Brian Lenihan Jnr (Dublin West, Fianna Fail)

I move: "That the Bill be now read a Second Time."

The Bill gives effect to the decision of the Government to reduce the pay of public servants to achieve a saving of approximately €1 billion in the public service pay bill in 2010. All of us in this House, in both our professional and our personal lives, have experienced the excellence and dedication of public servants. We all know, for example, the difference a good teacher can make not just to the lives of our children, but also to the morale of an entire parish or community. We know how gardaí have put their own safety and their lives at risk to protect the communities they serve. We know how medical staff in our hospitals and in our communities work long hours and, by definition, in stressful circumstances.

It is not just providers of these essential services who typify public service at its best. All of us in this House are familiar with the invaluable work carried out by civil servants with the highest integrity. Over the past 18 months, I have been repeatedly struck by the manner in which officials in my Department, other Departments and in this House have worked night and day and over weekends to serve the common good. As their employer, it is with great displeasure that the Government must now bring forward the first Bill to reduce the salaries of public servants since 1933. Like the Government of that time, we face enormous challenges and our options are limited.

In my budget speech last week, I set out the Government's strongly held conviction that the only way to reduce the deficit and continue on the road to economic recovery was to reduce Government spending. The cost of providing public services has to be reduced to bring it in line with sustainable revenue levels. Without any correction, day-to-day spending next year would be approximately €58 billion, an increase of €2 billion over this year. This is not sustainable.

The public service pay bill accounts for more than a third of all current spending and is the largest component in the cost of providing public services. In these circumstances, this Government has no option but to reduce public service salaries. I assure the House, as I am sure all Members understand, that this was a very difficult decision. We are well aware that most public servants are not on very high salaries. We know that, like others, they have mortgages to pay and families to support. They have entered into commitments on the basis of certain salaries which they have already seen reduced by the pension levy. I understand the burden all of this places on individual public servants. However, the only way to get out of our current difficulties and return to economic growth is to bring the cost of public services back in line with available revenues which have now gone back to 2003 levels. A reduction in the pay of public servants is a painful but necessary step in the right direction for the future of the country.

As I announced in the budget, the pay cuts will be progressive. Public servants on the highest salaries, including members of the Government, will bear the highest reduction in their pay. Last Friday, I published Report No. 44 of the Review Body on Higher Remuneration in the Public Sector which examined top level rates of pay in the light of the changed budgetary and economic circumstances and benchmarked them against rates for similar posts in other countries of comparable scale, particularly in the eurozone. Following its examination, the review body recommended reductions in pay varying from 8% to 15% and 20% in the case of the Taoiseach.

Due to the time constraints under which it did its work, the review body confined its examination to a sample of grades but recommended that the reductions be extrapolated for other relevant groups. Tables 1 and 2 of section 2 of the Bill set out the extended range of pay reductions as follows: 8% for persons with salaries above €125,000 to less than €165,000; 12% for persons earning from €165,000 to less than €200,000; and 15% to salaries of €200,000 or more. These reductions will take effect from 1 January next. The section provides that the Minister may intervene to address any anomalies that might result from applying straight pay cuts for persons whose pay is just above the cut off point for each band. As recommended by the review body, these permanent cuts in pay will replace the temporary waivers of pay made by some individuals including all members of the Government and Secretaries General of Departments. In some cases individuals have volunteered to take a pay cut over and above that recommended by the review body. Ministers of State and the Leas-Cheann Comhairle, for example, would have been due to take a pay reduction of 8% but they have agreed to take a permanent reduction of 10% and I will propose an amendment to the Bill to make that change tomorrow.

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