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Daniel McConnel: The referendum may be won but the Croke Park problem remains

It is now time for this deal to justify its existence or else face being torn up, writes Daniel McConnell

WITH the referendum now passed, governance in Ireland can return to its normal dysfunctionality.

Countless issues have been sidelined, deferred, suppressed for the duration of the campaign, but now they are back on the agenda.

Top of that list is the controversial and divisive Croke Park deal.

Created at the insistence of then-Taoiseach Brian Cowen in 2010, in return for delivering reforms and efficiencies, public-sector workers were guaranteed that their pay would not be cut and their jobs were safe from compulsory redundancy.

To many, the deal Cowen offered was a betrayal of the far greater majority who either work in the private sector or are out of work. It was an exercise in economic treason.

Fast-forward to June 2012, and while this Government did not create Croke Park, it has certainly embraced it, retaining the deal despite the country's continued vanquished state.

The need for reform is reflected in the Government's spending and income figures, shown in the table. Spending soared from €45bn in 2005 to a peak of €63bn in 2009, but has fallen back to €55bn this year.

However, tax income has also plummeted to a low of €31bn in 2010, and the budget deficit was €23bn last year despite cuts of €24bn since 2008.

Documents obtained from Public Expenditure and Reform Minister Brendan Howlin's department reveal a range of achieved savings during the course of last year. These savings will form part of the Croke Park Implementation Group report due out later this month.

However, fresh concern is being expressed from within the coalition this weekend over the viability of the divisive deal, and time is running out for Mr Howlin to show that it is worth keeping. Deep divisions still remain between Labour and Fine Gael over its merits.

Labour TD and PAC member Derek Nolan said: "Of course I support the retention of the Croke Park deal; we are getting the reforms across the public sector."

Party colleague Michael McCarthy agrees. "Croke Park is Government policy. If Labour wasn't in Government, Croke Park would be a thing of the past. Industrial peace and the reforms being achieved mean it is worth it," he said.

Labour TD Gerald Nash added: "We have to reform the public sector. We are doing it but it can't be done by confrontation. Industrial peace is the big success of Croke Park."

However, many within Fine Gael remain deeply sceptical about the merits of Croke Park. Several TDs have called for the deal to be scrapped, and said it was totally unsustainable.

"There is huge concern at Croke Park. Reform is not happening quickly enough and this is a sweetheart deal for those at the top of the public service.

"We have had too many reviews and not enough action. Unless we see that rapid action then there will be pressure to end the Croke Park deal," Fine Gael's Dr Liam Twomey said.

Eoghan Murphy concurred. "A burning issue for me and for members of the public are the pay rates at the top of the public sector. We have county managers earning more than the Tanaiste, it is farcical.

"There is still a huge disparity in pay levels and they are not sustainable. Many aspects of Croke Park are ridiculous and I am asking what the hell is going on."

But what exactly has Croke Park achieved in terms of actual reform?

Documents obtained by the Sunday independent show that the implementation group has been told of some of the achievements it is claimed have been made.

These include:

• Holiday arrangements have been streamlined and standardised across the public service.

• The departure of nearly 8,000 staff in January and February 2012 was managed "effectively".

• New roster arrangements were rolled out on April 30 in the Garda Siochana for the first time in more than 30 years.

The documents state: "Further progress has been made on developing the new single pension scheme for all new entrants to the public service, which will help to significantly reduce long-term public service pension costs."

The documents also say that a review of €1.5bn-worth of annual allowances and premium payments across the public service is being undertaken. However, unions are this weekend saying that they have a written commitment from Government that these won't be touched, which could prove extremely problematic for Howlin in his bid to make savings.

From Howlin's perspective, the two big selling points for the retention of Croke Park have been industrial peace and the reduction in public sector numbers.

"Other European politicians regularly ask us how has Ireland managed to reduce public sector numbers and pension entitlements without riots in the streets. Maintaining industrial peace has been very important, not only for stability but also for the country's reputation," Labour's Gerald Nash said.

Just under 8,000 people retired before the end of March, a move the Government says will save €3.3bn by 2015. Total numbers in the public sector will drop from a peak level of 320,000 to 290,000 by the end of this year.

However, the impact and the credibility of the savings have been offset somewhat by the rehiring of retiring workers in many sectors on "temporary contracts". There was also the upfront cost of paying the lump-sum pension to those who left.

There has also been deep public disgust at the series of multi-million pension package pay-offs to politicians such Bertie Ahern, Brian Cowen and their ministers and senior civil servants who had a direct role in the country's economic demise.

The total cost to the taxpayer of providing pensions to the former Cabinet has been estimated at more than €50m.

Some of the most controversial cuts have been made in schools across the country. Since 2010, Howlin claims there has been a reduction of 6,000 teaching posts in schools, a saving of €36m annually.

Redeployment at primary level has realised full-year savings of €50m.

In one of the more startling claims, the documentation states that "33,000 primary school teachers are working an extra 36 hours per year since early 2011" -- this works out at just one hour a week per teacher.

In health, there has been agreement to extend working hours for 3,000 medical lab technicians and radiographers, and some improvements in acute hospitals in Cork and elsewhere. The HSE had a net budget reduction of €683m or 4.8 per cent in 2011. "The service was delivered within budget," the documents claim.

Yet there has been precious little progress with the big-boy consultants, who are the key to the radical reform needed in the health sector.

Fine Gael TD and PAC member Simon Harris has identified this situation as the "two-tier" Croke Park deal, whereby those at the front lines and at the lower pay grades are doing the heavy lifting while those at the top have "yet refused to budge".

"It is most frustrating that Croke Park is clearly working in some areas, but not in others. It has to be dictated by those reforming the fastest and not dictated by the slowest," he said.

"We seem to have a two- tier Croke Park deal at play, with those at the top still overpaid and slow to reform. We can't have social partnership by stealth."

In 2011, more than €27.5m was saved by "establishing cost-effective, centralised contracts in large public spending areas including electricity, gas, stationery, clothing/uniforms, paper, cars/vehicles, advertising and janitorial supplies".

One of the biggest tangible gains that defenders of the Croke Park deal refer to is the new roster for gardai. The roster, amended for the first time since the Seventies, "will ensure that more gardai are available for frontline duty at peak times such as Friday and Saturday nights", the documents state.

However, John Fitzgerald of the ESRI said progress under Croke Park had been "far too slow" and that it was hard to judge the success or merits of the deal.

"Did all of these reforms happen just because of Croke Park, or did they happen because we are in a different world to where we were in 2008?" he asked.

Sunday Independent