Brian Lenihan Jnr (Dublin West, Fianna Fail)

The substantial reduction the Government has applied to the pay of persons at this level is starkly highlighted when net reductions are examined. The Government, in taking the difficult decision to reduce all public servants' pay, has sought as far as possible to protect the pay of the lowest paid and apply the major adjustments to those who can most afford it. Similar performance-related pay schemes, independently assessed, applied in other sectors of the public service, including the Health Service Executive and the local government sector. Accordingly, they also were included in my direction on pay.

I am concerned about the efficiency of management structures, particularly in the HSE and local government. Accordingly, the Government intends the McLoughlin group, undertaking an independent efficiency review of local authorities within a tight timeframe, will also review management arrangements in local authorities, as well as taking account of Government policy on local government reform and measures already in train in the transforming the public service agenda. The group is to complete its work by the middle of this year. The Government intends that a similar review will be carried out in the HSE.

The Government's policy approach on pay is dictated by necessity not confrontation. Common approaches and shared solutions remain the preferred policy instruments of the Government to address public service pay issues. These approaches have served well before at times of serious economic difficulty in the 1980s and have the potential to continue to do so. The approach is based upon a mutual recognition among all stakeholders, employers, Government and employees, of the scale of the economic problems facing us and an agreed policy response which sets aside short-term interests for long-term economic gain. The magnitude of the economic problems facing us are greater, but I believe we are in a much better position than in the 1980s in potential, ambition, confidence, achievement and determination. We have overcome our economic problems in the past and will do so again.

Budget 2010 was the latest in a series of measures, beginning in mid-2008, to bring order to the public finances. It is clear the actions taken by the Government are having an effect, the decline in tax receipts has moderated, expenditure pressures have lessened and the cost of borrowing has reduced from the high levels seen in early 2009. Recent movements in the international markets underline the importance of continuing to take such firm and decisive action to restore stability to the public finances. They also underline the importance of the decisions the Government took on public service pay in the recent budget. Decisive action now will return the economy to a sustainable growth path. While challenges and difficult choices still remain, the Government is determined to continue to take the necessary steps in this regard.

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