Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Deputies Keating and Buttimer are sharing time.

Derek Keating (Dublin Mid West, Fine Gael)
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I raise this issue as it is a matter of national importance and of great concern. Some senior civil servants are receiving vast sums of money by way of bonuses, pensions and special lump sums. Perhaps all these packages are tax-free. I raise this on behalf of the many who have been affected adversely by the economic circumstances in which we live. They are suffering as a result of job losses, price increases, reductions in services and difficulties in repaying their mortgages. In light of the exposure of this issue, I ask the Minister who agreed the terms. Can he give us definite information on this? What, if anything, can he do? Can an emergency taxation system be introduced to give the people some comfort?

Many people have been told for a variety of reasons in recent years that terms previously agreed cannot be met. Would it not be in our interest and that of the people to say to Mr. Dermot McCarthy, for example, that we are no longer in a position to meet the terms already agreed in his contract? What message would that send out to the people?

I met a man from Clondalkin last Saturday morning. He told me he had just read about this issue in the newspaper. He was wondering how we could pay a man €3,000 per week. I am wondering the same.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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I ask Deputies to refrain from mentioning individuals. It is not customary to mention those who are not in a position to defend themselves. Deputies may raise an issue with this in mind.

Jerry Buttimer (Cork South Central, Fine Gael)
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I want to raise the issue of the payment to a former Secretary General to the Government. Such a payment is wrong in the current economic climate. The Minister for Public Expenditure and Reform has given us the line of the day: we must live within our means. I accept this is a legacy issue but to the people, our fellow parliamentarians and other commentators, it is an issue of gargantuan concern that, in a recession, somebody can walk away with a lump sum that is multiples of his or her income, during which time the rest of the country is trying to live within its means.

I do not mean to personalise the issue and am not on a witch-hunt but I want to see fairness and balance. Our fellow citizens want the same. We are told unemployment, a reduction in services and increases in indirect taxation are coming on foot of the next budget. The people want fairness. The giving of largesse to a small coterie of people must be stopped and cannot be allowed to continue.

I appreciate that the Minister will embark on a project of reform and I commend him on this. We will support him in this regard. The people are sickened by what they regard as largesse being given to a small chosen few. To add insult to injury, they see potential for persons in retirement being considered for or asked to take a further job. This is according to the commentary of others, not the Government. This must not be allowed to continue either.

The Government, which has done a great job since entering office, has begun a process of reform and this must continue. We must end the practice of giving excessive largesse to those on the top end of the scale who are retiring, including ourselves. I am not talking about the ordinary people but those at the top.

Brendan Howlin (Wexford, Labour)
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The topic submitted pertained to reductions in Civil Service numbers. Therefore, my prepared notes relate to a topic entirely different from that raised but I am very happy to address the one raised. We need to tackle these issues face-on. I do not want to personalise the matter and take the Ceann Comhairle's admonition in that regard, but let me deal with the specifics. In 1987, the Top Level Appointments Committee was established to get younger people into the top levels of the Civil Service. The old system whereby Secretaries General were appointed for life and expected to receive a full salary until the age of 65 was terminated and people were given a fixed contract of seven years. In 1987, a deal was done to facilitate this because there was a desire for younger people to apply for the job for a seven-year period. The deal done was that at the end of the seven-year period the person was entitled to continue in an analogous post at the same level of payment or receive a severance payment. Everyone who has retired under TLAC terms since 1987 received these severance payments. Therefore, we should not personalise it to one individual. However, this does not make it right and in the new austerity we must face, everything is under scrutiny.

I will outline the three component parts of the very high sum which both Deputies instanced. The first part is the lump sum payment, which is one and a half times the final annual salary. The second part is the pension, which is 50% of earned salary over the period and which is normal for every public servant, whether a Garda, a nurse or anybody else. The third, more dubious element, is the TLAC severance element. The end of year salary for the person concerned was €285,000 but this has been reduced to €200,000 and pensions and lump sums of all retiring people will be based on this as and from the end of February 2012. We will have a significant exit from the public service - we may have a debate on this separately - because people will want to preserve their pre-cut level of pension entitlements. The very elaborate lump sum and pension entitlements will be significantly reduced for anybody retiring after the end of February next year.

I have a particular problem with the TLAC severance payment and I have asked the Department to see how I can deal with it. In essence, I have sought a way of abolishing it. I want to make clear that I am not interested in grandstanding on this. I do not want to make a pretence that I can do something if I cannot do it and I end up sending lawyers to the High Court costing us more money. I understand one more individual who would qualify under the TLAC terms, and not 55 as quoted in the newspapers, has notified the Department of retirement prior to the end of February. I am not sure what I can do about this. I have asked the Department to examine it. There may be more who have yet to notify the Department. This is a time-limited issue and this is a reforming Government, and once we get over this period we will change the entire process.

This month, I will introduce to the House a new comprehensive single pensions Bill which will fundamentally alter the way pensions are determined for all public servants including Deputies, the Judiciary, gardaí and civil servants. It will not be at an end of payment calculation; it will be a career average calculation. This will not affect people with a fairly flat profile of income such as teachers, but it will certainly affect people who end up in very high positions in the public service.

Derek Keating (Dublin Mid West, Fine Gael)
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I thank the Minister. I take some satisfaction from his reply because three things are very clear. First, I am delighted but not surprised to see the Minister is as passionate about this issue as I am and as are many people in Ireland. Second, the Minister sees this as a major issue and, third, we are a Government of reform and we will deal with these unacceptable issues. I thank the Minister for his reply.

Jerry Buttimer (Cork South Central, Fine Gael)
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I also thank the Minister for his reply. I welcome the reform process he is initiating. This is about higher paid civil servants and is a major issue that cannot be underestimated. As a people, a Government and a Parliament we must decide what is important to us. Today, the Minister has exemplified that although tough decisions and days lie ahead, the Government will show leadership. If this determination for reform is shown people will be brought with us and they will understand our economic situation. This is a matter of grave importance. It is not about cheap headlines or one person; it is about sending a message to our people that we can reform our economy and bring back our country. It must be done by those in authority and those at the top.

Brendan Howlin (Wexford, Labour)
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I thank both Deputies. I do not want to give any illusion that we will not have other instances between now and February. I do not know whether any senior civil servants are contemplating retiring and if they have a contractual arrangement, I may not be able to dislodge it. I have asked for advice on this. As I stated, I will not make false promises nor will I accrue legal costs to grandstand on it. However, we will fundamentally reform the system. We have already done so by capping top-level pay, starting with ourselves on our first day in government. We migrated this through all levels of the public service and we will copperfasten this process in law in the new pensions Bill. I hope Deputies on all sides of the House will engage with us in this reform process and support the legislation when it comes to the House before the end of the year.

Derek Keating (Dublin Mid West, Fine Gael)
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Is it possible for the Attorney General to go to the High Court without incurring costs to the State?

Brendan Howlin (Wexford, Labour)
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The State covers its own costs but if it loses a case, it covers the costs of the other party and I am afraid these can be considerable.