McCreevy had warned of public-private tensions

Former minister for finance Charlie McCreevy had warned in 1999 that “tensions” between the public and private sectors would make it extremely difficult to negotiate a new social partnership agreement.

In a secret aide memoire for cabinet, released under the Freedom of Information (FoI) Act, the then finance minister complained of the “sheer size” of pay claims advanced that year by public sector and construction unions.

“It is evident that wage inflation in the private sector, the serious problems with public service pay, the tensions that exist between both sectors (with each perceiving the other as having fared better) . . . will make it extremely difficult to negotiate an acceptable successor to Partnership 2000.”

The social partnership model that predated the Croke Park agreement was subsequently criticised in some quarters for having contributed to the overall economic collapse of recent years.

Mr McCreevy warned in the document presented to fellow ministers dated September 16th, 1999, that government had to follow through on the strategy for dealing with public sector pay claims, “not least to limit the risk of stimulating non-competitive private-sector wage demands”.

Growth

He warned that the claims put forward that year were “quite inconsistent with developments in competitor countries”. The preservation of solid economic growth required that pay increases “be consistent with maintaining Irish competitiveness in a fixed-currency environment”, he added.

The Programme for Prosperity and Fairness agreement and other deals followed Partnership 2000 but the process fell apart in late 2009 over the then government’s decision to opt for public service pay cuts.

The Irish Times sought copies of all cabinet papers relating to budget 2000 under FoI. A standard FoI request was placed initially with the Department of the Taoiseach at a cost of €15.

However, to release the documents a further amount of €125.70 was requested. This “search and retrieval” fee was calculated on the basis of two staff members working for three hours each at €20.95 an hour.

Mr McCreevy’s secret aide memoire prompted then secretary general at the Department of the Taoiseach Paddy Teahon to pen a note to then taoiseach Bertie Ahern.

“The Aide Memoire begs the question ‘Is there a credible way forward?’” Mr Teahon wrote. He said the government “might agree” that action was necessary in a number of areas, including the formulation of a new framework for managing public service pay. Government agreed.

“I believe also that you should deliver a high profile speech on the ‘The Situation is not good – The Government will act resolutely – There is a credible way forward’ Theme. We will produce a draft,” Mr Teahon wrote.

Warning

The Irish Times reported last week that Mr McCreevy had warned foreign investors he believed the Irish economy was “heading for trouble if the boom is let rip”.

Mr McCreevy criticised the “huge estimates demands” submitted by ministerial colleagues to his department ahead of Budget 2000. He also identified “widespread, unrealistically high” expectation among the public about wage increases, tax relief and current spending, which he said threatened competitiveness.