LARGE SALARIES and bonuses paid to chief executives of semi-State companies will be reviewed by a Government-appointed group set to begin work in the autumn.
Cabinet has approved the formation of the new group to examine how the wages of chief executives of companies such as ESB, RTÉ, An Post and the Dublin Airport Authority (DAA) are currently calculated. It will consider the appropriateness or otherwise of continuing this in the economic downturn.
“What is driving this is a concern that the pay of chief executives in semi-State companies is out of kilter with the rest of the economy,” a Department of Finance source said. Some chief executives earn packages worth more than €500,000.
The salaries of chief executives of companies including Bord Gáis, Bord na Móna and Coillte will also be reviewed.
The new group will operate separately from the recently-announced Review Group on State Assets, to be chaired by economist Colm McCarthy, which will consider selling public-sector assets.
“We don’t determine the way in which semi-State pay is calculated, that’s a commercial decision, except in the case of chief executives.
“Their pay has to be approved by the line Minister and Minister for Finance,” the Department of Finance source said.
Minister for Communications, Energy and Natural Resources Eamon Ryan and Minister for Transport Noel Dempsey are the line Ministers for most of the State bodies concerned. When a proposal to examine pay rates in semi-State companies was mooted at the end of last year, Mr Dempsey said Government should not interfere.
Minister for Finance Brian Lenihan brought the proposal relating to chief executives’ pay to the final Cabinet meeting last week.
Departmental officials will work on the group’s terms of reference and potential membership over the summer.
Chief executives’ pay is currently calculated with reference to private sector companies of a similar nature. Changing pay rates contained in existing contracts could cause legal difficulties and is not expected to happen. Such contracts typically run for seven years or less.
Minister for Finance Brian Lenihan appealed to senior public servants to consider surrendering 10 per cent of their salary in his October 2008 budget speech. In a post-budget press conference, he expanded on this appeal to others to make a similar move, referring to those “in command positions in the semi-States”. While some have responded on a voluntary basis, others have not.
Meanwhile, Fine Gael’s communications and natural resources spokesman Leo Varadkar has proposed the establishment of a new semi-State company to take control of Ireland’s water supply from the 34 local authorities. Mr Varadkar also said the major energy sector State enterprises — ESB, Bord Gáis, Bord na Móna and Coillte – should come under the control of a single holding company. The Freedom of Information Act should cover the semi-States where the information sought is not commercially sensitive, he said. He said the semi-State sector had an annual turnover of more than €9.8 billion but only six of the “big 15” paid a dividend to the State totalling €82 million. These were ESB, Bord Gáis, Bord na Móna, the DAA, Dublin Port and the ESB. “Bord na Móna was paid more in subsidies from the State than it paid back in dividends,” he said.
Mr Varadkar says he was disappointed that some semi-State companies were less forthcoming than others when it came to revealing pay scales and details of how they have cut costs in recent times. He said line Ministers should put greater pressure on loss-making semi-States to cut their costs and pursue new business. Mr Ryan said recently he was opposed to the privatisation of State assets that are “delivering”.
