Fine Gael must be careful that future public sector pay increases are affordable and do not compromise the potential for tax cuts and improved services,a group of the party's backbenchers have warned.
Minister for Public Expenditure Paschal Donohoe has indicated that public sector workers could have their pay levels restored quicker than had been initially envisaged under the Lansdowne Road Agreement on public pay
While Ministers have privately accepted the Lansdowne Road deal is unlikely to survive its full planned duration until September 2018, Mr Donohoe publicly raised the prospect of a successor deal kicking in before then. It will still be in the calendar year 2018 and would be part of next October’s budget.
A number of Ministers have privately warned, however, that too great an emphasis on public sector pay could reduce the room for spending elsewhere.
“Budget 2017 is done,” said one. “Budget 2018 isn’t but more pay increases means less for your things – public service improvements, reductions in taxation, increases in pensions and welfare.”
Dublin Fingal's Alan Farrell said that while all public sector pay deals should be honoured, there is a question of benefiting public sector workers through pay increases or everyone through tax cuts.
“Do you benefit 300,000 people directly or 4.5 million through the tax take?” said Mr Farrell. “I’m not the Minister for Public Expenditure but I would be cautious.”
Reduce resources
Dún Laoghaire's Maria Bailey said the Brexit could reduce the resources available to the Government.
Ms Bailey said she did not want to pre-empt any discussions that may take place on a successor to Lansdowne Road, but that the Government should exercise caution.
“Obviously budgets should be fair for all and should look after the squeezed middle.”
Dublin Bay South’s Kate O’Connell said the fact there was a successor to the Lansdowne Road agreement did not necessarily mean there was more money in the pot.
“We need to ensure we can afford it,” she said. “If we can afford pay restoration then great . . .We need to avoid constant upward pressure on pay. . . There is no bonanza for private sector workers do I don’t think there should be a bonanza for public sector workers.”
Kildare South's Martin Heydon, who is chair of the Fine Gael parliamentary party, said a "delicate balance" needed to be struck.
“All of our public sector worker have experienced pain over the last number of years and we need to show them there is a way out of that,” he said. “We can’t sign up to something we can’t afford and then have to cut wages again.”
Carlow Kilkenny's Pat Deering said the Government must be careful, adding: "I don't think there would be enough to go around everybody. Quite a lot of money would be involved in bringing forward the pay deal. There will be limited resources."
