Joan Burton (Dublin West, Labour)

Before we go into what happened and the sequence of events, it is very important that Fianna Fáil recalls the circumstances in which it brought the country, for the second time in as many generations, to the point of economic ruin. The reason it has had these extraordinarily difficult budgets, which have imposed very heavily on low paid people, people on social welfare, people in receipt of child benefit and people in receipt of early childhood payments, is that it destroyed the economy. During this crisis Fianna Fáil has taken a relentless approach, assisted by its public relations people, in trying to drive a wedge between the public service and the private sector. To some degree, it has been successful in that regard.

It was Fianna Fáil that blew up a fantastic housing boom from around 2000 when it created a vast range of tax incentives in regard to property and lending. The consequence of that was that two civil servants or two public servants on relatively modest wages - for example, a nurse married to a teacher - ended up in a position where, in an inflated property market, they could barely afford to buy a house. For generations, buying a house was a legitimate aspiration of people on modest middle incomes not only in the public sector but in the private sector.

It is foolish of the Government not to look back at how it brought the country to its knees and how it brought people to the pass it imposed on them in the last two budgets. Civil Service salaries rose very sharply on the back of a situation where ordinary civil servants found it difficult to buy a house. It is important to remember that.

The consequence is that many public servants at high and low levels are heavily indebted because they bought houses and apartments at the height of the property boom when the frenzy to get on the property ladder was so strong. The consequence of that is that a significant number of public servants of all ranks are trapped in negative equity and will bear the brunt of mortgage increases. I am sure the Minister and the Minister of State, who have spoken, have had people call to, and e-mail, them to tell them of their difficulties, in particular if the negative equity is accompanied by debt. Fianna Fáil will correctly say it never told people to borrow to buy houses but, of course, Fianna Fáil through its friends in the construction industry told people to get on the property ladder. It is important to recognise what drove the huge level of pay increases.

In regard to the events following the Minister's Budget Statement and subsequently, two lawyers for the Government have spoken lawyer talk to explain away everything and say black is white. That is what lawyers are trained to do. I congratulate the Minister, Deputy Brian Lenihan, and the Minister of State, Deputy Peter Power, for brazenly not acknowledging the crux of this problem.

The crux of this problem lies with the Minister for Finance, the Taoiseach and, to a lesser extent, the Tánaiste and Minister for Enterprise, Trade and Employment. When the Minister for Finance made his budget speech, he clearly laid out that there would be reductions in public service pay and that those reductions would bear less onerously on people on lower salaries in the public service. As the Minister said, there is a large number of people in the public service on €50,000 or less per year. One must bear in mind that many of them have debt problems in regard to mortgages and other debts. Like other people on low wages, they are hard pressed.

When the Minister declared - it was one of the headings in the budget - that those who are well-off would bear more of the burden, English being what we all understand, we thought that meant the people in the higher grades would take a proportionately higher hit. I do not believe anyone wants to see people take a cut in their wages. It is painful for Members of the House who have had to do so and, of course, it is painful for everybody in the public service. However, it was the deceit inherent in the presentation which is the cause of the public grief and anger.

The Taoiseach, rather like the Minister for Transport, Deputy Dempsey, on another occasion, said it was "only €5 million". When PPARS was a fiasco, the Minister for Transport, Deputy Dempsey, famously said it was only €155 million, we were good for that and that it did not matter. However, when we are in such an extreme situation, it matters a great deal. It is the inherent unfairness.

In regard to the pay and conditions of Assistant Secretaries, the Tánaiste and Minister for Enterprise, Trade and Employment said in the House that the review body on higher level pay indicated the bonus was indicatively part of their salaries. She accepted that a further reduction which would equal a reduction of 20% would be disproportionate. However, the review body stated, "we consider that, in the light of the very serious economic and fiscal environment, the developments in relation to such schemes [bonus schemes] in the private sector and our recommendations that reductions in remuneration are warranted, the continuation of performance-related awards cannot be justified in the current climate."

It may be that the Government, in setting up the performance-related bonus scheme in 2001, was at fault. It called it "a bonus". A bonus generally means a reward for exceptional service, dedication and achievement of required outputs where they are measured. On examination, it appears almost everybody got a bonus. The Minister for Finance has now backtracked and said, it was an inherent part, or as the Tánaiste and Minister for Enterprise, Trade and Employment said, it was an indicative part - I still do not understand what that means - of the pay package. Lower paid civil servants hear their bosses get bonuses. A bonus means something for exceptional service. Perhaps a bonus could be given to people who never have a sick day or to people who get an output over and beyond a required level of service. What happened with this was the absolute depressing appearance of a sleight of hand for a group of civil servants who had the Minister's ear.

What is even more disturbing is that remuneration package carries to many other grades. When I spoke about it at the beginning, people did not appreciate it applied to directors of service, county managers, people in the HSE and so on. People in the HSE get bonuses as an indicative part of their salaries. Many people find that difficult to understand because the level of dissatisfaction with the HSE is, at times, very extreme.

In another sleight of hand, the HSE is demanding of bodies funded by it under the Health Act 2004 to offer cuts of 21.5%, including salary cuts, or to find the cuts by other measures. The question again arises for the Minister. He has not been forthcoming on this. Does that mean that the people in the HSE-funded bodies at the affected grades of Assistant Secretary and Director of Service also have a different formula to people in the lower levels or do we just have a cut in services? The House and the public have been treated with a lot of contempt. A lot of damage has been done by this and by the Minister in the first budget when he made grandiose announcements about reductions in the pay of Deputies and Ministers which turned out not to apply for a long period of time. They applied afterwards but did not apply at the time.

On budget day the Minister was already fully aware of the situation and had been briefed that there was an issue relating to this group of civil servants. He could have done two things. He could have stood by what he said or he could have been honest and said these reductions will apply, except in the case of certain categories where they will be calculated in a different manner. At least then we would have had some honesty.

See this speech in context