Financial Emergency Measures in the Public Interest Bill 2013: Second Stage

Question proposed: "That the Bill be now read a Second Time."

On a point of order, a Chathaoirligh, níl go leor daoine anseo le héisteacht leis an méid atá le rá againn ar ábhar chomh tábhachtach le reachtaíocht a ghearrfaidh pá na mílte státseirbhísigh. Dá bhrí sin, tá mé ag iarraidh córam a ghlaoch sa Teach seo anois.

Notice taken that 12 Members were not present; House counted and 12 Members being present,

The Financial Emergency Measures in the Public Interest Bill 2013 gives effect to the Government's proposals to reduce the remuneration of certain public servants on higher rates of pay in excess of €65,000, provide for a reduction in the amount of pension or other benefits, other than lump sums, payable to or in respect of certain persons who are or were in the public service under an occupational pension scheme or pension arrangement, and provide for a suspension of incremental progression for three years for all public servants. The freezing of increments will apply unless the employees in question are covered by a collective agreement that modifies the terms of the incremental suspension and that has been registered with the Labour Relations Commission.

This is the fifth financial emergency measures legislative proposal that has come before the Oireachtas for consideration. Three were introduced by the previous Government in 2009 and 2010. Those Acts were introduced unilaterally and made provision for reductions in the annual remuneration of public servants through a pension-related reduction of €1.35 billion and a reduction in remuneration of €1 billion.

This was followed by the Financial Emergency Measures in the Public Interest Act 2010, which introduced the public service pension reduction, PSPR. The Financial Emergency Measures in the Public Interest (Amendment) Act 2011 was introduced by this Government in line with the outcome of the referendum on the 29th amendment to the Constitution to apply proportionate reductions to judicial remuneration following a vote of the people. The Act also provided the necessary legislative amendments to support the reductions applied by this Government to ministerial officeholders and on an administrative basis when taking office in March 2011. Senators will recall that one of the first actions of the Government was to cut the pay of the new Government and we applied further reductions to the pensions of the previous Government in the 2011 Act.

Notwithstanding the pressing economic and fiscal challenges faced in the recent past and which we continue to face as a country today, I do not consider that any of these financial emergency measures have been brought to the Oireachtas, irrespective of the Government concerned, by choice or with anything approaching enthusiasm. The reality is that no government or politician could expect a welcome for these measures. We must rely on the hope, certainly not the expectation, that these measures will be seen, in hindsight if not now, for what they are. They are not measures of choice. In effect when all options are unpleasant the choices become about trying to limit the pain imposed on those affected. These measures before us are painful certainly but they will make a vital and proportionate contribution to the repositioning of our public finances to a sustainable model and will assist us in regaining our economic independence as we reclaim control of our economic futures.

I and my colleagues in government are acutely aware that, irrespective of the requirement to meet the general government deficit target of below 3% by 2015 and the necessity of a proportionate contribution of €300 million in 2013 and €1 billion by 2015 in savings, to be made from the public service pay bill, the measures proposed in this Bill impact adversely on public servants and I am not trying to hide that fact. As I have noted previously, public servants have contributed significantly through the pension levy imposed in 2009, the pay reduction imposed in 2010 and through other measures, including head count reduction, reduced salary rates for new entrants and reductions in pension payments to pensioners under the PSPR.

Public servants live in the same economy as all workers do; they share the same costs, taxes and interest rates that all workers do; and, undoubtedly, they share in the many difficulties that the current crisis has caused for individuals and families in the wider economy, such as significant debt, high mortgages, negative equity and loss of employment for family members. There has been an unedifying rush to criticise and point out the weaknesses and ills of the public service for political and other agendas. Among the shrill voices there is a tendency to tackle the man or woman rather than the ball and grossly unfair generalisations are made about public servants as a group. This ignores the human face of the public service. People working in the service deliver vital public services that are of benefit to society on a daily basis at all hours of the day and night in an efficient professional way without fear, favour or judgment.

The public service is not perfect and this is why my Department has a particular title and mandate which focuses on reform and transformation. However, this should in no way denigrate the job done by and the many excellent characteristics of our public service and public servants which are well recognised by our international partners. We need look no further for an illustration of the capacity and ability to deliver by our public servants, even in times of severe resource reductions, than the current Irish Presidency of the European Union which draws to a close next month. An excellent Presidency has been delivered and this is widely recognised by our EU colleagues. I intend to reflect upon this performance and I hope to bring forward proposals that will go some way to acknowledge it in the coming months.

That is self praise.

This is not self praise. I acknowledge the work done by numerous civil servants, who have fronted the bulk of the work on a remarkable level in recent months.

While much is made of the significant remuneration rates at higher levels in the public service which were allowed to develop before the current fiscal crisis enveloped us all, my record as Minister since taking office in March 2011 stands scrutiny in respect of measures taken to tackle higher pay in the public service for employees and officeholders alike. However, the reality remains that the public service is not dominated by high earners. Currently, approximately 87% of public servants earn less than €65,000, a fact worth reflecting upon, and when the pension-related deduction is factored in this reduces to €60,225. A total of 68% of public servants earn €50,000 or less, and when the pension-related deduction is factored in this reduces to €46,750. This is reflected in the proposals made by the Government which ultimately, following the expert and welcome intervention of the Labour Relations Commission, have given rise to the proposed Haddington Road agreement, HRA.

The proposals in the HRA should be considered in the wider context. The HRA has resulted from an intensive engagement between public service employers and the process has been assisted by the Labour Relations Commission. They have negotiated a difficult and complex set of proposals which will deliver the necessary €1 billion saving in the public service pay bill by 2015 while ameliorating the impacts for public service staff on low and middle-incomes to the greatest extent possible. I underscore that the proposals have protected the core pay of 87% of the workers in the public service. They also address many of the concerns expressed by the staff representatives during the long negotiations.

The Haddington Road agreement seeks to achieve a broad balance of equity between public servants and sectors, notwithstanding the complexity and the diversity of public service roles, particularly at individual level. The measures provide that those at the highest levels of pay contribute the most. The proposals also clearly distinguish between the lowest paid, that is, those earning under €35,000, those on middle incomes, that is, those earning between €35,000 to €65,000, and the higher paid, that is, those with a salary greater than €65,000. Those earning under €65,000 will have their increments paused by between three and six months. They will, however, receive their next increment on time and the following increments will be paid in full. The HRA also provides for the continued payment of Saturday and night duty premia and the double time Sunday premium has been maintained. That was an important negotiating demand of some sectors, especially nurses. Other than the increment pause, there will be no impact on their core salaries. In contrast, those on salaries over €65,000 will have their pay reduced by between 5.5% and 10% with longer periods for the award of future increments where those apply.

Like the financial emergency measures legislation that has been introduced, the Haddington Road agreement also reflects the fiscal crisis and challenges which we face as a country. The legislation and the agreement are instruments of their time and their economic environment. Pay reductions through legislation are highly unusual in the history of the State despite our experience of recent times. A negotiated agreement between public service employers and their employees that provides for a significant reduction in the public service payroll is rarer still and I believe such an agreement has never been negotiated before in Ireland. Private employers often have to open their books to employees in similar circumstances but with the public finances there was no such requirement in this case. It is no secret that a sum of almost €1 billion per month is being borrowed to keep the show on the road to fund our public services and pay our public servants, while we are committed, through our international funding partners, to meet a general government deficit of less than 3% of GDP by 2015. These are the restrictive parameters within which the Government must work. These are recognised and understood by public servants and their representatives because they are all stakeholders in the country and citizens. While we may differ to some degree on how the situation can best be addressed, public servants recognise that the current situation is unsustainable in the longer term.

In essence, there will be three categories of pensioner. We must remember that people who retired after the last grace period had already had their pensions reduced because their core pay was reduced. I think it fair not to make the same deduction from them as from those whose pensions were based on a higher core pay. It is to have equity that this graduation has been introduced.

Section 6 consists of technical amendments to ensure that relevant elements of the Financial Emergency Measures in the Public Interest, FEMPI, Act 2010, including in respect of aggregation of pensions and calculation of pension, are adjusted for the purposes of the Bill.

Sections 7 and 8 provide for a freeze of progression along incremental scales by public servants for a period of three years, commencing on 1 July 2013. Public servants may have the effects of this provision modified on the basis of a collective agreement, which has been registered with the Labour Relations Commission, having been reached. As is standard in these FEMPI Acts, the Minister is, under section 8, granted a power to exempt public servants from the application of the measure on limited and exceptional grounds. That is an important provision. In designing any scheme for approximately 300,000 people, there might arise an anomaly where somebody is adversely affected to an extent that would be unjust. I believe we need the power to address this and to modify the impact where such a case arises.

Section 9 provides that persons retiring before 31 August 2014, or on a later date that may be ordered by the Minister, will be entitled to have their pensions calculated as if the pay reduction and any increment pause or freeze had not applied to them. This provision is similar to the "grace period" provision provided for under the Financial Emergency Measures in the Public Interest (No. 2) Act 2009. It is intended to prevent an unmanageable and unaffordable short-term outflow of staff affected by the pay reduction to the detriment of the delivery of public services. In other words, if people are coming close to their retirement date in the next year or so, they might want to go immediately if they felt their pay would be reduced and, therefore, their pension would be reduced. To deal with this issue, I want to give that grace period until August of next year for the gradual retirement in an orderly way of public servants who are approaching retirement age.

Section 10 amends the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 to provide that the employees of the Railway Procurement Agency and the National Treasury Management Agency will be subject to the measures proposed in this Bill. While they were not included in the pay reduction imposed under the Financial Emergency Measures in the Public Interest (No. 2) Act of 2009, this Government does not consider that the basis for their exclusion continues to be valid. It should be noted that the RPA is due for merger with the National Roads Authority under the rationalisation programme I announced in 2011. This was an anomaly. I do not know why the RPA and the NTMA were excluded from the cuts that were announced in 2009 and I intend to include them in this legislation.

Section 11 amends the Financial Emergency Measures in the Public Interest Act 2009 to provide for a modification of the pension-related deduction that applies to serving public servants. This was one of the changes negotiated under the Haddington Road agreement. This modification will reduce the pension deduction on all public servants by a very modest €125 a year, to commence from 1 January next. It looks like something that is almost totemic, at €125 a year, but it is important. I chose to anchor these necessary reductions in a financial emergency measures Bill because that says it is not a normal piece of legislation, nor is it a permanent piece of legislation. It is to deal with a hole in the public finances that must be addressed in as equitable a way as possible, and it should be relaxed as soon as those circumstances change. As a signal that these things are not permanent, a modest start in rowing back at the very lowest level was asked for by the unions and agreed under Haddington Road. That is how section 11 comes about.

Section 12 provides for annual review and report to the Oireachtas of the necessity of the measures set out in the Bill. As an administrative efficiency measure, one single review will now encompass the reviews currently necessary under the FEMPI Acts to date. In other words, it will be necessary for me, as Minister for Public Expenditure and Reform to, on an annual basis, come back to the Oireachtas and say the financial emergency continues to exist and that this is the reason these measures are still justified. The day will come, hopefully in the not too distant future, when that will not be possible to justify, and that happy day will mean we can unravel these measures. As I said, for reasons of administrative efficiency, rather than do it five times in five separate reports for the component parts of each of the five pieces of FEMPI legislation, I propose to have one single reporting mechanism. Section 13 states the Short Title of the Act.

Before concluding, I know that in some quarters there is an effort to portray both this Bill and the Haddington Road agreement as being anti-union and anti-worker. In my view, nothing could be further from the truth. Certainly, as I have acknowledged earlier, the measures provided for in the Bill and the Haddington Road agreement are far from painless for public servants, anything but, as I and this Government acknowledge. Many public servants are already well challenged by the impact of the crisis that has befallen our country and they will be impacted again by this Bill. I am very conscious of this, which is why I want to mitigate it as far as is possible and to apportion the burden in as fair a way as possible. However, it is a burden on all who will be impacted by it, and there is no escaping that.

However, there is nothing more pro-worker and more pro-trade union than their employers sitting down openly and honestly with them across the table to tell them the full truth of the economic circumstances of their place of work and, in this instance, of the country of Ireland, and to identify solutions that can be addressed to shared problems, while ameliorating the impact of the measures adopted to the greatest extent possible and generating a collective agreement on a collaborative basis that can enable both employer and employee to share in a sustainable future, with a guarantee of employment. Both the Financial Emergency Measures in the Public Interest Bill 2013, which is now before the House, and the Haddington Road agreement are mutually supportive of the worker as a stakeholder in the enterprise that employs him or her, that is, the Irish public service. They provide the framework for the concluding of fair and balanced collective agreements - not done on the previous occasions that FEMPI Bills were introduced - across all sectors of the public service so the necessary savings from the pay and pensions bill can be secured.

This is a vital contribution to the final leg of our fiscal consolidation efforts, while delivering public services and securing continued industrial peace. We owe this to our paymasters, the citizenry of our Republic, who pay all our wages and who depend on us to steer the ship of state in these turbulent and difficult times to safe harbour, and to give growth, job potential and a future for this land. I commend this Bill to the House.

The Haddington Road agreement, brokered by the Labour Relations Commission, represents a proportionate and equitable contribution to the fiscal consolidation required. The measures provided for in the Bill underpin it. I truly hope all public servants will be able to consider its provisions carefully in the context of the fiscal crises faced by their employers and the people as a whole. I hope they will all get the opportunity to make their judgment through the ballot box or whatever mechanism each union prescribes.
Before addressing the detail of the Bill, it is appropriate to confirm the approach and position of pensioners under the proposed legislation. In seeking to spread the burden of these financial measures it was necessary to look for a further contribution from public service pensioners by revising the public service pension reduction, PSPR. However, on this occasion I was determined to ensure lower paid pensioners would be fully shielded from any impact. On that account, the Bill sets a pension threshold of €32,500 below which no reduction will apply. There has been some confusion that the new PSPR rates applying to pensions of €32,500 would also then be applied to spouses’ pensions at €16,250. This is not correct. The only spouses’ pensions that will be affected by these measures will be those over €32,500. Just as 13%, a small percentage, of the overall public service earns more than €65,000, the number of pensioners entitled to pensions of €32,500 is also a small figure, 22% of the total pension cohort.
It is worth pointing out when the first PSPR was introduced from 1 January 2011, there was absolutely no consultation with any pensioner group and the measure was introduced unilaterally to impact on all pensions over €12,000. On this occasion I have introduced a PSPR measure which will impact on less than one quarter of public service pensioners. My officials and I have met the Alliance of Retired Public Servants to discuss the rationale behind this move and explain its detail. I felt it was important to show them the courtesy of meeting them, listening to their very genuine concerns and explaining to them why, in the interests of equity, it was necessary that a further contribution be sought from higher paid pensioners. As I explained, it gives the Government no pleasure to have to take these measures and we would all genuinely wish economic circumstances were otherwise. The reality, however, is that the Government must take steps to ensure the economic survival of the State and this impacts across society. The additional reductions, of between 2% and 5%, could not be regarded as excessive, particularly on pensions over €32,500. There was a general view that there must be a further contribution from higher paid pensioners. We saw many people walking out of office or financial institutions which were supposed to be monitoring the State’s progress in times of crisis with very large pensions. To ensure they make a contribution, one has to have a wider take as one cannot constitutionally target one tiny group of citizens to make a disproportionate contribution.
On the question of representation of pensioners, I indicated to the Alliance of Retired Public Servants that there would be advantages for both public service pensioners and the Government in having a formalised structure for ongoing engagement on public service pension matters. Before, when one dealt with retired public servants, each sector was represented by its own unique group such as civil servants and nurses. It was necessary to have an overarching representative group. I welcome this move to have an alliance. As soon as economic circumstances permit, it will be my priority to move as a matter of priority towards reducing the burden of the PSPR, with the initial focus on those in receipt of lower pensions. We owe this to public service pensioners.
The Bill’s primary purpose is to implement the proposed pay reduction for public servants earning annual salaries of €65,000 or more and the parallel but lesser reduction in public service pensions over €32,500. Contingency measures that may be deployed to secure reductions in the public service pay and pensions bill are also included, including provision for a universal freeze on pay increments. The legislation also provides a facility for unions and representative associations to conclude collective agreements with their public service employers which will avoid the need for these contingency measures to be used. I want each public servant to decide on these choices. I accept they are difficult, but I have promised that once this contribution is made, it will be the last ask of public servants.
Section 2 provides for a graduated reduction in the remuneration of public servants earning €65,000 or more. Any amount earned by those higher paid staff up to €80,000 will be subject to a reduction of 5.5%, any amount over €80,000 will be subject to a reduction of 8%, any amount over €150,000 will be reduced by 9% and any amount over €185,000 will be reduced by 10%. All public servants, including the Government and Members of the Oireachtas, other than the President whose pay is protected under the Constitution and the Judiciary will be affected. Those affected by the measure represent some 13% of the public service workforce, those who are paid the most in core salaries and allowances.
This section also includes a provision to enable a public employer or a Minister of the Government to exercise an existing power to fix terms and conditions so as to result in less favourable remuneration, other than core salary, or increased hours for the public servants concerned. That existing power may be exercised, notwithstanding the terms of any enactment, contract or otherwise. In essence, this provision aims to permit public service employers, including Ministers, to make necessary savings if they cannot be achieved by way of collective agreement.
It is important to point out that this section does not grant additional rights to employers to adjust terms and conditions. Basic salaries are excluded. Reductions in basic salaries should only be made in the context of primary legislation and with the consent of the Oireachtas. Furthermore, any group that has its terms of employment set by the Oireachtas cannot have them changed by a Minister or employer. This would include officeholders, in particular the Judiciary whose pay terms are determined not by a Minister but by the Oireachtas.
Section 3 sets out technical amendments which provide for the application of all existing ancillary powers of the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 to the new pay reduction, including the prohibition on pay increases and the ability of the Minister to modify the pay reduction as it applies to certain persons or groups on limited grounds, to the pay reduction provided for in the Bill.
Section 5 provides for amendments to be made to the Financial Emergency Measures in the Public Interest Act 2010 to increase and extend the impact of the PSPR on persons who have retired from the public service and attract pensions of €32,500 per annum or more. Persons in receipt of annual pensions of less than €32,500, or their widows who have pensions less than €32,500, will be unaffected by these measures.
To reflect the fact that public servants who retired before 29 February 2012 would have had their pension entitlements based on pay rates greater than those who subsequently retired after that date, different levels of reduction detailed in the tables apply. The reductions will apply from 1 July 2013. Section 4 is a consequential amendment to the definition of "pensioner".

With all of the praise and self-praise in which the Minister's speech is steeped, one would be forgiven for thinking the Croke Park II agreement was just a bad nightmare in the dreams of public servants, and that the proposals which the Government put forward, which were to divide union against union and to target those workers who work shift work and weekends, were all a nightmare, a dream that did not happen, and that it was not the spirit of this Government or of this Labour Party.

I sometimes wonder why the Minister is there and why we do not have Kieran Mulvey in that chair, because he is the man who has brought the unions and workers to a better position and, in my view, has shamed the Government into offering a fairer deal. It was not any politics that drove the nurses to vote against the original Croke Park II proposals by 95% to 5%; it was the sheer unfairness of it that the Government would target people who spend their nights in hospitals and who spend their weekends away from their families. Yet, the Minister comes to the House claiming all the credit for somebody who came along to clean up the mess that he created.

That is what happened.

(Interruptions).

Senator Byrne, without interruption.

We have the unedifying spectacle of a Minister coming in to extoll the benefits of the previous Financial Emergency Measures in the Public Interest Act in 2009 and 2010 when he viciously and vociferously opposed it on purely populist grounds at the time. We in Fianna Fáil acknowledge that the public pay bill must be tackled but we believe it should be done in the fairest possible way. Those previous pay cuts were very fair.

(Interruptions).

Senator Byrne, without interruption.

They were done in accordance with the ability to pay. This Government's position and values were expressed in the Croke Park II agreement, which does not get any mention in the Minister's speech, and reflected an attitude of unfairness and pitting one side against the other.

I object most strenuously to the guillotining of this legislation. There is a specific commitment in the programme for Government to have staging and space between the stages of legislation and not to have guillotines. The Government made much of this in opposition. We accept that there are occasions when legislation needs to be put through faster than is normal practice but the amount of guillotines and bad legislative practice is surely at record levels under this Government.

(Interruptions).

It is not enough to say that Fianna Fáil did it because Fianna Fáil was thrown out of office at the last general election precisely because Fine Gael and Labour promised they would do things differently. When the Taoiseach was challenged on this yesterday in Dáil, I was very disappointed to hear him respond by saying that Fianna Fáil did it so it is okay for the Government. It is not okay because the public said it was not okay and we paid a high electoral price for that. Fine Gael and Labour in government do not seem to have learned the lessons of that. They think it is okay to go ahead with the old ways of doing business and that is wrong. It seems that Fianna Fáil is one of the few parties that is trying to learn some of the lessons from the crisis when we acknowledged that the public did not agree with the way things were done. Simply by throwing back what happened in the past at us, this Government is definitely on the wrong course.

(Interruptions).

Senator Byrne, without interruption.

The Government seems to have brought an end to the process of overall public pay deals by conducting a series of bilateral negotiations in Croke Park II. Some sections of this Bill give it potential for further negotiations. This could appear to favour particular unions over others. There seems to be no overall decision, strategy or vision in respect of this, which may have a long-term impact on industrial relations. Industrial relations in the public sector have been quite good and public servants, as the Minister has said, have put up with a significant amount of cuts in the past few years. When he entered Government, the Minister was among the first to acknowledge that these cuts were necessary. He has since described the original pay cuts legislation - let us call these measures what they are instead of giving them nicknames or initials because the pension cuts were pay cuts - as an important part of stabilising the economic situation of this country. In 2011, when the Government was claiming all the credit for stabilising the fiscal situation, it ignored the fact that it had opposed many of the measures. Many of the measures mentioned by the Minister today were opposed by him when he was in opposition.

What is worrying is that the Government seems to be much more concerned about reducing the public sector pay bill than in improving the delivery of public services. The Minister made great mention of listening to the concerns of the Alliance of Retired Public Servants and asserted that it was not consulted by the previous Government. I certainly met it and I know that many Members of the Dáil met it at the time. I am certain that Ministers met with various pensioner groups at the time. I would be interested in finding out whether no meetings took place because the groups made a huge noise at the time and were very organised. I would be very surprised to hear that no formal meetings were held but I have no doubt that they may have met with Ministers in an informal setting at the time.

Section 2 of the Bill seems to give any Minister very wide powers in respect of staff under the aegis of his or her Department. The Minister is saying that it does not change anything and that this power to fix terms and conditions is already there. If that power is already there, why do we need a specific provision in law to allow the Minister to change terms and conditions? The fact is that any employer can fix terms and conditions if the employee agrees to them but no employer can break the terms of a contract. The Minister mentioned high public sector pensions and salaries. We are constantly told these cannot be cut. It seems always to come down to contract law. We cannot cut the pay of doctors or pharmacists by more than a certain amount because contract law seems to be supreme. Yet, the Government asserts that the Oireachtas has the power to bring in a provision that will allow a Minister to effectively cut the pay and change the conditions of public servants as he or she wishes. Giving Ministers that power is very dangerous for democratic accountability. In recognition and in honour of the work public servants do, such matters should be brought before the Oireachtas. The Oireachtas is well used to dealing with reductions in public sector pay. It is good that the consultation has taken place over the past few weeks and months, that unions were involved and that the Croke Park II talks took place because the Government got its answer and had to go back to look for a fairer system for the majority of workers. Here we are doing something that is most novel and unfair and we will certainly oppose giving Ministers this power. This power should be left with the Oireachtas. When we make laws to cut public sector pay, they have always been couched as one-off financial emergency measures. Well we have had five of them. If we must couch major pay cuts as financial emergency measures that are just taken in times of economic crisis, can we then give the power to a Minister to alter terms and conditions of employment?

Other than core pay.

The Minister has not learned the lessons of Croke Park II.

We do not need to take any lessons from Fianna Fáil.

The whole point of Croke Park II was that allowances, and in some small cases, overtime but particularly allowances on weekends were the core pay of nurses. Core pay includes all of those things and they are the lessons to be learned. There must be severe doubts about whether section 2 is lawful. It is certainly news to me that a Minister has an existing power to reduce terms and conditions of employment. There is no doubt that he can fix them. There is no difficulty if the Minister wants to change working arrangements for the better and the employees agree. However, giving this power to a Minister is very dangerous and we need far greater scrutiny of this on Committee Stage.

The Government has published the approved text of new legislation to give effect to the draft agreements arrived at during the recent LRC process. Legislation is needed if direct pay reductions are to be applied to the pay of any group of public servants, including officeholders, such as members of the Government, Members of the Oireachtas and members of the Judiciary, and to the pensions of former public servants. Legislation, therefore, is necessary, regardless of whether the proposed reductions are the subject of agreement with the public service unions and associations.

This legislation also confirms the Government's ability to make the necessary savings, should collective agreements not be reached with the unions, by setting out a number of contingency measures. We estimate that these measures will achieve savings to the value of €300 million by the end of the year and €1 billion by the end of the three-year period. The Government has sought at all times to make the necessary savings by agreement. There are very significant benefits for all if work can be done in an atmosphere of industrial peace across each part of the public service. This will benefit both people working in the public service and all of us who rely on public services working efficiently. Employees will know that the essential elements and protections of the Croke Park agreement remain in place. From a national perspective, industrial peace in the public service can be secured at a critical time in our path to economic recovery.

This is a critical time for Ireland. We have restored economic stability and regained our credibility on the international stage.

We are on our way to regaining our economic sovereignty. We are on the road to recovery.

In tackling salaries above €65,000 we are attempting in so far as possible to insulate lower paid public servants from the effects of necessary cuts. The Government has been committed to finding the necessary savings from the pay bill, some €300 million from the pay bill in 2013 and €1 billion by the end of 2015.

The Government has always maintained the preferred option is to deliver the necessary savings by agreement and this has been the basis for engagement with unions in the past five months. The Government has also indicated that it is prepared to show the necessary flexibility around how savings could be achieved. That flexibility was availed of by some unions during the original Croke Park II discussions and the Labour Relations Commission process. We are pleased at the outcome of the LRC process this week, which provides us with an opportunity to achieve the necessary savings, afford the protection of a collective agreement to public servants and to provide industrial peace in the public sector at a crucial time for our economy.

I welcome the Minister to the House and I commend the Bill.

I also echo the welcome to the Minister. I will be supporting what he is doing. We would all wish not to be in this position, but two years ago the Members of the Seanad met for the first time in the month of May and this was our job. One could have said that it was the fault of Fianna Fáil, but that is the position. It is amply illustrated in the review-----

The vote will not be unanimous on these benches.

Senator Norris will be voting against the Bill. I would like to welcome the Minister of State, Deputy Alex White.

In the report of review group on State assets and liabilities published in April 2011, the national development plan forecast that real GDP would be 42% higher in 2013 than is now expected. We have a political culture to spend the 42% we do not have. Nobody wants to be in this position but we must face up to the situation. I was saying to the Minister, Deputy Howlin, that this is what the Members of both Houses were elected to do. We would have wished for a different starting point but that was not the situation.

In the OECD-IMF staff estimates published in the autumn, our tax bill at 44% of GNP is about five percentage points above the OECD average of 41.9%. We cannot solve this problem by increasing taxation. In fact, in the two years we have been confronting this problem, taxation has risen far more rapidly than people intended or noted by the media. Public expenditure, in spite of headlines saying it has been cut, is in fact still increasing. The adjustment burden which will continue during the programme will be borne on the tax side. It might be a very nice low tax country for some people but, on average, it is not. I am sure the Minister of State's constituents confirm this to him.

The international comparisons on pay in that report show that Ireland has a high public pay bill. The OECD average for compensation of employees is 10.8% of GNP and in Ireland that figure is 14.1%, which is about 35% more than our competitor countries. We must compare ourselves with that. Part of the problem we are addressing is that in the era of benchmarking, public sector pay, at the top level in particular, was determined by people from the law and banks, who were totally out of touch with the international situation. We know from the books written at the time, that when the then Government went to seek assistance from our allies in Europe and abroad, the senior people on those delegations were paid far more than the President of the United States, the Prime Minister of the United Kingdom and indeed Chancellor Merkel. It was not that the delegates were particularly avaricious but were part of a system that generated pay rises which were way out of line with those in competitor countries. Now that we have asked people to rescue us, we must take notice of that.

A problem identified in the report of an bord snip nua, is that the numbers of higher management levels in the Civil Service grew by some 82% in the period 1997 to 2009, at a time when Civil Service numbers as a whole increased by 27%. Not only was the bill increasing, we were promoting people much more rapidly. It was praised at the time but in retrospect, at this juncture one would question the whole basis of social partnership. People were in a room awarding themselves pay rises and not taking much notice of the people who were outside the room. That is what we have inherited. A large part is public pay and the Government has tried to make greater adjustments to pay at the top than at the bottom level.

There is a problem. There is a culture that wants to spend money that we do not have. One exhausts the taxable capacity and the borrowing capacity of a country. Eventually that type of party has to end. I know the Secretary General of the Department of Public Expenditure and Reform has been talking about a new economic service. I think of the old system in which the job of the Minister, for example, the Minister for Transport, Tourism and Sport, is to get the biggest possible budget regardless of the consequences for the country. Each Minister fights for expenditure and when one adds up the cost, one ends up with the type of situation we are in today.

The proposal for a Government economic service, to have proper economic evaluation in every Department linked to the Department of Public Expenditure and Reform is absolutely essential. The growth of bureaucracy has been a problem in Ireland. William A. Niskanen has written The Budget-Maximizing Bureaucrat which deals with this problem

The lobbying culture is another factor. If one robs Peter to pay Paul, one will get the support of Paul, his lobbyist and his accountant. We must ask whether it is worthwhile from the point of view of society as whole. The Department of Public Expenditure and Reform has to strengthen itself against Departments which maximise their budgets and try to solve problems by throwing money at them.

The complexity of taxation is that people ask for public expenditure on the one hand and then design loopholes not to pay for it by taxation. That must be addressed as well. Many of the advocates of extra public spending do not intend to make any contribution. There is a culture of entitlement, clientelism and lobbying. I hope legislation on lobbying is brought forth. Weak scrutiny in Parliament is an issue. The Minister knows I will raise the need for more checks and balances and scrutiny. We need a Parliament with two Houses. The Seanad, which has 42 new Members, has been trying to do that.

We do have public compensation problems at 14.1% of GNP compared with OECD average of 10.8%, which is 31% more. We have a weak appraisal of capital expenditure. Our expenditure on welfare is 29% above the average and our public expenditure is 23% above the average. We have to tackle this expenditure on multiple fronts.

Current expenditure is €51.5 billion from which the Government is looking for €300 million in savings. These savings targets could also have been met had we made across the board cuts of 0.58%. The pressure must be kept on right across the board for proper economic assessment of spending. Public pay is part of the problem and must be confronted. It is part of the reason the Irish economy is on the rocks. I will speak in detail on the amendments during the Committee Stage debate.

One wishes that we were not starting from this point, but we must get back into line with the countries with whom we compete. Much reform is needed. I think we are slow in implementing reforms. I hope that measures, such as better value for money, assessment of projects, control of lobbyist and clientelism, and assessment of spending are tackled but one could not succeed without measures on public sector pay because that dominates current expenditure.

I welcome the Minister of State, Deputy Alex White, to the House. First, I will address some of the comments made by Senator Thomas Byrne. I find his comments somewhat incredulous. I think he is suffering from some form of schizophrenia. He must think we are all suffering from some form of collective amnesia. Let me remind him that in 2009 and 2010, cuts to pensions amounted to €1.35 billion and in 2010 there was a reduction of €1 billion in remuneration. I am sure that every single public servant in the country is well aware of that fact. On the other hand, we are supposed to believe the Fianna Fáil Party has had some type of Pauline conversion, acknowledged its mea culpa and has learned from the error of its ways. Again I do not think there is a public servant in the country who will swallow that.

Senator Byrne mentioned our failure in regard to the Croke Park II agreement. One of the difficulties we had in negotiating that agreement, as he well knows, is the fact that previous Governments failed to deal with low paid workers' core pay and instead of doing that they hid behind spurious increments and payments such as twilight hours payments and so forth.

They are not spurious. Ask any nurse in the country is that a spurious payment?

Senator Hayden to continue, without interruption.

If anybody is talking about blame for failure to deal with Croke Park II, I would refer him or her to the previous Government.

This Bill is a surprisingly short one comprising only 13 sections and is reasonably succinct in its aims. It enables the reduction of remuneration for certain public servants on higher rates of pay in excess of €65,000, it suspends the payment of increments for three years for all public servants unless they are covered by a collective agreement, it gives the Minister the power to set terms and conditions for public sector employment in terms of working time and variations to non-core pay, and it provides for the reduction in the amount of pensions paid to former public servants.

This legislation comes at the end of a long series of negotiations around pay and conditions in the public sector and, more importantly, it comes in the wake of a number of similar items of legislation removing benefits from public servants, most of them introduced by the previous Government. It is easy to understand the fatigue public servants feel, their anger towards further cuts and that they increasingly feel misunderstood and undervalued. Like all of us, they are sick to the teeth of the expression "delivering more with less". Under increasing pressure on service delivery, public servants feel that what they have delivered under Croke Park I has gone unrecognised by the public. They can be forgiven for that given the scant attention that the media has paid to what has been delivered under Croke Park, focusing instead on stories that drive a wedge between public and private sector workers.

It is important to start this Second Stage debate by recognising what public servants have delivered for this country in the past number of years. I will give examples of some of those achievements. By the end of 2012 there were 565,000 more medical card holders in the system, 50,000 more students in schools, 30,000 more third level students and 80,000 more State pensioners, all achieved with less resources. Significant changes have been achieved in work practices and in areas such as Garda rostering, and in spite of fewer resources in many areas of the public service, members of the public have not even noticed a change. We owe a vote of thanks to what the public servants of this country have achieved.

There is no doubt there is renewed confidence in the Irish economy in recent times. We have seen a turnaround in the property market with the recent Irish Banking Federation housing market monitor showing a 14% rise in residential property market transactions for the first quarter of 2013 and a stabilisation in property prices. We have also had recent good news with the creation of 100 jobs in Facebook and today 400 new jobs were announced for Cork. On top of that, we have had recent predictions from the ESRI that Ireland will exceed growth expectations for the next number of years. All of this might lead to an expectation that the crisis is over and that we take our foot off the pedal. We are back to the bond markets and one might think that the troika had gone home. I had almost forgotten A. J. Chopra's name. Unfortunately, that is not the truth of the situation. Although we are 85% of the way there, we still have a distance to go and whether we like it or not we are obliged to go the last 15% if we want to get our country back.

The suggestion has been made, usually from Members on the Opposition benches, that we could do what is needed by either increasing taxes or reducing the cost of provision of services. The reality of the matter is, as Senator Barrett has pointed out, that we have done both. The fact remains that the public service pay bill still represents 36% of total Exchequer expenditure and this currently amounts to €18.1 billion. In spite of all the pain that has been endured so far, we must effect further reductions.

These effective reductions will be achieved by pay cuts. I will not go over what the Minister has said but it is important to recognise that those pay cuts are to be endured by those earning more than €65,000 in the main. That is an important difference between what we are doing in this legislation and what was done under the previous five items of legislation, most of them delivered by the previous Government. It is important to note that to date the majority of public service unions have come on board with the LRC process. I would like to pay tribute to them, to the work of Kieran Mulvey and his team and to the work of the Minister's Department.

This legislation is necessary and it provides a legal framework that needs to be made, of that there is no doubt. As the recital to the Bill notes - it is important to bear this in mind and it bears repeating - these "measures are necessary to address a serious disturbance in the economy and a decline in economic circumstances of the State". An important commitment has been made, and I note the Minister made it again here today, that these measures will only last as long as is necessary. I welcome the commitment he made again here today that there will be an annual review of the necessity for these provisions. I am only too well aware of the scepticism there is among the public about any new cut or new tax imposed given past experience with levies that grow like the layers of an onion. This debate is not about the Haddington Road agreement but I welcome the provisions in it that will restore benefits to workers in the future.

This is the fifth financial emergency measures legislation. It sets a floor in terms of €65,000 of core pay and any pay under that is protected. An important point to repeatedly make is that 87% of workers in the public sector will suffer no reduction to core pay. I am not suggesting for a minute to Senator Byrne that they will not suffer in other ways but the fact remains that core pay is protected by this agreement. It is important to note also that the application of cuts is stepped in favour of those who earn more. Those who earn more than €65,000 and substantially more than that, will pay more, and that can only be justified. The alternatives, if we were to accept what has been proposed by some people, would be to cut levels of service, but I do not believe in the current environment with the levels of poverty that exist that this would be acceptable.

I accept there have been criticisms of the legislation. I note that it would appear that former public servants had no forum with which to engage with the State. I note the Minister addressed this matter. It is important to state that floor of €32,500 is in place to protect former public servant but this is really about intergenerational solidarity. I do not believe that the entire burden of what is before us should be shouldered entirely by serving members of our public service, many of whom have large mortgages and young families to support. By putting a floor €32,500 in place, we are protecting less well-off public servants.

As the Minister has said, this is the last ask of our public servants. I believe these measures are necessary to restore the economy having regard to the position we are in due to no fault of this Government. I would like to thank our public servants for what they have done for our country in this time of crisis.

I regret the Minister, Deputy Howlin, has left the Chamber but I welcome the Minister of State to the House.

The dictionary definition of bullying is the use of superior strength or influence to intimidate someone, typically to force him or her to do what one wants. The Bill before us today matches that word for word. This Government unilaterally and arbitrarily decided to cut €1 billion from the public sector pay bill, and it was done without any assessment of the impact of these cuts on our public services or the communities that depend on them.

The Government is trying to present these cuts as a reform measure but, unfortunately, the reality is very different. The €1 billion figure has nothing to do with improving our public services or assisting, as the Minister stated in his speech, "... the human face of the public service ... [who] deliver on a daily basis, at all hours of the day or night, vital public services that are of benefit to society in an efficient professional way without fear, favour or judgment". It represents the failure of the Government to reach its own growth targets as originally projected in the troika programme. Those targets were missed because of the policies of austerity, which are strangling the life out of the domestic economy. They are policies the Minister of State's ministerial colleague and party members stated in an article that the Minister co-authored this week were "a recipe for long-lasting recession and disintegration". What is the response? Is it to invest in jobs and people to stimulate growth in demand? It is not. Once again the response is to reach into the pockets of low and middle-income families and take more money from them. The result of that is that more families are pushed into poverty and hardship, there is further depression of domestic demand, and more damage is done to already strained health, education and community services.

These policies of austerity are not working. They may be keeping the European Commission happy to some extent but they are hurting hundreds of thousands of struggling families across the State.

I refer to a published article in which the Minister for Social Protection, Deputy Joan Burton, said, the pressure to make far reaching adjustments often means there is limited time to discuss reforms with trade unions and employers' organisations before they introduce undermining reform sustainability. That is why the overwhelming majority of public sector workers rejected the proposals. In rejecting Croke Park II, they were not only defending their own pay and conditions but our domestic economy and our public services. Despite the threats of unilateral pay cuts, they sent the Minister back to the drawing board and from that we have returned with the appropriately named "Beggars Bush" proposals. There was a reluctance to name the proposals after the place in which they were negotiated, but that is a far more appropriate name, not only because of the policy of austerity but they are making beggars out of many of our citizens, individually and collectively, because it was a former British army training barracks where the bullyboy tactics were taught to the British garrison until these tactics were defeated by Republicans in 1922.

That has nothing to do with the Senator's party.

Bring them back.

Today, Beggars Bush is home to the labour history museum which celebrates a long and hard struggle by ordinary working men and women for fair pay and decent terms and conditions. It is ironic that this is the same location where a Labour Party Minister effectively concluded an agreement that would undermine the pay and working conditions of low and middle-income working men and women. This same Labour Party Minister saw fit to ignore his own fine tradition of defending workers' rights and instead sought to adopt these bullyboy tactics which dominated Beggars Bush and earlier and darker period in our history.

We see what the workers think when they voted.

Some of them already have-----

It is truly remarkable.

We see what they did. A vote would be more important in the next general election.

See what the workers think.

Senator Kathryn Reilly to continue without interruption from any side.

Only from the Labour Party.

All about the problems-----

I ask that courtesy be shown to Senator Reilly.

Maybe it was his choice that led the Government to railroad the legislation through the Oireachtas this week and to avoid the inevitable sense of shame the Minister, Deputy Brendan Howlin, and his Labour Party colleagues must feel at having abandoned not only public sector workers but the proud Labour Party tradition of defending workers' rights. Sinn Féin opposes the Bill for one simple reason, namely, its intention and purpose is to threaten ordinary public sector workers into supporting the proposals negotiated at Beggars Bush. It is not about cutting excessive pay of overpaid public sector chiefs or introducing pay equity in the public sector or clawing back the excessive pensions of former politicians and senior servants but a threat to law, to sign up to the Minister's latest slash and burn raid of the public sector or else. Where I come from we have been taught to stand up to bullies-----

We saw how Sinn Féin stood up to people.

By opposing the Bill that is exactly what we are doing.

As other speakers have said, this is not an easy measure but it is one that must be put in place if we are to ensure we get our finances back on track. I hope it will not be necessary. I hope we will have agreement but we do not know how individuals will vote. We will leave that to themselves and their various unions but look forward to a positive result in that area. The overarching ambition of all these adjustments is to get our finances back on track. We need to be in a position whereby we are within 3% of our GDP by 2015. Some 85% has been done so far but the most difficult part is the balance. There is no doubt the last mile is always the hardest. The intention is to take €3.5 billion out of the economy in 2013, €3.1 billion in 2014 and €2 billion in 2015.

Some 35% of what the Government takes in is spent on pay and pensions in the public service. If we are to implement the necessary restructuring public sector pay and pensions must be part of that and there is no avoiding it. We are borrowing €12 billion each year to fund our public services and that is unsustainable. If we are to get the economy back on track and create a better future for those who are sitting the leaving certificate examination next week and those who are graduating from our universities this week, then it needs to be done. History will not be kind to us unless we do this. It is easy to rant and rave about it but the fact of the matter is that we have to get our house in order.

Fortunately, the news today is that the economy is good and growing. For the second successive year in a row we have had growth. Our GDP grew last year by 0.9%. The figures for unemployment today are positive. For the first time since 2010 unemployment is less than 14%, a small but significant change. For those who are unemployed the figure has reduced further. That is positive. The more people who are working and paying taxes the less dependence there is on the State for an income. The quicker we can bridge that yawning gap the better.

Senator Aideen Hayden mentioned Croke Park I. It has been positive and has worked well in Cork in respect of the reorganisation of local hospital services. I think I said previously that there is a need to move the services around whereby orthopaedic services are amalgamated in one hospital and cancer services in another. All of that was done because of Croke Park I. I was told by those who are involved in the process that it helped to get people around the table who were committed to delivering essential change in terms of the service delivery. There have been other positive developments under Croke Park I. However, the financial situation dictates that more must be done. Following rejection of the original LRC proposals, Mr. Kieran Mulvey was charged with contacting all relevant parties to engage in negotiations. Much debate took place here on Croke Park I. Some unions chose not to engage in that process while others did engage. It has been shown again with the Haddington Road agreement that they were able to state the effects the proposed changes would have on family and mortgage commitments and they were taken on board. There are new proposals now which will represent changes but will also ensure the Government gets the €300 million it wants in 2013.

I wish to make one further point. While we have heard much about imposing extra taxes on the rich we should be mindful of the recent Forfás report which warned against increasing the tax rate. Ireland already has a high tax rate. If we are to attract foreign investment and mobile workers to this country who are essential for our open economy, that tax wedge needs to be watched carefully vis-à-vis our competitors, particularly in the UK. The only future for this economy is a jobs recovery. We need people back at work. The tax wedge needs to be monitored and kept under constant review.

I strongly oppose the Bill. It is appalling, it is anti-democratic, anti-union and anti-worker. The Financial Emergency Measures in the Public Interest Bill is a misnomer. The first of these Bills was produced about five years ago. Do our emergencies last five years like the so-called "Emergency" we went through during what everybody else thought was the Second World War. This is a chronic situation.

That war lasted 60 years.

It is not actually an emergency at all. It is a chronic situation brought about by austerity and most international financial thinkers agree this is the situation. I come from a background where I actually voted against the bank guarantee. I also voted against benchmarking because I could see where it would lead but, on the other hand, of course I took the money when it came in so I am not a complete eejit. The Bill is not an emergency, it is a chronic situation otherwise we would not have all these Bills coming before the House. I do not believe I have seen the following in a Bill previously.

It is proposed to take Committee and Report Stages on Thursday. Accordingly, this list of amendments is circulated in advance of the conclusion of Second Stage. That is extraordinary notice to give on a Bill.

I refer to some of the points made in the Minister's contribution. He cited his attempts to ensure fairness. He challenged the idea that there were many rich people in the country. I disagree and say there are rich people in the country. The Government and its predecessor have presided over the greatest division between the poorest and the wealthiest and the greatest redirection of finance towards wealth and capital. The top percentage of people, the millionaires, pay an average rate of about 26%, while the rest of us are paying 45%, 50% or whatever it is. That is a fact and these are the statistics. The separation is widening. The Minister has stated these are the restrictive parameters within which the Government has to work and which are recognised and understood by public servants and their representatives. I do not think there is a great welcome for these measures and wonder how much they are understood by the people mentioned. They may be understood, but they are certainly resented. The Minister probably passed the representatives of SIPTU outside the gates of Leinster House yesterday who felt they had been let down badly by their leaders. The Alliance of Retired Public Servants had a very good idea, but it is not the Government's. It came from themselves and is a very good one.

The legislation proposes a universal freeze on the payment of increments. It provides a facility for trade unions and representative associations to conclude collective agreements with their public service employers which will avoid the need for these contingency measures to be used. That is a very smarmy way of putting it because it is nothing other than blackmail. The Government is prepared to punish people for exercising their democratic vote. It will not stop them voting, but if they do, it will slap financial penalties on them. That is not the way to go in a democratic society. I say to the Minister of State, Deputy Alex White, that there has been an extraordinary and very dangerous concentration of power in the hands of the Government and, in particular, its Executive. I wonder if this is constitutional and will give my reasons. I am a member of the IFUT which is balloting its members. Let us suppose the result is "No". What will happen to all of the members? They will all have these things slapped on them. As I am retired, I presume it will only affect my pension. In order not to be punished, they would have to leave the IFUT and join SIPTU. It is not only undemocratic but it is also probably unconstitutional. The Government has taken to itself in the Bill the power to unilaterally cut pay and pensions, change allowances, freeze increments, change conditions of service, including working hours, in the public service. This is very dangerous.

I wish to comment on what my good friend - we are very lucky to have him as a Member - Senator Sean D. Barrett said. I note that the Minister has returned and know he wants desperately to hear what I have to say. The increase in house sales is as a result of people crowding in from eastern Europe and all over the place to buy up the houses auctioned off in the Shelbourne Hotel every day of the week. There may be 6,000 new jobs in the private sector, but 5,000 have been lost in the public sector. I voted against the bank guarantee and benchmarking and I am also strongly against this Bill. We were told about robbing Peter to pay Paul and heard a very amusing analogy about Paul's accountant. However, the Bill is robbing both Peter and Paul to pay off the loan sharks. That is what disturbs me about it and I will be voting against it.

I wish to begin by apologising to Senator Thomas Byrne. I interrupted him during his contribution. There is a responsibility on Members to listen carefully to what other Members are saying. There is also a responsibility on them to say something that does not completely exasperate everyone else in the House. Senator Thomas Byrne cannot expect to come into the House and retain a shred of credibility when only six months ago he and his party were proposing measures to cut €350 million from the public pay bill - not €300 million as we have done in a fair way. He criticises us for doing what they proposed to do - to cut and defer increments, cut 5% from all allowances, impose additional working hours and cut premium payments. These proposals were all included in his party's pre-budget submission, yet he criticises us for doing something which takes less and in a fairer way. There can be no credibility in doing this.

I have to address the points made by Senator David Norris, if he does not mind. He mixes up cause and effect with reference to austerity.

It is giving the Minister power to tear up a contract.

Senator John Gilroy interrupted everyone else.

Sinn Féin's contribution is interesting for its entertainment value, like most of its economic policies. However, I note the genuine concern for the welfare of the Labour Party, for which I thank it.

This is the fifth Bill dealing with financial emergency measures in the public interest. We must acknowledge the sacrifices made by the public service and which it continues to make. I also acknowledge the contribution public servants have made in returning the country to some level of stability. The public service pay bill makes up 36% of Exchequer expenditure, at €18.3 billion. Savings are crucial and everyone must make a contribution. Higher earners will make a higher contribution. Sinn Féin argues that low-paid workers will suffer, but these measures will hardly affect low-paid public servants. The Minister acknowledges that this is an unpleasant business and I agree. No Government would ever countenance doing anything like this unless it was absolutely necessary to do so. Unfortunately, we find ourselves in that unenviable position.

I pay tribute to the Minister for the careful and thoughtful manner in which he went about his business and the careful and thoughtful manner in which he has gone about his business since he was appointed Minister. Even his critics will acknowledge this. I think even Fianna Fáil will be generous enough to acknowledge it.

I pay tribute to the public service trade unions which have robustly defended their position and that of their workers. They have recognised that the situation requires some adjustment to public service pay levels. That is the job of trade unions. They rejected Croke Park II, but the Minister did not panic, although many commentators said this signalled the end and that the sky would fall in. I have been a trade unionist all my life. I was a shop steward and a union secretary. Everyone knows that industrial relations are made up of an engagement process which creates proper and sustainable solutions. These proposals are reasonable. I do not wish to pre-empt the outcome of any vote or decision of the trade union movement, but it is in a position to recommend acceptance of the new deal by some unions which previously were unable to do so.

The key objective of this legislation is to achieve savings of €300 million this year and €1 billion by the end of 2015. The process is equally important. These savings have to be made but by agreement. I note that no other country has managed to implement these reductions in the pay and conditions of public servants without massive industrial unrest. All we have to do is look at Greece and our European partners to see how lack of engagement has resulted in significant societal and industrial unrest. It is a tribute to the Minister, the Government and the Labour Relations Commission.

I look forward to discussing the proposed amendments on Committee Stage.

I will leave it at that, but I must say to Senator Byrne that if he continues to contribute, he should at least try to be honest.

I will try to stay honest for Senator Gilroy.

I thank the Senator for his advice.

The Senator is generally honest.

I thank the Senator for his advice because it is always very welcome.

As always, the Minister is welcome. Senator Thomas Byrne laid out our stall but there are some specific points on which I would like to ask a few questions and with which we can deal on Committee Stage. If we were all honest, which we should be, we would know there is a need to make savings in Government expenditure, and that covers the public service and Civil Service sector. Croke Park I was very successful. Senator John Gilroy was not a Member of the Oireachtas when it was negotiated but the laissez-faire attitude of the Labour Party to Croke Park I - effectively, it had no view whatsoever - is in stark contrast to its attitude now, when Labour Party Deputies and Senators refer to the success of Croke Park I. We can all agree it was a success at a very difficult time. The public sector has made significant sacrifices.

I take the Minister at his word when he says this is the last thing he will ask, which I genuinely hope it is. Some elements of it are unfair. I have a difficulty with the powers this Bill confers on the Minister to bring in sweeping changes to pay and conditions for public sector workers whose unions do not sign up to the Haddington Road agreement. That would be better done by way of statutory instrument, which could be debated in each of the sectors.

I am concerned that the freeze on recruitment remains and that it is a blanket freeze. I raised the deficit in the north-east region in regard to adult mental health services during the week. Patients are being sent away and the HSE has stated that it is due to the public sector recruitment embargo. That is one example of it.

Should this be passed and should the unions agree to the Haddington Road proposals, the Government should use the opportunity to move quickly to restart recruitment to the Garda Síochána and to front-line services. The Minister has made changes in regard to graduate nurses and newly recruited teachers, which are welcome because the original proposals were unfair. However, the Government could go one step further. Law and order issues are to the fore. Our gardaí believe they are under-resourced, which they are. There is no question about that. The Government should reopen recruitment to the Garda Síochána.

If a union decides not to go with these proposals, what this Government intends to do in advance of a vote is to have the big stick ready with which to hit it in order to bring forward significant cuts. How would that work in a Department or local authority in which one union accepts the proposals while another does not? If two clerical officers are working in the same place, will the pay of one be reduced further than the other? How does the Minister see that working?

They are all represented by the same trade union.

That is probably a bad example. Let us take teachers or nurses in those situations. That will be particularly difficult.

The Minister does not have an easy job; I do not have to tell him that, because he is working in it every day. There are elements of this that I do not support. Applying pay reductions to those on more than €65,000 is, on balance, fair, but we must remember the pensions element in this. I do not believe pensioners were well represented in these talks. The Minister is looking to reduce the pensions of those who are receiving more than €32,500. Many of these people are retired nurses, teachers and gardaí - people who have given a lifetime's service to the State. Most of them do not have the ability to earn additional income. That is always a difficulty when one is cutting pensions. I am not talking about the pensions of former politicians or Secretaries General but about middle-ranking people who have retired, who could be in their 70s or 80s and who have no ability to earn additional income but who face additional costs, including the property tax. I do not believe that group of people were well represented in these negotiations. The Minister might be able to enlighten me on that and perhaps he has a view on how that could be dealt with. The last people we should be going near are those who have served the State for a substantial period and who have retired. I will be interested to hear the Minister's views on that.

I wish to refute Senator Thomas Byrne's contention that the Bill is being guillotined; it is not being guillotined. I explained what was agreed on the Order of Business. We will break for an hour after Second Stage, we will then take Committee Stage and, if necessary, we will break for another period before Report Stage. The Minister was quite willing to come to the House tomorrow, as was everyone, to deal with this matter if it was necessary but the fact that only 30 amendments were tabled for Committee Stage suggested that we could deal with them today. I think that clarifies the matter. I thought explaining it once on the Order of Business would have been sufficient for Senator Byrne, but obviously it was not.

I would like to comment on the suggestion of my colleague opposite, Senator Kathryn Reilly, that the Government is bullying workers. Sinn Féin would know more about bullying than many parties in this House.

What colour is Senator Cummins's shirt?

Do I look like a bully?

This Bill is one of a series of measures the Government is required to take in the public interest. The context is the continued priority given to the stabilisation of the public finances and to meeting the State's obligations in regard to the reduction of its deficit. The primary purpose of this legislation is to implement the proposed pay reductions for public servants earning more than €65,000. The legislation makes provision for the Government's preferred option, which is to reach agreement with all of its employees, but it also sets out contingency measures such as the universal freeze on increments, which will have to be implemented in the absence of sectoral agreements.

The Government is acutely aware of the substantial contribution public servants have already made to the fiscal consolidation process. However, the reality is that the public service pay and pensions bill still accounts for 35% of all spending and this further €1 billion in savings is crucial to the task we face. The State is still borrowing €12.5 billion per year, more than €1 billion per month, to fund its public services. In the absence of a desired agreement through consensus, these savings will have to be made through the measures contained in the Bill.

The Government was elected with a mandate to reform the public sector and it is determined to build on the efficiencies achieved to date under the Croke Park deal. The revised public service stability agreement, now referred to as the Haddington Road agreement, provides an opportunity to achieve the necessary savings, afford the protection of a collective agreement to public servants and contribute to the possibility of industrial peace in the public sector at a crucial time in our economy.

After the rejection of the LRC proposals, the Government asked Mr. Kieran Mulvey of the LRC to make contact with the relevant parties to investigate whether there was a basis for further engagement that might lead to an agreement. This was indicative of the Government's genuine wish to reach collective agreements and avoid unnecessary upheaval in the provision of our public services while taking real account of the clear concerns of public servants and particularly how those proposals would affect the lives of working parents in the public service and the incomes of certain key groups. The new proposals reflect these concerns while still achieving the necessary savings in the pay and pensions bill. The central fairness measures of the original set of proposals, such as protecting the core salaries of those earning less than €65,000, remain in place. Some specific measures have also been amended; for example, all premium payments for Sundays and public holidays will now be protected.

A substantive and welcome change in the new set of proposals is that a number of unions that did not engage in the first round of the discussions engaged this time and tabled suggestions. I hope that all the unions and representative associations will now be able to conclude collective agreements with their public service employers that will avoid the need to achieve the savings by way of the legislation we are discussing today. I sincerely hope we can proceed on the basis of consensus to the benefit the people working in the public service and the country as a whole.

I thank the Minister, Mr. Kieran Mulvey and the trade union leaders for concluding talks to agree a revised set of LRC proposals to be considered by trade union members. I urge public sector workers to consider very seriously the alternative to these agreed savings - imposed pay reductions by the Government and industrial conflict. This would be bad for the individual public sectors, service users and the country as a whole. The LRC has made it clear that the latest set of proposals represent the limit of what can be achieved by negotiation between the parties in all circumstances applying at this time.

I welcome the Minister to the House to debate legislation which should not be before us at all. He has a bit of a neck to present the Bill as anything other than threatening legislation whose intention is to divide and conquer the trade unions and threaten public sector workers into accepting a deal that imposes cuts to hard-fought gains made by staff over many years. The vast majority of public sector workers see this threatening legislation as the use of strong-arm tactics by the Government to force through pay cuts and also changes to the entitlements of people who work in the public sector generally - not just those at the top, but also those on low and middle incomes.

We do not support the notion that taking €1 billion out of the public sector is good for the people who work in the public sector, good for the provision of public services or good for the domestic economy. It is bad for all three, because public sector workers, as the Minister knows, have taken significant pay cuts over the past five years. When he was sitting in opposition, the Minister railed against the policies of Fianna Fáil at the time. Now, in government, he is implementing the very same policies. When the Labour Party was in opposition I remember a very different Deputy Gilmore, now the Tánaiste, who used to take to his feet and rail against what was happening with regard to the banks and what Fianna Fáil was doing to working people in the public and private sectors. Those same individuals see nothing different in what they did and what the Government is now doing. The Minister is simply implementing troika policies and Fianna Fáil policies that were agreed as part of the national development plan.

The Minister comes to the House and does not even look at or engage with the people who speak. He looks down at his notes and elsewhere.

He could not engage with the Senator without laughing at him.

He cannot even look people in the eye because there is such an arrogance about the Government-----

He is being polite to the Senator.

-----that he cannot even listen to what people have to say. Just like the Minister for Justice and Equality, he does not even have the ability to listen.

The Senator should play the ball and not the man.

On a point of order, that is enough of the personal attacks.

The soundbites are good.

This is just soundbite stuff. Let us talk about the substance of the Bill.

The Labour Party in opposition knew all about soundbites. It must be a source of embarrassment for the Minister and his party-----

Is this a fig leaf for Sinn Féin's lack of economic policy?

I sat here for 20 minutes without interrupting once while Senator Gilroy criticised my party.

That is because we are talking sense on this side.

Allow the Senator to speak without interruption, please.

I would like to continue with my contribution uninterrupted. The Minister will have an opportunity to respond later. It must be a source of embarrassment for some trade unions that they are in some way affiliated to the Labour Party, given what the Minister is doing in introducing this Bill and the erosion of workers' rights it involves. Does the Minister not realise that those rights, including the working week, were hard fought for? Trade unions had to fight for those rights every step of the way against previous governments. Increments, pay itself and overtime rates are all gains that were hard fought for by working people and they are now being set aside by the Government.

The public sector at the moment is creaking. We know what is happening in our hospitals. Morale is low among front-line nurses and doctors, and the same is true for teachers and local authority workers. Ordinary working people in the public sector have taken average pay cuts of approximately 14%. It is unsustainable for the Government to continue to come back and take from their pockets.

I will come to the substance of the Bill and the alternatives so that the Senators on the other side might learn something. Senator Clune talked about getting our house in order, the tax wedge, foreign direct investment, etc. It is always the same argument that we should not talk about taxes when it comes to foreign direct investment.

That is not the point I was making.

The Government cannot deal with any of that, but it has no difficulty introducing legislation that empties the pockets of low- and middle-income workers. She quoted a report that referred to the growing economy. The ESRI reports on the last two budgets referred to their being the most unfair and the most unequal. Here is what the Government could have done. If the Government cut the pay of the people at the top, it would hear no complaint from Sinn Féin - we would support it. It could substantially cut the pay of people earning more than €100,000 a year.

Is €65,000 not enough for the Senator?

Senator Cullinane without interruption, please.

It could, for example, deal with real waste in the system.

What is the top?

It is €100,000 a year.

So €98,000 is not the top?

The Minister knows exactly what our proposal is. Public sector pay should be capped at €100,000.

How many does that affect?

I know that would affect the Minister in his pocket, but we will leave that to one side. The Government could also deal with real waste in the system. We know we are spending too much on branded drugs and could achieve considerably greater savings in that area.

We all favour that. The Senator should tell us something we do not know.

When the Labour Party was in opposition it talked about eliminating waste in the system, but it has not done so. With a third rate of tax at 48% on incomes of over €100,000, a wealth tax and the standardisation of all tax reliefs, there are any amount of options. The problem is that the Minister is not prepared to listen, which shows the Government's arrogance. It has contempt for ordinary working people and its members know it. Come the next general election-----

It is all about the vote with Sinn Féin.

-----Labour Party Members will reap what they have sown from the people they have betrayed and let down by doing what they have done since coming into government.

I welcome the Minister to the House.

I welcome the opportunity to debate a Bill about which there has been extensive public debate. I also welcome the opportunity to speak after Senator Cullinane and take on some of the outrageous myths and fabrication he put forward by way of substantive speech. To hear someone from Sinn Féin suggest the Government is guilty of strong-arm tactics is hard to take.

What does Senator Bacik mean by that? Can she elaborate on it?

To resort to personal attacks on a particular Minister is outrageous. Sinn Féin Members should be able to debate the substance of the Bill but it is typical of the negativity of Sinn Féin and the way it has been thriving on people's misery throughout the past two years-----

Senator Bacik's Government is creating the misery.

It has been nothing but negativity. I have listened to Sinn Féin spokespersons being negative about every single piece of progress and every advance the Government has made.

We are dealing in reality and Senator Bacik will get it when she is on the doorsteps.

Senator Cullinane should stop shouting people down.

They were shouting me down.

Let us look at the substance of it. Senators Cummins, Hayden, Gilroy and others put forward the substance of the Bill. It is clear, as the Minister said in his opening statement, that none of us wants to be in a position of introducing the legislation. No Government would introduce cuts to public sector pay by choice. This is a circumstance in which we are in and these are circumstances are not of our making. The legislation is unprecedented. Far from strong-arm tactics, it represents a negotiated settlement with the majority of trade unions. Particular sectoral agreements, as Senators on the other side are well aware, have been reached with the Defence Forces, the Prison Service and the Garda Síochána. These dealt with particular savings in the sectors and were negotiated by union representatives acting in the best interests of their members. The Minister said this was unprecedented and it is the mark of the Labour Party in government. We are negotiating with unions and not imposing unilateral cuts in the way Fianna Fáil did in government on a number of occasions through emergency financial measures.

What about the Croke Park agreement? That is a ridiculous statement to make. The Senator would not make a comment on it in a previous Oireachtas. The Croke Park agreement was negotiated by the previous Government.

To be fair, the previous Croke Park agreement was negotiated by the previous Government. I pay tribute to the unions that engaged in the process and stayed with it. I pay tribute to the Labour Relations Commission, which facilitated the process that led to the Haddington Road agreement. It is an agreement that, as others have said, protects the core pay of 87% of those working in the public sector earning less than €65,000. Pay reductions will be introduced for those earning more than €65,000, which is regrettable. It is the best way of doing it in a way that is fair and that has the least impact on those who are lower paid and those earning less than €65,000.

Other speakers referred to the increment freezes to be implemented and where collective agreements apply, the increment effect will be different. The individual's next increment will be paid and there will be a deferral of three months for those under €35,000, a deferral of six months for those earning between €35,000 and €65,000, a total deferral of 12 months for those earning between €65,000 and €100,000, and a three-year deferral for salary scales commencing above €100,000. There are clear graded measures on increments that take into account people's earnings. It is a way of trying to ensure the impact is least on those earning least in the public service.

There are significant advantages for unions that have signed up to the Haddington Road agreement or those that will sign up, having balloted their members. That is to be welcomed. It is not something any party in government is happy or enthusiastic about doing, particularly the Labour Party, but it is something we are committed to doing as part of a package of measures, as Senator Cummins said, to ensure we bring about economic recovery.

There is good news today when we see an increase in the number of people in employment. Today's CSO figures show a drop of 30,000 people on the live register. For the first time since the start of 2010 we see the number on the live register drop below 300,000. It is still far too many people but it is a sign of an improvement in the economic situation. It is an indication we will be able to get out of the current troika package by the end of the year and that we will regain economic sovereignty. That is a goal many people did not think was possible in 2011 when this Government took office.

Many people on this side could see how difficult the economic situation was and how little finance was available to Ireland. That is what we are trying to get out of through this sort of measure, which is not palatable or something that appeals to any of us. We see it as a necessary way to achieve the economic recovery we are aiming for and working towards. The Government greatly values public servants and the Labour Party values the public service. This is the last ask in this Government.

Cuirim fáilte roimh an Aire. Cuirim fáilte roimh an díospóireacht an-tábhachtach seo. Beidh tionchar fadthéarmach ag an mBille seo ar go leor oibrithe sa tír seo. Ba mhaith liom mo mhíshástacht agus míshástacht mo chomhghleacaithe i Sinn Féin maidir leis an gcaoi ina bhfuil an reachtaíocht á thabhairt chun cinn a léiriú.

The Haddington Road agreement, as it has become known, is an effort to strong arm public sector workers and it is unhelpful and unnecessary. The Minister tasked Mr. Kieran Mulvey of the Labour Relations Commission to enter into fresh negotiations with union leaders following the members' rejection of Croke Park II. At every turn, the Minister has undermined his initiative with persistent threats of unilateral cuts. It is particularly unhelpful that, at a time when unions are going to their members to ballot them on the issues discussed in the Haddington Road agreement, this legislation hangs over them as a threat. It is a retrograde step by any Government, particularly one that steeps itself in links to the unions. Railroading this legislation through the Dáil is little more than throwing political shapes.

The Minister is responsible for the largest workforce in the country. If an employer treated staff in such a manner, Labour Party Deputies would be the first to voice their outrage, and rightly so. Union leaders have held up their side of the negotiations by coming to the table and entering negotiations with the chief executive of the Labour Relations Commission. Over the coming weeks, workers will make their decision on the Haddington Road deal. The boot boy tactics at every turn of the process have been deeply disappointing, not least for low and middle-income public sector workers at the front line of the Government's austerity agenda.

Sinn Féin does not support cutting the pay of low and middle-income public sector workers, therefore we do not support the Government position that €300 million in 2013, and €1 billion by 2015, must be cut from the public sector pay and pensions bill. Savings can be found in the pay and pensions bill by targeting those at the top, such as capping hospital consultants pay at €150,000 and imposing a higher levy on goldplated pensions to former Ministers and taoisigh, which would save €100 million. Deputy Mary Lou McDonald submitted a number of amendments to the Bill during its passage in the Dáil. These would target pay at the top and cut goldplated pensions and payments, reduce politicians' pay and perks, protect low and middle-income workers' increments and remove the ability of the Minister to increase public sector employees' working hours at the Government's discretion.

In addition, Sinn Féin budget 2013 expenditure proposals set out fair expenditure reductions across public services. We also set out additional taxation measures that are sustainable and equitable. It is up to public sector workers to consider whether they will sign up to the Haddington Road agreement. We have been consistent in our analysis that targeting low and middle-income workers' pay year after year is economically and socially unsound. Taking people's spending power out of the domestic economy and putting it into the black hole of bad bank debt is not a strategy but a road to nowhere for the 14% on the live register, the 300,000 people who have left Ireland over the past four years and the one in four households experiencing household distress.

Senator Bacik mentioned employment figures released today but what was not mentioned is the major increase in under-employment. That must be factored in. Fine Gael members of the Government are quite happy with the legislation because it pushes their agenda of dividing and conquering the unions. It is a pity the Minister for Public Expenditure and Reform is in the position to do so. The effect this will have on services and morale in the public services and on the economy cannot be underestimated. This will not stimulate the economy, which is what we need to do to create jobs and have a job stimulus. Contrary to what was said, Sinn Féin has made plenty of positive proposals.

I do not think Senator Gilroy has read it.

I read it all as bedtime entertainment.

Senator Ó Clochartaigh, without interruption.

Go raibh míle maith agat, a Chathaoirligh Gníomhach, as ucht beagáinín smachta a chur ar na bully boys thall ansin. We constantly put forward positive proposals on job stimulus and creating jobs. We will continue to do so. There is major scope for additional spending savings, particularly in the public sector pay and pensions bill. However, these reductions need to come from the top. Sinn Féin's budget 2013 expenditure proposals set out fair expenditure reductions across public service. We have also put forward additional tax measures that are sustainable and fair.

The Minister has no problem threatening low-paid clerical officers, the majority of whom are women, with unilateral pay cuts, increment freezes-----

(Interruptions).

There are no cuts.

-----but he baulks at the very suggestion of reducing Bertie Ahern’s or Brian Cowen’s pension payments of €150,000 each year.

Rushing this legislation through the Dáil and Seanad this week is an unnecessarily combative move. Union members should have been given the time to decide on the Haddington Road agreement without these bullyboy tactics.

Sinn Féin has submitted several amendments to this legislation for Committee Stage that will target pay at the top, reduce gold-plated pensions and politicians’ pay and perks, as well as protecting low and middle income workers. Bhí muid ag caint an tseachtain seo caite ar na tuairiscí sna meáin idirnáisiúnta nach bhfuil comhlachtaí ollmhóra áirithe ag íoc dóthain cánach. Níl aon fhadhb ag lucht an Rialtais dul i ndiaidh na hoibrithe bochta, ach níl siad sásta dul i ndiaidh na n-ollchomhlachtaí ata ag déanamh an t-uafás airgid. Ba chóir dóibh é sin a dhéanamh seachas dul i ndiaidh na gnáthoibrithe.

I welcome the Minister to the House and thank him for bringing forward this legislation for our consideration. One factor in Irish politics is that by the time we get to deal with legislation in this House, the debate has more or less concluded on the outside. We need a better and more substantive way of discussing major matters of financial importance. That is a debate for another day, however.

As we try to bring about some degree of hope and confidence to the economy and down to the citizens of our Republic, we cannot ignore from where we have come. Sometimes it is easy to forget that it is little over 100 weeks ago since the Government took office at a time when our country was almost financially bankrupt, entirely devoid of any sort of political leadership and every citizen was genuinely fearful not just about their own economic position but the very plight of the country and its financial independence. All sides of the House must agree that this type of thinking has fortunately changed. The public is not lighting bonfires on street corners but there is a degree of stability and an increasing degree of confidence that everyone must welcome. That is the backdrop to this debate about our public sector.

It goes without saying that every single elected politician and citizen fully supports our public sector and the work which it does. We would be doing a great disservice to our public sector and the tens of thousands working in it if we did not concentrate on the fact that we need to ensure there are suitable future careers for all who work on our behalf in the public sector. We cannot pretend there is no tomorrow and continue with certain salary and pension levels when we know they are unsustainable. We must have realism in this debate. We have one of the best educated public sectors across the globe. They know as well as we do the financial plight of the country. Everyone appreciates that no Government wants to do what this one has been obliged to do over the past two years. It would be lovely to believe that this is the end of it and all gardens are rosy but it is not as simple as that.

We must ask about the language not just of this debate but of the whole economic debate over the past 18 months. Obviously, if I were in opposition I would keep using words such as “austerity” to bring about a mindset of doubt, fear and concern. Our challenge must be to move beyond that language of austerity and point out a route of progress and hope. What is austerity?

The Senator should ask the Minister for Social Protection, Deputy Burton that.

Certain words take hold in the language of politics for several years and then they disappear. The big word at the moment is “austerity”. What some call austerity is what others would call a genuine attempt to balance the books. In every household, people are trying desperately to live within their means, struggling to do so. Sometimes they have to borrow to make ends meet but are still trying to live responsibly within their means. That is what the Government is trying to do too. If one wants to call it austerity, that is fine. However, the creation of negativity might generate short-term political gains for a few but it does very little for the citizens. Let us move beyond austerity and be more positive.

Extraordinary work has been undertaken in the course of the Haddington Road agreement negotiations. Unions, as one would expect, have not always been united as there is no perfect or unitary solution when it comes to economics. There is a genuine effort, the fruits of which we see with this Bill, to bring about a public sector agreement which is sustainable and over which everybody can stand. In that sense we must support this agreement.

Austerity, housekeeping and bookkeeping are one important side of the equation. Nationally, the Government must look at the other side of the balance sheet with the cost of living endured by our citizens. We must make more strident and powerful efforts on health care, transport and energy costs. All the salary increases in the world are of little benefit if we cannot contain and control the cost of living. The Government has no choice but to take income from people in this Bill. We must also make the same effort to tackle costs. The Government must set aside a significant amount of political time over the next months to challenge the costs base in this country. We seem to be refusing to tackle it head on and give people some degree of hope on the spending front.

I wish the Minister well in his efforts with this legislation. We all know we are slowly but surely bringing the country around. I should not say “A lot done, more to do”. However, 100 weeks ago this country was devoid of all hope. At least there is some degree of confidence now.

I welcome all the contributions from every side of the House. Each Member brings his or her own views, passionately and fairly held in all these debates. Obviously, I do not agree with them all. These are difficult times for everyone and it is difficult for me as a Labour Party Minister to bring this legislation to the House. It is the right thing by our country, however.

Many Members referred to my party. I was privileged to be a part of the team that negotiated the programme for Government. I was under no illusions about exactly the backdrop that Senator Bradford just laid out and how awful the country’s circumstances were at the time. There was a real doubt in all our minds if there was a sustainable path out of that mire without total calamity. When we see what has happened in Greece and Cyprus or the pressures in Portugal, we understand how close to disaster this country was. The Labour Party made a decision to roll up its sleeves to do its best. We knew it would be much easier to be the largest party in opposition and do the critique from the safety of the bleacher seats and let others try to tackle the disaster. Instead, we opted for government to tackle the problems in a way that would mitigate the impact as best we could on the most vulnerable. When we will ask the people to decide on that, not our critics, I believe we will get a fair hearing.

The cuts in core pay for those over €65,000 and the cuts in pensions are all unpalatable but necessary to cut a pay bill that is in excess of €18 billion. I came to that conclusion last year and I opened the books to the public sector unions. One of the parting gifts from the last Fianna Fáil Government was a profile of cuts over time but it had unallocated cuts - a lovely phrase - where it had not determined where those cuts should fall. If we had followed that Government’s path, it would have meant an additional €1.5 billion in social welfare cuts this year, so the spend on social welfare would have been €18.5 billion rather than €20.2 billion.

We still would have had to find other unallocated savings and, bluntly, I did not think it was morally right to go back to the well again. If one takes social welfare, health and education together, one can see that they make up over 80% of everything we spend. If one adds in justice, the figure is 87%. It is really difficult to make savings in these areas, as they have an impact on people's lives. Therefore, when one considers that payroll accounts for 36% of total expenditure, it is reasonable to ask for payroll savings and that is what we did. We asked the trade union movement in a very honest way to engage with us to find these savings and it did. There were those who obviously were looking at each other within this negotiating structure. As I have been a trade unionist all my life, I know the dance and that there are trade unions - I will not reference them - which have never signed up to a collective agreement with the Government on these matters and have not been part of agreements from the very start. However, some of them are happy to embrace them once they are negotiated, but they will not vote for them. That is their tradition. By and large, however, people did embrace the process and negotiated. It was part of the process that some of them required a second round before they really began to engage. Part of the learning process involved seeing what was achievable by coming to the table and that the Government was not prescriptive about how the savings were to be made. That is the process that has concluded with the Haddington Road agreement and the necessary legislation that underpins it.

I will not go through the individual commentary. In respect of Senator Kathryn Reilly's comments, I have a headache listening to the same single transferable speech from Sinn Féin Deputies and Senators. If one says the same thing long enough, the facts can be completely changed. The notion that this is a tax on the low-paid is demonstrably facile and ridiculous. The proposal asks for a reduction for those earning in excess of €65,000. As a representative of the Labour Party, it is very hard to escape the working class because, apparently, €100,000 is the new threshold. One is a low-paid worker if one is earning less than €100,000. Few people in the country escape that figure. The CSO figures were published this week. The average private sector wage this year is €32,670, while the average public sector wage is €47,500. Even among those in the private sector who are relatively higher paid, €65,000 accounts for a tiny subset and makes up 13% of the public sector. To ask these people to make a contribution is demonstrably not to attack low and middle income earners. Please, therefore, make the argument, but couch it in reality, fact and truth.

I listened to Sinn Féin Members in the other House. Its strategy is that one does not need to cut anybody's wages but to place a cap on everybody earning above €100,000. That argument was repeated by Senator Trevor Ó Clochartaigh. However, the programme changed last night because suddenly something dropped somewhere and Sinn Féin believed one could not sustain a health service, certainly a public health service, with a cap of €100,000. For the first time last night in the other House Sinn Féin introduced a cap of €150,000 for one category of worker - hospital consultants. They would be allowed €150,000 before they would be capped.

It is interesting to look at what the impact of a cap of €100,000 would be. A total of 6,000 out of 300,000 earn more than that figure; therefore, the income saved would be tiny in comparison to what we require. With regard to the consequences, would one have principal officers wanting to be Secretaries General and take on all of their responsibilities? It was done in Albania where one has a single wage, no matter what one's job is, with the result that there is no differential. I was raised in a trade union household and believe in differentials where the craftsman is paid more for the skills he or she possesses. That is just the way economies work and this needs to be embraced.

I will reference a few more points. Senator Deirdre Clune spoke about the change in the public sector facilitated by Croke Park I. It was an extraordinary tool for change and I defended it for two years against all comers and, by God, I received a lot of criticism, particularly in the Sunday newspapers, for defending the public service and public services. However, I had come to the conclusion that we needed these changes because of the inevitability of the economics. We could not go back to the same well to seek further reductions, nor could we continue to borrow at the rate of €1 billion per month. It was unsustainable. Please God, our debt will peak this year at 123% of GDP, which most people regard as unsustainable. Most economists - we have a very distinguished one in our gathering today - acknowledge that this is an unsustainable level. Even when we get to a deficit figure below 3% by 2015, we will still be borrowing money. We need to give the next generation some chance. Our legacy is bad enough with regard to what happened to the economy in the past decade without continuing to pile on debt for it to try to unravel in the future. Let us be realistic about what we need to do and ask people to make a contribution according to their ability to do so. Above all, let us be truthful and honest.

I know that politics is often a game in which people look for political advantage. I might have said this in the House before. I was not long in the job when I met a very distinguished economic figure whom I will not reference. He came into my office and said, "You know you have the worst job in Europe." I said, "Thanks very much," just in case I was not daunted enough already by the task ahead. However, I was and still am honoured to do it. It is not out of a sense of arrogance, but if somebody else wants to take it tomorrow, I will not cry salty tears. I will do the job to the best of my ability for as long as I am entrusted by the Oireachtas to do it.

We have travelled 85% of the way and more. We can talk about the macro-economic figures, but it will take a long time for them to impact on ordinary people because we are still taking money out of people's pockets through this legislation and imposing additional taxes because our tax base collapsed or the pressures on public services increased exponentially because more people were in receipt of unemployment assistance. In addition, 500,000 more medical cards were issued than were issued at the peak of the boom; therefore, the demands on services have never been greater and the resources available to meet them are diminishing all the time. Squaring that circle is the greatest testament to the extraordinary and fine public service we have, which I wish to acknowledge. It gives me no joy to ask people to make a further sacrifice and I would not do it, if I did not think it was necessary to do so. I will unwind it as soon as economic circumstances permit. These measures are challenging for everybody, but they are economically necessary.

I want to see whether I missed out on anything that was said. I do not think so.

One of the issues that daunted me the most since taking this job is the fact that a few in the school of politics want us to fail because they see in economic failure the potential for their own political success. I have no interest in that sort of politics. I would prefer for my party to cease to exist than to betray the people who expect us to serve our country. If we put ourselves forward for this job, let us do it in the best interest of the people who depend on us, particularly in times of crisis. The people will ultimately see through the notion that we measure the good of our country and the betterment of our people against short-term political gain will.

I asked a specific question on pensions. The Minister spoke about unwinding the position if things improve. What about the pensioners?

Every Member of this House will have encountered considerable annoyance and a sense of grievance at people walking away from public life with fat pensions. In outlining some of the facts, I do not speak to the Fianna Fáil benches in any pointed way. It is interesting to consider the reductions for the current crop of politicians. In 2009, Brian Cowen earned €285,000 as Taoiseach. The new rate of pay for the current Taoiseach is €185,350 before the pay rate deduction which will reduce his income to €167,000, which represents a 41% decrease since 2009. Ministers have taken deductions of 36%. I will come to the pensions issue.

The Minister is making a fair point and I am not trying to stop him.

There is no longer an enormous gap between the pensions enjoyed by some who walked away and those who are currently serving as their successors, which is interesting. I felt we needed to ask for an additional contribution from those who have decent pensions. I am formally advised that there are three constraints in cutting these pensions. It has been determined by the courts that pensions are a preserved property right under the Constitution. The criteria for reducing pensions at the top is that a financial emergency obtains - I think we can sustain that argument - and that the reduction would make a significant contribution to resolving that emergency. The take would not be sufficiently significant to justify targeting a tiny number of people. Finally, it must not be discriminatory in targeting a tiny group of people.

We needed a reasonable spread if we were to do this in a fair and proportionate way. If we are considering pay reductions for those currently at work and earning €65,000, half of that is €32,500. That is a high pension. Only 22% of public servants have pensions of that amount or greater. These are the people I have asked to make a contribution. The contribution is small at the margin, at 2%, and nobody will be asked to go below €32,500. The rate ratchets up to an additional contribution of 10% at the top, which is reasonable. I introduced an additional take of 20% for those earning more than €100,000 in the Financial Emergency Measures in the Public Interest Act 2011. The deduction will be brought to 28% with this Bill, which is sustainable within the confines of the Constitution. It is reasonable to ask that such a contribution be made.

Clearly pensioners were not directly involved in the talks. I did not meet with them or anybody else until the talks concluded, other than some of the principals of the Irish Congress of Trade Unions. I did not meet individual groups, such as gardaí, but I wanted to meet the pensioners once the talks had concluded. My officials had a long meeting with them first and I subsequently met them on Monday to go through the Bill and explain my reasoning. I will not suggest they were happy but I think they understood the reasons. An unanswerable case can be made for an alliance to be formalised so that we are not dealing with associations of retired gardaí, nurses and civil servants separately. I think they will coalesce into a formal alliance and I have guaranteed that I will deal with them as Minister if that happens not only in respect of pension matters but also about how this can be unwound. I have written formally to them to give that commitment.

Question put:
The Seanad divided: Tá, 28; Níl, 16.

  • Bacik, Ivana.
  • Barrett, Sean D.
  • Bradford, Paul.
  • Brennan, Terry.
  • Burke, Colm.
  • Clune, Deirdre.
  • Coghlan, Eamonn.
  • Coghlan, Paul.
  • Comiskey, Michael.
  • Conway, Martin.
  • Cummins, Maurice.
  • D'Arcy, Jim.
  • D'Arcy, Michael.
  • Gilroy, John.
  • Hayden, Aideen.
  • Healy Eames, Fidelma.
  • Henry, Imelda.
  • Keane, Cáit.
  • Kelly, John.
  • Landy, Denis.
  • Moloney, Marie.
  • Moran, Mary.
  • Mulcahy, Tony.
  • Mullins, Michael.
  • Noone, Catherine.
  • O'Donnell, Marie-Louise.
  • O'Neill, Pat.
  • Sheahan, Tom.

Níl

  • Byrne, Thomas.
  • Cullinane, David.
  • Leyden, Terry.
  • MacSharry, Marc.
  • Mooney, Paschal.
  • Mullen, Rónán.
  • Norris, David.
  • Ó Clochartaigh, Trevor.
  • Ó Domhnaill, Brian.
  • O'Brien, Darragh.
  • O'Donovan, Denis.
  • O'Sullivan, Ned.
  • Power, Averil.
  • Reilly, Kathryn.
  • Walsh, Jim.
  • White, Mary M.
Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators David Cullinane and Ned O'Sullivan.
Question declared carried.
Sitting suspended at 4.40 p.m. and resumed at 5.30 p.m.