Donohoe says messy compromise will not work for public pay

A messy political compromise similar to how the water charges controversy was settled will not be adequate to solve greater challenges like public sector pay, Minister for Public Expenditure Paschal Donohoe has warned.

Writing in Wednesday's Irish Times, Mr Donohoe says the compromise between Fianna Fáil and Fine Gael on water charges was not "pretty" but showed the political centre can hold.

However, the Dublin Central Fine Gael TD doubts if this approach can be repeated for issues such as public sector pay and setting infrastructural spending priorities.

The water charges controversy was eventually settled between Fianna Fáil and Fine Gael, although the process was marked with distrust and quarrels.

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The confidence and supply agreement between the two parties means Fianna Fáil will have to facilitate the passage of any spending proposals the Government makes, making its input into public sector pay and infrastructural spending crucial.

“Last week’s activity in the Dáil on water may not have been pretty, but it showed that the centre can hold and compromise can work,” Mr Donohoe says.

“How often that feat can be repeated is open to question, however. This approach may have worked for water, which is a relatively small amount of exchequer funding. It is unlikely to work for bigger challenges such as public pay policy or investing in new infrastructure.”

Relative pay rates

Talks on further public sector pay increases are likely to get under way once the new Public Service Pay Commission finishes its work, expected in the next month. The commission is examining relative pay rates, pensions and working conditions in the public and private sectors.

Mr Donohoe argues that, in a time of international unpredictability, assurance in Ireland across a range of policy areas can "win big". He says that Ireland, historically, has shown it can maintain a steady range of policies even as governments change office. An example of this is the 12.5 per cent corporation tax rate.

“The process for setting public pay will be the most important example of this in 2017. Employees in the public service need to know where they stand with their wages, now and in the future. Crucially, this then gives the Government the required order to plan both public service improvements and pay changes.

“Order with over one third of government expenditure can then help set the right tone for decisions across our economy. This can create an intangible infrastructure which could be every bit as valuable as our roads and ports.”

Water debacle shows that the centre can hold: Opinion Page