Martin Mansergh (Tipperary South, Fianna Fail)

I thank Senators for what has been a very interesting and worthwhile debate with a very wide range of views expressed. Senator O'Toole began the debate after I had spoken, giving a purported account of the breakdown of the talks. I say "purported" not to cast any doubt on his good faith but simply because he has a narrative from his own sources.

The reality is, just taking it as he described it, that there were discussions with three Secretaries General that seemed to be reaching a positive conclusion. I am afraid, however, as with any negotiation, particularly where aspects of negotiation are delegated, the stage one has reached must be referred back, in this case to the members of the Cabinet for them to form a judgment on it. It is not realistic to say, even if were true, and since I was not there, I am not in a position to comment on that aspect, that a degree of understanding or optimism about where they had reached with three Secretaries General constituted an agreement and that the Government then decided to dump on the agreement. The Government had some very clear criteria by which to judge the agreement, including whether it would achieve the savings required and whether those savings would be permanent and lasting. However, there was also another criterion, which is what would be the credibility at home and abroad of a draft agreement in the terms on which it had been reached. I do not have to repeat what the Taoiseach said. He has responded and commented on those trade union claims on a number of occasions. The Government came to a negative judgment of what was on offer and has explained in detail why it did not meet the necessary criteria.

I fully accept Senator O'Toole's point that the idea of unpaid leave was taken from the private sector, which is true. I am aware of many cases where that sort of formula was used in a different type of employment. We are not talking about classroom employment, for example.

What has taken place or is taking place is a change of culture. There was no desire to collapse talks, certainly not on behalf of the Government, but the results of talks had to meet certain hard realities. The regret is, without casting doubt on anyone's good faith, that it did not happen.

In respect of the specific points raised by the Senator, I will deal first with political increments. As someone who entered this House in 2002, I would have qualified this year for a long service increment. I did not regard it as hard that I had to give it up for an indefinite period. Perhaps there are younger people for whom the experience is different. I accept that, but it is a relatively light sacrifice being asked of politicians who have seen substantial increases in pay in the last decade.

Senator O'Toole raised the question of principal officers and principal teachers. The most recent benchmarking report recommended no increases for the vast majority of public service grades. For these two grades, however, small increases were recommended - the figure was about 1.1% for principal officers. A small number of other grades were also subject to small amounts. The Government took the view, in the context of the Towards 2016 negotiations, that the increases could be considered and implemented. However, this year it decided that Towards 2016 could not be funded and implemented and, therefore, the increases for principal officers and principal teachers would not be paid. A similar complaint could have been made by all review body grades when only the first part of the 2007 report was implemented and the remainder of it deferred until 2010. These have since been overtaken by the recommendations made in the most recent report. It is important to remember that savings on the pay bill must be real, not based on notional payments.

It was also suggested the Bill should only cover reductions that would help to reduce the public service pay bill. There have been specific queries in the last few days as to whose pay will be reduced under the legislation. It is important this is set out clearly as many have been concerned unnecessarily. If a person is employed by a body which everyone recognises as a public service body such as the Civil Service, the Garda Síochána, the HSE and so on, his or her pay rate will be reduced, just as it would have increased in previous years when agreement was reached on public service pay. As there is no income limit, all are affected. Where a person works part time, his or her part-time salary has regard to the equivalent full-time salary and the reduction applies pro rata.

There are other bodies funded in myriad ways by the Government from public money referred to in legislation as a subsidiary or a company set up by such a body. Because it can be difficult to determine in a particular case if a body can truly be counted as a public service body, the Bill provides either that such bodies are expressly excluded because they are listed in the Schedule to the Bill or that the distinguishing factor is whether a public service pension applies to or may be made by that body. There is the same definition of a public service pension as included in the legislation earlier this year that introduced the pension levy. It excludes the employees of most community and voluntary groups, about which there has been some concern. In those cases where there is a doubt, the Bill provides that the Minister can determine if the pay reduction applies. This is the correct approach because no Bill can deal in advance with all of the complexities of a public service employing well over 300,000 people and funding the employment of more.

Senator MacSharry asked about mortgage arrears. There are specific measures in the budget that extend mortgage interest relief until 2017 and, to some degree, address the problems faced by those who bought at or near the peak of the market.

The question of the Judiciary was raised; it was also debated in the other House yesterday. The advice the Government has received is that the deduction cannot be made consistent with the Constitution, as it stands. As a fall back position Fine Gael has proposed a constitutional amendment and that Bill, drafted by Deputy Shatter, will come before the House early next year.

I accept much of what Senator Twomey said. There is no doubt that many pension arrangements, particularly at the top of the public service, are, by any standards and especially by present standards, exceptionally generous. He spoke about our overpaying ourselves, a point I have made myself. There were huge improvements in pay, conditions and numbers that are no longer sustainable. He said people could not continue to expect to be paid at the same level as at the height of the boom and made comparisons between Ireland and Britain.

Senator Feargal Quinn is of a view I respect, but, although there is merit in the analogy between the Government and a business, I would not carry it too far. The Government must look after people in a different way from businesses. He is, however, correct to contrast our situation with that of Greece and point to the different approach we are taking. He is also right about what was done in the late 1980s on a bipartisan basis. That still has relevance to what we need today. I notice that, in contrast to some other Senators, he said we should not interfere in bodies such as the ESB, as they are commercial bodies. Does one within a strategic Government framework let them deal with matters, including pay, themselves, with the exception of chief executives, or does one try to absorb them into the public service?

Senator Boyle referred to the first benchmarking process as being shrouded in mystery. There was a good reason for that - it was meant to replace relativities. The judgment was made that to have published it would have led to renewed arguments and would have been self-defeating. It is possible to take a different view, however, with the benefit of hindsight.

The Senator also argued that Anglo Irish Bank should be treated as part of the public service and its employees as public servants. With respect, they are not public servants and do not have public servant security of tenure. If they were to be treated as public servants, presumably they would have to have security of tenure, which would make it difficult to undertake some of the rationalisation that may be necessary. Obviously, pay bill costs can be controlled in other ways, including through a redundancy programme. The outcome of the restructuring plan before the European Commission will determine the future of Anglo Irish Bank, including its staffing need, while its pay levels will be determined by the board of the bank accordingly. The Government does not propose to cut across any of these vital processes for Anglo Irish Bank and its shareholder, the State, with this legislation.

Senator Paddy Burke talked about FÁS. It is important not to confuse the FÁS board with FÁS operations. As far as I am concerned, it is not in any way a discredited organisation. I know the Senator was not saying that and I am not suggesting he was but it is important to underline the distinction.

Teagasc also gives rise to an issue in my constituency. There has been a certain level of rationalisation of agricultural offices and colleges. The Government was criticised in the other House for not doing more to shut down quangos, but I accept an agricultural college cannot reasonably be described as a quango. Teagasc, perhaps, is so described, but I do not really see it in that light. However, there has to be rationalisation of such offices.

As I dealt this morning with the question of wholesalers on the Appropriation Bill, I do not intend to go into that matter again. On the question of consultancy fees, I do not have specific information, but I make the general point, as emphasised by many Members in this and the other House and outside, that we are dealing with vast sums of money. Nobody is seriously denying that in what the Government has done and what it believes it had to do there are serious risks. As we cannot afford to make mistakes, I do not believe it is valid to make comparisons. As I am not at the coalface on this subject, I am unable to make comparisons between those who are managing these very sensitive, risky and important activities and people in more everyday types of employment. That said, consultancy fees, in general, are, with a lot of other professional fees - a subject raised by another Senator - exorbitant; they are one of the costs that need to come down. I have responsibility for the Office of Public Works and would be very slow to appoint consultants unless an overwhelming case was made. In my experience of consultancy studies over 20 to 25 years, they are generally very expensive and often of distinctly variable quality. I do not deny the necessity for them, but they certainly should not ever be a source of Government patronage. That is my conviction.