The Government's four-year plan says that savings of €7 billion will be made on current expenditure by 2014. 40% of those savings will be frontloaded in 2011. The Government says the cuts are designed not only to return public spending to a sustainable level but to hasten economic recovery.
The Government says that the public service pay bill will be reduced by €1.2 billion, while social protection expenditure will be cut by €2.8 billion while other expenditure will be cut by €3 billion.
The public service pay bill has already been reduced by over €1.4 billion in gross terms in 2010 compared to the previous year due to pay cuts and reduced staff numbers. Public service staff numbers have already been reduced by about 12,000 since the end of 2008.
Additional savings will be made through an immediate 10% cut in the pay of all new entrants to the public service leading to a further sustainable decrease in public service pay costs over the medium term.
The Government says it wants to have a total of 294,700 civil servants by 2014, a reduction of about 3,300 from 2011 to 2014. The cuts sought will bring Garda numbers back to 2006/2007 levels of 13,000. Civil service numbers will go back to 34,600 or 2001 levels, while HSE numbers will return to 100,000 or 2005 levels.
However, education numbers will increase over the four year period, reflecting demographic pressures and in line with Government commitments.
The Government says the proposed cut in public service numbers will drive major reforms in the way the sector does its business. 'The public service will be smaller, with fewer organisations and fewer staff operating from a reduce number of locations with significantly reduced resources,' today's plan says.
The Government says its vision for an increasingly integrated public services, which is leaner and more effective, will be facilitated by the Croke Park agreement.
Public service pensions to be reduced
The Government has also decided that a reduction in the cost of public service pensions is necessary as pensions now account for almost 15% of the total public service pay and pension bill.
Given the present budgetary constraints, the Government says it is cutting the annual cost of public service pensions for some pensioners by 4% in 2011. This will save €100m in 2011.
The decrease will apply to existing public service pensions, former office holders, retired members of the judiciary, and their survivors. There will be no change in public service pension scheme terms.
For 2011, savings of €760m are required from the social protection allocation - the exact measures will be announced on Budget Day in December. Further savings of about €1.9 billion will be made from 2012 to 2014.
The Government says to achieve these savings will require a combination of enhanced control measures and 'labour activation' measure which would lead to a fall in the number of people on the Live Register and well as further rate cuts as necessary.
New scheme for water charges
The Government says that charging for water will introduce a new revenue stream to meet costs at present funded by taxation. It says that the cost of providing water to the domestic sector in 2008 was €590m.
It is intended that domestic water charges will cover local authorities' operational costs.
