Brian Hayes (Dublin South West, Fine Gael)

I will not detain the House in my reply to Second Stage because it will give us an hour and a quarter to go through the amendments that colleagues have tabled. I will make a number of general points. I thank the Senators for the contributions made.

On the issue of a well paid public servant or former politician who had served for many years and who has a pension of €125,000, as a result of the accumulative reduction in his or her pension, it is now down by €13,760. The totality of the pension is down to approximately €112,000. However, when one factors in the marginal rate of tax, now at 41%, plus 11% for USC and PRSI, one can see that approximately 40% of that is now going back to the State in tax. At two levels, the totality of the pension has come down but also, because of the increase in taxation over the course of the past three years, the amount accruing to the person has substantially reduced, and that is exactly as it should be.

The Minister for Public Expenditure and Reform, Deputy Howlin, has already put through legislation which will radically alter pension provision for public servants in the future in terms of career averaging. As Senators will be aware, in the past the pension point was very much determined at one's exit point. Now it is based on a career average, and also with a later pension age. That will generate substantial savings to the public purse over the coming years.

Third, next year we anticipate, as a result of reduced numbers and a reduction in the pension bill in its totality, that in net terms there will be a saving of €300 million because of the smaller public service numbers. That will continue over the course of the coming years. The total saving is €400 million in gross terms. When one factors out the net amount less pension cover, it is another €100 million. That is a significant saving that has been, and will continue to be, made over the course of the coming years.

Senator O'Brien asked about health professionals and consultants. He raised an appropriate point. The view of the Minister for Health, Deputy Reilly, is that he wants to ensure much greater efficiencies within the health service and buy-in and support for his radical plans across the acute health care system. He is in negotiation with the consultants. Senator O'Brien spoke about the carrot and stick approach. It is the view of the Government that, in terms of our negotiations with the consultants, we will wait for the conclusion of those talks to see whether we get the buy-in, the efficiencies and the kind of additional reforms that we need to see in the health sector before the issue of pensions for consultants is addressed further.

On the question of the Croke Park agreement and increments, implicit in the agreement is that the Government will not reduce public sector pay again in the way that it has over the course of the past three years, a reduction on average of 15%. That will not be reduced again and we will not introduce compulsory redundancies, if we get buy-in and support for our radical public sector reform plans which was launched by the Minister, Deputy Howlin, and myself only three weeks ago. Will that happen? If we do not see those changes, significant change in terms of rationalisation, shared services and an ability to move across the public sector, then the issue of increments may well come back on the agenda. However, if increments were to be frozen for a period of time who suffers most? Those who suffer most are clerical officers and others who do much of the processing of the work on behalf of the State. It is not those at the top of the tree.