TENSIONS are mounting between Finance Minister Michael Noonan and Public Spending Minister Brendan Howlin over the €200,000 salary cap for the new secretary general at the Department of Finance.
The Irish Independent understands the pay cap is proving to be a deterrent to attracting the right calibre of person for the job -- particularly those candidates living abroad.
The Government is currently seeking to replace Kevin Cardiff in the position after his controversial appointment to a plum EU job.
Mr Noonan is believed to be in favour of raising the salary cap for the prestigious position, but Mr Howlin is against the move.
A number of potential overseas applicants have expressed dismay at the fact there is no relocation allowance with the job -- a perk that is common in the financial world. The Department of Finance is also refusing to pay the flight or transport costs of those who attend the interview from overseas, which would also be the norm in business recruitment.
The position carries a term of up to seven years and has attracted over a dozen applicants. But only a few are understood to be of high enough quality to fill the post.
The Government capped maximum pay levels for higher positions across the public service at €200,000 -- the same salary as the Taoiseach.
But the Coalition has breached this limit to get the best person into key posts.
Government sources said there was an argument to be made for abandoning the cap in this case.
"They could make an exception on the basis of an absolutely key job. The real issue is that they have put themselves in a position of their own making by insisting no civil servant earns more than the Taoiseach," a source said.
Within the Department of Finance, some officials are expecting an outsider will get the job and morale is understood to be at an all-time low following the high-profile departure of the previous secretary general Mr Cardiff.
After a controversial ratification, Mr Cardiff is moving to Luxembourg to become Ireland's representative at the European Court of Auditors.
A report published last year by former Canadian deputy finance minister Rob Wright into the Department of Finance found the department suffered from a "shockingly low" level of expertise and did not engage enough with the broader Irish economic community.
The report called for a doubling in the number of economic staff trained to Master's level and an increase in the number of experts in banking and financial markets.
The €500,000 Government pay cap for bankers also created problems earlier this year in the search for a new chief executive of AIB. Several senior international bankers snubbed the role due to the pay cap.
Mr Noonan had refused to lift the pay cap for the bank saying he could not see any evidence of an exceptional case that would merit its lifting.
Traditionally, the Department of Finance secretary general was the best paid public servant in the country. In the 1920s, the general rule was that nobody in the public service was paid more than £1,000, except for the secretary general of the Department of Finance.
The position used to be on its own at the top of the civil service pay tree, but was joined by the Department of Taoiseach secretary general in the past decade.
Five years ago, a review body looking at the salaries of higher public servants recommended the salary go up to €303,000.
But this 2007 recommendation was never implemented and the salary of the secretary general has reduced in line with the cutbacks in public sector pay.
This resulted in a reduction in the salary for the post from €285,341 to €228,466 -- a decrease of €56,875 -- and the same salary as the Taoiseach at the time.
When the new Government came to office, the Taoiseach's salary was reduced to €200,000, giving the Coalition a new base figure.
But the Government's promise to cap public sector pay is being undermined as it is increasingly forced to provide for "exceptional" salaries to attract top talent.
In a recent breach of the much-vaunted pay ceiling, Mr Noonan sanctioned a salary, technically €50,000 above the limit, for the new deputy governor of the Central Bank.
The approval of the €250,000 pay packet for Swedish economist Professor Stefan Gerlach came just weeks after the Government introduced lower pay ceilings for senior public servants.
A special request was made to the minister by Central Bank Governor Patrick Honohan.
Mr Honohan sought approval for the salary just a week after Mr Howlin capped maximum pay levels for higher positions across the public service at €200,000. Mr Noonan rubber-stamped Prof Gerlach's appointment two weeks later.