Vol. 966 No. 9
1. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform his views on the content of the report on pay equalisation as specified in the Public Service Pay and Pensions Act 2017; the actions he will take from the report; his plans for process to pay and equalisation; and if he will make a statement on the matter. [13698/18]
The Minister published the report on examining remaining salary scale issues in respect of post-January 2011 recruits last Friday. My party sought that report as part of the Public Service Pay and Pensions Bill. Can the Minister outline what he intends to do with that report? A statement from his Department indicated that there is a process, as we are aware, involving the Public Service Pay Commission but it is important that he would also have discussions with the unions about it.
As part of the negotiations last year leading to the public service stability agreement all parties acknowledged "issues of concern relating to the increased length of salary scale for post 2011” new entrants and committed to examining these issues within 12 months of the commencement of the agreement.
In general the issues of concern relate to the insertion of two lower salary points at the bottom of the existing salary scales. We started examining these issues with the parties as soon as the agreement was ratified last October. At that point we agreed with staff representatives that a data gathering and analysis exercise to determine the individuals and grades effected was a necessary first step in examining the issue.
Subsequent to that an amendment to section 11 of the Public Service Pay and Pensions Act required me to submit a report on these matters within three months, which I did last week. The report was laid before the Oireachtas. It shows there has been strong recruitment since 2011 to the estimated 237 recruitment grades across the public service, with more than 60,500 new entrants hired or just under one fifth of the public service. This includes more than 16,000 teachers, 5,000 special needs assistants and almost 10,000 nurses. In reality, that figure would be even higher as the numbers who joined and left the entry grades during the past seven years are excluded.
Importantly, it also quantifies the cost of a two-point adjustment as approximately €200 million and the potential benefit to the individual as €3,301 on average. It should be noted that these costs are not included in the €887 million ring-fenced for the implementation of the public service stability agreement.
It is intended that the report will provide the evidence base for further engagement over the coming months between the parties to explore how the matter can be addressed.
The Minister has continually referred to strong recruitment and the figures he presented suggest that, but among all the people who have been recruited there is a growing sense of injustice at the pay gap but more starkly at what will be the career gap by the time they come to the end of their service compared to those who were employed pre-2011.
We have focused a good deal on teachers in this discussion but I want to focus on the nursing sector. As part of the Irish Nurses and Midwives Organisation's submission to the Public Service Pay Commission in 2017, it highlighted that 78% of the undergraduate nurses who are doing degree courses in our fantastic colleges around the country, the majority of whom are 23 or younger, are considering leaving Ireland on qualification. It further highlighted that the top three incentives that would entice graduates to stay were pay increases, improved staffing levels and working conditions, and access to funded postgraduate education.
We are educating these people and sending them abroad to places, such as Australia, where they are getting starting salaries of twice what we are offering here. We are taking that pool of talent away from our health service and meanwhile we are long-fingering negotiations to try to resolve that.
As I said, pay is not the only issue. Of those who participated in a survey, and who had completed their internship here, the majority of them were not offered permanent contracts until July of the year, at which stage they had been offered jobs abroad. Therefore, there are other issues in question but pay is the issue that is the causing the most division within our public service at present. We need to act on it urgently to stop a flight of graduates from the service.
On overall public service pay, we are discussing an agreement, which, as of the start of this week, all unions and representative bodies are now party to or associated with. The Deputy has raised concerns with me regarding public service pay but I would suggest to the House that we now have an agreement in place that over the next three years looks to increase public service pay by approximately 2% per year. This agreement has been accepted and ratified by the majority of our unions and all unions are either party to or associated with it.
On the specific points the Deputy put to me, first, on shifting the debate beyond teachers, that is what this report does. It looks at the impact of this issue on the entirety of our public service.
On the Deputy's point regarding Australia, it will always be difficult for us to compete with jurisdictions that are paying twice or more what we are paying, but we can point to other things that our country offers that make it a very good place to work in.
I accept that there are pay increases. Yesterday the NHS announced a very specific pay increase of 6.5% for people in its service. This will obliterate the increases that are on offer here in terms of attractiveness. We need to act on this urgently. There is a growing sense of anger across the public service, including, teachers, nurses and staff in Houses of the Oireachtas, in regard to this pay difference. We cannot afford to lose these people or to allow that anger to go unaddressed.
I understand that the report has been published but will there be an opportunity to debate it? As a former teacher I know first-hand that morale is low among teaching staff. As pointed out by Deputy Calleary, morale is low across the public service. I believe we should have a right in this House to debate this report and I ask that the Minister give us an opportunity to do so.
It is a matter for the Business Committee if the House wishes to debate this report. In recent weeks, another report produced by an Oireachtas committee was debated in this House. If the Business Committee wishes to provide for a debate on this report, it is open to it to do so.
On the NHS and the 6.5% increase mentioned by Deputy Calleary, the agreement that we have is between 6% and 7%, with the majority of the benefit focused on new entrants and those at the lower end of the income scale. If the Deputy is suggesting that we should do more for a particular grade or group of workers within our public service, the issue that then arises is how we do that while remaining consistent with the maintenance of a collective wage agreement. I know from hearing the Deputy speak on this matter very knowledgeably over a number of years that he appreciates the need for a collective wage agreement and the need to maintain it.
As Deputy Doherty is not present, we will move on to Question No. 3.
A note was sent to the Ceann Comhairle's office requesting that I be allowed to take Question No. 2 on behalf of Deputy Doherty as he is at a meeting this morning of the Joint Committee on Finance, Public Expenditure and Reform, and the Taoiseach.
Is it agreed that Deputy O'Brien can take this question on behalf of Deputy Doherty? Agreed.
2. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the reason unclaimed lottery prizes are no longer returned to the prize fund; and if he will make a statement on the matter. [13519/18]
Why are unclaimed lottery prizes no longer returned to the prize fund and will the Minister make a statement on the matter?
One of the main objectives of the sale of the national lottery licence in 2014 for a 20-year period was to generate upfront proceeds for the State. Proceeds of €405 million from the sale were used to fund a range of expenditure projects and served to reduce the need for further tax increases at the time.
Under the terms of the current licence for the national lottery, which was agreed in February 2014, clause 6.9.2 provides that any expired unclaimed prizes shall be forfeited in favour of the licensee, provided that such expired unclaimed prizes shall be used solely for the promotion of the national lottery and-or the lottery games in a manner determined by the licensee, which shall include the funding of special draws and additional or top-up prizes and may include incremental marketing and advertising of the national lottery or such other activities to promote the national lottery and-or lottery games as specifically agreed in writing with the regulator from time to time and no later than within 365 days from the day on which they were forfeited in favour of the licensee. This change in policy regarding the treatment of expired unclaimed prizes is not having a detrimental effect on lottery sales and prizes and, consequently, revenue for good causes.
Under the current licence, national lottery sales increased by 13% in 2016, the last year for which we have audited accounts. This is leading to an increase in prizes and funds for good causes. Prizes have increased by 11%, from €381 million in 2015 to €422 million in 2016 and funds for good causes have increased by 13.5%, from €193 million in 2015 to €219 million in 2016.
How do we know that the unclaimed prize money is being used as per the contract and who has oversight in this regard? My colleague, Deputy Pearse Doherty, asked the Department of Public Expenditure and Reform for the figure for unclaimed prizes but it was unable to provide it and it asked the regulator to raise the issue with the licenceholder. The licenceholder replied that it could not disclose the figure. If we do not know the figure, how we do know if it is being spent as per the contract and with whom does responsibility in this regard rest?
There is a regulator in place to oversee the operation of the licence and other matters. The Deputy is correct that the regulator of the national lottery did write to Deputy Pearse Doherty stating that under the terms of the agreement it is not in a position to release the information to the Deputy because it is commercially sensitive. That said, a considerable amount of money is being made available for good causes, in respect of which I provided some figures in my initial reply. For example, in 2014, €178 million was released for good causes. This figure now stands at €227 million, such that the figure has increased to a considerable level.
Is Wesley College a good cause?
Is the Minister saying that he and the regulator know the figure but that it cannot be published because it is commercially sensitive or is it the case that the regulator does not know the figure because there is a secrecy clause in the contract such that the licenceholder does not have to reveal how much in unclaimed prizes is used for the promotion of the national lottery and special draws? We have all heard what the figure is off the record but is the regulator and the Minister aware of what it is?
I am not aware of it. I will give the Deputy the full context of the letter. It says that this information is the licensee's confidential information and, therefore, under the clause of the licence it cannot be disclosed by the regulator.
Does the-----
I am sorry, Deputy. The time for this question has expired.
I want clarification-----
No, Deputy.
Does the Minister know the figure?
3. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform when legislation to increase the compulsory retirement age for public servants will be published; the timeframe for the legislation to pass in Dáil Éireann; and if he will make a statement on the matter. [13699/18]
The Minister made an announcement last December regarding the extension of the retirement age for public servants, in respect of which there was huge interest but, unfortunately, people have been left in abeyance since. Many people are currently being forced to retire. What is the timeline for the legislation and does the Minister have any plans to deal with those people due to retire between the timeframe of the announcement and the enactment of the legislation? I have a case which I want to bring to the Minister's attention which is typical of a lot of cases in the public service.
As the Deputy is aware, on 5 December the Government agreed that the compulsory retirement age of public servants recruited before 1 April 2004 would be increased to 70. This is the only group of public servants who currently have a compulsory retirement age of less than 70. Primary legislation is required for the change approved by Government to be implemented.
The Government has approved, on my proposal, the general scheme of the Bill to give effect to its decision to increase the compulsory retirement age for most public servants recruited before 1 April 2004. I have asked the Attorney General to prioritise the drafting of this legislation so that the new compulsory retirement age will become effective as soon as possible.
The drafting process is under way and an initial draft of the Bill is being prepared. The Bill is on the list of priority legislation for publication in the spring-summer session of this year. It is not possible to determine the length of time it will take for it to be drafted and passed by the Houses of the Oireachtas, given the scheduling requirements and composition of the House. However, it is being treated as a priority and it is my intention to bring forward the necessary legislation as soon as possible.
The new compulsory retirement age will not come into effect until the necessary legislation is commenced. In the meantime, the Government has approved some limited interim arrangements to apply in the intervening period between the Government decision and the commencement of the necessary legislation. The interim arrangements which have to respect the current statutory position on the compulsory retirement age of 65 years, through retirement and rehire, allow affected public servants who reach the age of 65 years during that period to remain in employment until they reach the age of eligibility for the State contributory pension, which is currently 66 years. Details of the interim measures have been put in place by relevant sectors.
I wish to outline the impact of some of the interim measures. A colleague of mine has been contacted by a clerical officer who will be forced to retire this year. The person concerned will then be rehired at the age of 65 years in the manner in which the Minister has announced. He will be paid at the lowest point of the scale, plus a portion of the annual pension entitlement, strictly for one year only, to bridge the gap to the State pension. For him, this represents a cut in salary of approximately €11,000 per year. The portion of his pension that he will receive will not bring him anywhere near his current salary. He will be expected to do the same job and carry the same level of responsibility owing to the fact that we are having difficulty in passing the required legislation. Others may not be able to do so because of the delay in passing the Bill. I again ask the Minister to look at the limited arrangements in place. It is not fair that somebody facing that kind of cut will be expected to continue to do the same job because of a birthday.
If I had not put interim measures in place, members of the public service who wanted to avail of this option would not have been in a position to do so under any circumstance. We have the interim measures in place because I felt it was necessary to have some lead-in time between announcing that we were going to do this and bringing forward a Bill to give people time to arrange their affairs and make decisions on whether they wanted to continue to work. I introduced the interim measures cognisant of the fact that people might quickly decide that they wanted to work further and I wanted to allow them to do so.
The provisions for people commencing work on the minimum point on the salary scale ensure we will stand by and implement the principle of abatement. Otherwise, we would find ourselves in a situation where people might continue to work but the aggregate figure of what they would get in maintaining their salary plus their pension would deliver a sum that was very high. This all comes from my desire to allow people to avail of this option before the legislation is passed.
4. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the flexibility in terms of capital spend he has sought from the European Union in view of Ireland’s need to catch up on capital investment; and if he will make a statement on the matter. [13218/18]
I ask the Minister the flexibility in terms of capital spend he has sought from the European Union in the light of the State's need to catch up on the capital investment programme and if he will make a statement on the matter.
The EU fiscal rules have been designed to promote budgetary discipline and underpin sustainable economic growth. While the economy is growing and debt is on a downward trajectory, the debt level is still high and we have to be careful owing to the potential of roll-over risk should interest rates increase. This is a small and very open economy in a world which now has more risk than is usual. Therefore, meeting the fiscal rules underpins our objective of being careful with the national finances.
The issue of facilitating greater flexibility within the application of the fiscal rules has received a significant focus at European level and framed discussions on the establishment of structural and investment clauses which were codified by the European Commission in November 2015. Specifically, the provisions allow for temporary deviations from the required structural budgetary adjustment, subject to strict conditions. Furthermore, as the Deputy is aware, there is existing flexibility within the expenditure benchmark whereby capital increases are smoothed over four years, with the result that only one quarter of the increase in public investment must be funded from the first year within the fiscal space. This provision which means increases in capital spending for housing and other purposes can be front-loaded within EU rules and has been availed of in our plan.
The Deputy should also be aware that any decision to increase capital expenditure over and above already planned levels would need to balance the danger of potential overheating in the economy with the need to address infrastructural priorities and risks such as Brexit. As the Deputy will know and as demonstrated by our recent experience in the early years of the last decade, pro-cyclical budgetary policy can jeopardise future living standards.
I recognise that the updated capital programme is an improvement and to be welcomed. The smoothing of capital increases over four years is something of which we have availed and also welcome. However, we need greater flexibility, given that the capital budgets in the most progressive economies are 4% of GDP. We are not going to reach a figure of 4% of GNI* until 2025. Therefore, we have catching up to do. The Committee on Budgetary Oversight made some proposals in a report it issued. One was that there be an increase in the four-year smoothing period, while another concerned a relaxation of the fiscal rules for capital projects co-funded by the European Investment Bank. Has the Minister raised any of these issues with the European Union? He said at the committee that he would discuss the matter with it to see whether we could avail of other mechanisms which he outlined in his initial response.
I have not discussed the specific report to which the Deputy referred with the European Commission, but I have raised with it the need to make sure the fiscal rules facilitate appropriate levels of public capital investment in those things which will allow the economy to grow in a sustainable way. Within the fiscal rules as structured, the plan we launched, Ireland 2040, looks to provide for a very significant increase in capital expenditure year by year. The Deputy will find that by 2021 the figure for capital expenditure will be 3.8% of national income. Year by year, there will be increases in capital expenditure of at least €700 million per year. We have to ensure that as we increase expenditure at that rate we will have the capacity within the economy to translate it into investment at prices we can afford.
That is welcome. I refer to the report of the Committee on Budgetary Oversight on capital investment. I am sure the Minister is well aware of it as it makes a number of recommendations that he may consider raising at the next opportunity available to him, given where we are and need to get to. It is welcome that there has been an increase in capital spending which we will continue to see increase up to 2025. We are so far behind other progressive economies that any help we can get is welcome.
Since the Minister has not raised those issues, is it something he would consider doing in addition to what he has already raised with the Commission and is hoping to secure?
All I can do at this point is give the Deputy a commitment to consider it. I will have to read the report and consider it before I decide what I will raise with the Commission. Currently, my focus is on ensuring that the significant increases in capital expenditure we are implementing at present happen and that the projects we are committed to are delivered at affordable prices. However, I will read the report the Deputy mentioned. I have not had the opportunity to consider it yet. When I have done so I will see if there are areas within it which I might raise with the Commission. I am due to appear before the Committee on Budgetary Oversight in a number of weeks and during that meeting I will give the Deputy an update on my view on the report.
5. Deputy Joan Burton asked the Minister for Public Expenditure and Reform the steps he has taken to ensure minimal disruption to existing public private partnerships being carried out by companies (details supplied); and if he will make a statement on the matter. [10866/18]
What steps is the Minister taking to ensure there will be minimal disruption and loss to the State in respect of public private partnerships and a number of significant PPP companies, given that Carillion has collapsed and Capita has severe financial difficulties? How will he protect the State's and the public's interest in the context of the difficulties of these companies?
The public private partnership, PPP, model is an internationally recognised model to design, build, finance, operate and maintain public infrastructure. In accordance with international best practice, PPP contracts already typically include detailed provisions that apply in the event of the liquidation of a consortium member of the PPP company, or an entity under the contract, to protect the public interest and ensure that the project proceeds to completion.
Under the terms of such contracts, in the case of liquidation of a consortium member, or an entity under the contract, the PPP consortium’s funders and remaining shareholders are required to intervene and implement rectification measures to ensure that the project is completed to the satisfaction of the State. Liquidation of a company involved in delivering a public infrastructure project is an unfortunate development but would impact on any project where a supplier became insolvent during the delivery process, regardless of how the project is procured. The issue, therefore, is not PPP-specific, but where it arises in a PPP project the provisions of the contract ensure that the public interest is protected.
It is worth bearing in mind that this is not the first time a PPP in Ireland has experienced issues with its construction contractor, which is not uncommon given the risks inherent in the construction market. In all previous similar cases, the projects were completed successfully and are now fully operational. These examples demonstrate the resilience of the PPP contractual structure and underline the importance of adhering to the contractual documentation in resolving issues, which has previously been raised as a negative feature associated with PPPs.
The Minister's party appears to have a strong preference for the PPP model over the traditional public service model of direct procurement or, indeed, the public service undertaking the actions itself. One of the companies concerned, the Capita group, has responsibility for a significant amount of housing to be brought forward in the Dublin area through three different projects. Given the absolutely tortuous failure of the Government in the current period to provide housing at a reasonable speed and cost, these projects are not delivering. The fact that the company is in difficulty means that assurance of delivery and so forth is even less reliable than it would have been at the outset.
The Deputy's party displayed an unbridled enthusiasm for PPPs when it was in government. In fact, the largest quantity of PPPs was implemented under the party's current leader. Whatever views the Deputy has now are very different from what was displayed when Deputy Howlin was Minister for Public Expenditure and Reform.
With regard to the Deputy's question on how we complete projects, difficulties with projects such as these are very unfortunate but they can occur regardless of the procurement process for the projects. Where difficulty occurs the payments the State is required to make to the people who are involved in delivering the project will not be made until the State is satisfied that the project is completed to the standard required.
As regards the schools, a number of meetings took place during February about the schools with the school principals. The National Development Finance Agency, NDFA, participated in all those meetings. The latest position on the contractual negotiations is that the Dutch Infrastructure Fund is now in the process of finalising its rectification plan, which I hope will deal with the matters the Deputy raised.
I ask the Minister to give us more information, perhaps by way of a further written note. Both the Minister and I represent Dublin constituencies and we are both familiar with the housing situation. Having the provision of 1,500 houses in the Dublin area slowed down is basically holing the housing programme below the waterline with a huge hole. This is the difficulty.
The Minister implied, wrongly, that my colleague, Deputy Howlin, was avid for PPPs. The reason is that in that era, as the Minister knows well, the Government could not raise tuppence anywhere because we inherited a situation in 2011 where our credit had been destroyed and the Government was constrained by the troika, under an agreement with the previous Government, to very difficult terms and conditions. However, we are in a different era now. We have financial capacity. I do not understand why the Minister is not looking at both the good elements potentially of PPPs and particularly many of their disastrous features.
I have a technical question. The Minister said that if there is difficulty with one of the funders of a PPP there is no exposure to the State. Are there indirect costs that could accrue? For example, if there is a slow down in the construction of housing is there a cost to the State if it is paying housing supports and in the case of schools if it is renting prefabs? Is that an indirect cost that could accrue to the State or is that factored into the risk and the insurance policies?
I will reply to Deputy O'Brien's questions first. There is an indirect cost to the State if a project is being delivered through a PPP or another procurement strategy and the project does not happen and people are in alternative accommodation being paid for by the State. The Deputy is correct. That is the case whether it is a school or a house.
Regarding my approach to PPPs, I agree with Deputy Burton that the context in which we have to evaluate PPPs has now changed. It has changed because the rate at which the State can borrow money is very different and, most fundamentally, we can borrow money in a way we could not between 2011 and 2014. That is why my approach to PPPs is very much on a case-by-case basis. I will evaluate them against the traditional approach of the State building the project directly.
We will decide if it is the right approach to take on a project-by-project and case-by-case basis because these are also fundamentally negotiations. In the next couple of weeks I will make available my overall review of PPP policy, which will develop the point I have just made.
