The Minister for Finance, Mr. Brian Lenihan, T.D., today published the Financial Emergency Measures in the Public Interest Bill 2009. In publishing the Bill, the Minister for Finance stated:

“The Bill gives statutory provision to a number of the measures decided by the Government and announced by the Taoiseach on 3 February last to stabilise the public finances and achieve expenditure adjustments of €2 billion in 2009.

Click here for full speech given by the Minister, Private Member's Business 17th February, 2009

The Bill introduces provisions to give effect to:

·        a pension related deduction for the public service

·        a reduction in professional fees and services,

·        changes in the Early Childcare Supplement, and

·        the deferral of certain payments under the Farm Waste Management Scheme.

Ireland is facing major economic and budgetary challenges which must be dealt with.

The Government recognises that the future prosperity of the country will be determined by the actions we take now.

The Government has a clear strategy for the future development of the economy and for dealing with the budgetary shortfalls which have emerged. The measures contained in the Bill are an important element of this strategy achieving savings from public service pay, from the fees paid by the State to professionals, from the farming sector, and in respect of the early childcare supplement.”

The Second Stage debate on the Bill will take place tomorrow in the Dáil.

END

Background Note

The Bill includes Recitals which follow the Long Title and link its provisions to the current economic and financial challenges facing the State.

The Bill defines “public service body” as the Civil Service, the Garda Síochána, the Permanent Defence Force, local authorities, the Health Service Executive, the Central Bank and Financial Services Authority of Ireland, vocational educational committees etc. The definition includes primary and secondary schools, third-level institutions, and the non-commercial semi-state bodies where a public service pension scheme exists or may be made.

“Public servants” are defined as office holders or employees of public service bodies. Members of either House of the Oireachtas, members of the European Parliament, and qualifying office holders such as Ministers, the Attorney-General, the Chairman and Deputy Chairman of the Dáil and Ministers of State are also covered by the provisions of the Bill. Under the Constitution, the President and members of the judiciary cannot be included in this measure.

“Remuneration” is defined to be total earnings, including allowances, overtime or any other like payment, payable by or on behalf of a public service body to a public servant for his or her services as a public servant. This definition draws on the definitions in the Taxes Consolidation Act 1997.

The deduction shall be made from the remuneration accruing from 1 March 2009 at the rates decided – a 3% deduction on the first €15,000, 6% on the next €5,000, and 10% on the remainder as shown in the Table below.

TABLE

Regulations to be made in relation to deduction and collection arrangements and the deductions are to be paid into the Exchequer in accordance with the directions of the Minister.

Public servants (except the Permanent Defence Force) who have less than two years service on 1 March 2009 may before 1 April 2009 terminate their employment without giving notice, if they do not wish to make the deduction. Deductions are to be repaid to those who leave the public service with no preserved pension benefit, i.e. with fewer than two years service. The Bill provides that no additional pension benefit is conferred by the deduction.

The Minister has power to exempt certain groups from the deduction or modify the extent of the deduction if he is satisfied they are materially distinguished by some particular aspect of their employment terms from others subject to the deduction.

The Taxes Consolidation Act 1997 and the Income Tax (Employments) (Consolidated) Regulations 2001 are amended to ensure the tax deductibility of the payment; public servants who are making Additional Voluntary Contributions or other pension contributions will not be brought above the relevant limits as a result of the deduction.

The Government decided that the new pension-related deduction would apply to local authority staff. It was also agreed that, in order to realise savings for the benefit of the Exchequer, it is necessary to amend the Local Government Fund legislation. At present, section 4 of the Local Government Act 1998 requires that the Exchequer contribution to the Fund be increased annually in line with inflation.

Accordingly the Bill repeals section 4 of the Local Government Act 1998 and introduces a new provision under which the annual allocation is agreed between the Minister for the Environment, Heritage and Local Government and the Minister for Finance.

Payments to Professionals

It is provided that, notwithstanding any existing enactments, contractual or other arrangements, the Minister for Health and Children may by regulation, made with the consent of the Minister for Finance fix the payment or rate of payment to be made to health professionals for services which they render to or on behalf of a health body.

The section requires that, in making a regulation for this purpose, the Minister must engage in consultations. It prescribes the role of the Minister and health body, the nature and manner of the consultations and the considerations to which the Minister must have regard in making any regulation. It allows a health professional who does not wish to continue to provide services, following the Minister’s determination of a payment, to give notice of withdrawal of services. It also allows the health body upon receipt of such a notice to engage the services of another health professional to ensure that the services continue to be available. The section also prescribes the procedure which the Minister must follow in making a regulation for this purpose and for laying it before each House of the Oireachtas.

The Bill provides for the enabling power set out above to be exercised by any other Minister by regulation with the consent of the Minister for Finance and with appropriate modification.

Farm Waste Management Scheme

The deferral of certain payments under the Farm Waste Management Scheme is also provided for. The Section gives the Minster for Agriculture, Fisheries and Food the power to defer payments under the Farm Waste Management Scheme where he or she is of the opinion that it is necessary to do so because of the economic and budgetary circumstances in the recitals to the Bill.

Early Childcare Supplement

The Early Childcare Supplement (ECS) is a direct, non-taxable payment paid to the parents of eligible children by the Department of Social and Family Affairs on behalf of the Office of the Minister for Children and Youth Affairs. The payment is designed to assist parents with the higher costs associated with caring for pre-school children.

When the ECS was introduced in 2006, it was payable in respect of all children eligible for Child Benefit who were under 6 years of age, the rationale being that six is the age at which school attendance becomes compulsory. The approach ensured that no child would lose eligibility for the payment before starting school. However, most children start school well in advance of their 6^th birthday, and it is considered that a more targeted approach is appropriate given the pressures on the public finances. For this reason, the age limit for eligibility is being reduced to 5 years, and the amount payable in respect of each child in a calendar year is being reduced from €1,104 to €996, to be paid in monthly instalments of €83.

The savings resulting from these changes will amount to approximately €77m in a full year.

Annual Review

An annual review of the operation of the measures in the Bill is provided for. This will involve consideration of whether the provisions of the Bill continue to be necessary, and the making of findings as the Minister thinks appropriate. A report of the review will be laid before each House of the Oireachtas.