Róisín Shortall (Dublin North West, Labour)
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Question 94: To ask the Minister for Finance if, in view of the changing economic climate, the Government proposes to review its decision to accept substantial pay increases for Members of Cabinet, albeit on a deferred basis; and if he will make a statement on the matter. [21971/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 78 and 94 together.

As the Deputies are aware the Government decided that the increases recommended by the Review Body on Higher Remuneration in the Public Sector should be implemented for the generality of grades covered by the recommendations on the following phased basis: 5% from 14 September 2007, the date of the report, or where the total increase is less than 5%, the full increase from that date; half the balance from 1 September 2008; and the remaining balance from 1 March 2009.

However, the Government has already decided to defer implementation of the review body increases recommended for ministerial and parliamentary office holders and to phase them on the following basis: 4% of the increase from 1 September 2008, half the balance from 1 September 2009 and the remainder from 1 September 2010. On this basis the increases will not be applied in full until September 2010.

Richard Bruton (Dublin North Central, Fine Gael)
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The Minister has not answered the question he was asked, which was whether he intended to set any preconditions before the Government would agree to give up the pay increases. Will the Minister set any preconditions? Does he share the Taoiseach's view that the increases should be surrendered if a satisfactory outcome is forthcoming from the national pay talks? What does he regard as a satisfactory outcome from the national pay deals that would trigger the surrendering of this pay increase? Will the decision to surrender some of this pay increase be confined to Ministers or will it apply also to senior public servants, who are due to receive further increases on 1 March next year, according to the schedule?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I have been considering this question since my appointment as Minister for Finance. The Taoiseach has made clear that the Government is prepared to review all increases in the context of the social partnership discussions that are under way. I do not want to pre-empt those discussions at this stage. I appreciate that the Deputy asked whether preconditions were being set. In my discussions about this with the Taoiseach I have not viewed it as a matter requiring preconditions but as a matter, as indicated by the Government through the Taoiseach, that is there for discussion in the context of the social partnership negotiations.

Richard Bruton (Dublin North Central, Fine Gael)
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To clarify, will the Government surrender the pay increase regardless of the outcome or only if the outcome is within some range? Perhaps the Minister would clarify Government policy in this regard.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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No. I——

Richard Bruton (Dublin North Central, Fine Gael)
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The Irish Congress of Trade Unions, IBEC and so on do not normally negotiate Ministers' pay, so it is up to the Minister to decide what is to be done. With whom will the Government sit down and negotiate? Will representatives of the Government sit down with David Begg? Will they negotiate will all three pillars within the social partnership? Will the Minister clarify what the policy is?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I recognise the considerable public disquiet surrounding these pay increases. They were determined, as the Deputy knows, by a group——

Richard Bruton (Dublin North Central, Fine Gael)
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Why not just surrender them?

Kieran O'Donnell (Limerick East, Fine Gael)
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Yes.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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They were determined based on an exercise of comparison with the private sector. I know from discussions with finance Ministers from other countries that there is grave concern in many European countries about the high levels of remuneration with which senior private executives are awarding themselves. In that context, I agree with the position of the Taoiseach and the Government that we are prepared to review this matter in the context of these discussions, which I do not want to pre-empt. In any event, when participating in discussions of this type, it is not wise to indicate what one will do. One does not go into discussions or negotiations after indicating what one intends to do anyway.

Richard Bruton (Dublin North Central, Fine Gael)
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Who will the Minister discuss it with?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I will not indicate at this stage what I intend to do.

Joan Burton (Dublin West, Labour)
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We will receive more Exchequer figures this afternoon — the Minister probably knows them already — which may not be any better than those for the first five months of the year. In view of the state the economy is now drifting into and the current pandemic of uncertainty, and from the point of view of the moral authority of the Government, should it not bin these pay rises now?

Richard Bruton (Dublin North Central, Fine Gael)
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Hear, hear.

Joan Burton (Dublin West, Labour)
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The process for determining Ministers' pay rises should be handed over to the system that governs the pay of TDs, so that they are within the public sector process. Does the Minister agree that in view of the culture of greed with regard to bonuses which has so infected the international private banking sector, determining Ministers' salaries by comparison with the private sector whose workers are immersed in the bonus culture, does not make sense? That is why the moral authority of the Government is in danger. Why does the Government not just give up these increases and provide moral leadership and authority on this issue? The level of these pay increases is totally unjustified.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Two or three issues arise from the Deputy's question. I agree with her that the bonus payments, characterised by some payments in senior banking positions, are deplorable. That these increases are occurring in international financial markets is a cause of common concern among many European Finance Ministers.

Concerning the comparators used by the body in question, the review and benchmarking bodies compared public sector jobs with jobs of equal value in the private sector, but not necessarily senior executives in banks. The review body found that the salaries of many senior public service posts — we will leave Ministers out of the equation for the moment — were below private sector levels even when allowance was made for the value of pensions. It was on this basis and in respect of the lower quartile of the private sector rates that the commission worked.

At this stage, I am not prepared to be more definitive concerning the Government's position because it is important that the negotiations on social partnership should occur between the relevant partners. The Taoiseach has made clear that the matter has been placed on the agenda. This is as much as I can state at this stage.

Regarding Ministers' positions, Deputies have an arrangement whereby their increases are made automatically because they are linked with a particular grade in the public service.

Joan Burton (Dublin West, Labour)
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Assistant principals.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Ministers have no such linkage and are consequently in an impossible position constitutionally and politically.

Kieran O'Donnell (Limerick East, Fine Gael)
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I will make two brief points. Today, the OECD issued a report on Europe's economic indicators. In Ireland, it singled out the ongoing pay talks and pay restraints. This is like déjÀ vu because I also asked the Minister's predecessor whether he believed that telling people to have pay restraints on the one hand while, one the other, Ministers are accepting pay rises above the average industrial wage was hypocritical. Does the Minister believe he is entitled to be paid more than the Secretary of the Treasury in the US?

Seán Ardagh (Dublin South Central, Fianna Fail)
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I am sure the House will get an answer to that.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I have made it clear that the Taoiseach has placed this matter on the agenda of the public social partnership talks. I am not prepared to go beyond that this afternoon. The Taoiseach has made it clear that the matter will be subject to further discussion and that issues have not been finalised in that regard.

Kieran O'Donnell (Limerick East, Fine Gael)
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Unlike the pay talks, the Ministers' wages are already determined. They should lead by example and have the moral authority to stand up and say——

Seán Ardagh (Dublin South Central, Fianna Fail)
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Does the Deputy have a question?

Kieran O'Donnell (Limerick East, Fine Gael)
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I am telling the Minister that, effectively, it stands to reason——

Seán Ardagh (Dublin South Central, Fianna Fail)
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That is not in order, this is Question Time.

Joan Burton (Dublin West, Labour)
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It sounds as if the Cabinet has gone in like a negotiating group with a shop steward at its shoulder and told people that Ministers should get a certain amount. The salary increases are unacceptable to most people. The increases would be difficult to justify at any time, but they are almost impossible to justify given the economy's difficult situation. Where is the Minister for Finance's leadership? Yesterday, he told people — we will not use the "W" word again — that they should show restraint in their comments.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy can use it if she wishes.

Joan Burton (Dublin West, Labour)
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I will not.

Seán Ardagh (Dublin South Central, Fianna Fail)
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Will the Deputy put her question to the Minister?

Joan Burton (Dublin West, Labour)
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He is giving the impression that, somehow or other, the Cabinet has, as an adjunct to the pay talks, participated so that it can negotiate a bit for itself. This would not be acceptable, as the Government must show moral authority.

Seán Ardagh (Dublin South Central, Fianna Fail)
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Does the Deputy have a question?

Joan Burton (Dublin West, Labour)
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Why will the Government not forgo the increases?

Kieran O'Donnell (Limerick East, Fine Gael)
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The Government is entitled to be paid——

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I did not intend to prohibit Deputy Burton from using that word, but I will prohibit myself from using it in future.

Kieran O'Donnell (Limerick East, Fine Gael)
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Is the Minister withdrawing it?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Entering the talks, it is neither my frame of mind nor the Taoiseach's that this item is on the agenda because we want to justify the increase.

Richard Bruton (Dublin North Central, Fine Gael)
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Is it the Government's position that, in future, the setting of ministerial pay will be a matter for the social partners or will it continue to be a decision by the Government and an order of the House? If the latter remains to be the case, it is up to the Ministers to decide not to take it. It is not up to Mr. David Begg, Mr. Turlough O'Sullivan or anyone else sitting around the table, as it is not their role. It is up to the Ministers to show leadership and say that they will not take the increases because the economy could not take it and to do so would be inappropriate.

Seán Ardagh (Dublin South Central, Fianna Fail)
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Is that a question?

Richard Bruton (Dublin North Central, Fine Gael)
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That is a question.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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It was decided to defer it for a substantial period and the questions the Deputies raise are not simply of relevance to Ministers but concern a substantial category of senior public servants as well.

Joan Burton (Dublin West, Labour)
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Does the Minister believe the senior civil servants in question are entitled to those increases while people on the lowest rungs of the civil service are barely earning €400 gross a week? We live in the real world.