Brendan Howlin (Wexford, Labour) | Oireachtas source

I welcome all the contributions from every side of the House. Each Member brings his or her own views, passionately and fairly held in all these debates. Obviously, I do not agree with them all. These are difficult times for everyone and it is difficult for me as a Labour Party Minister to bring this legislation to the House. It is the right thing by our country, however.

Many Members referred to my party. I was privileged to be a part of the team that negotiated the programme for Government. I was under no illusions about exactly the backdrop that Senator Bradford just laid out and how awful the country’s circumstances were at the time. There was a real doubt in all our minds if there was a sustainable path out of that mire without total calamity. When we see what has happened in Greece and Cyprus or the pressures in Portugal, we understand how close to disaster this country was. The Labour Party made a decision to roll up its sleeves to do its best. We knew it would be much easier to be the largest party in opposition and do the critique from the safety of the bleacher seats and let others try to tackle the disaster. Instead, we opted for government to tackle the problems in a way that would mitigate the impact as best we could on the most vulnerable. When we will ask the people to decide on that, not our critics, I believe we will get a fair hearing.

The cuts in core pay for those over €65,000 and the cuts in pensions are all unpalatable but necessary to cut a pay bill that is in excess of €18 billion. I came to that conclusion last year and I opened the books to the public sector unions. One of the parting gifts from the last Fianna Fáil Government was a profile of cuts over time but it had unallocated cuts - a lovely phrase - where it had not determined where those cuts should fall. If we had followed that Government’s path, it would have meant an additional €1.5 billion in social welfare cuts this year, so the spend on social welfare would have been €18.5 billion rather than €20.2 billion.

We still would have had to find other unallocated savings and, bluntly, I did not think it was morally right to go back to the well again. If one takes social welfare, health and education together, one can see that they make up over 80% of everything we spend. If one adds in justice, the figure is 87%. It is really difficult to make savings in these areas, as they have an impact on people's lives. Therefore, when one considers that payroll accounts for 36% of total expenditure, it is reasonable to ask for payroll savings and that is what we did. We asked the trade union movement in a very honest way to engage with us to find these savings and it did. There were those who obviously were looking at each other within this negotiating structure. As I have been a trade unionist all my life, I know the dance and that there are trade unions - I will not reference them - which have never signed up to a collective agreement with the Government on these matters and have not been part of agreements from the very start. However, some of them are happy to embrace them once they are negotiated, but they will not vote for them. That is their tradition. By and large, however, people did embrace the process and negotiated. It was part of the process that some of them required a second round before they really began to engage. Part of the learning process involved seeing what was achievable by coming to the table and that the Government was not prescriptive about how the savings were to be made. That is the process that has concluded with the Haddington Road agreement and the necessary legislation that underpins it.

I will not go through the individual commentary. In respect of Senator Kathryn Reilly's comments, I have a headache listening to the same single transferable speech from Sinn Féin Deputies and Senators. If one says the same thing long enough, the facts can be completely changed. The notion that this is a tax on the low-paid is demonstrably facile and ridiculous. The proposal asks for a reduction for those earning in excess of €65,000. As a representative of the Labour Party, it is very hard to escape the working class because, apparently, €100,000 is the new threshold. One is a low-paid worker if one is earning less than €100,000. Few people in the country escape that figure. The CSO figures were published this week. The average private sector wage this year is €32,670, while the average public sector wage is €47,500. Even among those in the private sector who are relatively higher paid, €65,000 accounts for a tiny subset and makes up 13% of the public sector. To ask these people to make a contribution is demonstrably not to attack low and middle income earners. Please, therefore, make the argument, but couch it in reality, fact and truth.

I listened to Sinn Féin Members in the other House. Its strategy is that one does not need to cut anybody's wages but to place a cap on everybody earning above €100,000. That argument was repeated by Senator Trevor Ó Clochartaigh. However, the programme changed last night because suddenly something dropped somewhere and Sinn Féin believed one could not sustain a health service, certainly a public health service, with a cap of €100,000. For the first time last night in the other House Sinn Féin introduced a cap of €150,000 for one category of worker - hospital consultants. They would be allowed €150,000 before they would be capped.

It is interesting to look at what the impact of a cap of €100,000 would be. A total of 6,000 out of 300,000 earn more than that figure; therefore, the income saved would be tiny in comparison to what we require. With regard to the consequences, would one have principal officers wanting to be Secretaries General and take on all of their responsibilities? It was done in Albania where one has a single wage, no matter what one's job is, with the result that there is no differential. I was raised in a trade union household and believe in differentials where the craftsman is paid more for the skills he or she possesses. That is just the way economies work and this needs to be embraced.

I will reference a few more points. Senator Deirdre Clune spoke about the change in the public sector facilitated by Croke Park I. It was an extraordinary tool for change and I defended it for two years against all comers and, by God, I received a lot of criticism, particularly in the Sunday newspapers, for defending the public service and public services. However, I had come to the conclusion that we needed these changes because of the inevitability of the economics. We could not go back to the same well to seek further reductions, nor could we continue to borrow at the rate of €1 billion per month. It was unsustainable. Please God, our debt will peak this year at 123% of GDP, which most people regard as unsustainable. Most economists - we have a very distinguished one in our gathering today - acknowledge that this is an unsustainable level. Even when we get to a deficit figure below 3% by 2015, we will still be borrowing money. We need to give the next generation some chance. Our legacy is bad enough with regard to what happened to the economy in the past decade without continuing to pile on debt for it to try to unravel in the future. Let us be realistic about what we need to do and ask people to make a contribution according to their ability to do so. Above all, let us be truthful and honest.

I know that politics is often a game in which people look for political advantage. I might have said this in the House before. I was not long in the job when I met a very distinguished economic figure whom I will not reference. He came into my office and said, "You know you have the worst job in Europe." I said, "Thanks very much," just in case I was not daunted enough already by the task ahead. However, I was and still am honoured to do it. It is not out of a sense of arrogance, but if somebody else wants to take it tomorrow, I will not cry salty tears. I will do the job to the best of my ability for as long as I am entrusted by the Oireachtas to do it.

We have travelled 85% of the way and more. We can talk about the macro-economic figures, but it will take a long time for them to impact on ordinary people because we are still taking money out of people's pockets through this legislation and imposing additional taxes because our tax base collapsed or the pressures on public services increased exponentially because more people were in receipt of unemployment assistance. In addition, 500,000 more medical cards were issued than were issued at the peak of the boom; therefore, the demands on services have never been greater and the resources available to meet them are diminishing all the time. Squaring that circle is the greatest testament to the extraordinary and fine public service we have, which I wish to acknowledge. It gives me no joy to ask people to make a further sacrifice and I would not do it, if I did not think it was necessary to do so. I will unwind it as soon as economic circumstances permit. These measures are challenging for everybody, but they are economically necessary.

I want to see whether I missed out on anything that was said. I do not think so.

One of the issues that daunted me the most since taking this job is the fact that a few in the school of politics want us to fail because they see in economic failure the potential for their own political success. I have no interest in that sort of politics. I would prefer for my party to cease to exist than to betray the people who expect us to serve our country. If we put ourselves forward for this job, let us do it in the best interest of the people who depend on us, particularly in times of crisis. The people will ultimately see through the notion that we measure the good of our country and the betterment of our people against short-term political gain will.