Joe McHugh (Donegal North East, Fine Gael)

I acknowledge one achievement on the part of the Government. It engaged in a game of divide and conquer. It played it skilfully. Through its spin doctors it manipulated the media and created the public sector private sector divide. Unfortunately, the people left in the middle of the divide and conquer game are faced with a conundrum. They face many problems and challenges, one of them being survival in terms of paying their bills, repaying their mortgages and living day to day in that category.

The €30,000 salary was specified in our pre-budget submission because the people affected are looking at what is happening at the senior civil servant level and deciding whether they will work. They are considering the €30,000 they could get by not working. We have further disincentivised working at a time when we have a spiralling unemployment level which will get worse, particularly in light of the additional taxes, costs and penalties being introduced in the Finance Bill for people who are trying to survive.

Two years ago Deputy Bruton and our leader, Deputy Kenny, who were very strong on this issue, talked about a pay freeze in 2008 and we got hammered for it. I got hammered for it on local radio. Families rang in to say they would never again vote for me because I called for a pay freeze in 2008. That is only two years ago, but the Minister has now taken a very harsh stance on people who cannot survive.

Not everybody is in a position to do their apprenticeship in their own county. Many low-earning civil servants, who have to come to Dublin and rent accommodation, cannot survive. That creates a disincentive to work.

At a macro-economic level, we must get this country working again but we will not do that by penalising people, which is what the Minister is doing. We are creating the paradox of thrift where the people who are in a position to save are continuing to save; the people who continue to save are not willing to spend; commerce is grinding to a halt because people are not spending; businesses are folding up; and there are more and more people on the unemployment register. That is the outcome in this whole debacle - more and more people in an ever-increasing unemployment spiral.

The Minister must look at what is happening. All bets are off in terms of people's survival. They bought houses which they could not afford. Every night they go to bed in fear that mortgage interest rates will go up in the next several months. When the Government sends out a signal that certain civil servants at the higher levels will not be subject to pay cuts, it demoralises and disenchants those affected, leading to a disincentive to work. This is a dangerous position in which the Government finds itself. It is a conundrum out of which it can get by exempting those earning €30,000 and under per annum. It must, however, be addressed in the short not the medium term.

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