Coalition faces stark choice on cuts to pay or services

INSIDE POLITICS:THE PEOPLE of this State stood by their government and voted Yes to the fiscal treaty just over a week ago. It is now time for the Coalition to show solidarity with the people and make fairness the cornerstone of tough decisions still to be made to restore the Republic to economic health.

One of the themes encountered by Fine Gael and Labour canvassers on the doorsteps during the referendum campaign was outrage at the fat salaries paid to Government advisers and the huge lump sums and pensions paid out to retiring high-profile public servants.

There is a feeling across the community that the pain of the economic crash has not been shared equally. The Coalition will need to do something about it very soon if it wants to survive a full term.

One of the reasons for Sinn Féin’s big rise in the polls is the line the party has taken in condemning fat public service salaries and proposing a cap of €100,000 for the entire sector.

Mind you, as figures released during the week show, the party’s 14 TDs have not been behind the door in claiming their extremely generous tax-free Dáil expenses which, on top of their salary of €92,000, gives them an effective income of close to €150,000 a year.

To be fair to him, Enda Kenny reduced the taoiseach’s salary to €200,000 when he took office and pro-rata reductions applied to ministers and senior civil servants. For all that, Irish politicians and public servants are still paid very generous salaries and have pension arrangements that strike outsiders as unbelievable.

One of the reasons for our European Union partners’ reluctance to further ease the Irish bailout terms is that the money being made available at relatively cheap rates to keep the country afloat helps to fund top-of-the range salaries and pensions for Irish officials.

For the past decade foreign diplomats based in Dublin have remarked on the much higher salaries paid to their Irish counterparts. It doesn’t stop with a handful of senior officials, but cuts right across the public service into local government, health service and myriad quangos.

When the late Brian Lenihan, as minister for finance, was persuaded to exempt about 150 assistant departmental secretaries from a pay reduction two years ago, he found to his astonishment that – because of pay relativities across the public service – almost 500 people qualified for the exemption.

More recently, private sector PAYE workers looked on in wonder at the packages paid to departing public servants who decided to take early retirement and avail of pensions and lump sums based on the salaries they were paid before the crash.

So far the Government has resolutely avoided tampering with public service pay, arguing that its hands are tied by the Croke Park agreement, which was negotiated by its predecessor. Given the scorn it expresses for most of the things done by the previous government, the attachment to Croke Park is only explicable as lack of courage.

Seán McGrath, who recently stepped down as head of human resources at the Health Service Executive, in a recent interview with this paper referred to some of the extraordinary working arrangements that are a feature of the health service.

He suggested that money could be saved in the health service without reducing pay but by changing working hours to ensure services are available for patients.

McGrath noted that the working week in the health service ranges from just 33 hours to 39 hours, with the highest paid working the shortest hours and being able to work in private practice for almost half the week.

“My personal view is that, from the taxpayer’s perspective, having somebody in the system that can go off-site and earn private income within the normal working week is mad. It is not happening in any other public sector organisation, nor would it be tolerated in the private sector,” he said.

McGrath added it was not only consultants but a range of workers across the health service, including nurses, who had terms and conditions unsuitable for the delivery of a modern health service.

He personally brought forward proposals to this Coalition Government and the previous administration suggesting that all staff should work up to 39 hours per week, with senior management and hospital consultants working 43 hours.

His advice was ignored.

Facing up to big problems such as reforming the health service is easier said than done and demands courage and commitment. This is especially so when dealing with vested interests who know only too well how to use the media to advance their ends.

I have previously quoted American thinker John Jay Chapman’s remark that “people who love soft methods and hate iniquity forget this; that reform consists in taking a bone from a dog. Philosophy will not do it.”

After more than a year in office the Coalition still commands a fair degree of public respect, as the referendum outcome proved. But it runs the danger of squandering that goodwill if it is not seen to act fairly while it continues the task of reducing public expenditure.

Gesture politics – like calling publicly on German chancellor Angela Merkel to modify the bank bailout terms – is the easy bit and, despite the publicity it generates, may in fact prove to be counterproductive.

The hard part is focusing on the fact that three-quarters of the problem facing the country has been created at home by the huge gap between what the Government spends on services and the income it raises from taxation.

That problem will be at the heart of the estimates process in the autumn. Big issues will come up for considerable discussion as the budget decisions are made.

But in the end it is likely to boil down to the choice of paring back further on services for the genuinely needy or tackling the scale of the public service pay and pensions bill.

There are no easy options left.