Michael McGrath (Cork South Central, Fianna Fail)

How does one follow that from my good friend and colleague, Deputy Mattie McGrath?

I am pleased to have an opportunity to make some brief comments in the time available on the motion as put forward by the Fine Gael Party in relation to this pay issue concerning senior civil servants and related grades. I stand foursquare behind the Minister, Deputy Brian Lenihan, on all the decisions he has taken since becoming Minister for Finance in the summer of 2008. I believe he has performed outstandingly well in that role since that time. He is internationally recognised as somebody who has the courage and conviction to take very difficult decisions. He has set the economy on the right path and made decisions that will help us get the public finances in order. We need to discuss this motion, I believe, on the basis of the facts.

When I learned just before Christmas that a decision had been made to reduce the impact of the pay cuts on assistant secretaries and deputy secretaries of Departments, I, too, was surprised until I looked at the detail. We are all acutely aware of the impact budget decisions have had on the low paid in particular. However, in considering this issue, it is important to look at the package of the three budgets since October 2008, including the one in April 2009 and the budget of last December, as well as the decision in February 2009 to introduce the pension levy. We need to examine the impact of the package of those financial decisions on different grades in the Civil Service and within the public sector generally. It is quite clear from any objective analysis that the progression of the impact on people earning higher levels of pay has been quite aggressive. Consider the main elements introduced in those budgets. Under the pension levy, the first €15,000 of earnings is exempt. The levy is 5% on the next €5,000, 10% on the subsequent €40,000 and 10.5% on earnings above €60,000. The income levy is 2% on earnings up to 75,000, some 4% on incomes between €75,000 and €175,000 and 6% on pay in excess of that. I put those figures on the record to highlight the progressive nature of the decisions taken by the Government in recent budgets.

It is fair to say that there can be no question that the basic principle of "those earning the most paying the most" has certainly been respected by this Government and has been at the centre of its approach to tackling the public finances. Take for example the figures which the Minister for Finance introduced last night. The impact, collectively, of those measures on clerical officers was 7% of net pay but 25% on assistant secretaries at the mid-point, equivalent to more than three times in percentage terms. In monetary terms the cut is equivalent to 14 times greater.

I am the first to recognise that every euro is of greater value to someone on low pay compared to a person earning €150,000 or more, but having said that the cuts have been far greater for higher civil servants. The media would suggest in recent weeks that higher civil servants were not taking any cut at all, or that their cut is relatively smaller, when in fact this is not the case. At the heart of this controversy is the treatment of the bonus in the calculation of the pay cut. It is important to address that issue and acknowledge that the Minister for Finance, Deputy Brian Lenihan, abolished what was a very flawed bonus scheme.

Deputy Bruton was correct last night that bonus payments had become par for the course and were being seen as virtually an automatic entitlement, and that was certainly wrong. It defeated the whole purpose of incentivising civil and public servants to achieve high standards.

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