Marc MacSharry (Fianna Fail)

The Financial Emergency Measures in the Public Interest (No. 2) Bill 2010 gives effect to a number of the measures announced in the four year plan and the budget last week. There is no doubt some of them will be painful for every household in the country and everyone will have to make sacrifices and adjustments. Taken in isolation, the individual measures are unfair and difficult to contemplate but considered in their entirety they are as fair as they could be in the difficult economic circumstances facing the nation.

The Bill reduces certain public service pensions by an average of 4% to save €100 million in 2011. There is further scope to do this in future budgets. It is unsustainable for people to earn pensions that are multiples of their starting salary or average earnings during their careers. Somebody elected to the Dáil in 1969 would have earned the equivalent of €1,500 per year, but after a full 20 years would have been entitled to a pension of approximately €52,000. That is unjustifiable and we were unable to afford it, even at the height of the Celtic tiger. However, while it is appropriate that we revisit these issues, we should do so across the entire public sector. I welcome this as a contribution to the overall figure of €6 billion to be achieved this year.

Reference was made to further reductions in the pay of the Taoiseach, the Tánaiste and Ministers. I welcome these reductions, although there is scope for more. While it is enshrined in the Croke Park agreement that we must not touch public sector pay, we benchmarked wages against those in the private sector that was falsely bloated by an economy fuelled by an unsustainable property boom. In the medium term wages will have to be benchmarked against those in the public sector in other countries rather than the private sector. The first review by the independent body of the remuneration of the Taoiseach and the Tánaiste was based on the pay of their counterparts in other countries. This is the benchmark that should be used in the future and the process needs to begin sooner rather than later as we cannot afford to continue to pay ourselves at current wage levels.

Among the conditions set by the IMF is that further pay cuts will become a reality if the savings envisaged under the Croke Park agreement are not achievable. As I have previously pointed out, it is laughable in the extreme that, after nine months, it is considered that we need a further nine months to consider further pay cuts. If the agreement is truly the business plan for the public service to meet future demands and challenges, the matter would have been decided yesterday and implemented today. The commercial world has to operate in that context. We have to target the public service and political classes in the same way by introducing the level of agility demanded in the commercial sector to a cumbersome and lethargic public and political sector. A review of agreement needs to be conducted at the earliest opportunity and, if this is not done before the general election likely to be held in the spring, any new Administration will have to deal with the matter decisively in the interests of protecting the country's future.

Senator Phelan specifically referred to the Taoiseach, the Tánaiste and Ministers. I have had my rant on public sector pay in general, but it would also be useful to consider the figures involved. The average public sector worker's pay has already been reduced by 14%; Deputies' pay has been reduced by 26%, while Ministers have seen cuts of up to 40% and 46%. While that is certainly just and there may be scope for further cuts, it is superficial to focus on this area.