Farm Ireland

Thursday 18 January 2018

John Shirley: Latest public sector reforms are pussyfooting around real issue - benchmarking and salary levels

John Shirley

At several meetings in recent months, Farm Minister Simon Coveney talked about having to make a net €200m saving within his Department of Agriculture next year to satisfy his Cabinet colleague, Minister for Finance, Michael Noonan. He even asked for suggestions as to where savings could be made.

Farm organisations have expressed surprise at the minister's up-front stance. They believe that Mr Coveney is undermining the sector by conceding ground in advance of the Budget on December 6.

They contend that agriculture, with its potential to support economic recovery, should be nourished rather than pruned.

Since then, the Government has released its capital expenditure plans for the next five years at €168m a year. This is €100m less than this year. Does this cutback mean that half of the proposed €200m saving has already been catered for?

As I write, I listen to radio and TV reports rabbiting on about the Government's plans to reform the Irish public service and how the numbers will be reduced by about 20,000 to around 280,000 by 2015.

These reform proposals contain positives in terms of rationalisations of State agencies, but overall they must be regarded as one big fudge.

Firstly, I question the savings that are outlined. Enticing State employees to take early retirement still leaves the cost to be borne by the public purse.

The only difference is that payment is in the form of pension rather than salary. Secondly, the proposed job cuts are voluntary and do not discriminate to protect the so-called frontline services delivered by teachers, health workers and gardai. Already we are seeing schools losing teachers, despite the fact that there are 70,000 extra children in the education pipeline.

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Thirdly, the ability of the public services to reform themselves from within has to be questioned given the experience to date. The culture of the public sector doesn't lend itself to self-pruning.

Most of all, frustration with this Government is boiling over because of their failure to tackle the monster in our midst. This monster is the fallout from the benchmarking pay deals of the past decade, and especially Charlie McCreevy's deal from 2002.

These cosy arrangements between Bertie Ahern and the trade unions are the genesis of the bloated public sector pay and social welfare costs which are wrecking our economy, and of the obscenity of the politicians' pensions and perks which could yet trigger civil unrest.

In the absence of unravelling the benchmarking deals, which have been copper fastened by the Croke Park Agreement, the latest public sector reform proposals can only be regarded as cowardly pussyfooting around the fringes of the real problem.

The cuts being sought by Mr Coveney must also be viewed in the context of the overall economic scenario.

We are in a financial emergency. This is a time for drastic but common sense measures.

Here is a proposal for Mr Coveney. It is a template which other ministers, indeed the whole country, could adopt.

Start with a clean sheet on expenditure. The arrangements of the recent past haven't worked. Actually, they have brought us to bankruptcy.

On this clean sheet, prioritise spending as you would for any prudent business. Start with the biggest cost in your department -- salaries.

I hardly dare mention the word again, but let's benchmark salaries to a rating that is fair and equitable, such as the average industrial wage.

Currently, the average industrial salary is about €35,700 a year. (I have refrained from using the €18,000/yr average farm income as the benchmark).

Given the job security and pensions that go with the public sector and Civil Service, what would be a fair adjusted average salary for them? €30,000?

The reality is that the average public sector salary is almost €53,500.

Relative to the adjusted average industrial salary, how much should a minister earn? Three times that? That would give him or her €90,000.

The reality is a ministerial salary is €169,000, less the pension levy.

Similarly, for a secretary general of a Government department, given their permanent position, how much should they be paid at this time of emergency? How much can the exchequer afford? Two-and-a-half times the adjusted average wage? This amounts to €75,000.

With about 3,600 staff in his department moving from the average of €53,500 to €30,000, this would amount to a saving of some €84m, excluding pension savings.

Across the entire public sector, the saving could be €7bn, excluding pensions.

Wouldn't that make a big hole in the Budget deficit which this year is heading towards €20bn?

I'll dream on.

Indo Farming