John Paul Phelan (Fine Gael)

I welcome the Minister of State, Deputy Conor Lenihan. Fine Gael does not support this Bill, which is emergency legislation that follows on the announcement in the budget last week regarding a reduction in the minimum wage, a reduction in pension provisions for retired public servants and a reduction in the wage paid to various office holders.

I have a number of difficulties with the proposals in the legislation and would like to refer to some of the issues raised by the Minister of State. When speaking about the reduction in public service pensions, he mentioned that bodies considered commercial in nature were excluded. I presume they are excluded for some reason to do with the contract of employment. Will the Minister of State elaborate on that in his concluding remark and outline to the House why those pensions are specifically excluded? He also went into detail with regard to various increases in the minimum wage over the past ten years and said we had come through a period of huge wage increases. I agree we did. However, the result of the passing of this Bill and of the budget is that the burden is being placed disproportionately on those who can least afford to pay.

I have a particular view of politics and economics and largely take the view that taxation should be as low as possible and that the Government should keep out of people's lives as far as is possible. However, the measures introduced by the Government in the past week are unsatisfactory. Just about an hour ago, we completed consideration of the Social Welfare Bill, which consisted of a series of attacks on the people who are least capable of paying for the economic mess in which we find ourselves. The reduction in the minimum wage is aimed at a sector that is not responsible for the economic mess we are in, but they are being asked to pay a disproportionately high price through the proposed reduction of €1 per hour in the minimum wage.

I am a member of the Oireachtas Joint Committee on Enterprise, Trade and Innovation and over the past 12 months the committee has received various submissions from unions and employers. Most of the employer groups did not suggest there was a need to reduce the minimum wage but did refer to our antiquated system of joint labour committees, registered employment agreements and employment regulation orders which allow some sectors of the economy to have a minimum wage three or four euro higher than the minimum wage of €8.65. The employers affected by these joint labour committee positions justifiably called for the position to be rectified, but few called for the minimum wage to be reduced. As a result of the announcement made in the budget to reduce the minimum wage, possible benefits may accrue to self-employed company directors. They may find themselves better off while people on the minimum wage could be up to €1,500 less well off. It is difficult to justify that.

These changes are coupled with a complete failure on the part of Government over the past two years to reduce its own costs. I welcome the measures in the Bill that reduce the wages of office holders, including those of the Taoiseach, Tánaiste and Members of the Government, but that should have happened a long time ago. It is unsatisfactory that even at this juncture our Taoiseach earns from €40,000 to €45,000 more per annum than the Prime Minister of the neighbouring island. This is unjustifiable. At a time when we are reducing the minimum wage of those in the lowest ranks of our economy, the cost of living has not decreased dramatically. There have been reductions in the cost of some of the basic requirements and grocery bills have been reduced, but the cost of services and of attending doctors or dentists and availing of such facilities has increased dramatically in recent years with no sign of a reduction during the current economic mess. Therefore, the costs faced by many families and individuals remain high, yet still the Government has attacked the minimum wage with this measure.

I understand and have some sympathy with the Government position on the reduction in the pension provision for retired public servants. People still working in the public service have faced a significant reduction in their incomes as a result of the different levies and measures imposed over the past two years, while people who retired prior to then enjoy a pension provision based on the income they had before they retired. I understand the need for an adjustment in that regard.

The Government did not lead by example in reducing its own costs. That is my primary difficulty with the Bill, alongside Fine Gael's objection to reducing the national minimum wage, rather than streamlining the joint labour committee system, registered employment agreements and employment regulation orders which impose additional charges in particular sectors of the economy. These changes were sought by employers in these sectors and could have been justified. We have an antiquated system of joint labour committees. The legislation recently passed by the Houses amended some of the systems in place, but it missed the opportunity to restore competitiveness without reducing the incomes of those who could least afford it.

Welfare payments for the unemployed have been cut, but the incentive to work will decrease when the national minimum wage is reduced. I am not ideologically hung up on the issue, but there is a danger that the incentive to work will be removed. I would like to hear the Minister of State's opinion on how we might avoid this possibility.