Martin Mansergh (Tipperary South, Fianna Fail)

This debate has provided the Minister for Finance with a welcome opportunity to dispel the myths and misrepresentations, which have surrounded one aspect of the implementation of the pay reductions for public servants provided for under the Financial Emergency Measures in the Public Interest (No. 2) Act 2009, Committee Stage of which I took in December.

An immediate reduction of the public service pay bill was necessary to meet the expenditure reductions required under the EU agreed programme for the stabilisation and recovery of the public finances. There was general agreement in this House on the level of expenditure reductions required in 2010 and an acceptance by the public service unions in discussions with the Government that a reduction in the pay bill for 2010 was necessary. The Opposition has the luxury of agreeing on a macro level what is required to address the immense challenges we face in the public finances, while proceeding to oppose nearly all the microeconomic measures decided upon to achieve the required expenditure reductions. The Government, on the other hand, must make the necessary decisions and implement them no matter how unpopular they may be and regardless of the level of plausible misrepresentation, which is very high over the present issue.

Pay cuts are always unwelcome and put extra pressure on those affected by them. Two thirds of public servants earn €50,000 or less, but given the scale of reduction required in the pay bill, €1 billion, it was not possible to exempt lower paid public servants from the pay reductions. However, the average value of incremental increases at lower grade levels in the Civil Service range from 3% to in excess of 4.5%. These incremental increases were retained, despite Fine Gael proposals that they should be abolished, and remain in place, albeit at the reduced rates.

The recommendations made by the Review Body on Higher Remuneration are not binding or mandatory on Government. Looking back on report No. 38 in September 2000 at the very height of the boom, the size of the increases recommended was very large and, in my opinion but admittedly with the benefit of hindsight, too large.

See this speech in context