IRELAND - Legislation allowing the introduction of a pension levy on public sector workers has been approved by Dáil Éireann, the house of representatives in the Irish Parliament, on the night before the first trade union strike over the issue.

In the Oireachtas last night, the Financial Emergency Measures in the Public Interest Bill 2009 was passed by just nine votes, following a debate which saw the government reject an amendment introducing a 'sunset clause' on the existence of the levy.

The proposal, put forward in various formats by the Labour Party and Fine Gael, called for the Bill to include a phrase ensuring the levy would need to be renewed by the Oireachtas in two or three years' time.

Deputy Joan Burton, from the Labour Party, told members of the house: "The proposed sunset clause would enable us to address some of the anomalies in two years and ascertain whether the pension levy will be permanent."

"If that is the case, the levy will not be funded in that the moneys raised will not be allocated to a fund earmarked or hypothecated to finance future public service pensions. Instead, they will be allocated to the Exchequer on a current basis, with the result that when we return to prosperity in a few years, public servants will have no identifiable claims arising from their contributions to the levy to have their future pensions paid," she said.

Deputy Pat Rabbitte, a Labour Party TD, added if the 'sunset clause' was included it would "go a long way in assuaging the feeling that currently exists among public servants, that they have been unfairly singled out by a punitive measure. A sunset clause would at least allow people to understand that normality will return after this period of financial crisis".

The amendment was eventually defeated by 81-73 votes after Brian Lenihan, the minister for finance, claimed the legislation included an annual review section of the "operation of the measures included in the Bill, consideration of whether the provisions continue to be necessary and the making of findings".

Lenihan revealed a report on the review would be laid before both houses of the Oireachtas, and acknowledged "clearly the [first] review must be done before 30 June 2010".

But he added: "I am not in a position to foresee the circumstances in which we may find ourselves in two years time. I would not care to prejudge the position as the amendment seeks to do. Instead, I will review the position on an annual basis and report to the Houses when I have done so."

The minister also confirmed the measures outlined in the Bill, including the levy, "is not temporary legislation but emergency legislation. It was never expressed to be temporary legislation and is designed to deal with an economic emergency which is increasingly being acknowledged on all sides of the House".

A further Labour Party suggestion was rejected and subsequently withdrawn which argued the money collected from the pension levy should be "paid into an emergency national pension levy fund" that could then be used for government spending.

In her argument Burton stated: "When a return to better financial circumstances occurs, this fund could be then used to pay public service pensions. The Minister is calling this mechanism a pension levy. When people pay such a levy or make contributions to a pension fund, it is implied that there will be a build up of funds, which will be earmarked or hypothecated for the purposes for which the levy was raised."

And she warned: "If public servants surrender this money, they want to rest assured that it will be available for the State to meet its pension commitments. If such an assurance is not forthcoming, they will wonder, having paid out their money, whether the State will meet those commitments."

Despite heavy criticism from opposition parties, the Bill was approved by the Dáil and will move into the Seanad Éireann, although the final debate and committee stage of the Bill was followed today by the first strike of public sector workers.

The Civil and Public Services Union (CPSU) initiated a day-long strike outside the Dáil Éireann, which resulted in all Social Welfare Local Offices being closed to the public and an admission by the Department of Social and Family Affairs that the loss of a full day's processing time "may lead to short-term knock on effects on processing and the putting into payment of claims".

Other trade unions have been encouraged by the Irish Congress of Trade Unions (ICTU) to hold a three-week ballot of members over the possibility of strike action from Monday, although the Teachers Union of Ireland (TUI) has already initiated the voting and is urging members to agree to industrial action. (See earlier IPE article: Irish pension levy reaches final stage)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Topics