Wallace – on restoring the balance in Public Finances – Dail Adjournment
19th March 2009
Minister Mary Wallace TD replies to a question raised last week during the Dail Adjournment on public finances on behalf of Minister for Finance Brian Lenihan. Response is outlined as follows:
“The drive to secure savings and efficiencies across all areas of the public service is now well advanced and this process has been underway for some considerable time”.
“Even before the full extent of this unprecedented downturn in public finances became apparent, the Government was publicly committed to an ongoing programme of streamlining public expenditure. In the 2008 Budget Statement, the then Tánaiste and Minister for Finance Brian Cowen announced an efficiency review of all administrative spending across the whole public service. The Minister indicated that particular areas of interest included possible inefficiencies due to the multiplicity of boards and agencies; the need for better sharing of certain services; and efficiencies in management, travel and consumables in general”.
“In July of last year, his successor as Minister for Finance, Deputy Brian Lenihan announced a range of efficiency and savings measures including those identified as a result of the Budget day efficiency review. Among the other measures were;
- A reduction in the payroll bill of 3% for all departments, State Agencies and Local Authorities – other than Health and Education – by the end of 2009.
- A Significant reduction in expenditure on Consultancies, Advertising and Public relations by Departments and Agencies in 2008 and a minimum 50% decrease in 2009.
“These measures were designed to minimise the effects on users of services in the areas of Health, Education and Social Welfare and were estimated to deliver savings of €440 million in 2008 and €1,000 million in 2009”.
“In addition, Minister Brian Lenihan instigated a review of agencies to determine whether they could share services, whether it would be appropriate to absorb some of their functions back into their parent departments or whether some agencies should be amalgamated or abolished. In budget 2009, the Minister for Finance announced 30 rationalisation decisions that will reduce the number of State agencies by 41. As of now 9 of the 30-rationalisation decisions have been implemented, covering 9 state agencies and the closure of the 4 Army barracks. Legislation to give effect to the remaining decisions is in preparation”.
Measures Announced in February 2009
“The continued fall in economic activity coming into 2009 meant that, even with these savings, the fiscal position has continued to deteriorate which lead the Government to announce further measures in February of this year. These further savings are estimated to achieve up to €1.8 billion in 2009 or €2 billion in a full year. While further efficiency and capital savings were announced, the main element of this package of measures was the introduction of public service pension-related deduction”.
“The principle behind the public service pension-related deduction is that it should apply across the public service. This is based on the need to reduce the public service pay bill and in recognition of the pension benefits enjoyed by public servants”.
“One category to which the deduction does not apply is the judiciary. Our Constitution is quite clear on this. Article 35.5 expressly sates that; The remuneration of a judge shall not be reduced during his continuance in office” We have legal advice confirming that the pension-related deduction should not be applied to the judiciary”.
“Of course, the pension –related deduction is not the only action that the Government have taken to contain and reduce public service pay costs. The increases under the review and Transitional Agreement 2008-2009 are not being paid, which will lead to further savings of up to €1 billion next year”.
Conclusion
“The measures outlined above show the determination of Government to restore balance to he public finances in the face continued international economic slowdown. As you are now no doubt aware, the Taoiseach has announced the Government’s intention to present a supplementary Budget to the House on April 7. This supplementary Budget will continue the process of adjustment begun by the earlier savings measures, as this is the only way to ensure the future fiscal stability and economic prosperity of this country”.