Tom Shehan (Fine Gael) | Oireachtas source

I welcome the Minister to the House. He is a frequent visitor and is the one Minister who will always provide great clarity. I will turn first to the Haddington Road agreement. Fine Gael believes that the Lansdowne Road agreement strikes an appropriate balance between the legitimate aspirations of public servants for pay recovery while ensuring sufficient resources for tax cuts for all workers and sustaining and improving public finances. We acknowledge that public servants have had the benefit of secure jobs and secure pensions throughout the financial crisis. However, they have sustained severe pay cuts averaging 14% while adjusting to workplace reforms when the size of the public service was reduced by 10% at a time of growing demand on public services. Public servants not only had pay cuts to deal with but they also had additional responsibilities because of the 10% cut in the numbers employed in the public service.

The new deal targets the bulk of available resources at lower and middle income public servants and, importantly, it meets the existing commitments made under the Haddington Road agreement, reinforcing the ongoing commitment of public servants to the wider reform agenda in the public service. All the extra hours and other workplace flexibility secured under the Haddington Road agreement are retained. While these benefits are targeted at the lower and middle income public servants, there is the old saying that "a rising tide lifts all boats" and we cannot lose sight of that. In time, everyone will benefit.

There is welcome evidence that private sector employers are once again agreeing sustainable pay increases with their staff. It is right that workers are seeing a dividend from the economic recovery. As the economy recovers, it is right that Government now sets out the prospect of gradual, sustainable pay recovery for public servants linked to continuing reforms to improve the efficiency and effectiveness of public services. We can never go back to the Fianna Fáil approach of making unsustainable pay awards which then had to be reversed because they were not linked to productivity or competitiveness.

All workers, both public and private sector, benefitted from last year's budget which reduced the universal social charge at the lower end and reduced the marginal rate of income tax. This year, both public and private sector workers benefit again from the budget's tax cuts. Budget 2016 brings the marginal tax rate to below 50% for any person earning under €70,000 and also increases the minimum wage by 50 cent per hour. Tax cuts for all workers can complement sustainable, affordable pay growth in a way that secures the economic recovery. This is a sensible budget designed to keep the recovery going, reduce our deficit to 2.1% of GDP in 2015 and 1.2% in 2016 and eliminate Government borrowing by 2018. Spending growth will be capped at below the underlying growth rate of the economy. This is consistent with EU rules ensuring sustainable public finances. If this rule had been applied from 2000 to 2007, it would have halved the growth in public spending which would have left public finances in a much stronger position in which to fight the recession.

The €27 billion capital investment plan is both affordable and responsible but opposition parties, particularly Fianna Fáil, wanted it to go further. Tax revenues will increase by 15% but spending will increase by only 4%. Over 2015-16, much of this unspent revenue will help to reduce the deficit. A minimum improvement of 0.6% of GDP in the structural deficit is required in order to comply with EU fiscal rules. This budget projects a 0.8% improvement in 2016.

While it is true the Government continues to borrow money, that borrowing has become very manageable and is available now at historically low rates. The Government will be in a position to implement moderately expansionary budgets every year until 2020 and still have a balanced budget in structural terms. The Government will do nothing to jeopardise the recovering economy and the plan is to return to full employment.

Fianna Fáil forgot to mention that it is the reason public servants had to endure seven years of pay cuts and tax hikes. It also forgot to account for the Lansdowne Road agreement in its alternative budget submission. In fact, it had a black hole totalling €550 million. This hole was made up of €300 million needed to meet the extra demand due to demographics, for example, in health and education, and €267 million for the new pay deal which was the Lansdowne Road agreement.

As part of the Stormont Executive, Sinn Féin implemented a two-year pay freeze in December 2010 for 12,000 civil servants earning more than £21,000, which equates to approximately €24,000. Sinn Féin is also cutting 20,000 public sector jobs this year as the North's public finances go from bad to worse. Despite these cuts in the North, Sinn Féin has tried to capitalise by opposing the Haddington Road agreement in the South, which imposed further pay savings. The Minister for Health, Deputy Varadkar, has said that Sinn Féin's plan to recruit more than 250 hospital consultants for less than €100,000 is nonsensical. The difficulty in recruiting consultants is well known, caused in part by competition on pay with other English-speaking countries. This year we are seeing the tide turn and Sinn Féin's barmy left-wing policies will jeopardise all of that.

I welcome the Minister's clarity regarding public servants pensions, which are to be restored, and the restoration of teachers' pay in lieu of the school yard supervision, which will be returned by 2017. My colleague raised the matter of nurses. There was a debate in the House recently regarding An Bord Altranais. The HSE is trying to recruit nurses from abroad. At the same time, there are up to 3,000 nurses in Ireland who have left the profession, many in order to raise their families.They are trying to get back into nursing but are finding it most difficult. I ask the Minister to contact An Bord Altranais to encourage it to pave the way for these qualified nurses to get back into nursing. Those who have left the profession to raise a family may need some time to brush up on their skills but they should be helped to do so.