The Department of Public Expenditure and Reform has insisted that the Haddington Road Agreement will still deliver €1 billion in payroll savings by 2016 when it expires.
Its statement came after weekend reports that the Health Service Executive cannot deliver almost €200 million of the cost reductions targeted for the health sector this year.
The department said that in 2013 almost €300m in savings from implementing various HRA measures was incorporated into the revised estimates for the year.
It said those savings had helped the Government to meet its fiscal targets and exit the bailout. It estimated the total Government pay bill for 2014 at €14.5bn.
The department said the central HRA measures enacted through financial emergency legislation, including pay cuts, were "for the most part" implemented on 1 July.
It said they will deliver approximately €340m in savings over the three-year lifetime of the agreement.
However, the department did not indicate which elements were not implemented on time, in which sectors, and the cost of delay in implementation.
It said that the deferral of increments will be implemented on a phased basis throughout this year.
It also stated that a number of "sector-specific" measures will deliver total savings of almost €230m when fully implemented. These include lower rates of overtime and non-core payments.
The department also anticipated that it will secure a further €430m in cost savings from increases in productivity deriving from almost 15 million additional working hours and a range of other reform measures.
However, it stressed that those savings will only arise when the reforms are "fully operational" and it did not specify how long that could take.
The department also expressed the hope that as the reforms under the Haddington Road Agreement and the Public Service Reform Plan continue to deliver efficiencies, some of the savings will be reinvested in new or improved services as part of the "reform dividend".
It emerged at the weekend that a consultancy report had found that the HSE would fail to meet its cost reduction targets this year by €186m, which is almost a fifth of the total savings target for the HRA over three years.
Minister for Public Expenditure and Reform Brendan Howlin said yesterday that he was confident that the health savings will be secured.
His department is currently awaiting an implementation report from the Department of Health and the HSE on how they propose to deliver the original target for savings.
Last night, in a strongly worded statement, the HSE said that a consultants' report had found that the €186 million shortfall in savings was an "unrealisable gap".
It said the "validation" process carried out by the external consultants had demonstrated the practical difficulties in securing the expected budget reductions in payroll costs.
Report says shortfall could increase by 20%
The €186m shortfall in savings from the agreement could increase by up to fifth, according to the external report by PA Consulting.
In a note within the report, PA Consulting stated that the shortfall could rise or fall by up to 20% based on "consistency" and "data quality in the returns".
PA said its assessment had highlighted "significant anomalies" resulting in an "overstatement of cash releasing value".
The report was focused on the value realised by up to five million unpaid additional hours generated under the HRA.
PA identified a number of factors affecting costs in the HSE.
These included implementation of the 48-hour working week for non-consultant hospital doctors, which has led to "new" demand for agency work.
It said that so far there has been no attempt to quantify the effect of the European Working Time Directive, which may have a significant impact on the actual gain from the HRA.
It also noted the impact of headcount reductions, adding that some managers are using HRA hours to offset the fall in staff numbers.
PA Consulting also noted that the HSE is facing increasing difficulties attracting staff to fill vacancies, leading to wider increases in spending on agency staff and overtime.
It said the limitations on staff numbers and the lack of overall staffing norms could lead to increased rates of sickness and absence, and of staff moving to work elsewhere.
It noted the increase in demand from an aging population and a reduction in coverage through private insurance, which are putting pressure on public waiting lists and emergency departments.
PA Consulting concluded that the full realisation of the savings outlined in the report will be "challenging" for the HSE, particularly in the acute hospital sector.