jobseekers’ payments is now more than three times the 2006 level. There are 500,000 more medical card holders than in 2007. Demographic changes mean there are more children to teach and more public pensions to be paid. This means we have to drive productivity. When we ask whether productivity has increased, the answer is “Yes”. Costs have come down and staff numbers have fallen, but services are still being delivered. We need to go further, however.

The Croke Park agreement was reached in 2010 between the Government, as employer, and the public services committee of the Irish Congress of Trade Unions. It is designed to support a reduction in payroll costs and the continued delivery and maintenance of high quality services against a backdrop of reducing resources and staff numbers. Its aim is to ensure the public service continues its contribution to the return of economic growth. When we consider the value of the agreement, it is important to recall that it was preceded by an escalating and damaging programme of industrial action by public servants in early 2010, which disrupted the provision of important services to the public. The agreement has been successful in delivering widespread industrial peace at a time of unparalleled difficulty and change. It has been endorsed by trade unions and staff associations across the public service. Staff are co-operating with its provisions around change and reform. It has provided the necessary conditions in which difficult decisions can be taken.

We need to reduce costs while meeting increased demand for front-line services. That means we have to fundamentally reform how public services are delivered. The Government set out an ambitious blueprint for change in the public service reform plan that it launched last November. The plan sets out a wide range of actions and commitments that will radically [441]reform structures, operations and processes across the public service. A key element of the plan is the planned reduction of 23,500 in the number of people employed in the public service between the end of 2010 and the end of 2015. In 2008, there were approximately 320,000 people working in the Irish public service, in its totality. By the end of 2015, that number will be just over 280,000. We envisage that between 2008 and 2015, the number of personnel across the public service will have reduced by approximately 37,500.

Senator Jim Walsh: Information on Jim Walsh  Zoom on Jim Walsh  In 1997, there were 220,000 people in the public service, including pensioners.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  That will be a substantial reduction over a seven-year period. I recently addressed our parliamentary colleagues in the Bundestag. They asked how we are managing to knock out between 12% and 14% of the public service while meeting ongoing demands. They wondered why more protests are not happening on our streets. We have managed this change without street protests, at a time of substantial difficulty, because the Croke Park agreement is in place. I contend that the agreement will play a key role in facilitating the delivery of the planned reduction in staff numbers. The co-operation and engagement of staff across the public service is vital if we are to do this successfully. The buy-in of staff at all levels is needed if the significant redeployment, restructuring, rationalising and reconfiguration that is needed is take place. We will not be able to do that, in a highly unionised and disciplined workforce, if the workers oppose us.

There appears to be a widespread misunderstanding about what the Croke Park agreement is and is not. It is important to emphasise that it is not a cost-saving plan in itself. Savings are made when the Government or the management of the public service decide to implement change to services and work practices, introduce new technology and agree that the number of public servants can or must be reduced. The agreement provides the consultation framework to manage changes in work practices and service delivery, boost productivity and improve efficiencies as the number of public servants decreases over time. The agreement is a mechanism for securing the active co-operation of staff for the changes that are needed to ensure the significant ongoing reduction in staff numbers does not have an adverse impact on services.

  12 o’clock

In many respects, the Croke Park agreement is the exact opposite of a partnership agreement. Rather than paying and hoping for the best, the deal makes it clear that if public servants do not help us to extract costs, improve productivity and implement reform, we will not be able to stand by our commitments to them. The unions understand what the agreement involves. The deal for the public services is twofold. We have agreed not to hack away at salaries again, to use an awful phrase, as long as two conditions are met. First, the personnel reductions that are set out in the plan need to be achieved. Second, the reform agenda has to be bought into and supported. I admit that the second aspect of the deal is more nebulous, but it has to be achieved in 2012. We have made it clear to the unions that if they work with us on the reform agenda, by keeping front-line services in place while totally altering the deployment of back-office staff, we will be able to meet our pay, numbers and pensions commitments. They have to buy into the concept of doing things in a totally different way as any business would have to do in these circumstances. I think the unions understand that it is a two-way process. They have managed to meet us in terms of the agreement we need.

We have to address the misperception about the contribution public servants have made towards our recovery. It is too often a case of “eaten bread is soon forgotten”. The reality is that the take-home pay of public servants has been significantly impacted since 2008. I refer to the following: the non-payment of the general round pay increases under the terms of the 2008 review of the Towards 2016 transitional agreement; the imposition of the pension-related [442]deduction of an average of almost 7% to all the earnings of all public servants in March 2009; and the reduction of between 5% and 20%, depending on salary level, in the rates of pay of public servants. We tend to forget that the average pay reduction suffered by a public servant has been 15%. The average reduction at the top has been 30%. Consideration also needs to be given to the universal social charge, PRSI and all the levies that have been put in place. We often forget that the real and substantial reductions which have occurred since 2008 have made a huge difference to the earning capacity and spending power of public servants, many of whom have substantial mortgages and are finding it difficult to make ends meet. We often hear about the glorious example of the elite at the top of the Irish public service, but are we fully aware that the great majority of public servants are having to cope on a daily basis with the significant reductions in their take-home pay and do more work in return for it?

That is what we and they face in the teeth of the economic crisis. The Croke Park agreement has provided the framework of co-operation and flexibility to enable us to extract all of these necessary savings from the Exchequer pay and pensions bill. The impact of all of these measures is that the total net cost of the public service pay bill will be reduced from 2008 to 2015 by approximately €3.5 billion, that is, 20% in seven years.

Senator Jim Walsh: Information on Jim Walsh  Zoom on Jim Walsh  Pay and pensions.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  The figure refers to pay. We will come to the Senator’s contribution in a moment. Pensions must be paid in any case. A 20% reduction in the pay bill is a staggering fall in the cost of employing public servants to deliver public services. It is unprecedented in the history of the State and I suggest it is a larger reduction than those achieved in the majority of private enterprises with significant staff costs.

I will now address what has been achieved under the Croke Park agreement since 2010. Members will be aware that an implementation body was established in July 2010 to drive implementation of the agreement. The body comprises of representatives from public service management and members of the public services committee of the Irish Congress of Trade Unions. It is chaired by Mr. P. J. Fitzpatrick, a retired senior official with a track record of delivering change in public service bodies.

The body’s key functions are to monitor and oversee progress on implementing the agreement, to cost and verify savings being achieved under the framework of the agreement and to deal with implementation issues that arise. To support its work the body has established a series of subgroups to oversee implementation within each sector. In addition, every sector and public service organisation is obliged to produce an action plan setting out in detail the specific change and reform measures to be taken forward under the Croke Park framework.

The agreement provides for a comprehensive review to be undertaken each year by the implementation body, focusing on assessing the sustainable savings achieved and progress on implementing the change and reform agenda in each sector. The first such review was carried out by the implementation body last May and culminated in the publication last June of the first annual progress report. In its report, the body found that sustainable savings in the Exchequer pay bill of €289 million had been achieved in the first year of the agreement, driven primarily by the decline in public service numbers but also by reduced overtime costs and other work practice changes. It also identified examples of some €308 million in non-pay savings through better use of resources, re-organisation of work and achievement of greater internal efficiencies.

Overall, the implementation body found that “solid and measurable progress” had been made. It concluded that in the period under review staff numbers had fallen substantially and [443]more quickly than previously estimated, services had been maintained and in some cases expanded and productivity had increased. Moreover, the cost of delivering public services had fallen in a sustainable way, primarily through reducing head count across the public service, enabling the State to meet its external economic and fiscal commitments; thousands of staff had been redeployed, including across functional boundaries. This helped to meet two challenges, namely, avoiding gaps in service as numbers reduced and changing the way in which public services are delivered to citizens and business. It also concluded that the reconfiguration of services had commenced in earnest.

Last November, the body produced an interim update which provided further evidence of ongoing progress on reducing the cost and size of the public service and reforms aimed at building a leaner, more integrated and streamlined public service. In terms of the progress to date public service staff numbers have fallen by more than 20,000 since 2008 and will fall further in the coming weeks as the 29 February deadline approaches. Despite this decline, services have by and large been maintained and in some cases improved. This is against the backdrop of increasing demands for services provided by the State. For example, more than 1 million medical card applications and reviews have been processed since July last year alone and volumes in the social welfare payments area have also increased considerably. Prisoner numbers have risen, as have the numbers of students in our universities and institutes of technology as staff numbers in these areas have fallen.

Redeployment is one of the key tools provided by the Croke Park agreement to help protect services as numbers fall. Under the agreement staff are being moved to areas of greatest need. For example, more than 1,000 staff of the community welfare service have been redeployed from the Health Service Executive to the Department of Social Protection. Further, in excess of 500 staff have been redeployed from Government Departments to the Department of Social Protection to meet increased demands on social welfare offices and services. Moreover, 700 staff from FÁS are in the process of being redeployed into the Department of Social Protection. In the education sector, new redeployment procedures for second level teachers were implemented in 2011, resulting in the elimination of a surplus of approximately 200 teachers, with a consequent full year saving of €10 million, and the redeployment of approximately 850 surplus primary school teachers has delivered further savings of €50 million. In the health sector, more than 750 staff were redeployed internally in the six months from April to September 2011 alone as services were reconfigured.

Measures are also being implemented under the agreement to increase productivity and efficiency. For example, additional working hours have been implemented in schools and universities. Parents will have noticed fewer in-house training days and so forth, which is a direct benefit of the agreement. New working arrangements are being implemented for radiographers and those working in medical laboratories in the health sector with accompanying savings in expenditure. Outmoded practices such as bank time and privilege days have been eliminated in the Civil Service.

Staff are also co-operating with efforts to rationalise and streamline the public service. For example, progress is being made on rationalising the number of vocational education committees from 33 to 16. In my Department the Office of Public Works is rationalising its office accommodation portfolio. In 2010, for instance, we surrendered 27,000 sq. m. of space, achieving savings of nearly €10 million. The Department of Agriculture, Food and the Marine, Teagasc, the Revenue Commissioners and the Courts Service are all engaged in rationalising their office space. A special delivery unit has been established to re-organise services in the health sector. Efficiency reviews of all prisons are continuing and are on track to deliver savings of €21 million. By late last year, the National Procurement Service, NPS, in the Office of Public Works had put in place 45 national framework agreements and contracts for high spend [444]requirements which are helping to significantly reduce the cost of purchasing goods and services across the public service.

Two years ago, the State spent €16.5 billion per annum on the procurement of goods and services. While I do not have the full figure for 2011, I expect that it will have declined to approximately €14.5 billion, achieving a saving of roughly €2 billion for the State. While we are spending less on capital, the State is also radically reducing expenditure by achieving greater efficiencies. I can point to contracts arranged by the National Procurement Service last year which secured savings of €21 million in the area of energy and €80 million in group print management costs. We are, therefore, spending less, securing better value for money and achieving greater efficiencies. I do not make any apologies for eliminating local procurers by centralising the procurement process. We are doing exactly what the private sector has been doing in the past decade in the teeth of crises such as that which we currently face. We will continue to achieve substantial savings. We need the support of Members in these endeavours because procurement will be an essential part of public sector reform if we are to spend less and obtain greater efficiencies in expenditure.

Steps have also been taken to integrate the public service. For example, legislation has been published for a new single pension scheme for all new entrants to the public service and new standardised annual leave arrangements have been introduced. New standardised sick leave arrangements will be progressed during 2012. This week I sought and received from the Government a mandate to introduce shared services. To cite an example of the shared services approach, 810 people are working on human resources in Departments. By the end of 2014, a shared human resources service will be in place which will employ approximately 350 people. This will provide us with the capacity to redeploy hundreds of staff who will not join the shared service.

We also have the power under the Croke Park agreement to demand that staff move up to 45 km., regardless of whether they wish to do so. That concession was given under the agreement and we can also redeploy staff within and between Departments. Ultimately, we will be able to redeploy people from local authorities to central government and to see it as one seamless service of public servants, all of whom are paid by the State and prepared to work with us in a totally reconfigured public service. These are the changes which are happening despite the fantastic headlines one reads in some Sunday newspapers every so often as well as the frightening analysis and so on. These are the actual changes which are happening, namely, shared services, redeployment, better procurement, efficiency savings, doing things better and introducing technology where people were previously in place. We are following that model and we are succeeding. We want the support of people as we attempt to do that.

The Government’s view is that the Croke Park agreement can be an important asset as we seek to put the economy on a more sustainable footing. The implementation body, to which I referred, under Mr. Fitzpatrick will conduct its next annual review of the agreement after Easter. It is critical that its report, which we expect by June, shows tangible evidence of further savings and reform being delivered.

Some weeks ago, I made a direct appeal to public sector unions to get on with the task of working with us on the sectoral plans which are now coming into our Department and which are being worked on. What are those sectoral plans about? They are about changes in rostering and effectively getting rid of some premium payments. If people worked on Saturdays and Sundays, they would get double time but that will change. That is the kind of approach of which we would like to see early delivery from the public sector unions this year. I think 2012 will be a critical year for the agreement, for public sector unions and to get some of these changes, which have been left to this year, over the line.

[445]I use this Chamber to appeal directly to the public service unions to continue to travel the road with us. We have already demonstrated significant achievements to date. More needs to be done and 2012 is the time when additional change must occur.

It is clear a solid start has been made under the Croke Park agreement but there is no room whatsoever for complacency. The economic and fiscal environment is volatile and uncertain and we must respond accordingly. The evolving economic environment means we need to go much further under the agreement while the task of reforming the public service — of ensuring that each part of this incredibly complex system is working efficiently for its customers — is never-ending.

In this regard, each sector has been asked by the implementation body to revise its action plans under the agreement in order that they support the new Government targets on public service numbers and payroll reductions and take account of relevant decisions arising from the recent comprehensive review of expenditure in 2012. These plans must be ambitious in their scope and timeframe for delivery and they must seek to exploit the full potential of the agreement.

The priority for the Government will be to use the framework provided by the agreement to: maximise the productivity of the existing staff through, for example, the announced sick leave reform, redeployment, new rostering arrangements for gardaí and nurses, for example, and better performance management; extract additional costs wherever possible, for example, through the Government’s comprehensive review of allowances and premia pay; and enable the ambitious public service reform programme, which we launched just before Christmas, to be fully implemented across the public service.

The Government expects hard won management agendas to be pursued by sectoral management even where that means some difficult negotiations. I must warn the House that some of the challenges facing both sides will push that forbearance to its limits. It may be that we will see a greater level of resistance than before. If that is case, those advocating it will be playing into the hands of those from various quarters calling for a renegotiated Croke Park agreement. Those calling for a renegotiation are very vague about what this means. They need to be explicit about the alternative strategy they put forward and be upfront about what that would mean for our teachers, gardaí, nurses and other ordinary public servants in terms of further cuts in pay and compulsory rather than voluntary redundancies. Importantly, they also must consider the potential wider impacts in terms of the inevitable severe disruption which would be caused by widespread industrial action across the public service. Those who argue for some alternative yet to be defined are effectively arguing for some kind of nuclear winter which this country would face by throwing the situation into crisis mode. I say that to people who speak freely about getting rid of the Croke Park agreement or about renegotiating it.

Senator Thomas Byrne: Information on Thomas Byrne  Zoom on Thomas Byrne  It is not this side.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  Let them spell out——

Senator Thomas Byrne: Information on Thomas Byrne  Zoom on Thomas Byrne  It is many of the Minister of State’s backbenchers.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  ——what the alternative is and be upfront with the people. What we have achieved to date — there is much more to be done — is a phenomenal achievement in the context of where this country is currently.

The truth is that the critics of the agreement on both sides do not appear to have any credible alternatives. Any alternatives must have regard to those working within the public service who are called on to deliver more services in difficult circumstances, in an environment where resources have never been so stretched and who are themselves taxpayers, mortgage holders [446]and participants in the wider economy. That said, the Government will fully support management acting to drive the reform agenda and extract unnecessary costs from the system.

There are no easy solutions to the challenges we face. We must bring public expenditure back to sustainable levels while maintaining front line services and delivering improvements where possible. That will not be easy, of course. The bottom line is that the Croke Park agreement has delivered to date. That has been demonstrated by the implementation body. It is critical that it continues to deliver. The agreement cannot, and was never intended to, be the solution to all of our problems but it can make an important contribution to ensuring stability and certainty, the necessary foundations for a return to growth.

We must have a more informed debate about all of these issues. There has been far too much populist, ill-informed comment about the public finances and the Croke Park agreement. This has had the effect of creating deep divisions between the private sector and those working in the public sector. That kind of false dichotomy, or false fight, between the public and private sectors does no one any good. It is a fundamental lie for those not so much in this House but outside it to perpetuate some kind of continuous battle between the public and the private sectors for their own selfish ends. We need people working together in a totally changed environment to get us through this enormous crisis. We need people working together, whether from the public sector or the private sector, to ensure this country has a future. That is what we intend to achieve and if the Croke Park agreement is part of the solution to that, then so be it.

Senator Thomas Byrne: Information on Thomas Byrne  Zoom on Thomas Byrne  Ba mhaith liom mo chomhbhrón a chur in iúl don Teachta Éamon Ó Cuív maidir lena mháthair a fuair bás, Emer Í Chuív, iníon dheireanach Éamon de Valera. Tá brón ar pháirtí Fhianna Fáil agus cuirim ár gcomhbhrón in iúl. I welcome the Minister of State and his robust defence of the Croke Park agreement and robust challenge to those involved in it to continue it to its logical conclusions and to further develop, promote and enhance the public service. However, he must acknowledge that much of the criticism of the Croke Park agreement is coming from his own party members in the Oireachtas, and I agree with him that it is very ill-informed in many cases.

Do these people calling for the abolition of the Croke Park agreement, in particular from Fine Gael, know what is in it because, in effect, what they are calling for are pay cuts, redundancies and a stop to progress in implementing reforms or some other way to force people to reform? That is what they are doing and I am not sure if they realise it. My impression is that some Members of the Oireachtas believe it applies to very senior civil servants and that if one abolishes the Croke Park agreement, one would be cutting the pay of those at the very top. That is not the reality. If the Croke Park agreement is abolished, every public servant would be hit.

It is important to acknowledge that the Croke Park agreement is a singular achievement of the last Fianna Fáil-led Government and the last Taoiseach, Brian Cowen, which the Minister of State did not do. The Croke Park agreement was not supported by the Labour Party when it was put in place because of its ties to the union movement. I am glad it is now on board. The Minister of State is right to continue to call for debate on it and to continue to challenge his own colleagues and the unions. While substantial progress has been made, more needs to be done in the local authority sector in particular. People who will be paying the €100 household charge will expect enhanced services from their local authorities. At the very least, they will expect to receive replies from local councils on whether something can be done. That will require further reform in local authorities and there is already substantial evidence of public demand for this type of reform, which the Croke Park agreement cannot deliver. At the [447]moment, the main challenge for the Minister and the Government is to ensure that front line services are protected and that the public will not be made to suffer reduced or impaired services unnecessarily, but that has not happened. Much of the planning for what is going on has been done on the hoof.

In my own HSE region of Dublin north-east, 20 public health nurses are retiring. Some 31 will be retiring in HSE west, which is very badly affected. Those retirements are having a huge effect on a much smaller population. In my area, however, public health nurses are under severe pressure. One public health nurse told me that she dealt with 30 births in one month last summer, on top of all her other duties. There is a huge demand and that is one aspect of the health service that will be hit due to lack of planning by the Government for this particular eventuality. In the Dublin north-east region alone, 740 HSE staff are retiring. The figure for Dublin mid-Leinster is 931, HSE south 1,038, and HSE west 1,106. Those retirements will have a big knock-on effect.

We have heard the Taoiseach talk of transition teams. I was in and out for the Minister of State’s speech, but I do not recall having heard the term “transition teams” in it. Is there a reason for that? Are there really such teams or, as was alleged in a newspaper during the week, was the Taoiseach just making things up as he went along? That was alleged by a serious political commentator. It is a serious allegation that needs to be responded to. If these transition teams are not in place, it is a very serious situation. It does not appear that the Minister of State has referred to them. The approach taken by various Ministers is that it will be all right on the night.

In addition, the approach to the Croke Park agreement taken by various Ministers has been unfortunate. The Minister for Health, Deputy James Reilly, has in effect laid the blame on nurses, asking them to change their work practices. In one case, wards were closed and subsequently nurses were told that the wards would not have closed if they had changed their work practices, although there was no awareness of that. I know one nurse who works any hours she is asked to do — nine to five, sleepovers, long days, overnights and six hour shifts. I am surprised that work practices are an issue because in many sectors nurses are working incredibly flexible hours. It is unfair of the Minister for Health to be talking in generalised terms, saying that nurses are all working long days to avoid doing a proper week’s work. Not all nurses are working long days. I know one nurse who this week is working a nine to five, an eight to four, a long day and a sleepover. That is a lot of work for a nurse, and many other nurses are working such shifts all over the country. It is not fair therefore to blame nurses for hospital ward closures after the fact. As the Minister of State suggested, we should instead continue to engage with them under the terms of the Croke Park agreement.

The issue of gardaí is a serious one. The Government made some progress following a call by the Garda Commissioner, Mr. Callinan, to fill vacancies. The Government filled some of them, but not all. It was unfortunate, however, that the Garda Commissioner had to put pressure on the Government because he should not have to do so. It shows a failure by the Government to deal with this issue and plan for changes that are happening now. There is no point in blaming Fianna Fáil because we stood over the Croke Park agreement as it was being negotiated, endorsed it and set it as our policy. The Government has now had a year to plan for the changes that have been made as a result of these early retirements arising from overall public sector reductions. I accept that the Minister of State has not blamed Fianna Fáil.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  We have moved on.

Senator Thomas Byrne: Information on Thomas Byrne  Zoom on Thomas Byrne  They have not because in the other House this morning the Minister for Social Protection, Deputy Joan Burton, continually blamed Fianna Fáil. The reality, [448]however, is that over the last year the Government has had time to plan for these changes and deal with them. I welcome the fact that both Government parties have now taken over ownership of the Croke Park agreement because it was a Fianna Fáil policy. Everything we did was supposed to be wrong and we were accused of ruining the country, but this is one thing the Government is embracing as best it can.

A Senator:  They got us where we are.

Senator Thomas Byrne: Information on Thomas Byrne  Zoom on Thomas Byrne  It is no wonder that some Government backbenchers are opposed to it because they probably think it is part of the country’s ruination. The Government must take this matter in hand and take responsibility for cuts in services and the lack of strategic planning that is evident from what has happened recently. It is unacceptable to make policies on the hoof. We need more of these debates to keep pressure on the Government. I did not mention savings because that is not a clear-cut issue when one takes pensions into account. Nonetheless the troika acknowledged that it had not been dealt with.

We wish the Government well in its continued pursuance of this policy, but a lot more needs to be done.

Senator Tom Sheahan: Information on Tom Sheahan  Zoom on Tom Sheahan  I will start by quoting from a speech that the Minister of State, Deputy Brian Hayes, gave himself, as follows:

As regards our international funders, we will call them our liquidators or receivers because the country is in receivership.

Senator Thomas Byrne: Information on Thomas Byrne  Zoom on Thomas Byrne  That is stark language.

Senator Tom Sheahan: Information on Tom Sheahan  Zoom on Tom Sheahan  I am sceptical about the Croke Park agreement. Senator Byrne asked for alternatives and said that people of my opinion were creating a crisis mode. I have a serious problem with the scenario of jobs for life. I have seen people in the public sector who are not up to the job. They may suffer from burn-out or just not be capable of carrying out a job out of work, yet it is impossible to get rid of them. It does not lie well with me. In a recent speech, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, said: “The Government reaffirms its commitment under the Croke Park agreement on pay rates and job security for serving public servants.” Therefore job security will not be up for question.

Recently, I spoke to a senior manager in the public sector who said that if he was allowed to remove the people he wanted to remove from his staff, he could reduce numbers by 20% and increase productivity. That is a very strong and telling statement.

Public sector payroll savings this year will be up to €400 million and will reach €3.5 billion by 2015, which is approximately 20%. The Croke Park agreement is not for short-term gain, however, and as has been stated many times we are in receivership. I do not know of any receiver or liquidator who gives five-year plans for receivership. This year, the Croke Park agreement will cost €600 million in lump sum payments and up to €1 billion with pensions, to [449]achieve staff reductions by the end of this month. While Croke Park is a long-term plan, the country is in crisis now. If over 65,000 public sector workers took a 5% pay reduction it would be immediate and would achieve what needs to be done much more quickly. I accept that there would be pain but I have not mentioned increments. We must wake up and smell the coffee in respect of how we are seen abroad. In this country, members of the public sector get half an hour on Friday to cash a cheque yet they are paid by electronic funds transfer. Let us get a grip. I am led to believe that was not up for renegotiation in the Croke Park agreement.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  That is gone.

Senator Tom Sheahan: Information on Tom Sheahan  Zoom on Tom Sheahan  Some ground has been made up. The Minister of State asked for an alternative idea and I referred to a 5% pay cut on salaries over €65,000. Through better procurement, the Minister of State has made savings but there is more fat and room for more savings. I suggest that officials from the Department of Finance could go into the credit unions as special managers and carry out the work being carried out by private firms at €423 an hour. It could be done by officials from the Department rather than private companies that are part of the big consortiums. I would like to see progress made on this.

Senator Mary Ann O’Brien: Information on Mary Ann O'Brien  Zoom on Mary Ann O'Brien  I welcome the Minister of State and thank him for his in-depth presentation. I refer to this issue in passing during other debates in this Chamber. I usually bring it up in the context of some cut that is adversely affecting individuals and groups in the State. I welcome the opportunity to discuss specifically the Croke Park agreement. As a business owner in the private sector, I am fully aware of the need to have peaceful and positive industrial relations in order to run an efficient business. In this regard, it amazes me that we do not see trade unions protesting outside the gates of this complex on a regular basis in light of the economic situation in which we find ourselves. This leads me to question why the unions are so timid in their objection to current policies. I can only draw the conclusion that the Croke Park agreement favours and protects the best interests of the unions and they do not wish to rock the boat for fear of less favourable conditions for their membership. As a country, can we afford the Croke Park agreement any longer?

We are all in agreement that the public sector needs major reforms urgently. It is my belief that the Croke Park agreement is not the tool to achieve meaningful and real reform of our public service. With each passing day, we see mounting problems within the State-provided services. Yesterday evening I met someone working in this House as an intern. Her sister has a child in Walkinstown with Prader-Willi syndrome, which is the most sad and awful syndrome with which any family could be struck. That family has two wonderful social workers; one gives wonderful advice on nutrition and how to guide the baby to achieve a good result, the other is a social worker laying out a plan. Both are taking redundancy packages and the Minister of State has heard countless such cases. It is a disgrace and the family is left wondering how it will cope.

The two main areas where the Croke Park agreement falls down is the flexibility the agreement permits and the speed at which reforms are introduced. What is required is a private sector ideology in our public services to deliver efficient and timely services despite shrinking budgets. On 29 February, 7,000 public servants will retire. While it is clear that we need to reduce drastically the number employed as part of the reform, one must question the voluntary scheme. What genius came up with the date of 29 February? Imagine that we are running a school. I do not have to imagine because I have a boy doing his leaving certificate. Imagine the administration that it will take to make teachers redundant on 29 February and rehire them, I hope at the same cost, to keep those children taught properly to achieve their examin[450]ation results in June. If we were running a business like we were running a school, it would spell disaster.

We hear Government representatives state that this voluntary package is the brainchild of the past Government and that it inherited it. This may be true but the current Government has been in power for almost a year and is free to make changes at any time to the terms and conditions but it has chosen not to do so. The flaws are numerous. That there is no compulsory element in this round of redundancies is ludicrous. At the end of the month we will lose hundreds of highly skilled people in specialised areas, with no way of replacing them without fresh recruitment, which involves additional outlay. This could have been avoided if redundancies were targeted at areas within the public service where there is excess.

The Minister of State said he hears all the time about the public sector and the private sector. Taking a small business like mine, with 100 people, in 2008 the world economy collapsed and world currencies went crazy. I had to make a 25% cut in my workforce. If I had suggested voluntary redundancies of 25% of the workforce, Lily O’Brien’s would have been gone. I do not know how the public sector is coping. Some of the people who have been with me for 12 and 14 years, such as my financial controller and my CEO, might have been the ones to come forward. One cannot run a business like that. I fail to understand the thinking behind it.

On 7 December, in The Irish Times, the Minister of State stated that the Government is expected to pay out between €250 million and €300 million in increments in the year ahead for public service staff who are due to move up a further point in their pay scales. The Minister of State said that the issue of increments for public service may well have to be revisited. I would love to work in the public service because my job is safe for life and my increments are there. I hope the Minister of State will revisit it.

Senator Aideen Hayden: Information on Aideen Hayden  Zoom on Aideen Hayden  I propose to share time with Senator Moloney. I welcome the Minister of State. Senator Thomas Byrne never disappoints. I remind him that 16 years of Fianna Fáil in government preceded today’s situation. With regard to Senator Mary Ann O’Brien’s contribution, I remind her that the date set, 29 February, was set by the previous Administration. I also noted the comments of Senator Byrne with regard to the Labour Party. Is it some power crazed thing in Fianna Fáil that it is not only content with 16 years in government but also tied the hands of the next Government? I am proud that the Labour Party supports the Croke Park agreement.

I am disturbed at much of what I read and hear in the media. It is not being said that we have an admirable public service in this country and an admirable public service ethos. I am not reading about all of the occasions when public servants are at the front of the people facing the dole, put in extra hours and deal with distressed and upset people. Day in and day out, they do a public service for this country but unfortunately I have a list of media content in which that is not being emphasised.

The Minister of State referred to the huge amount of us and them, division between those people with safe, secure, highly paid jobs on the one hand and everyone else living in deep uncertainty. That is not true and it is a point to which I will return. I resent the media implication that there is a major division between the Labour Party and the Fine Gael Party on the Croke Park agreement because it is not true.

On under-performance in the public service, I want to refer to the PMDS system. There was a review on its effectiveness in 2010. It has been agreed and acknowledged that it is a system that needs to work better to strengthen performance management. There is also a robust system in place to examine effectiveness and efficiencies within the public service. It is not true to say [451]that people sit in the public service with jobs for life and their effectiveness is never subject to review.

We have the agreement because it makes sense. We are not Greece or Ireland in the 1980s. I lived through Ireland in the 1980s. I was doing my leaving certificate at the time and had to study by candlelight. Is that what people in this country want? We have a system whereby we have an agreement with our public servants. Sacrifices have been made on both sides, including by public servants. As the Minister of State said, very significant cuts have been suffered by our public servants.

The issue of increments is very contentious. A number of people in the media have painted this to be the big bogey of the Croke Park agreement. I do not know whether a lot of people know that those who would be most impacted by the failure to pay increments are the lowest paid public servants in the country, not the highly paid public servants people are so keen to highlight in the media. Increments affect those who earn between €23,000 and €37,000 over a period of 17 years. New entrants at that grade have had their salaries reduced to €20,000 up to €33,000. I do not know how many staff in Lily O’Briens are earning that kind of money.

A lot of women are the most poorly paid in the Irish Civil Service and public service. In terms of increments, there will be a review of the agreement in April 2012. The lower paid grades of the public service have suffered most from the agreement. I ask that we return to the agreement and see how we can rebalance its effects on lower paid public servants.

Senator Marie Moloney: Information on Marie Moloney  Zoom on Marie Moloney  The Minister of State took the wind out of my sails today because he gave a very extensive report on the working of the Croke Park agreement. I had researched it but I will not repeat what he said.

Many people have said they want to break the agreement. Have they really thought that out in terms of what it would do to the country? The public sector has the potential to bring this country to a standstill. We would have strikes and people would work to rule. Those who called for the agreement to be broken would tell us it is our fault if that was happening and we should do something about it.

We have stopped strikes and people working to rule through the introduction of the Croke Park agreement. We did not enter into it lightly. Negotiations took place between many parties, including trade unions and the Government. It was not done overnight, it took a long time to negotiate. We are now getting co-operation, flexibility and mobility from public sector workers all over the country.

The problem is that the media will always portray what it wants to and put its own spin on things. Will it look at what is going on in local authorities? Refuse workers have moved onto the roads painlessly. Things are happening quietly and negotiations are taking place behind the scenes. In the health sector cleaners, porters and domestic staff have all been redeployed to other jobs. Such changes are happening painlessly and without an uproar.

The education sector is of most concern. I implore people not to break the agreement but to keep it in place. It is working. As people say, why fix something that is not broken.

Senator Feargal Quinn: Information on Fergal Quinn  Zoom on Fergal Quinn  The Acting Chairman is a disciplinarian and is keeping us on our toes.

I found this debate very interesting. I like to hear a Minister of State who is in control of his or her brief, knows what he or she is talking about and is determined to put it across. I do not think the Minister of State is right in everything he said, but he has asked those of us who are critical to be more explicit. Senator Mary Ann O’Brien was explicit in what she said.

[452]I have argued that we should be running the country more like a business. If a business is in trouble, it renegotiates with suppliers in order to survive. The Croke Park agreement does not go far enough in this respect. It does not seem to be working and even if it was it would be very difficult to argue that we can afford it because things have changed since it was put into operation.

Now that the Central Bank has cut its forecast we are borrowing from month to month to keep afloat, as the Minister of State said. How are we still able to afford incremental pay rises? According to the CSO figures from last November, the growing pay gap means earnings for public servants are almost €300 a week higher than those in private companies. Weekly earnings in the public sector now average €906 compared with €617 in the private sector. Those figures are explicit.

A county manager who spoke to RTE said he tried to reduce the leave of local authority staff on the basis that “We felt that was consistent with Croke Park” and did not involve compulsory redundancies or reducing pay. He then went on to say: “It eventually emerged that there was an increase in leave for outdoor staff, no change in leave for the bulk of staff, modest reductions at the very top and, perversely, for those staff for whom the State has decided their leave is too high they are to be compensated for the reduction in their leave by giving them more leave.”

He said there was an attempt to raise hours from a modest 33.25 to just 35, which had been ruled out under Croke Park. He said they could not advance any reductions in premium pay and the view was that premium pay for staff, such as for overtime and weekend work, rendered them completely uncompetitive. He said it has been quite frustrating addressing the reform agenda. He was actively involved in this issue. It is a damning appraisal from someone on the inside. How is this a good deal for the consumer and taxpayer?

In addition, it seems that the coalition’s public stance on the agreement may need to change. A survey of 520 city and county councillors, of whom 317 were from Fine Gael or the Labour Party, shows a desire for change. In all, 65% or 206 of the Government parties’ councillors said the deal should be renegotiated. The majority of respondents also said the payout of an annual €250 million in bonuses or increments to public sector workers should also be stopped. A lot of the public may feel the same.

Jürgen Stark was a top German official in the ECB. He argued public sector pay in Ireland is too high by eurozone standards and should be cut to help restore order to the country’s public finances. He said that by implementing changes the Irish Government has the chance to surprise the market positively. In this respect, it is interesting to study Lithuania. I have become a fan of its economic approach. It had reached a new low and was in a much worse situation than Ireland when the IMF was called in.

It has come back up very quickly. It implemented tough measures, such as a reduction in top level public sector salaries of more than 20%. That, along with other cuts, has seen it become one of Europe’s success stories, just as Ireland, it is to be hoped, will be. It is one of the fastest growing economies in Europe with an annualised growth rate of 6.6%. When one compares that with Ireland, one realises how well it is doing. We must take heed of how targeted cuts can result in significant benefits.

We must tackle inefficiencies and consider unpopular measures like cutting public sector salaries. Lithuania has taken the hard medicine and many believe it is on the road to recovery. Its growth rate, at least, would point to this. Too often politicians are worried about re-election and do not want to touch taboo subjects. The Government must show real courage to further restore our competitiveness and fuel our recovery.

[453]It is so interesting to listen to Senator Mary Ann O’Brien. She talks about running a business and says when things change in the outside world, the person running the business must also change. The Minister of State is running this business and things have changed. The expected growth rates have not materialised and on that basis he must go back to his employees and say we have a challenge on our hands. A good manager is able to convince the employees that they must make changes. There are enough examples in the Croke Park agreement that would allow him to say things have changed, we must also change and it would be to all our benefit to do that.

Senator Hayden said we must renegotiate because the lower paid are not paid well enough. That may be the case but we must renegotiate and see if there is a better deal. We do not want to end up in the same situation as Greece and we could do that if we do this wrong. A good manager, a good disciplinarian should be able to convince his employees that we must make certain changes in all our interests.

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  There is no need to be a disciplinarian with the Senator.

Senator David Cullinane: Information on David Cullinane  Zoom on David Cullinane  I welcome the Minister of State to the House and welcome the tone of his speech. He set out a good context for today’s debate and I welcome that.

I also wish to dispel the notion that running public services is the same as running income generating businesses; it is not. Of course there must be efficiencies but the health service, the Garda Síochána and schools are not income generating businesses and there is a world of difference between running a business and running a school or a hospital.

Senator O’Brien made the point that trade unions represent their members and protect their interests. Of course they do; their members have taken a significant pay cut of 15% across the board in recent years. Any more cuts to the disposable income of low to middle income public sector workers will have a dampening effect on our domestic economy so it makes economic sense not to hit low to middle income workers in either the public or private sector at this point.

The Minister of State said there is a need to embrace further changes and for Croke Park to be driven on. I met some of the unions in recent days and the reality is that many of these changes are being embraced by the workers and the unions, who are pushing for these reforms, but much of the resistance comes from management and the Minister of State should reflect on that. The evidence exists to suggest redeployment, rostering, secondment, creating efficiencies and increased productivity are all happening. There have been savings of €280 million in payroll costs and €308 million in non-payroll costs.

People mentioned the media and I want to read one quotation, which spells out where much of the opposition to the Croke Park agreement is coming from. On 27 November 2011, Brendan O’Connor wrote in the Sunday Independent, and I know we should not take Brendan too seriously:

That flies in the face of the reality faced by public sector workers. It is important in this debate that we pay tribute to those public sector workers on the front line providing services and doing more for less up and down the country, in our schools, hospitals and local authorities. This debate should be about protecting public services, citizens’ rights and those who work in [454]our public services who are doing a tremendous job above and beyond the call of duty in the difficult circumstances they face.

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  We are now going to the question period where Senators have one minute to ask a question. I ask the Minister of State to reply at 1.05 p.m.

Senator Tony Mulcahy: Information on Tony Mulcahy  Zoom on Tony Mulcahy  I agree with Senator Cullinane; public and civil servants are a much-maligned group of workers. Their morale is low but they all show up for work every day and put their shoulders to the wheel. They are down quite an amount of money in the last few months. There are, however, areas that must be attacked. I take issue with Senator Byrne's remarks. Unfortunately I must use the accident and emergency services on a regular basis and they are disorganised. It is the front line staff, not the Minister for Health. They are lovely people, they are always very good to us when we are there but there are organisational issues that must be sorted out in accident and emergency departments and we must get on with that job.

I welcome the Minister of State’s agreement that we must work within the framework but selected, targeted redundancies must be an issue at some stage and some incremental pay issues must be addressed. The grade eight structures within the HSE were arrived at under the stewardship of the current leader of Fianna Fáil and Mary Harney, where we came from 18 grade eight employees to over 1,000 such employees. Those are the areas we must examine. I do not know if that can be reversed but that is the cause of many of the pay issues we now have. The HSE was a huge transgressor in that respect.

Senator Susan O’Keeffe: Information on Susan O'Keeffe  Zoom on Susan O'Keeffe  I thank the Minister of State. I commend the cancellation of the decentralisation programme, which has resulted in some savings. Will that ultimately lead to a better regional approach to deployment? Given all the criticism vented in the House today about how the media has handled this debate, would the Minister of State’s office run a proper briefing, perhaps over a full day, where some of the achievements of those trying to implement the Croke Park agreement could be outlined? The Minister of State could give journalists the information on a more intimate basis. Much of the misunderstanding arises from a lack of information.

The Minister of State himself said he could see forbearance will be pushed to the limit. Perhaps he could tell us what he will do to reduce that. He warned about what he sees coming down the tracks. The statement, if left hanging, could produce even more of these problems with the media.

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  I will break with protocol where people who made statements usually do not get back in but since we have time, I will allow Senator Quinn back in.

Senator Feargal Quinn: Information on Fergal Quinn  Zoom on Fergal Quinn  I am not sure what freedom the Minister of State has to negotiate but do we need four county managers, each earning between €350,000 and €400,000 per year, to look after a population of 1 million people in Dublin? We should look at higher earners rather than those on lower wages. Senator Hayden made a strong argument for that and I understand it. Do we need that and do we have the freedom to negotiate in that area?

Senator Tom Sheahan: Information on Tom Sheahan  Zoom on Tom Sheahan  In an interview in the Irish Independent in December, the Minister for Public Expenditure and Reform was “critical of a culture of inertia and lack of ambition among some higher grade public sector workers that was hampering the determination of younger lower grade civil servants to change the public sector ethos.” In the same article, he also identified a degree of inertia at middle management level. Both higher level and middle [455]management level inertia and lack of ambition is a problem so has any progress been made there or is there still resistance to change?

Senator Thomas Byrne: Information on Thomas Byrne  Zoom on Thomas Byrne  I would like the Minister of State to describe the transition teams that were set up to look at change. When were they set up, who are they and what is their role?

Senator Marie Moloney: Information on Marie Moloney  Zoom on Marie Moloney  My question is similar. This morning the news broke in Kerry that 15 care workers and nurses are to leave St. John of God’s in Tralee and St. Mary of the Angels in Beaufort.

Just as the Minister for Education and Skills is to leave teachers in examination classes, will staff be employed in the interim to keep that facility and similar ones open? We must get approximately 15 staff for it as quickly as possible. Will the Minister allow for the re-employment of the staff?

  1 o’clock

Senator David Cullinane: Information on David Cullinane  Zoom on David Cullinane  Does the Minister agree that a pay cut averaging 6.5% from 2010, an additional 15% pay cut for new entrants to teaching, an average cut of 7.5% through the public service pension levy, the non-payment of the 2.5% due on 1 June 2010 under Towards 2016, a 4% cut in pensions for retired teachers and an additional 33 hours of non-teaching work per year show exactly the true pain that is felt in the public sector? These cuts are in education but such cuts are also being made in the health service, local authorities, the Garda and right across the board. Does the Minister of State agree that the pain is being felt by public sector workers? Like Senator Quinn, I believe the 6,500 people who earn over €100,000 per year in the public sector should take a pay cut. Is the Minister of State minded to consider this?

Senator Mary Ann O’Brien: Information on Mary Ann O'Brien  Zoom on Mary Ann O'Brien  With regard to those earning under €40,000, there should be no discussion on cutting increments. I agree that there have been enough pay cuts. What will be the yearly pension contribution bill to the State as opposed to the yearly wage bill for the 7,700 public servants who are leaving at the end of February?

Senator Aideen Hayden: Information on Aideen Hayden  Zoom on Aideen Hayden  Some 53% of all civil servants are in the lower grades. One of the concerns that arose regarding the Education (Amendment) Bill was the re-employment of retired teachers and health professionals. We do not want to see them coming out one door and in another, particularly when there are large numbers of unemployed young teachers and health professionals. How do we protect against that?

Caution should be exercised with regard to the substantial cancellation of increments for teachers with additional qualifications because international research demonstrates that the implications for the teaching system generally of not incentivising teachers to obtain higher qualifications can be very damaging to the education sector. Would the Minister reconsider this move on the basis that reversing it would not be particularly costly?

Senator Jim Walsh: Information on Jim Walsh  Zoom on Jim Walsh  Does the Minister of State agree that the reduction of numbers has very little to do with the Croke Park agreement because it was already in train? Does he agree that unless there is a radical reduction in the cost of public service pay and pensions, we will find it impossible to extricate ourselves from our financial difficulty? In 2000, public service pay and pensions cost €8.6 billion. Ten years later, the gross cost was €18.6 billion, which is not sustainable. Does the Minister of State agree that the €3.5 billion referred to as a saving will effectively be halved because of the pensions worth €1.75 billion? Does he agree the tax foregone on the other half will reduce the figure to €850 million? The saving is, therefore, only 25%.

[456]Does the Minister of State agree with Senator Sheahan that numbers could be reduced by 20% — this is exactly the figure I got from senior and middle management — if only they could remove those who are not performing, and that this would improve productivity? This is surely what we should be doing in the current crisis rather than imposing cuts on people with disabilities and on social welfare.

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  That is a statement, not a question.

Senator Jim Walsh: Information on Jim Walsh  Zoom on Jim Walsh  The question I am asking the Minister of State——

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  The Senator is 40 seconds over time.

Senator Jim Walsh: Information on Jim Walsh  Zoom on Jim Walsh  Does he agree that the imposition of the cuts is wrong when we are re-employing people who have gone out on one and a half times their pay——

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  I ask the Senator to respect the Chair.

Senator Jim Walsh: Information on Jim Walsh  Zoom on Jim Walsh  They are actually coming back with their pension and their salaries. That is unfair in the current climate.

Senator Marie Moloney: Information on Marie Moloney  Zoom on Marie Moloney  The Senator was not party to the Croke Park agreement.

Senator Jim Walsh: Information on Jim Walsh  Zoom on Jim Walsh  I disagreed with the Croke Park agreement from the day it was introduced. Fine Gael agreed with me at the time and now it disagrees with me.

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  I call the Minister of State, who must swim through all the paperwork.

Minister of State at the Department of Finance (Deputy Brian Hayes): Information on Brian Hayes  Zoom on Brian Hayes  I will do my best. This has been a most interesting and useful debate, regardless on one’s perspective on the Croke Park agreement. It has been a very useful exercise and I genuinely thank all the contributors.

The public sector is not big by international standards. Those in many European countries are much bigger. We are engaging in very substantial change. Approximately 12% in total will be taken out. I concede that, in the good years, public pay was ramped up at an unsustainable level. In the period 2000 to 2010, public pay virtually doubled. In Germany, it rose by approximately 15%, thereby demonstrating the problem. There were ridiculous benchmarking exercises where double-digit growth in public sector pay was allowed allegedly to deal with the disparity in wages. We are dealing with that fundamental mistake, a political mistake in which unions were bought off and on foot of which no substantial efficiencies were delivered. A merry-go-round was established which is now at an end. We must now move on from that appalling political legacy and do so in partnership.

Senator O’Brien and others asked me what occurs if there is no money. If it is not available, it is not available and we will have to change accordingly. I remarked earlier this year that the question of increments is fundamental. I said quite bluntly to the public sector unions, as did other Ministers, that we want genuine buy-in and support for the very radical sectoral plans that we want to get over the line in the early period of 2012. These plans will make a difference regarding rostering, premium payments and a host of other areas. This is the kind of buy-in we need.

I was asked about the transitional teams in health, education, local government, justice, defence and the Civil Service. Since the autumn, we have been working on these teams. They [457]have been putting together plans because they have recognised that, between 1 January and the end of February this year, very substantial numbers of people will leave the public sector. There are many opportunities for young people who will suddenly be employed in the public sector. Many young teachers will get jobs this year who would not get them otherwise because staff in their early 60s and late 50s have decided to leave early. The young teachers will be entering the public service on a different pay scale and will be replacing staff at the top of their pay scales. This will result in substantial savings and a considerable opportunity for schools. Many highly educated and motivated staff will be coming into the system.

We will be getting rid of approximately 9,000 staff but, because of the gaps in the front line, approximately 3,000 additional appointments will be made in specialist areas. Most of the appointees will be young. They will be getting opportunities and filling in gaps, and they will have a motivational effect. The transition teams are in place.

Senator Thomas Byrne: Information on Thomas Byrne  Zoom on Thomas Byrne  That is not what the Taoiseach said yesterday; he said it would be next Tuesday.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  We can have a game of semantics or a genuine debate on what is happening. What is happening is that since last autumn, through the Department of Public Expenditure and Reform and the sectoral teams, we have been working on plans. The Minister, Deputy Howlin, will be submitting a report to the Cabinet next week setting out their extent. The plan in question was initiated by the former Government, which set the date. Effectively, public servants were allowed to make a decision up to a very late date and, consequently, the number leaving was not actually clear. We must deal with this. We pay managers a lot of money to manage. It is not the task of politicians in Leinster House to micro-manage sections of the public service across the country. These people are paid good money to manage and it is their task to do so. We see very good examples of such management in hospitals. Speakers mentioned the accident and emergency wards. Why is it that we have very good practices in some of those wards but not in others? The reason is good managers who decide to take responsibility, who put it up to the staff and lead. It is not a deficiency of front-line staff.

If I am honest, what I have seen is a lack of management throughout the public sector. There are probably too many managers. One of the great aspects of social partnership was the explosion of the managerial class within the public sector, reporting to nobody, taking no responsibility, having no aspect of project management. That is what we must weed out and thereby ensure that if people are paid well to manage they will manage the nurses, doctors, teachers and those who operate within the local government system. That is crucial.

I stated that the increments issue might come up again if we do not get reforms over the line. I have made that very clear and I stand by that position. To take up from what Senator O’Keeffe observed, that is the sting in the tail. We have an international agreement and this is part of the memorandum of understanding, as Senator Sheahan noted. We have a deal here with our external funders. This could all be on the agenda again if we do not have the money. If a new external shock were to come into the foreground it would produce a response. We hope that does not happen because we want to work with the public sector in making sure we get these changes.

However, I cannot predict the future. I do not know what will happen in six weeks, never mind six months, given the scale of the international crisis we face. We have managed it pretty well so far but there will be difficulties. Let us be blunt. Taking 40,000 people out of the system is a dirty way of doing what is required but I am not convinced there is another way to do it.

I am not convinced that one can micro-manage a system. I appreciate what Senator Mary Ann O’Brien said because she employs 100 people. However, it is slightly more complex in the [458]public sector, which has 300,000 people and 150 grades, where there are people at professional levels and others coming into service on a contract basis, where people provide services for others who are utterly stressed because they cannot find work in this country. It is a slightly different set-up.

There may have been a view that we could achieve all this by selectively moving personnel and thereby reduce numbers by 40,000. Such a view is not genuinely honest about how the world works. What has happened has been very difficult. I heard the comments of Eddie Molloy, a much respected expert in the area of public administration and he said it was dirty but there was no other way of doing it.

As for those who have been putting forward alternatives — how real are they? We will see a radically different public service but the whole objective is to keep the front line in place while altering the back office staff. There will be fundamental change for people as we do that but we have the capacity within the Croke Park agreement to do it.

I want to nail this issue——

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  The Minister of State has two minutes.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  I apologise. I wish to say this because it is important for colleagues to hear it. In 2008 the total public sector pay and pension bill was just short of €20 billion, with €17 billion in pay and €2.3 billion on pensions. By 2015 under our estimation, the pay bill will have gone down from €17 billion to €14 billion while the pensions bill will have gone up from €2.3 billion to €3 billion. When one factors in the pension levy on top of that there are savings of €3.6 billion. In 2008, therefore, we were paying €2.3 billion on pensions while by 2015 we will be paying €3 billion. The increase is of €700 million but the actual pay reduction will go down from €17 billion to €14.3 billion, in a seven year period and in a circumstance where inflation is back in the economy. Is there any business, the Senator’s included, which could produce that, when the country has been put into receivership?

That is what the Croke Park agreement is and people need to understand that. They should not mind the inflated headlines they see in the newspapers. Those are the facts of the situation.

Senator Maurice Cummins: Information on Maurice Cummins  Zoom on Maurice Cummins  If the Minister of State can give us five extra minutes in order to answer questions, I am prepared to amend the Order of Business.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  I suspect people are listening to me. That is the problem.

Acting Chairman (Senator Pat O’Neill): Information on Pat O'Neill  Zoom on Pat O'Neill  Is it agreed that the Minister of State should have five extra minutes? Agreed.

Deputy Brian Hayes: Information on Brian Hayes  Zoom on Brian Hayes  I thank the Leader for the extra time. The point was not picked up in the speeches of the Minister for Public Expenditure and Reform, Deputy Howlin, and the Minister for Finance, Deputy Noonan, in the Dáil that our task in 2012 and 2013 is to reduce overtime payments. I believe the figure is 10% for those years. It is a little known fact. People will be working longer and harder because of the extra case loads and there will be fewer colleagues around to help but they will not receive the same overtime pay as they did in the past. It is not only a reduction in core pay we have seen from 2008 to 2012 but also a reduction in overtime. That will be very difficult to achieve. How many people in the private sector can achieve that?

My friend, Senator Quinn, rightly asked if we have too many county managers in Dublin. That is an issue for the Minister for the Environment, Community and Local Government, [459]Deputy Hogan, in the first instance, and I know he is looking at it. One difference we have made is to set a very significant cap of €200,000 for the elite, the praetorian guard of the Irish public sector. That is the maximum figure.

I listened closely to what some colleagues observed in the argument on increments, and whether people who earn more than €60,000 should be entitled to receive them, given they are in a totally different financial category to the great majority of public servants, who as Senator Hayden pointed out, earn €20,000 to €30,000 and are mostly women. That is a fundamental question and it can be genuinely asked. It is bandied around that we could save €320 million tomorrow by simply getting rid of all increments. Once again, however, that is not true. It is estimated that no more than €180 million per annum, with less than half that sum in 2012, could be saved by getting rid of increments, 70% of which go to people who earn less than €30,000 and live on very small pay. Whatever about the argument for getting rid of increments for people in a different income category, for the great majority of public servants these are, frankly, pretty small beer in terms of their public pay position. I reiterate, we are reviewing special allowances and have introduced a comprehensive audit of allowances in respect of additional non-core pay that may come into the foreground.

I apologise if I have not answered all questions. It is a difficult task and I am learning it. I have one final point, which picks up on what Senator O’Keeffe observed. I have been in this job for about 11 months. One of the things that most fascinates me, working with the Irish public service, is its failure to embrace and explain to the public the enormous successes it has achieved in appalling financial circumstances. I offer one example. Road deaths and road carnage in this country have fallen dramatically as a result of changes in the law made in this House and the other House, but also as a result of An Garda Síochána and the Road Safety Authority. What greater success could any country have than to say it has managed to reduce road deaths? This was brought about by a compliant public but also by a dedicated public service that worked together to achieve that result, following the laws of the Oireachtas.

In my own area of procurement we have introduced savings. The private sector rightly sets out what it achieves but there seems to be an inherent problem in the Irish public sector about taking ownership and control of the wonderful things it has achieved. These are the most motivated people in the Irish public sector, across the system, who are sometimes frustrated and want to achieve other things. However, we must find a way of explaining to the public the enormous achievements of these people, on our behalf, as legislators and policy makers. Since coming to this job, I have been struck by this failure to communicate in simple ways about the achievements.

At the outset I mentioned how we had redeployed staff across the public sector. That has been achieved without protest or megaphone diplomacy but in a nice, quiet and deliberate way through moving people around and getting them to buy into redeployment. The public sector has gone about this work in a quiet and deliberate way but it will need support to get through even more difficult stages. If we have learned anything from the crisis over the past several years, it is that we know we need a public service at its best. In the crisis, there was a failure politically on which the public had its say but there was also a failure of public administration. That can never be allowed to happen again. This country can never again be in the position into which it has been forced in recent years. A way out of that is to motivate the public sector to ensure we get the best out of its workers who are genuinely publicly spirited and want to achieve for their country and their children. The Government will also ensure the type of reform implemented will make a difference.

Sitting suspended at 1.25 p.m. and resumed at 1.35 p.m.

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