Cabinet must factor in extra €250m for benchmarking

CABINET ministers will have to factor in almost an extra €250 million into their spending estimates for next year, now that the full cost of benchmarking has at last been established.

Next year the full cost of paying the benchmarking wage increases to public servants will be €775 million, according to revised figures from the Department of Finance.

As no substantial increases in public spending are expected next year, due to the economic downturn, ministers will have to pay the majority of the bill from within existing resources.

Previous estimates provided by Minister for Finance Charlie McCreevy had only factored in half of the cost of benchmarking next year.

Government ministers are currently putting together their spending estimates for next year and benchmarking affects the sums required in every department.

Government coffers have been stretched to come up with €522 million needed to meet benchmarking this year, as public servants received one-off lump sum back payments worth €262 million and the first phase of €260 million.

However, in 2004, an extra €253 million will be needed to cover the cost of the second phase worth €515 million, due to be paid on January 1, with the full year impact of the first phase of €260 million.

The first two years of the implementation of benchmarking will see the largest year-on-year increases in spending as a result of benchmarking.

According to a report in yesterday’s Sunday Business Post, the revised estimate brings the final bill to the taxpayer for benchmarking over the next three years up to €4 billion.

Fine Gael finance spokesman Richard Bruton, who received the new figures in response to parliamentary questions, said the Government had failed either to ensure benchmarking could be paid or would garner value for money.

The fact that Mr McCreevy has not reestablished an expert group he set up to suggest cutbacks and savings, nicknamed ‘An Bord Snip’, is seen as a sign that ministers have been instilled with a new sense of discipline in their spending.

While the group of ‘Three Wise Men’ of the Independent Estimates Review Committee is not being reformed this year, their extensive recommendations are still live and under consideration.

An Bord Snip was set up after last year’s general election, as ministers were deemed to be unwilling to reduce spending in their departments.

According to Mr McCreevy’s spokesman, the proposals made by An Bord Snip are specific to departments, including a number with medium-term impact, and can be revisited at this time.

“Ministers have been very disciplined in terms of their spending this year. The proposals are there and the document is available. If they were looking at optimising, clearly that is one course of advice that is open to them.

“The new reality is that we are in a post-Celtic Tiger economy. The days of double digit economic growth and expenditure are gone. It is a requirement for us all to readjust our expectations.”