The Government and Croke Park
IT IS DIFFICULT to know what is driving the Government’s sudden resolve to squeeze the greatest possible savings from the Croke Park deal: a failure to secure early EU concessions on the banking debt, the troika’s requirement that it meets expenditure targets for 2013, or a need to protect the most vulnerable in the budget. Whatever the reason, Ministers are faced with what they see as “extraordinarily difficult choices”.
Having spent most of the year emphasising the need for significant savings in public sector allowances, before abandoning that position, Minister for Public Expenditure and Reform Brendan Howlin is again talking tough. But, despite various speeches and last week’s meeting with the Croke Park implementation body, nobody seems to know what precisely is intended. The 88 allowances originally identified for elimination – out of a total of 1,100 – are again under threat. But the agenda is much broader than that.
Mr Howlin has spoken of the importance of setting out the scale of reforms that have yet to be achieved, while acknowledging the progress already made. In that regard, Taoiseach Enda Kenny has taken an assertive, hands-on approach by inviting all Ministers to submit proposals on how the Croke Park deal could be used to achieve efficiencies and payroll reductions. Those individual proposals or “plans” are likely to be presented to trade union officials later this week. In addition, a targeted voluntary redundancy package will be offered to administrative staff within the Health Service Executive and the Department of Agriculture, while major changes in structures and work practices are envisaged for health services and local government.
A difference in approach by the Government parties towards the Croke Park deal and the need to extract additional savings has been evident for some time. Last week, changes to work practices were accorded importance, but the starkest message involved costs. Expenditure targets would not be met, an official said, without a “significant reduction in payroll costs”.
In that regard, the Taoiseach indicated that not alone were allowances under review but that pay increments could be affected ito reduce the €14 billion public pay bill. Pressure for reform in this area has grown, following evidence that less than 1 per cent of public servants fail to meet qualifying performance standards. And while the suspension of increments would be regarded by unions as a breach of the agreement, the criteria under which they are awarded may be modified.
If the Government is to maintain core social welfare payments and income tax rates in a period of lower than expected economic growth, while meeting expenditure targets, then public sector costs will, inevitably, come under pressure. Anticipated savings from the Croke Park deal may be disclosed during the coming days when negotiations open with the trade unions.
Failure to close a deal with the hospital consultants and a sudden rush to alter local government structures to save money do not inspire confidence. A more methodical approach is required.