Pay rise has hit Government's moral authority

As an indirect beneficiary through pensions linked to the pay of Dáil deputies and ministers, I have some hesitation about commenting…

As an indirect beneficiary through pensions linked to the pay of Dáil deputies and ministers, I have some hesitation about commenting on ministerial pay.

But, given that I write about almost everything else, it would be cowardly to dodge this subject! And enough has been said about the Budget in the past two days.

At the outset I should say I believe that in our kind of society, two criteria should in general determine wages and salaries. First of all, a wage should be sufficient to protect people from poverty, and if for some reason it is not sufficient, the State should supplement that wage, as we in Ireland do through the family income supplement scheme.

Beyond that, wages and salaries - taking due account of the security of any job and of pension provision - should be at or around the level that will be sufficient to attract people with the skills required for it.

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In the determination of public service pay, both the exceptional security and pay-related pensions of public servants should, of course, be fully taken into account. Their pensions have recently been calculated to add, on average, 15 per cent more to the value of their remuneration than do pensions in the private sector, a fact that it now seems may be a factor in the current benchmarking process.

(That was not done in the first bench-marking several years ago. There was, in fact, no transparency in that exercise, for the criteria and pay calculations used were never disclosed, and one member of the evaluation group, economist Jim O'Leary, resigned from it and later wrote to demonstrate the defectiveness of its recommendations.)

Various higher grades in the public service have their remuneration based on recommendations made by a special review body. In its recent report this body has claimed that "it would not be appropriate at this time in the Irish administration, as is the case in some other countries, to have a situation where the salary of a civil service head of department is considerably more than that of a minister". However, the body made no attempt to explain just why this "would not be appropriate at this time in the Irish administration".

As to politicians, including ministers, they used to be underpaid, possibly reflecting many decades later the impact of de Valera's decision on coming to power in 1932 to reduce ministerial salaries from £1,500 to £1,000 a year.

When I was appointed minister for foreign affairs in March 1973, my combined Dáil allowance and ministerial salary was about £7,500 (in today's money terms equivalent to around €90,000).

Now, since 1973, the average industrial wage has risen 18-fold , which, when allowance is made for an almost tenfold increase in the cost of living, means that the purchasing power of an industrial worker has since then increased by about 90 per cent.

Against that background an increase of something like 125 per cent, or perhaps a little more, in the purchasing power of the salaries of formerly somewhat underpaid ministers would seem to me to be reason-able - effectively undoing rather belatedly de Valera's 1932 pay cut!

In fact the purchasing power of Ministers' current €214,000 a year stands 135 per cent above its 1973 level, which seems to me to be as big an increase as one can reasonably justify, vis-a-vis industrial workers' 90 per cent increase in purchasing power during that period.

It is difficult to see what case can be made for a further salary increase now - one that, if implemented, (and yesterday's Irish Times told us that the necessary statutory order has not yet been made), would raise the purchasing power of ministerial gross income to more than 160 per cent of the 1973 level.

In deciding what politicians should be paid I believe that the key factor should be the importance of attracting to the profession people with a sense of service to the community, rather than people viewing politics as a way of becoming well-off. Politics should never be allowed to become a career that people enter for financial reasons

That is why I have always believed that, so long as appropriate provision is made for the extraordinary uncertainty of the politician's job, by way of severance payments and generous pension provision, the current pay of politicians should be slightly below, rather than above, that of people with similar skills and workloads.

I believe that is why, even in very large countries, the pay of prime ministers or presidents as well as ministers is in general less than our ministerial pay rates as recently increased. The incomes of these other heads of state or government appear to take due account of the service purpose of politics - which, I am afraid, we have unwisely come to ignore.

Our politicians ought to have realised some time ago that it has been damaging both to them personally and to confidence in our political system for their pay to continue to be determined by a review group whose main task is to recommend changes in the pay of the higher levels of the public sector, taking account of the need to pay enough to retain key people whom the private sector might otherwise tempt to leave.

Equivalence between the pay of senior civil servants and ministers is unnecessary, for there is no evidence of ministers resigning office to join the private sector!

The Government could and should have pre-empted the review committee's role in respect of this matter by simply announcing the exclusion of politicians from its remit.

Failure to do that has done great damage to Fianna Fáil's popularity, but, more seriously, it has also undermined the moral authority of Government at what is now clearly a critical juncture in our economic history.

If the Government decides to accept the Taoiseach's strongly-held view on this issue by making the relevant statutory order, they would do well to salvage some credibility by accompanying such a decision with an announcement of something of the order of a five-year moratorium on further increases in payments to politicians (including political pensioners and TDs), so as to allow time for others to catch up with this exceptional and I think excessive pay increase for politicians.