Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

My colleague, the Minister, Deputy Donohoe, clearly outlined the international headwinds our economy is facing into and how it is necessary to take tough decisions, such as the continuation of the FEMPI legislation, so that we do not gamble with our economic recovery. In closing this debate, I want to firmly link international and national developments to show that our stance on FEMPI is reasoned and informed by our experience of the twin crises in the recent past.

Ultimately, it was not the banking crisis that collapsed the Irish public finances in 2010. It was the combination of the banking crises and a fiscal crises that brought the troika to our door. Each on its own could have been manageable, given our low debt and National Pension Reserve Fund, but together they were impossible to navigate. As the Oireachtas banking inquiry found:

The Government's fiscal policy resulted in significant, long-term expenditure commitments being made on the back of cyclical, transaction-based revenue streams that ultimately proved to be unsustainable...

The oversight, challenge and effective scrutiny by the Oireachtas of the Government and its policy decisions in relation to fiscal policy, financial stability and the system of financial regulation was inadequate in the pre-crisis years...

All the main political parties, whether in opposition or in government, advocated pro-cyclical fiscal policies, including increasing expenditure and reducing taxation, in the years leading up to the crisis...

As the former Minister, Mr. Charlie McCreevy, stated in his testimony to the inquiry, "It is difficult to run a surplus in a democracy." We are not running a surplus; we are running a deficit. As the annual review of the FEMPI legislation notes, the headline general Government deficit in 2015 was 2.3% of GDP, or €4.9 billion, and yet some here would put the €2.2 billion savings made as a result of the FEMPI measures straight on to this deficit in one budget year. If we did that, we would be repeating the mistakes of our recent past, loading permanent expenditure onto an economy and tax base that is not yet able to sustain them. This would violate the terms of the Stability and Growth Pact and send a signal to international debt markets that their expectations of continued sound financial management were false. The cost of Government borrowing to meet this deficit would soar. Inevitably, as the Minister, Deputy Donohoe, explained, this would also mean no spending for other priority areas - no targeted recruitment of front-line staff, no capital investment in our schools and hospitals and no relief from USC for low paid workers, including public servants.

Instead of this unaffordable and fiscally dangerous scenario, we have in place a negotiated and agreed pathway to pay restoration. Some 280,000 public servants out of 300,000 are working within the Lansdowne Road agreement, LRA, and enjoying sustainable pay restoration on the back of our continuing recovery. Twenty-three out of 26 public service unions and representative bodies have signed up to the agreement.

The Government has to, and will, respect and keep faith with the decisions of the vast majority of public servants to come within the Lansdowne Road agreement. The benefits of and the protections afforded by being within the agreement will therefore apply to them.

The Government does not want to be in dispute with any group of people working for it. Those not represented by a body which is within the agreement cannot expect to benefit from the terms of that agreement. For those representative bodies which remain outside the terms of the Lansdowne Road agreement, it is they who are choosing to set themselves apart from their public service colleagues, it is they who are seeking to obtain the benefits of an agreement to which they seek to resile from the obligations of their colleagues under that agreement and it is they who wish to obtain preferential treatment over and above that available to their colleagues under the LRA.

The recent decisions by the TUI and AGSI to sign-up to the Lansdowne Road agreement is a sign of the progress that can be made when parties work together under the terms of the LRA. The agreement is also flexible enough to allow for the concerns of recent recruits to the public service to be addressed in a negotiated way.

In that context, officials of my Department and the Department of Education and Skills agreed on Tuesday last with the INTO and TUl, both unions inside the agreement, to have engagement later this month to begin to scope out the issues involved fully regarding pay arrangements for newly qualified teachers. This represents a sensible and sustainable mechanism for pay restoration in the public service. It allows for careful fiscal planning, with public service wages growing at a pace that the economy and our tax base can support, now and in the future. I urge those unions and representative bodies not signed up to the LRA to engage with the Government and follow their colleagues and friends into the agreement.

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