Brian Lenihan Jnr (Dublin West, Fianna Fail)

There are many big questions there. First, I believe we should have a strong, vibrant and proud public sector. As Minister responsible for the public sector, I am very concerned at the demoralisation that has taken place. However, no sector can be immune from criticism and no sector that is paid for by the taxpayer can be immune from cost control. These are fundamental matters for any Government.

The public sector we all want to see in Ireland and the vision I would subscribe to is a public sector that is highly motivated and, as Deputy Gilmore said earlier, showing the virtues and attributes which its members have shown in the areas affected by the floods, which have been very remarkable virtues showing a huge sense of commitment. By and large, that exists within the public sector. However, when we are talking about pay and pay rates, we have to ground ourselves in realities about the public sector. All of the objective studies that have examined this question have shown that the average rates of pay in the public sector, occupation by occupation, are often way above either international comparisons or valid local existing comparisons.

It is true that there is no comparison, for example, in the case of a Garda, a nurse or a teacher because, generally, these are public service occupations. However, when one makes comparisons with other countries, it is clear they are well paid by international standards. We do not debate this often in this House. Some work was done by the ESRI on this and I regret the fact that this ESRI coverage did not seem to factor into the equation the pension levy, and the extent to which this had already effected a reduction, because the 20% referred to by the ESRI as the average disparity had immediately to take a 7% deduction. That is important and worth noting. The public sector has made a big contribution towards resolving our financial crisis. I do not think the argument about pensions can be made as strongly in regard to public servants any more because, increasingly, the proceeds of the levy will provide for the cost of the pensions. This is an example of where the Government has engaged in what is a public sector reform, although not a popular one, I accept.

With regard to the Deputy's wider questions about the causes of the current crisis being the existence of a free market and the lack of regulation, they are two distinct issues. Most individuals nowadays subscribe to the view that market disciplines and performance indicators are very important in measuring the value of any service that is delivered, whether it is in a competitive market or a sheltered market that is free from competition, and there are sheltered markets in both the public and private sectors and there are of course competitive markets in both the public and private sectors. I am not sure the question of the free market bears on this.

I would agree with the Deputy that lack of regulation in banking was a major problem. She makes a fair point in regard to lack of regulation in banking, which was part of a worldwide trend as the banking crisis here is not unique. What is unique about it is the form it took, namely, a rather old-fashioned banking crisis involving excessive lending to property developers. In many countries, the financial crisis took the form of highly sophisticated financial instruments whose face value bore no relationship to their actual value. When market confidence collapsed in these instruments, banking systems and economies collapsed with them.

I do not want to return to the NAMA debate which took place at length in this House. I want to take up the question the Deputy raised about tax rates, including low tax rates, which the Deputy maintained were part of the problem that generated our economic crisis. If one analyses these low tax rates, the incontestable fact is that they have benefited the lowest paid the most. If one has an income tax system where half the earners are paying no income tax, one clearly has a tax system which incentivises work. In ways, that is a very good state of affairs. Of course, one has to balance that with the need for social solidarity and for every citizen to realise that he or she pays a contribution towards the services which he or she receives. That is a balance we will have an opportunity to argue about in the budget.

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