Extra €1bn on savings agenda
The Government will seek further savings of €1 billion on re-entering the issue of public sector payroll costs when they engage with the unions this week, Minister for Public Expenditure and Reform Brendan Howlin has affirmed.
Coy about revealing specifics of proposals ahead of the negotiations, he said the Government saw itself as on target to reduce the public pay bill by 20 per cent, in net cash terms by €3.3 billion, and with numbers employed reduced “very substantially” by 2015.
Speaking on This Week on RTÉ Radio 1 today, Mr Howlin said the first interaction with the unions on revisiting the agreement would be a chance for his department to set out its stall on savings sought.
Despite all the savings already achieved, he said “we have to go further”. A proposal for an additional €1 billion in payroll savings had been approved at Cabinet. It was not his intention to pursue core pay for middle and lower income employees, nor any compulsory redundancies.
A comprehensive set of proposals would be tabled on which to negotiate, he said. The Government was pursuing a deficit of less than 3 per cent between now and 2015, which entailed him seeking the extra €1 billion in savings by that year.
Some of the unions were “rightly” saying they had already given a lot, he added, but this was an “extraordinary crisis” and although the State had taken a number of “clear steps away from the precipice, we actually can see the finishing line in terms of regaining our economic sovereignty”.
All of the departments were expected to live within the budgetary arithmetic, he continued - "it’s very challenging, very difficult, for everybody". He said there were some departments where this was “uniquely difficult, and health is foremost amongst them” as it it was an "unpredictable, demand-led service", where the "quantum or severity of cases is unknown".
As he put it, a "huge" health edifice had been created by the former administration which now had to be reformed, and this edifice had “obscured financial management at ground level”. Minister for Health James Reilly’s brief is to “drill down, to disaggregate all of that duplication so that every euro is spent in the area in which we expect it to be spent”.
Mr Howlin said the budget would be a “fair and accurate reflection of what we expect to happen”. He was confident the Government would achieve and exceed the target for this year despite the negative trading environment.
He had negotiated with the troika with regard to social welfare costs on their last visit, "to count the level of unemployment as one of the cyclical pressures that are not captured by the ceiling of expenditure", he said. Those without jobs were putting "greater pressure on the Department of Health in terms of Medical Cards", the numbers of which are much greater than had been anticipated - “but they [the troika] weren’t prepared to accept that as a cyclical issue in the same way”.
Mr Howlin had previously said salaries of higher paid civil servants are unlikely to be on the agenda for the new talks.
Pressed on the issue of salaries of more than €100,000 to some senior civil servants, Mr Howlin repeatedly said he would “not be part of the destruction of public services”.
Mr Howlin was asked by Sinn Féin TD Mary Lou McDonald “for a yes or no answer” on whether higher public service salaries would be on the agenda as Government sought an additional €1 billion in savings from the public pay bill.
He said “the greatest cohort” of salaries of more than €100,000 was in the health service, and these were often necessary as Ireland was competing against places such as the US and Canada to attract consultants.
The “sort of engagement” he wanted to see was in relation to rates of pay for Saturday and Sunday working, as well as a standard rate of pay for hours between 8am and 8pm and possible alterations to working hours. Some people saw working longer hours as a pay cut in itself but he wanted as best he could to protect core pay.
He told the Oireachtas Committee on Finance, Public Expenditure and Reform some €3.8 billion in gross savings achieved under the Croke Park agreement would not be enough to meet fiscal targets by 2015. He had secured permission from the Government on Tuesday to invite the Irish Congress of Trade Unions to talks on “an extension to Croke Park”. The “gap to be filled” over three years to 2015 was an additional €1 billion.