Brian Cowen (Laois-Offaly, Fianna Fail)

Regarding the question of discussions with the unions, I outlined before Christmas my preparedness to enter intense discussions during the month of January to consider a comprehensive framework for addressing the current issues, which was agreed on 28 January with the social partners. Unfortunately, we were not able to reach a consensus on the first item, which was the necessity, as I have clearly outlined, of implementing savings of €2 billion at the beginning of February in the interest of sending a clear signal to ourselves as a country and to the international community that we would take the necessary steps to start to bring some order back into our public finances, which have deteriorated considerably as a result of both domestic issues and the international crisis which is also faced by other economies.

We decided to introduce a pension levy as part of that solution on the basis that we did not believe we should proceed with any reductions in current expenditure over and above what was agreed as part of the €2 billion package. We introduced the levy because we believed that in view of the security of tenure that public service workers thankfully have, and the value of their pension provisions compared to the serious losses being encountered in other areas of the economy in terms of the decimation of pensions, this was the best way forward at this time. We took into account that more than one third of our day-to-day expenditure is being borrowed this year and a large proportion of that is the pay and pension bill. I have heard no alternative offered from the Opposition with regard to what areas of current expenditure should be cut if the pension levy is reduced.

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