Public sector pay and spending: repeating past mistakes

Higher living standards, better services, tax cuts and more jobs cannot be afforded at the same time

 

A weak government is an easy target when powerful groups come calling. Concessions already made to gardaí could yet destabilise the Lansdowne Road Agreement while, in an unexpected departure from stated policy, Minister for Public Expenditure Paschal Donohoe has raised the prospect of speeding up pay restoration for the entire public service.

As with most governments, hanging on to power – even at the risk of wrecking the economy – is a central consideration. It happened under Bertie Ahern when a benchmarking deal on public pay undermined national competitiveness. Following the crash, drastic cuts to public pay and pensions were required to stabilise government revenues. Rather than learning from those mistakes, however, Taoiseach Enda Kenny appears to think that this time, following pay restoration, the outcome would be different.

Lip service was paid to the Lansdowne Road Agreement even as it terms were being strained in response to garda pressure. A €4,000 rent allowance, to be included as core pay, is expected to push up premium rates, overtime and pension costs while a special ‘briefing allowance’ will encourage nurses and others to make similar demands. SIPTU officials wondered where the €30m for the pay offer had come from when no provision had been made for it in Budget 2017. The prospect of the Lansdowne Road Agreement unravelling moved closer.

This minority Government has shown no willingness to take difficult or unpopular decisions. That may arise from disagreement between Fine Gael and Independent ministers or from the conditional Fianna Fáil support it depends upon. Whatever the cause, the result could undermine future prosperity.

Economic recovery is well underway but is localised and under threat because of Brexit. Creating an expectation that a return to Celtic Tiger living standards, along with improved services, tax cuts and higher employment are within touching distance is disingenuous and wrong. Items on this wish list cannot all be afforded at the same time. Trade-offs will be necessary. And that will require public education and straight talking.

At the moment, centre ground politicians are in denial, refusing to acknowledge that a repeat of past policies and accelerated pay restoration could spell disaster. At the same time, their left-wing opponents and Independents are clamouring for additional spending and the removal of property and water charges. There appears to be no place for hard choice in the so-called ‘new politics’. Should you have more public servants or pay public servants more? Do you cut taxes or invest in health, housing or other services? What should be done about pension reforms? What kind of society do we want? These issues demand public discourse. Leadership is required.

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