Saturday 10 December 2016

'I don't want to be leader after Kenny' - Donohoe

Public Expenditure Minister favours 'new politics' but with some limits

Published 30/05/2016 | 02:30

Minister for Public Expenditure and Reform Paschal Donohoe in his office in Dublin Photo: Frank McGrath
Minister for Public Expenditure and Reform Paschal Donohoe in his office in Dublin Photo: Frank McGrath

Public Expenditure Minister Paschal Donohoe wants to be known as the "sensible minister", so much so that he is taking himself out of the Fine Gael leadership race.

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The party's rising star definitively ruled himself out as a potential successor to Enda Kenny, telling the Irish Independent: "If and when the Taoiseach decides he wants to move to other things in his life, my name will not be going forward."

Speculation had begun to grow that he could be a contender following his promotion to the Department of Public Expenditure and Reform.

However, he is leaving the battle to Leo Varadkar, Simon Coveney and Frances Fitz- gerald.

Dublin Central TD Mr Donohoe said he wanted to "be straight" about his ambitions.

"When the Taoiseach decides at a point of his choosing that he wants to move on to other things, I will not be putting my name forward," he repeated.

"Our country is in a very new political environment, has gone through an economic trauma that ruined the lives of too many people, and I want to see our country now complete the journey so that we are all moving into a better place.

"I want to play my role in that, and that's why I'm very clear - the only job I'm thinking about is the one I have."

Mr Donohoe's decision is also being influenced by local issues.

"I've gone through a whole cycle. Look at what happened to me in the General Election we've just had," he said.

"I had my boundaries completely redrawn to a very new constituency for me, and I find myself in the place now where the people of that constituency re-elected me against the predictions of many."

The minister is known in Leinster House as one of the "nice guys", so it is no surprise when he says he is keen to embrace "new politics". However, he warns that he won't be shaken by the clamour from unions to get their slice of the recovery.

"I and the Government could spend the fiscal space every day. Every day that goes by in this role, we have a very high number of understandable demands coming through from society and government departments," he said.

"The money I'm spending in this department is not my money, it's not the department's money, it's not even the Government's money. It's taxpayers' money. The people who I'll be thinking about all the time are the people out there paying their taxes who expect the money to be spent in a better way than it has in the past."

That means there will be no extra money to speed up pay restoration for the public sector.

The Lansdowne Road deal, which runs until 2018, allocated €884m for public sector pay, and that figure will not change.

In his first interview since taking up his new ministry, Mr Donohoe told the Irish Independent: "The framework of Lansdowne Road is the only show in town. We will be imple- menting that through this Government."

However, that does not mean there will be no room for manoeuvre within the confines of the agreement.

"Lansdowne allows us to work with unions and have consultation about matters that their members care about," said Mr Donohoe, "but alongside that there are figures in Lansdowne Road which relate to pay changes of €844m across the three-year tenure of it. That's what the figures are."

He admitted it is difficult for newly-qualified teachers and gardaí to be on a different pay scale from their colleagues, but argues that it's a reality of the crash.

"The message I'd like to give is that we want to work with them, but we have to work inside Lansdowne Road," he said.

"You had new entrants coming in at a point when our economy was incredibly different to where it was a decade ago. It is a feature of many, many employers that the environment in which they work changes for the worst, as God knows ours did. The way in which they hired people also changed.

"This has created issues which is why I say Lansdowne is the way in which we do want to engage with people on this."

Recruitment in the public sector will increase, but in tandem with reform.

Mr Donohoe intends to compile a new Public Sector Reform Strategy by the end of the year to replace the current three-year plan. "We will only spend more money in areas if and when that is accompanied by reform. More recruitment has to happen alongside more reform," he said.

Reforms will include changes to work practices and increased transparency for the public.

On tax, Mr Donohoe said the new Government plans to continue reducing the much-hated Universal Social Charge for low and middle-income earners.

The 2:1 split in terms of spending versus tax cuts will be strictly obeyed.

"It's also about having tax rates that are affordable, that are competitive and create jobs," he said.

"The really big rationale for why we need to continue to reform our tax system, particularly for low-income workers, is about the need to make sure that work pays and that it allows work to be created.

"People who are on the average industrial wage are paying marginal tax rates that are in excess of 50pc. For every tenner that everybody earns for working an hour of overtime they are taking home less than half of that. That isn't an incentive for more work to be created."

The minister promised that all sides of the Oireachtas will have an opportunity to take part in the budgetary process.

Finance Minister Michael Noonan will deliver a Summer Economic Statement next month, followed by a mid-year Expenditure Report from Mr Donohoe in July.

"Our budget process tends to focus too much on a big day in October as opposed to being more of an all-year process, understanding how money is spent and hearing the views of the Oireachtas," said Mr Donohoe.

"The tangible difference in this process is that through the year as figures become available to ministers regarding how government departments are spending their money, as figures become available to the Government regarding tax and tax options, we'll be making that same information available to the Oireachtas."

He warned, however, that the new openness will only work if opposition TDs are "sensible".

"If we end up in a situation where we have new politics with old habits, we're going to have bad laws and bad budgets," he said. "This needs to be a sensible Government working with sensible people that delivers sensible policy for our country."

Donohoe in quotes

"If we end up in a situation where we have new politics with old habits, we're going to have bad laws and bad budgets." - On giving Opposition TDs more input into the budgetary process.

"I and this Government could spend the fiscal space every day. Every day that goes by in this role we have a very high number of understandable demands coming through from society and Government departments." - On how he intends to manage extra monies becoming available to his department.

"The really big rationale for why we need to continue to reform our tax system, particularly for low-income workers, is about the need to make sure that work pays and that it allows work to be created." - On plans to further cut the Universal Social Charge.

"Lansdowne Road is the only framework that is available for dealing with the competing needs that people have to be paid, and well paid, for their work." - On public sector pay restoration.

"I don't believe there is a need to go back to the old system of social partnership. Government departments and the Oireachtas were not part of policy formation in areas that were of deep importance to the country." - On social partnership.

"You had new entrants coming in at a point when our economy was incredibly different to where it was a decade ago." - On the two-tier pay rates for gardaí and teachers.

Irish Independent

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