Fiona O'Malley (Independent)

I welcome the Minister of State. I was not planning on speaking in this debate because I had spoken on a related subject last week and the previous week and thought there was only so much I could say. However, given what other speakers have said, I have been tempted to make a contribution.

The situation is fluid with regard to our fiscal problems and, unfortunately, the deficit figures continue to rise. We are now all agreed on an adjustment figure of €15 billion and that we need to produce a four-year plan. Last weekend I travelled with a former Member of the other House. That man in his retirement is earning far more than he ever did when he had a full-time job here and we have a problem in financing this. Whatever about the public sector pay bill, the Government must tackle the issue of public sector pensions. We were all delighted when the Croke Park agreement was reached because we could see the benefit in having security. I believe public sector workers recognise that having job security is to be valued in this day and age. However, the economic reality is that we cannot really afford it. I recognise that people do not want to speak about this until we first secure recognition that we need reform and a process of reform is under way. However, we need to get a grip on public sector pensions. I know people have rights and entitlements and that the law is there to protect all of us, but there comes a time when we must consider what is affordable in the national good. We need to recognise that we have allowed ourselves to be rewarded, particularly when it comes to public service pensions, in a way that is no longer affordable. We need to be brutally honest and say that while people have rights and entitlements, the position has changed utterly.

We do not have any easy options.

In this game of politics the current Government must take responsibility for the finances and where the axe will fall. Unquestionably, there will be pain in every household. If we do not pass the next budget, and it could well be the case that it might not be passed, there will be a general election. This will elect another Government that will have to introduce an equally harsh budget. The economics do not change just because the politics do. Politicians would do well to recognise that. The people will not be fooled for a minute if politicians resile from a difficult situation. In that context I pay tribute to the Fine Gael Party. Its members are being far more measured in their deliberations and assessment of the situation. Credit is due in particular to Deputy Michael Noonan who is showing a great deal of restraint and responsibility in his role as Opposition spokesperson on finance. If the tables were turned in a few months, should the next budget not be passed and he is in charge of the Department of Finance, he knows how tough that job will be. There was a period in the 1980s when three budgets were introduced in quick succession and I can envisage us returning to such a situation. That is not good for the country. We must bear in mind what is good for the country rather that what is good for one's brand of politics.

Very harsh measures must be taken. There is a certain amount of scope within the higher echelons of the public sector, especially in the semi-State sector where we can no longer afford to pay people such wages. There is a desire throughout the country for a sense of solidarity. Who wants to be the person, either retired or working in one of the semi-State bodies, on an income that is triple or quadruple the salary of the Taoiseach of the day, to stand over cuts to old age pensions or social welfare payments? People do not want that. When the public service levy was imposed last year, judges were excluded from it. They should examine what they are doing as well. People who are very well paid from the public purse must recognise that while they signed a contract to earn a certain amount of money, there are other Irish people who have a great deal less. Can they really in good conscience continue to take their salary as if immune to the challenges the Government is facing? I do not believe they can. We need to appeal to people who are earning a great deal of money to consider how the country can make the required savings and ensure all resources are targeted at those who need them most.

The trouble is that when we were wealthy and had plenty of money, rather than deal with problems and progress change we threw money at them. We are reaping the dividend from that now but we simply cannot afford it. I wish good luck to the Government in preparing for this budget. It is the toughest budget any Government has had to face. Very difficult decisions will have to be taken but this must be done. I have a preference for cutting public expenditure rather than increasing taxes. As Senator Quinn said, when we have kept taxes low it has created incentives to make more money. The black economy is the only thing that will grow if taxes become unfair. We face a very challenging time. We all must examine our own situations and households to see how we can make a difference in order that the money we have is made available to the people who need it most.