Martin Mansergh (Tipperary South, Fianna Fail)

The current crisis requires realism and urgency. A sense of fairness is important too, but the acknowledged difficulties in achieving a consensus on how that is to be reflected cannot be an alibi for inaction or delay or for arguing that the responsibility falls on other people, not ourselves.

As the chief economist at the Commerzbank in Germany stated in the Financial Times of 14 February, "The lesson of the past six months is that every country has been affected — whether it had a bubble in the property market or not." The main story in today's Le Figaro, headlined, The Collapse of the Japanese Economy, reports on an annualised drop in growth of 12.7% and a fall in industrial production of 21% between December 2008 and December 2009. We are not uniquely to blame for our situation, but we bear responsibility, past and present.

We have a great belief in our exceptionalism, but it is a pity all of us did not learn more from the Asian tiger economies when they became defunct. Even though providentially overflowing revenue was put aside into the National Pensions Reserve Fund, some of which will be used to recapitalise the banks, and private savings were incentivised, former Minister for Finance, Charlie McCreevy, is often criticised for his remark, "When we have it, we spend it." During those years, the Government was often urged by those opposite to spend still more of it. If there were prophetic voices crying in the wilderness, they did not include any party that put before the electorate in 2007 ambitious plans to spend more and tax less.

Nearly everyone was glad of the Celtic tiger. Some gained only moderately, others a good deal, and a few gained spectacular runaway wealth. Child benefit and pensions increased far beyond inflation. We have the second highest minimum wage. In no other country has 38% of the workforce been exempt from tax. Unfortunately, we allowed a culture to develop where, higher up, people's value has too often been defined by their salaries and their bonuses.

Public servants participated in the good times as well. Salaries since 1997 have increased from 20% to 60% in real terms. Numbers went up from 219,000 to 317,000. The conviction that private sector wages were increasing even faster was responsible for the first benchmarking exercise. Only Professor Ed Walsh is calling for benchmarking today, because all-round wage cuts would be the outcome.

Earlier today, I was speaking to executives of an indigenous company, employing 80 people. To preserve employment, and against union advice, the workforce agreed recently to a 5% cut in wages for anyone earning more than €25,000 a year, a 7.5% cut for those earning more than €60,000 a year, a 10% cut for those earning more than €80,000 a year and a 17% cut for the two top earners. Last weekend, I spoke to the vice-president of a US multinational outside my constituency. Leaving aside low-wage competition, he told me the average wage for their Irish workers was €58,000 a year, €45,000 a year for their US workers and about €34,000 a year for their English workers, with implications for their ability to maintain their workforce unless something is done to change costs.

In the past, real wages could be adjusted downwards by inflation and devaluation and competitiveness could be restored. Today, deflation may help preserve spending power, but that is all. As members of the eurozone, our currency has appreciated and we are committed to tight budgeting disciplines to which we must return if we want to retain control over our destiny. Currently, established public sector employees are guaranteed a high degree of job security. If we do not face the fact that all our wage costs must be lowered, at least in weighted proportion according to ability to pay, we will exacerbate our situation.

I accept that it is very difficult to ask trade unions, whose job it is to defend their members and to negotiate better conditions, to accept this. It also asks much of the majority of us who spend what we have and run up debt. However, the reality is that unless we are ruthless with ourselves and adapt quickly to the new situation without excessive arguing and fighting, we will endure a worse experience and stay on the floor longer.

What of the really wealthy? In 1932 at the time of the Great Depression, de Valera famously declared that no man was worth more than €1,000 a year.

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