Mary Wallace (Meath East, Fianna Fail)

I am speaking in this debate on behalf of the Minister for Finance, and I thank the Deputy for raising this issue.

The drive to secure savings and efficiencies across all areas of the public service is now well advanced, and this process has been under way for some considerable time. Even before the full extent of this unprecedented downturn in public finances became apparent, the Government was publicly committed to an ongoing programme of streamlining public expenditure. In his 2008 budget statement, the then Tánaiste and Minister for Finance, Deputy Brian Cowen, announced an efficiency review of all administrative spending across the whole public service. The Minister indicated that particular areas of interest included possible inefficiencies due to the multiplicity of boards and agencies, the need for better sharing of certain services, and efficiencies in management, travel and consumables in general.

In July 2008, his successor as Minister for Finance, Deputy Brian Lenihan, announced a range of efficiency and savings measures, including those identified as a result of the budget day efficiency review. Among the other measures were a reduction in the payroll bill of 3% for all Departments, State agencies and local authorities, other than health and education, by the end of 2009; a significant reduction in expenditure on consultancies, advertising and public relations by Departments and agencies in 2008 and a minimum 50% decrease in 2009. The above measures were designed to minimise the effects on users of services in the areas of health, education and social welfare and were estimated to deliver savings of €440 million in 2008 and €1 billion in 2009.

In addition to the above savings, the Minister instigated a review of agencies to determine whether they could share services, whether it would be appropriate to absorb some of their functions back into their parent Departments, or whether some agencies should be amalgamated or abolished. In the 2009 budget, the Minister for Finance announced 30 rationalisation decisions that will reduce the number of State agencies by 41. At the moment, nine of the 30 rationalisation decisions have been implemented, covering nine State agencies and the closure of the four Army barracks. Legislation to give effect to the remaining decisions is in preparation.

The continued fall in economic activity entering 2009 has meant that, even with these savings, the fiscal position has continued to deteriorate, which led the Government to announce further measures in February. These further savings are estimated to achieve up to €1.8 billion in 2009 or €2 billion in a full year. While further efficiency and capital savings were announced, the main element of this package of measures was the introduction of public service pension-related deduction. The principle behind the public service pension-related deduction is that it should apply across the public service. This is based on the need to reduce the public service pay bill and is also in recognition of the pension benefits enjoyed by public servants.

One category to which the deduction does not apply is the Judiciary. Our Constitution is quite clear on this. Article 35.5 expressly states, "The remuneration of a judge shall not be reduced during his continuance in office." We have legal advice confirming that the pension-related deduction should not be applied to the Judiciary. Of course, the pension-related deduction is not the only action that the Government has taken to contain and reduce public service pay costs. The increases under the review and transitional agreement for 2008-09 are not being paid, which will lead to further savings of up to €1 billion next year.

The measures outlined above show the determination of the Government to restore balance to the public finances in the face of a continued international economic slowdown. The Taoiseach today announced the Government's intention to present a supplementary budget to the House on April 7. This supplementary budget will continue the process of adjustment begun by the earlier savings measures, as this is the only way to ensure the future fiscal stability and economic prosperity of this country.

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