Brian Cowen (Laois-Offaly, Fianna Fail)

As stated previously, it is unavoidable that there will be an adjustment in the public service pay bill, particularly as it forms such a large part of public expenditure. At present, approximately 35% of day-to-day expenditure - €20 billion per annum - relates to public sector pay and pensions. The final decision on how the necessary reductions will be achieved is a matter for the Government to consider in the context of the forthcoming budget.

I must emphasise that progress in talks with the public service unions would be of great assistance to the Government in reaching its decisions. During the past week there has been a series of meetings involving public service employers - led by the Department of Finance - and the public service committee of the Irish Congress of Trade Unions, ICTU. In an effort to explore the possibility of savings in each part of the public service, a number of sectoral level meetings involving, for example, HSE management and the health unions, the Department of Education and Science and teachers' unions, etc., have also taken place. These meetings adjourned over the weekend in order to allow the parties involved to refine and cost options and will formally resume this afternoon. Some sectoral level engagement did occur yesterday.

In light of the level of detail required on a sector-by-sector basis and the complexity of assessing the impact of particular measures in calculating associated cost savings, it is expected that talks with the unions will continue - and, we hope, intensify - during the course of this week. The examination of options and the costing exercise is without prejudice to agreement by either side, Government or trade union, as to the acceptability or adequacy of measures or proposals put forward. We must all ensure, to the greatest extent possible, that measures to achieve the essential reduction in the pay bill will have the least possible impact on services to the public.

The purpose of the talks is to explore the possibility of achieving the necessary reductions in the public service pay bill on an agreed basis. The parties must be given the space to do that. A range of options is being considered. However, it would not be of assistance to go into further detail at this stage. Time is short and the Government needs to see signs of progress this week, particularly in light of the comparatively short lead-in time to the December budget. 3 o'clock

I wish to acknowledge that during the course of this year all public servants have been obliged to adjust to the fact that the pensions levy has been imposed by Government and come to terms with pay freezes, etc. In many respects this is a difficult time for everyone in the public and private sectors, particularly in the context of their commitments. The fact of the matter is that there exists an issue that must be dealt with. In fairness, the interaction taking place is at the initiative of trade unions who suggest there are alternative means or measures that could be considered in an effort to make the adjustment we deem to be necessary. In this regard, people need to be given the time and space to consider all the issues in as wide and comprehensive a manner as is possible. We will have to wait to see what emerges. As I said, the process is without prejudice. This is a complex area as people associated with the industrial relations area will be aware. Sector by sector different issues in terms of the structures in pay scales arise. We must allow people to engage in a constructive fashion to see, based on the realities that confront us all, how we can move forward.

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