Thursday, 17 December 2009
Financial Emergency Measures in the Public Interest (No. 2) Bill 2009: Second Stage
Martin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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This Bill gives effect to the decision of the Government to reduce the pay of public servants to achieve a saving of approximately €1 billion in the public service pay bill in 2010. The debate on the Bill should be set in context. This is the first time since 1933 that legislative measures have been brought forward by any Government to reduce the salaries of public servants. This is not a measure that has been considered lightly or easily embarked upon.
The measure reflects the continuing threat to the economic stability of the State, where the forecast outturn for 2009 will result in a deficit of in excess of €25 billion. Without the expenditure reductions announced in the budget which included a reduction of approximately €1 billion in the public service pay bill, the finances of the State will continue to deteriorate to a position where they become unsustainable. That is not a position any responsible and sovereign government can allow to continue. To address this, the Government has adopted the necessary measures to reduce public expenditure and begin the process of stabilising the public finances under a programme agreed with the European Union.
In simple terms, the budget strategy of the Government is designed to maintain the economic independence of the State. The pay reduction measures for public servants contained in the Bill form a vital part of this strategy. It is a strategy based on necessity, not choice. As it impacts on all major areas of public expenditure, it is certainly not painless. Undoubtedly, the pay reductions provided for in the Bill will impact adversely on public servants, as the reductions in the social welfare expenditure will reduce payments to social welfare recipients. However, the magnitude of the adjustment required in the public finances and the budget decisions necessary to effect this process in 2010 have involved decisions which have adversely impacted on all sectors of society.
In setting out the context for the legislation we must also consider the significant process of engagement undertaken by the Government with the public service unions in an effort to agree measures that would deliver the targeted reduction in the public service pay bill in 2010. Agreement by discussion was the preferred option of the Government to secure the necessary savings. The failure to reach agreement does not adversely reflect on the bona fides of either party to the discussions. The need for the savings required in the public service pay bill shaped the discussions because the Government was up front with the requirement to reduce the public service pay bill in 2010. This raised issues for the public service unions and their members which were immensely difficult. I readily acknowledge the real efforts on both sides to achieve agreement.
However, there came a point for the Government when it became clear that the necessary amount of permanent savings required could not be obtained from the measures proposed by the unions. Even in the closest of relationships, there will be setbacks and difficulties which will, at the end of the day, have to be addressed and overcome because ultimately it is in the interests of the unions and Government to address them.
We have had 22 years of, for the most part, very productive social partnership. I regret the difficulties partnership is in but there were exceptional improvements from 2000 to 2007, particularly in public service pay, conditions and numbers. This is also part of the context and, unfortunately, in the current circumstances not all these improvements remain sustainable.
There has been much talk of the reform agenda and opportunities lost in the discussion process. On public service reform, I will confine myself to a simple statement. If real, practical and necessary reforms have been identified by the public service unions and Government in the discussions, as they clearly have been, these reforms continue to stand on their merits and represent nothing less than what we, as servants of the public, must deliver. We owe our citizens nothing less.
The Bill provides that public service salaries of up to €125,000 will be reduced as follows: by 5% on the first €30,000 of salary; by 7.5% on the next €40,000 of salary; and by 10% on the next €55,000 of salary. This produces overall reductions in salaries ranging from 5% to slightly less than 8% in the case of salaries up to €125,000. This is a progressive, measured reduction that provides that those who have higher salaries will contribute more. However, the reality is that the majority of public servants, around two thirds, are on a salary of less than €50,000. It is not possible to obtain the scale of the reduction proposed in the pay bill without impacting on those even with relatively modest salaries.
That the majority of public servants are on relatively modest incomes is one of the more salient facts which has been ignored by some commentators in their less than objective criticisms of a public service, which continues to serve on a daily basis and will, I am sure, serve this country well into the future. As I stated yesterday, public servant is the title of which I am most proud and I have been a public servant for 35 years.
Salaries above the level of €125,000 will be adjusted in line with the recommendations of the Review Body on Higher Remuneration in the Public Sector, bar a few minor upward adjustments. Last week, the Minister for Finance published Report No. 44 of the Review Body on Higher Remuneration which examined top level rates of pay in light of the changed budgetary and economic circumstances and benchmarked them against rates for similar posts in other countries of comparable scale, particularly in the eurozone.
Following its examination, the review body recommended reductions in overall remuneration varying from 8% to 15% generally and 20% in the case of the Taoiseach. In the case of Ministers of State and the Leas-Cheann Comhairle their salary level would attract a reduction of 8%. However, Ministers of State and the Leas-Cheann Comhairle felt, notwithstanding the recommendation of the review body that a permanent reduction of 10% should apply to them. The Bill, as passed by Dáil Éireann makes provision for this.
The reduction in rates of overall remuneration for officeholders in the Seanad is set out in Table 1 of section 2 as between 7.2% and 7.9%. These percentages reflect the rate of reduction applicable to persons on equivalent rates of salary of less than €125,000 in the public service. As recommended by the review body, these permanent cuts in pay will replace the temporary waivers of pay made by some individuals, including Ministers and Secretaries General of Departments.
Owing to time constraints, the review body confined its examination to a sample of grades but recommended that the reductions be extrapolated for other relevant groups. Tables 1 and 2 of section 2 set out the extended range of pay reductions as follows: 8% on all salary for persons with salaries from €125,000 to less than €165,000; 12% on all salary for persons earning from €165,000 to less than €200,000; and 15% on all salary for salaries of €200,000 or more.
One of the largest groups of public servants at these salary levels, hospital consultants, was not among the grades examined by the review body. However the Government has decided that reductions should be applied to hospital consultants on the same basis as other groups at similar salary levels and on their current salary.
Taxable allowances which are related to basic salary, such as overtime, will be cut in line with the relevant salary reductions. Fixed taxable allowances will be reduced by 5% for those with salaries of up to €125,000 and 8% above this figure. Any allowance or payment which is a reimbursement of an expense will not be reduced.
While the review body concluded that it was constitutionally precluded from recommending a reduction in judicial pay, it stated that were it so precluded, it would have considered a downward adjustment. The Government and I share the view of the Chief Justice and Presidents of the courts who have urged all judges to pay a contribution equivalent to the pension levy and provision will be made in the Finance Bill to facilitate these payments. In light of the findings of the review body, the Government has decided there will be no increase in judges' pay during the lifetime of the Government. The Minister has also stated that future Governments may choose, as in the past, to continue this course of action.
The Government has accepted the review body's recommendation that there be no increases in the pay of the higher public service groups, including any adjustments that might otherwise arise under national agreements, before the end of 2012. It has also accepted the recommendation that performance related award schemes in the public service should be suspended.
I will now outline briefly the other principal features of the Bill. Section 1 is a standard type provision providing for the definition of terms used in the Bill for interpretation and other purposes. It defines for the purposes of the Bill the terms "public servant" and "public body" which delimits the application of the pay reduction provisions of the Bill. The Bill sets out the range of bodies whose employees are liable to the pay reduction and broadly corresponds with that which applies for the pension related deduction. It applies to the public service as traditionally defined. The Civil Service, Garda Síochána, Permanent Defence Force, local authorities, Health Service Executive and vocational education committees are all public service bodies.
In addition any statutory body, company or subsidiary established and financed wholly or partly by a Minister in respect of which a public service pension scheme exists or applies or may be made is defined as a public service body. However, the legislation will not apply to the many bodies in the community which, while in receipt of funding from the State, are independent of it. The staff of such bodies are not public servants and do not have access to public service pension schemes.
Any body funded by the Oireachtas or Central Fund and in respect of which a public service pension scheme exists or applies or may be made also is defined as a public service body. Non-commercial semi-State bodies, such as FÁS or Enterprise Ireland, are included in this definition and their employees are liable to the pay reduction.
Commercial State sponsored bodies are not included. These bodies were not included for the pension related deduction and they are expressly listed in the Schedule. Pay cuts in the commercial State sponsored bodies such as Bord Gais and the ESB would not bring any reduction in expenditure on the public service pay bill. The pay of these bodies is funded generally through their commercial activities and not by the Exchequer. Due to their nature, they have a large degree of autonomy in regard to pay and they have not been covered by the public service element of pay rounds in the past. The Minister for Finance does not control the pay of the staff of these bodies except for the chief executives. The Minister has announced that he will bring proposals to Government early next year to review their pay levels.
I have already outlined the main content of section 2, which provides for reductions of pay rates by amendment of all provisions, including statutory provisions, circulars, instalments and contractual arrangements, which currently fix the remuneration rates of public servants. Section 3 enables the reductions of salary rates to be disregarded for the purposes of the calculation of the pension entitlements for those public servants who have previously retired or will retire in the period from 1 January 2010 to 31 December 2010. Having considered the potential legal, superannuation and personnel management issues and their impact on the public service, the Minister may extend the period beyond the specified date of 31 December 2010. A managed retirement rate for older and more experienced public servants over the course of next year, and beyond if necessary, will help avoid disruption of service delivery.
Section 4 affirms that, other than as provided for in the Bill, any purported amendment of a provision fixing the remuneration of a public servant that would increase the remuneration of a public servant has no effect, unless it is by a future Act of the Oireachtas or is necessary to reflect a legal entitlement of the public servant or servants in question, for example, because of an equal pay claim under European law.
Under section 5 a public servant has no entitlement to receive a higher rate than that provided for under the legislation and the employing public service body has no entitlement to pay a higher rate. Any overpayment should be recovered by the public service body concerned; otherwise, the overpayment amount may be withheld from any funding provided to the body concerned.
Section 6 provides a limited power to the Minister of Finance to exempt or vary the reduction in pay rates provided for in the Bill in respect of a public servant or group or class of public servants, where exceptional circumstances exist relating to a condition or aspect of employment and a substantial inequity would arise as a consequence or because of an arbitration award that the Government would normally be required to implement. A similar power was also included in respect of the pension levy. It intends to exercise this power sparingly and only when just and equitable.
Section 7 requires an annual report to each House of the Oireachtas reviewing the operation, effectiveness and impact of the legislation and considering whether any or all of the provisions of the Act continue to be necessary, having regard to its purposes, State revenues and the public service pay and pensions bill. The first such report will have to be submitted by June 2011 at the latest. Section 8 is a standard regulatory power. Section 9 permits disputes as to whether any public servant is affected by the reduction provided for under the Act to be finally determined by the Minister. Section 10 states the Short Title of the Act and provides for its commencement. I commend the Bill to the House.
I thank Fine Gael for allowing me to speak first. I welcome the Minister of State, who knows my views on this important Bill. I am completely, utterly and implacably opposed to it. The statement of the Minister of State contains some elements that are misleading. Knowing him so long as I do, I do not believe he would do this deliberately. It is important to address the question of the breakdown of talks to which the Minister referred, suggesting failure to reach agreement did not adversely reflect on the bona fides of either party to the discussions. When people sit down to do business, they decide whether they want to do a deal. If they do not, they walk away at that point. If they do, they indicate the objectives and then identify the problems and thereby create the agenda. People work through the agenda and if, at some stage, they realise they cannot achieve their aims, people shake hands and walk away. Trust, confidence and relationships need not be broken. In this situation people understood they had done a deal with three or four Secretaries General speaking with the minds of their political masters and achieving all the Minister for Finance and the Government wanted. There is an extraordinary breakdown of trust such that people cannot see how they would get back around the table again. I say that with some regret because I have never seen it in my time but it is the fact of the matter. I want to deal with that in this particular way. If the Government had a problem with this going through it should have been disclosed. The Taoiseach referred to three criteria: that savings of €1.3 billion were made, that they would be permanent and that there would not be a diminution of public services. All three were delivered in the negotiations.
I wish to put the following on the record and I believe no one will deny it. The public service union leaders, in an act of extraordinary courage, generosity and patriotism, announced they would negotiate a reduction in salaries for their members. I never saw that before. They will never be thanked for that, either by their own members or the Government. They saw where the Government was, its difficulties and the objective of the Government in saving €1.3 billion. The public service unions decided to co-operate in doing so.
I want to explain how this was achieved. The Minister of State and I know each other long enough to know we will speak the truth to each other. People are speaking about what was and was not agreed in the public media. What I will put on the record was agreed and accepted by three Secretaries General late on Thursday night or early Friday morning when the agreement broke down. The objective was to save €1.3 billion. Ministers have said recently that this was not achieved and that a mere €750 million was agreed. I will list how the savings were to be realised. We have learned that there is no point in winning arguments if one cons people on the other side. In order to ensure everyone was singing from the same hymn sheet, the public services committee brought in an independent accountant from Mazars to sit with the Department of Finance officials, do the calculations and ensure everyone knew what they were talking about. In the early stages of negotiations, the amount to be achieved by the reduction was €750 million. It was also quite clear and accepted by the trade union movement that this was not enough. A new format was created, with bands up to €50,000 to be reduced by 4.6%, salaries from €50,000-€60,000 to be reduced by 6%, salaries of €60,000-€70,000 to be reduced by 7% and those over €70,000 to be reduced by 7.5%. This was costed and brought in €786 million. The agreement on overtime meant that one could not earn overtime without completing eight hours of ordinary time and this amounted to €80 million. The review body savings amounted to less than €100 million and there was also the moratorium carried over from last year. Adding these savings amounts to a sum closer to €1.3 billion than €1.2 billion. The savings achieved by the budget measures are significantly less than that. If that is not acceptable, I want to know precisely where the figures I have given are incorrect. There should be honesty in all of this.
The Taoiseach referred to the problem of permanency and of maintaining these savings. That was to be achieved through a heavy demand on public service workers where the public service would be reduced by approximately 15,000. This point was put forward by the Government and Fine Gael. The idea was that the cuts I referred to would be in place until they were permanently created by the reduction in numbers. This would be done by asking public servants to work harder, to work longer, to be more productive and to earn less overtime. Some speakers referred to reform of the public service as people doing their job differently. This is not the case; it was an old-fashioned request for people to work longer and for people to take on responsibility for tasks they did not have before. It brought a private sector ethos where people are asked to do more. There was an honesty and openness in the approach and an understanding of the Government's key objectives, namely a €1.3 billion reduction and a reduction of 15,000 people in the public sector. 3 o'clock
The question of unpaid time in lieu created problems for all sides. It was agreed, although this was never said publicly, that this would be done with the discretion and agreement of local line management. Someone could not walk out the door and say he or she would not be in on Monday and Tuesday of the following week. It had to be done over a period of years so it would not create disruption to the service and it would be part of a continuing process. Where did this come from? It came from the private sector where there are lay-offs a day per week, a day per month or a couple of days per month to save money. It was exactly the same as that. That is what was being brought forward. It was going to be a permanent saving because the cuts would be in place until such time as the reduction in numbers made the savings permanently. That was to be done through an agreed process where an outside group would come in and make the cuts. It was agreed that a meeting would take place in May or June to establish how much progress was made. The thinking was that the Government had made the commitment and this was how it would be made permanent. There was pressure on the Government because the cuts would be in place until the savings were permanently created. If they were not permanently created the cuts would remain. For the life of me, I cannot see how the Government walked away from that deal. It had got everything it sought. I know the Minister of State has to defend the Government position but given that the Ministers with the most difficult portfolios felt they had made huge progress in these negotiations I do not know where all this comes from.
The Minister of State referred to various groups including the ministerial 15% reduction in pay, and senior civil servants. I wish to put three specific technical points. I see Senator MacSharry smiling. He will appreciate at least one of them.
An interim award of 6% from the review body on higher remuneration was paid in 2007. In the reduction in pay, that is being netted off. In other words, for people who were supposed to have a 10% reduction, the reduction will only be 4% of the amount prior to 2007 because the 6% interim award is being paid. That is correct. However, within all of that, there is unfairness. There was another group, principal officers in the Civil Service and principal teachers in schools, who had a much lower award made around the same time of 1.5%, 2% or 2.5% which was not implemented. For the system to be fair, that should also be netted. In order words, if 7.5% is taken off principal officers it should only be 6% in order to be consistent with what we did for those who were covered by the review body on higher remuneration. I hope this is clear as it is complex. The interim award was paid and that is being netted against the 10% reduction, in order words, it is being paid in and then 10% is taken off. Compared to the later group which did not come under the review body on higher remuneration but which got an award, in particular principal officers and principal teachers and related groups, that 1% and 1.5% should be netted against the reduction and does not require a change in the legislation but it would be fair.
There is one other group which has been treated with some cowardliness by the Government. Before making this point I wish to state I have no self-interest whatever and I stand to gain nothing. I am talking about people who were elected to the Dáil and the Seanad in 2002. I have been involved in the negotiation of the salaries of TDs and Senators for many years. I recall the time when the Government was slow to pay and we agreed across the table that instead of paying what in trade union terms is called "the rate for the job", there would be a delayed payment to save the Government money and so increments were introduced. These are common in the Civil Service and in the public service. They were also introduced for politicians, TDs and Senators, whereby after seven and ten years they would receive certain increases. The Government decided to accept a media description of these as bonuses. They are not bonuses. They are the rate for the job being paid on a delayed basis to save the State money. It is grossly unfair on those younger politicians that they would not be allowed get their increment like every other worker in the public sector and in the Civil Service. I know I will get no thanks for saying this but it should be put on the record. It has nothing to do with myself, I have no self-interest whatever and I stand to gain nothing from it.
I am sorry. The Minister of State stands to gain but I do not wish to put him in an awkward position. I wish to make one final point. This is an important issue that has not been put forward. I read what the Minister of State said about semi-State companies. They are a group like the semi-State companies and self-funding organisations. The Long Title of the Bill states clearly that its purpose is to reduce State expenditure and to achieve significant savings in expenditure. I must explain one point, which the Cathaoirleach will appreciate, and for which I beg his indulgence.
If the State is not paying somebody in a semi-State company or in a self-funded quango or Government body it receives certain PRSI and other cuts from his or her salary. If their salaries are reduced the amount coming back to the State is reduced in the form of lower levels of PRSI because the State is not paying their salaries. For example, if I was earning €50,000 and was paid by the State, I would pay the full rate of PRSI on the €50,000 but if my earnings were reduced to €45,000, the State would only receive PRSI on €45,000. That goes against the Long Title of the Bill and I want that clarified.
I wished to say a whole lot more-----
I join others in welcoming the Minister of State. I welcome the opportunity to make a few points on the legislation. I pay tribute to Senator O'Toole for his overwhelming contribution to the social partnership model over many years. He was a champion of that cause and made a convincing argument today on many points. It was interesting to be taken through some of the negotiations last week. I know he has to leave but, as with any negotiation, nothing is agreed until everything is agreed. It is a regret we all share that it was not possible on this occasion to get agreement with the social partners. I very much hope we will be in a position to return to that model at an early date because it has served us exceptionally well during the past 22 years that the trade union movement and workers were working hand in hand with the State and facing the various problems we have had to overcome in that time. I accept what the Minister of State has said that the fact there was not an agreement does not cast any aspersions on the bona fides of either party within those negotiations.
An insolvent State cannot pay anybody. That is a critical point. As I said on the Fine Gael Private Members' debate last night nobody would wish to introduce measures such as are outlined in the Bill. Nobody would wish to reduce anybody's pay, no matter what the level. I very much regret that it is necessary to introduce the reductions outlined in the Bill. In terms of Government expenditure, €1 out of every €3 goes on public sector pay. Borrowing €400 million per week is unsustainable. While I recognise that public servants have already made a substantial contribution in terms of reducing public expenditure and the pension levy on average by 7%, the Government has decided the pay for all public servants will be reduced from 1 January. That is regrettable. We are all affected. Nobody likes the idea of it but it is a simple fact that it must be done.
We cannot have this debate without reflecting also on the private sector where we have seen much change in recent years. Many people have lost their jobs and many more will lose them. Many families have seen their incomes halved through unemployment. Private sector pay cuts have ranged between 10% and 35%. It is important in the context of this debate that we acknowledge that. Even with the correction in the public finances provided for in the budget, the State will have to do more again in the budgets of 2011 and 2012. The State will still have to do more in the budgets of 2011 and 2012, as mentioned in last night's debate. I hope future savings will not have to be made by reducing public sector pay. We look forward in hope to the day when pay rates can be restored to their current levels.
The transformation of the public sector can play a huge role in this regard. The challenge is to work together to effect that transformation. I know it will be painful for every single household. It will certainly not do much in the attraction of votes, but we are way past this in dealing with the economic crisis and the measures that have to be introduced. As the Minister for Finance, Deputy Brian Lenihan, said in the Dáil last week, we face enormous challenges and our options are limited. There is only a certain amount we can do. I think of the situation in which Greece find itself - it is somewhat worse than ours. Its budget has come in for serious criticism because it has not dealt with the issue of public sector pay. The reality is we cannot afford to pay what we were paying and, as a result, these measures have to be implemented.
The Minister of State went through the various sections of the Bill in detail and I have no intention of repeating what he said. However, I would like to make a couple of points not directly related to this legislation but which nonetheless are very important. The Minister of State, Senator Twomey and other Members will often have heard me speak on the issue of mortgage arrears and the prevention of family home repossessions which, as we all know, is a growing issue. I would like the Minister to try to follow up on some of the issues I have raised many times.
With regard to legislation, we have had the Irish Bankers Federation protocol which was very admirable, there is te very good work MABS and we have the regulator's code of conduct on mortgage arrears, which is also good. In the Budget Statement the Minister asked the regulator to consider extending the moratorium for 12 months. Collectively, all of these measures are quite good. However, I have a fear with regard to the many mortgage providers - some refer to them as sub-prime lenders - such as Stepstone Mortgages and Start Mortgages which are not covered by the IBF protocol. We should introduce legislation - perhaps an amendment to the Enforcement of Court Orders Acts - to prevent banks from obtaining a court order for the repossession of a primary family residence unless the family is processed through a series of measures such as those outlined by my group or within the IBF and MABS protocols, to place this on a statutory footing. That would ensure an order for repossession could not be achieved unless consideration had been given to these matters. This should be done.
There should be a publicity campaign. Whether it is undertaken under the auspices of the Department of Social and Family Affairs or MABS, or whether we make the banks do it, people in mortgage arrears and in difficulty should not be afraid to contact their financial institution and MABS and work through the various processes available, however flawed. Communication is vitally important, but people are genuinely afraid to contact their financial institutions if they run into difficulty. We need to have a publicity campaign to show the supports available.
There was a high profile repossession case in Waterford this week. When a repossession is taking place, the homeowner is in a very difficult position, but the relevant support agencies are not on site in the courts. This issue should be examined.
Another issue concerns lenders - I cannot call them rogue lenders because it is legal - such as Provident Personal Credit. I understand, although I did not see last night's television programme, that Provident is legally charging an APR of 187%, which is simply criminal. The European norm is approximately 30% to 35% in terms of the maximum rate chargeable. To think we are presiding over a regulatory system which permits Provident to charge 187% is disgraceful. We should immediately investigate this matter. I gather the programme shown last night suggested these organisations had no respect for existing regulations. From that, the existing regulations are not adequate. For any institution, a rate of 30% to 35% is far above what should be acceptable, but certainly we should not permit rates of 80%, 90%, 100% and, in the case of Provident Personal Credit, 187%.
It is my strong belief that, while we cannot get involved because of the separation of powers, legislation should be brought forward to permit a reduction in the salaries of the Judiciary. It is a national effort and everybody has to play his or her part. I accept that the Minister has said there will be further measures in the finance Bill to allow for voluntary payments to be made by the Judiciary. However, there should be a reduction in pay rates. It is as simple as that.
While I know semi-State bodies have a commercial mandate and finance expenditure on pay from their activities, in the context of utilities, a directive should be given to them to reduce wage rates in line with the reduction in the cost of living of 6% to 7% in the past year. This would reduce the cost of utility bills, whether gas or electricity, to families who are struggling. I would like these issues to be considered.
Nobody would wish to introduce measures such as these, but the fact is they are necessary. The economic circumstances demand such draconian measures. I regret this, but, nevertheless, we must look to the future, take the pain now and eventually success will be self-sustaining. It is vital that we get our cost base right and grow from there.
I do not know if it has dawned on Members how serious is the issue raised by Senator O'Toole. If what he is saying is true, I ask the Minister of State to ask the Taoiseach to clarify some of the remarks made by the Senator. He is suggesting that essentially the Government collapsed the partnership talks because it would not be able to sell what was being negotiated by the Secretaries General of the major Departments. I assume the Secretaries General were carrying out the negotiations on behalf of the relevant Ministers and had their full authority. The talks were collapsed because it had all become a little too complex for the Taoiseach and was beginning to turn into a public relations nightmare for him. Therefore, the issue was just cast aside because it was too complex. We are now facing the worst industrial relations disaster we have seen in years, with the leadership of the public sector unions and even some private sector unions threatening to go on strike and engage in major industrial action next year because of what seems to be an issue of trust and a view that they were let down by the Taoiseach - I do not know if other Ministers were involved. Whatever I had planned to say has been completely altered by that statement by Senator O'Toole which changes the situation dramatically. It means there is a complete breakdown of trust between the leaders of the public sector unions and the Government. The collapse was orchestrated on the Government side, although I am not sure if it happened by accident or design. It seems to have happened because the Government was unable to sell to the general public what was going to be agreed.
This is incredibly important because the pay cuts and alterations to the way the public sector works are only beginning. What happened in the budget was not the end. It does not take a genius to work out that there must be a massive alteration to work practices, efficiencies and reforms, as Senator O'Toole pointed out, within the public sector. There will be a need for a reduction in the number working in the sector and a change in the way public servants work. As Senator O'Toole said, staff will have to work longer for no extra pay and will have to do other jobs which they have not done heretofore. How can this reform process move forward if the public sector does not trust the Taoiseach, if there are mixed messages from Ministers and if the Secretaries General of the relevant Departments consider they do not carry the authority of their Ministers when they enter into negotiations with public sector unions? That is dramatic, no matter how we look at it, whether one thinks public sector pay should be slashed. This is the failure to carry out negotiations and adhere to normal management practices in the manner expected of someone in that position. It is unbelievable and a clear statement should be made on the issue.
The Minister of State spoke about tax revenues at 2003 levels, while current expenditure is 70% above 2003 levels. He has pointed out that we will be borrowing between €17 billion and €20 billion every year for the next five years. From the same budget projections, GDP growth will be minimal, if it grows at all in the next couple of years. Where does that leave us?
We used to talk about the pensions time bomb but now there are a number of time bombs ticking away. There is a borrowing time bomb. If these figures are correct, we will have borrowed €100 billion more by 2014, even without taking into account those issues about which we do not know such as recapitalisation of the banks and giving money to Anglo Irish Bank.
We also have a GDP time bomb because, no matter what improvements we make in the next couple of years, if the economy is to grow and people are to go back to work, we must focus on growth in the export sector which will not cause GDP to increase to the levels seen during the property bubble.
There is also the pay time bomb. The Minister of State knows from looking at the figures that the issue public sector pay has not gone away. There must be dramatic movement in the next 12 to 18 months. The Minister might have been in bad form when he said that if there were not efficiencies, there would be more savage pay cuts. We may have a difficulty using any other mechanism to deal with public sector pay in the next 18 months.
That leaves us with the pension time bomb about which we spoke during the years of plenty. It has gone off. Private sector pensions have been destroyed and the issue of public sector pensions has come to the fore. The Government is now talking about radically changing pension entitlements for new entrants into the public sector.
I was going to talk about other issues such as the craziness where CEOs of semi-State companies are paid in excess of €400,000 and county managers on seven year contracts receive two and a half years salary in severance pay when their contracts expire, with an extra ten years added to their pensions if they have previously worked in the public sector. A person who is a county manager for seven years can receive a severance payment of almost €500,000. At the same, looking at the budget printed by the Department of Social and Family Affairs, we see single pensioners on a State contributory pension will receive €12,080.60. We can see some individuals for whom the State is responsible are just about kept going, but a sizeable percentage of people have terms and conditions that are out of control.
These issues must be dealt with in the next couple of years. There is a need for us to see significant reform of what went on in the public sector in recent years. There is an acceptance on the part of many public servants that something must be done, but it must be done fairly.
We must act regarding the Judiciary. The Minister of State is wrong. Judges are being set up to be the next group to be abused by the public because the Government claims they are constitutionally protected from pay cuts. That would only apply if individual judges were being singled out. They are part of the overall public sector and must have pay cuts applied to them in the same way.
It is very serious that there has been such a breakdown in trust, where people feel they were wronged, that they have been shafted, because it will be hard to get them back to the negotiating table. That concerns me because we never achieved the efficiencies and the changes to work practices required in the benchmarking process. We saw some changes but not to the extent necessary. Some of the Secretaries General thought they would get a great deal from the reforms proposed until the talks collapsed.
On the basis of what has been said here, I doubt whether the Minister of State can address all of the issues raised. The Taoiseach must deal with this issue. This is not just about what happened two weeks ago and ensuring it will never again crop up. This is something we must deal with in the next three to four years to get the public finances right. I will be tabling amendments to the Bill tomorrow to look at this issue.
The Minister of State has mentioned that the Government has penalised even the lowest paid workers in the public service. That will cause resentment. One of the most important factors in these hairshirt budgets, when we are doing what we tried to do in the early 1990s to pull the country out of the mess it was in, is that we try to hit everyone equally and single no one out for special treatment. The Government is failing in that respect, people do not consider they are in this together. If the Government fails in the most basic aspect of the negotiations, however, we do not have much hope it can achieve the necessary objectives.
It was Mr. Micawber in Hard Times who said, "Annual income, twenty pounds, annual expenditure nineteen and six, result happiness; annual income twenty pounds, annual expenditure twenty pounds and sixpence, result misery" and the position has not changed since Victorian times. We must live within our income.
There is no doubt about it, but the result of overpaying ourselves during a period of sustained growth followed by a property bubble is that we have become uncompetitive. There is no easy way to break bad news, but it is easier to make a decision when there is no choice and in this matter we have no choice.
It does not help to suggest not everyone is playing an equal part. The results are already in from the private sector, in which there have been hundreds of thousands of job losses, businesses are going out of business and people are unable to make ends meet. It would be unsustainable in any format for any of us to be within a group which could indefinitely be paid at the highest level such as those at the height of the boom when others who are paying for this were going through such difficulties. It is just a matter of facing the realities. In that time different sectors had been overpaid. Had we been producing the goods that justified that pay level - a level we appear to have reached in 2003 - it would have been sustainable.
A medical registrar in a regional hospital in Ireland earns €57,720 a year while the salary for an equivalent post in the UK is €44,000. A teacher in Ireland is paid on average €61,000 a year, €54,000 in the UK and €39,000 in France. A Civil Service clerical officer is paid €28,500 and the equivalent in the UK is paid €20,400. A police officer is paid €43,000 while the equivalent pay in the UK is €35,000. I would have been very happy to see such levels of pay continue if we could have afforded them.
This Government had certain jobs and we undertook them very well. We underpinned our economy by ensuring a viable banking sector which had been brought low not, as has been misrepresented, as a result of the actions of the regulator or this Government but by international events, and no words can change that fact.
The Government had a job to ensure the public finances were in order. The public finances are in order because many people have undergone hardship at a time when others are facing severe difficulties. We are all in this together and the Government has the figures. It is not the case that the Government works in a vacuum. The Ministers and the Taoiseach hear what is being said. The Taoiseach has the statistical information but also people write to him and give him instances of how they may have invested €2 million in their business and may not have taken any income out of the business in the past year so that they can continue to employ five or eight people and may eventually have been forced to let people go. When we are called upon to do what is necessary, it is our national duty to do it.
There are none the less, positive and welcome signs for the future. This is not the first time the public service has been asked to stand up. It was the public service, through Ken Whitaker and Seán Lemass, which created a strong and viable national economy. The public service is being asked to share the burden. We will turn the corner. Just one and a half years ago, in April 2008, we did not know whether there would be viable banking sectors in Ireland, America or Europe. We did not know whether we were heading for a second Great Depression, but thankfully the lessons of the past have been learned. The last quarter has seen a rise in gross domestic product, as announced today. I know this is tentative and only a start. One hundred new jobs have been announced for Dublin. We are still attracting foreign direct investment. The reason we are still attracting foreign direct investment and the reason our bond market prices have not gone through the roof as is the case in Greece is because we are taking the necessary steps.
I know the Cabinet spent hours, days, weeks and months ensuring parity and fairness. We all aim for consensus but I am conscious of the individual who wrote to us collectively when the first 1% levy was imposed. He was apoplectic with rage that he was being charged an extra 1%. If he could only have seen what was coming down the tracks he probably would have belted the computer. We do not expect to satisfy everyone but we must ensure everybody sees that what we are doing is fair and the reasonable man or woman understands that the action being taken is necessary and in all our interests.
This Christmas, people can know the economy has been underpinned by stability, that it is on a track to 2014, that we will not be wondering in the morning whether the IMF is coming in or whether bonds will be refused on the world market, and that the plan for the economy has been accepted by the EU and praised by the IMF. It has been a difficult time for us. Some people will go through hard times. However, just as a doctor gives a patient unpleasant or unpalatable medicine, we do not doubt that the doctor knows what is right and the Government is only doing what is right.
I regard my experience in running a business as not unlike the experience of running a Government. It is so easy to do in the good times and it is so easy to be critical in the bad times. In the good times of running either a Government or a business it is easy to explain that challenges exist which need to be faced but that everything is going well and the profits can be divided and shared. However, when the business or Government hits the wall, so to speak, we need something like a short, sharp shock, as Senator MacSharry said. It is very easy for those in Opposition to criticise the Government and to say it is not doing the right thing and that it should delay. I do not believe a business could survive in that way and neither could a Government or the economy. I think of the criticisms made when the Government backed down on the suggestion of unpaid leave. The very people who criticised the Government for backing down are the very ones who now say it should have been accepted. This does not make sense.
I refer to the economic situation in countries such as Greece and Dubai. As late as yesterday the Greeks were saying they would not take the same actions as Ireland did and now they are paying far more for their money and they do not enjoy the confidence of the international markets. We need the honesty to face our challenge. We have to take these cuts. We have to sell these cuts to our own people by saying we do not have a choice and that it is better to do it now rather than to put off. These cuts are not easy. The Minister for Finance has said that those at the top in the public sector will lead by example in the national readjustment of pay, which I welcome. The private sector has already endured massive reductions. I know the public sector has had to endure two substantial pay cuts this year but those in the public sector have relatively secure jobs and secure pensions as well while at the same time almost half a million people are unemployed, mostly from the private sector. We must ensure a balance.
According to a survey carried out by Marsh and McLennan, the human resources consulting unit of Mercer, released yesterday, half of all companies in Ireland plan pay freezes this year and seven out of ten companies reduced payroll costs in 2009. It is never easy.
When I was in business I remember one occasion when I had to explain to the 90 people employed in one section that the business was not doing as well as expected and they would have to go. At least this was at a time when jobs were easy to come by and it was not disastrous for those people. This is what a business has to do in those circumstances and this is what a Government has to do when it hits the tough times.
According to the ESRI, average pay in the public sector remains higher even after the cuts announced in the budget. If the Government did not show leadership or the appetite to reduce these costs, competitive adjustment would have to be shifted to the private sector by having it take even bigger pay cuts. We must bear in mind the stark situation that if unions succeed in their plan to resist the cuts, the next cuts will not be by the Government but by the IMF.
In regard to the manner in which unions behave in such circumstances, the case of British Airways, which is losing €800 million per year, comes to mind. When it told its staff that some steps would have to be taken to overcome this problem, the union's response was that its members would effectively close down the company by striking for 12 days over Christmas. I do not understand the logic of unions behaving in that way. I hope it is only a negotiating tactic on that union's part.
I do not understand the mindset of people who do not recognise the situation we are in and who do not agree that we have to act. If the IMF intervened here, the situation would be stark and cruel for all of us. We must do our utmost to avoid that. We are able to control our own destiny now. I realise many people are complaining about the pay cuts but they also have time to complain about our massive deficit. Such commentary is inconsistent. How can they do both? The pay cuts are being implemented to enable us to reduce our massive deficit.
In 1985 the then Government was slow to react to the fiscal crisis and it allowed spending to rise by 7.5% in that year. Ireland was the only EU member state to go into recession the following year, in 1986. By contrast, the Government took decisive action in 1988, with the support of the Opposition, and cut spending by 1.3%. The following year the economy grew by 4.7%. We can take great inspiration from our determination and experience of turning around our economy but we need a to have a fighting spirt. We need to be able to say we can do this, that we cannot put off doing it and that we must do it now.
Instead of focusing on what has happened with the banks and asking where is our bailout, we should do our utmost for this country if we are avoid having to be bailed out by somebody else, such as Dubai has experienced. We need selflessness, which is so often absent from the debate on ways to get the country back on track. We have very high unit wage costs. That makes it more difficult for our economy to grow quickly and to generate tax revenue. Therefore, there is no option but to address that in some form or other.
I will mention again what is happening in the private sector and I am conscious of repeating myself. I said to some people in Dundalk who were being made unemployed that they would have to go work in Newry and they said that the pay there only one third of what they earn here. We must become competitive and examine how we can do so in a manner that includes wage costs. How can we manage to do that in the private sector if we do not at least attempt it in the public sector?
I support this Bill as I believe the Government has shown a fighting spirit with these budget measures. Our future situation remains in our own hands and our future economic growth depends on the cutback measures we introduce now.
The question at issue is the semi-State sector and how we should handle it. Clearly, there is a difficulty there. I had the experience of managing An Post many years ago. It is useful to recognise that when An Post, which was part of the Department of Posts and Telegraphs, became a separate organisation, the then Government gave to the new board of An Post the responsibility of looking after its ability to survive. Therefore, I understand the Government faces the challenge of how it will handle semi-State bodies, particularly semi-State utilities that are not necessarily in the front line of competitiveness. That is a very difficult one. What is required will not be easy to experience. Those who have worked in a State body that becomes a semi-State body still wear the hat of a State body and believe that they are part of the State. We must recognise that is a challenge. I urge the Government to pay particular attention to that. We have semi-State bodies to which we have given independence and we should ensure we do not interfere too seriously with that. However, we have to balance the books. We have to be jugglers and to keep those two balls in the air.
This Bill is one of a series of measures that is difficult to deliver but it is necessary in the current budgetary context. The public reaction to the 2010 budget has been grounded in a sense of realism and perhaps resignation that shows that we as a country are beginning to deal with the fiscal situation in which we find ourselves. Obviously reducing the income of any group of workers would be strenuously avoided in most circumstances and it would be a decision that would be avoided to the greatest extent possible, but the two areas where public expenditure has been curbed in the 2010 budget, those of public sector pay and social welfare payments, represent more than 50% of public expenditure every year. If we have to make savings in public expenditure, those are areas where savings cannot be avoided. The remainder of public expenditure funds the provision of public services. The choice facing the Government in curbing public expenditure was either to reduce the level of public services or to reduce the cost of the provision of public services. The former option would have involved closing hospitals, schools, Garda stations etc., an option that was chosen far too readily in the past. Fortunately, in the past ten years we have been able to reward and acknowledge public service in a way that was not done in the past. Some of that was done in a quite controversial manner. When the economic history of this country is written, the act and practice of benchmarking and the fact that it was shrouded in such mystery will be looked upon by economic historians with mild surprise at the least and perhaps they might even be aghast if they were honest. Even at this remove we do not know what was being bechnmarked against what and under what circumstances. The State was forced to invest a large amount of resources to make that exercise work.
We must acknowledge that with part of the narrative about the public sector that is talking place now we are in danger, philosophically, of going down a cul-de-sac. The question of whether we pay the public sector enough is a side issue from some of the comments that were made which run the risk of having the impact of demeaning and undervaluing the sector. We must get an appropriate balance with a renewed public sector in the future. There is no doubt that reform of the sector is needed. Whether the climate exists to do it with the way these measures need to be introduced by the Government is difficult to know in the short term, but it must be acknowledged across the political spectrum that such reform must take place as well as the implementation of cost-saving measures in this Bill.
One of the dangers with the introduction of new legislation or a new policy is that anomalies may be created. A sincere attempt has been made to graduate the cuts in public sector pay from the very highest incomes to the very lowest incomes, especially at the lower end. There are some difficulties we need to address to examine if they can be finessed in the medium term in particular.
I do not support the argument proposed by Fine Gael that there should have been a cut-off point at which these cuts should not have applied. In the context that social welfare payments had to be cut, the introduction of such a cut-off point would have created an even worse anomaly. The difference between the gross cut applied to people on higher incomes and the net cost for people on lower incomes creates a difficulty for those on higher incomes. If people are not in the tax net and other people are paying income tax at 20% and all the levies do not apply to them, the net effect proportionately for people on lower incomes in the public sector is higher. We need to remedy that in the short term.
There is also a difficulty as to how we define the public sector and the public service, and I will deal with the semi-State sector in a moment. There was also the difficulty as to whether workers in non-governmental organisations which received block grants from Departments and who had their pay pegged with public service rates should be treated the same as those in the public sector. That difficulty has been addressed by way of amendments made in the other House. I argue that they should not be treated the same because they lack job security and do not qualify for the type of pension arrangements that apply in the public sector. Amendments have been accepted in that respect. That question also arises about bodies such as county enterprise boards and whether the staff in those bodies should be treated the same as those in the private sector. A huge dichotomy arises in that respect in the case of a body such as Anglo Irish Bank which has been nationalised but is not seen to be part of the public sector because it has a commercial remit. The principle that applies seems to be that because semi-State bodies are independent and most of them do not receive any direct input from the State in terms of additional funding, this Bill should not apply to them. That is obviously not the case with Anglo Irish Bank, given the level of recapitalisation to which we have already committed and which we might need to do again. In terms of how we approach the further rescue of financial institutions, if they are nationalised or largely nationalised institutions we should define them as very much part of the public sector.
One has different types of bodies in the semi-State sector depending on the competitive environment in which they exist. One has semi-State agencies that get a State subvention, such as CIE for public transport, but other semi-State bodies operate in a semi-competitive environment where they have a monopoly. If we wish to bring about competitiveness in the economy in general, there is not a role for Government to direct what should be the wage levels in each of the semi-State bodies. It is in order for the Government to suggest that controlling wages in semi-State bodies is something for which we should strive, because if we can get competitive costs down, especially in the utility companies then the economy will improve more quickly. I echo Senator Hanafin's welcome for the fact that we have had a 0.3% of 1% increase in GDP, although GNP has decreased by a further 1.4% in the most recent quarter. That is a positive sign.
The indications of where we are in terms of the private sector, the public sector and semi-State bodies could be explained by a set of figures I wish to place on record before concluding. The average industrial wage is €36,000. The average rate of pay in the public sector is €48,000. The average level of pay in one particular semi-State body, the ESB, is €68,000. When we have those types of divergence in terms of how we go forward as a country, as awkward and difficult as legislation like this can be, I do not think we can avoid making decisions of this type at times such as this to achieve the benefit we need as a country and economy.
I welcome the Minister of State, Deputy Mansergh. In effect, it is a budgetary Bill but it has been transferred into legislation as an emergency measure.
Much has been said about competitiveness by various speakers. As a nation we have lost our competitiveness. This side of the House has been saying that for a number of years. The Government side laughed at Deputy Kenny when he objected to benchmarking in its original format. What has happened in that regard is that the vast majority of those public servants have been sucked in and they now find that they have high mortgages, huge credit card debt, big car loans and their wages have been slashed. In many cases it is a very sad situation both for those involved and their families. That is the reality. We did not look closely enough at benchmarking at the time. It was a measure designed to win a general election.
Prior to the recent budget the Government looked to all parties for ideas both in the Dáil and in this House. All parties were forthcoming with ideas. The Fine Gael Party put forward various ideas and designed stimulus packages. The party's NewERA document proposed the creation of 100,000 jobs, new semi-State bodies and the sale of existing semi-State bodies. The Government did not take a single idea from any of the Opposition parties. It looked for them in several debates prior to the budget but it did not take on board a single idea from any one party. One could wonder why. The Government came up with a budget that was all about cutting wages and public services without introducing a stimulus package.
I wish to ask the Minister of State questions about training. The social welfare budget has been savage enough and will have a serious effect on the lives of some families on social welfare. FÁS is to get an extra €70 million for training grants. At the same time, the Government, through Teagasc, is closing one of the few agricultural colleges left in this country and some Teagasc offices, including one in my town of Castlebar. The biggest disappointment is the closure of Mountbellew agricultural college. It never had as many students as is currently the case but it is proposed to close it from 1 June next year. I cannot understand such a decision being taken by the Minister for Agriculture, Fisheries and Food, the Minister for Finance and the Government for the sake of a measly amount of money when at the same time they intend to give extra money to FÁS, which has a largely discredited board, for it to introduce new incentives. In spite of the fact that some of its schemes were proven to be a sham, it is being invited to create new training schemes. In contrast, an agricultural college that existed for years is being closed. It has never had as many students and is liaising with the institutes of technology to provide some great courses and training for farmers and the agribusiness sector in general. That is something the Minister should take on board.
My colleague, Senator Twomey, raised the issue of excise duty this morning. A number of jobs are at risk due to the effect of excise duty on the drinks industry. The Minister of State said he had been approached himself. Dwan's and Finches in the Minister of State's constituency will be greatly affected.
Martin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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They are in Tipperary North.
When one goes to Croke Park, one supports Tipperary. No distinction is made.
This could cost larger wholesalers such as Gleeson's and Britvic, which has more than 800 employees, in excess of €1 million. That will have an effect on jobs. Will the Minister of State indicate what will be done in response to this issue? A significant number of jobs are at risk. It is somewhat similar to what happened with benchmarking. Those people have stocked up to the brim for Christmas. They have been working in difficult conditions in recent years given the exchange rate with sterling and the Border factor in terms of VAT. They have been trying to hang on to their customers as best they can. By reducing excise duty right before Christmas the Government has left them with significant bills. When that happened in 1994 the Government of took decisive action. Some of the goods were sent back to bonded warehouses and the people involved were probably refunded. If something of that nature is not done, major job losses will ensue. There are smaller wholesalers in every county and jobs will be affected.
I raised the issue of consultancy fees paid to banks previously with the senior Minister and with the Minister of State. Anglo Irish Bank is fully nationalised. By the end of next year AIB and Bank of Ireland could be up to 70% State-owned. Irish Nationwide Building Society will either be taken into State ownership or the Government will ask that it be amalgamated. Consultants are working in all those financial institutions currently assessing loans being transferred to NAMA and the transactions involving the amalgamation of Irish Nationwide Building Society with the EBS or whatever other banking institution. I have been led to believe that a senior consultant is being paid €3,500 per day while a junior consultant is being paid €750 per day. Is that the case? If it is, it is a great shame given that the Government is taking €8.50 from the blind pension while at the same time paying €3,500 per day to a senior consultant working in the banks, some of which are worth nothing. The Irish Nationwide Building Society is worth nothing and it owes billions of euro. Anglo Irish Bank is in State ownership and the other banks could be 70% to 80% owned by the State early next year. I would like an answer to this question.
The situation of the 3,000 or 4,000 people working in the drinks industry, who are working in very difficult conditions, needs to be looked at. We need answers in that regard.
I welcome the Minister of State. We have had to put together a very difficult budget. I am sure the Minister spent much time on the budget to ensure we got as fair a one as possible. It is fair to say we were forced to do things we probably should have done earlier. We should have looked at our public sector, which we have now been forced to do. That is the one criticism I have that we should have done this two or three years ago.
It is also fair to say the public sector has been extremely good and has been diligent in the work it has done. Those in the public sector are investing in this country and in their jobs, which is vitally important. We have only started to look at the public sector.
It is important to bear in mind that when we looked at the wage bill in the public sector, we found it was far too high. Once wages go over 51% in any company, alarm bells must start to ring. That is exactly what has happened here. For example, the wage bill in the health service is 51%, which cannot be sustained. Senator Hanafin gave us examples of what teachers, doctors, consultants and so on earn in the neighbouring island. We cannot ignore that under any circumstances.
This is an opportunity to reform the public sector. In the negotiations which broke down, the unions said they were prepared to look at the reform of the public sector. I suggest to the unions that now is the time to do that and not to be dragged screaming to the table 24 hours before another budget. That would be wrong. We must ensure we get the best value for taxpayers and give an efficient service to people who pay their taxes.
If one was asked to take a 5% pay cut in the private sector, one would certainly take the hand of one's employer because we all know people in the private sector have been taking 25% and 30% pay cuts and that many people have lost their jobs. We know that those in the public sector are angry, that it is difficult to lose money from one's wage packet and that it is not what we like to do.
However, good housekeeping would not allow us to continue to borrow at the current rate. The people lending to us would soon tell us it is not possible to continue to borrow. Where would we go then? There would be no money to pay the public sector. The taxes we are getting in have sharply dropped from €55 billion to €32 billion. It would be unsustainable to keep borrowing the difference over the next five years. The unions' proposal that we extend borrowing over a longer period would cost us €2 billion to €3 billion per annum to fund. Surely, that does not make sense.
That is why the Government had to take very difficult decisions in the budget. It looked at the public and private sectors and at social welfare, including old age pensions. As reasonable a job as possible was done.
It was important to send a message to our European counterparts and the people buying our bonds on the international markets who are looking at how we are conducting ourselves. I believe that message was well received in the international markets.
It was good the Minister mentioned that it was probably one of the toughest budgets we will have to present. There is still much work to be done before the next budget. Now is the time for the unions and the public sector to look at finding the best system before the next budget. It is an opportunity for us to have a well organised and well motivated public sector. That is what we need because the public sector plays an important role in any country. The public sector in this country has not been found wanting.
It is important to mention that unemployment has stabilised at approximately 12.5%. Senator Hanafin said there was a very slight upturn of 0.03%. Although it is very slight, it is important to see us turn the corner. We are at the bottom currently and we can only improve.
I take this opportunity to wish a happy Christmas to my colleagues opposite, the Minister of State, the Acting Chairman and the staff, who work diligently to ensure every operation goes well.
I welcome the Minister of State and I support the budget. I do not think he will agree with much more I have to say after that. The problem with the budget is that it does not go far enough, although I do not mean in regard to social welfare. I will not engage in any hand wringing. We needed this budget. I fully support the comments of Senators Burke and Twomey on the need to include the semi-State bodies in the remit.
I will concentrate on the common-sense grasp which the Irish people have on the facts. The recession has been a crash course on many things. I agree with the Minister of State's indication that the depression here was a result of a banking-fuelled construction industry, although he does not spell out the banking side, along with an international downturn. It was a lethal combination that did us in - we may have pulled ourselves out of the problem otherwise. Reality will break out eventually.
Separate from that issue, the question of the public sector has been around our necks like an albatross for most of my lifetime. I worked in the public sector for 25 years and the private sector for 20 years and I know there is good and bad in both. What I can say with certainty is that reform must be forced on the public sector. There is no chance whatever of anybody who has an emolument, as Edmund Burke pointed out, ever giving it up voluntarily. All talk of social partnership in a recession is a joke, as it only works in a period of surplus. It does not work in a recession. The talk should have stopped long ago and the Government should have governed.
I have personal experience of these issues and people should not talk about what they do not know in practice. When I worked in RTE, if I put out a good programme at 7 p.m. that had a large audience, I got exactly the same money as a person who put out a programme a half hour later and did not bother his backside about what was in it. The problem with the public sector is that it did not reward merit and excellence. One of the potential benefits from this recession will come if the Government toughens even further and states flatly to the public service that it will revisit the issue of pay and pensions and freeze all pay indefinitely until the public sector looks seriously at reform. The value of that reform should benefit good public servants.
I hate this sweet-talking of the public service and saying how much we worship and love it while all the time taking money from public servants. I believe in no hypocrisy. We are taking money from the public service because it got too much in the benchmarking period relative to everybody else. Everything in this life is relative. The public sector relative to the private sector in Ireland is a bit like the experience of the people of Britain in the Second World War relative to the people in the Soviet Union. It bears no comparison in terms of suffering.
The private sector is suffering real hardship but the public sector is a cosseted class. It is protected by a vested interest in the form of public service unions, which have had nothing to do for years under social partnership except to make mischief now. The unions are underemployed. What does a public service union representative do all day? I am speaking as a member of a general union for more than 20 years. These people do very little and now they are to make mischief.
I agree strongly with Senator Twomey as it is time for the Government to move to phase two and tackle the appalling position in semi-State bodies. Craft unions have got a grip on institutions like the ESB. These are not craft unions of the sort we understand in Ireland but rather those which come from a culture of British trade unionism of the Scargillite Trotskyite sort, which talks freely in Britain about taking down governments and taking them apart. They believe in the general strike and are always looking for mass strikes and confrontations.
That is the culture of the craft unions in the ESB and there is no point pretending it is not. There is no point pretending that it is the culture of the trade union movement that I grew up with. There have been two great traditions in the Irish trade union movement; these are general unions like the transport union and worker's union, which admitted anybody to their ranks, women and all. I do not give a damn about charges of trade union sectarianism here.
I have had personal experience of the craft unions and how they operate. They have kept out women and all forms of progressive change for years. In RTE they forced us into six-man crews when we could have managed quite happily with two and three-man crews; RTE manages with such crews now.
The craft unions must be taken on, if necessary by taking the ESB apart. No government should live under the constant threat of people who would state flatly that people cannot negotiate in the dark. That is no way to live or for a democracy to exist. Sooner or later the craft unions in the ESB will have to be taken on. If it is a question of them turning off the lights on the old and sick and incubators in hospitals, we must get equally tough with them. If that means breaking up the ESB, it is better we do so than tolerate that kind of blackmail. It is disgusting, repellant and we should reject it.
In the ESB we have a former trade union malcontent who wrecked Iarnród Éireann. There is another who has said people cannot negotiate in the dark. A third talks of taking down governments. They all owe their allegiance to a culture of Scargillism. Nobody here wants to tell the truth about these things. Had Rupert Murdoch and Thatcher not taken these people on, Britain would be a basket case today. I have experience of that in my own newspaper.
If Members want to read how craft trade unionism will leave Ireland, they should read Bill Bryson's famous book, Notes from a Small Island. There is a description of working for one of Murdoch's newspapers before the reform. A reporter asked the author to retrieve a telex detailing the latest stock exchange prices and he saw a man with his feet on the telex machine. He said the author could not touch the machine as it came under the remit of the graphical union. He could not tell the author the figures. The author could not get the paper himself because the man was on a break. That was the world of British craft unionism and we do not want to see it here.
We want to do business with the great traditions of the Irish Larkin and Connolly trade union movements, which put the national interest - rather than craft interest - first. There are people in the Irish trade union movement, David Begg among them, who are prepared to do business with the Government in response to a decent offer. There are others who have no intention of doing any business with the Government, and such people must be taken on. If the price is to take the semi-State bodies apart and privatise them, I am for that.
I respect people and all parties who have stood the hard line. My heroes are Kevin O'Higgins, Gerry Boland and Des O'Malley. My heroes are not the emollient ones. The Irish people have always welcomed good government and the reason this Government stands high in public opinion at the moment is because it took the hard choices. It had no other choice, of course, as necessity knows no law. Give it the credit for doing what was needed, as Fine Gael may need to face the same challenge at another time.
This is not the time for Fine Gael to finangle or floddle but, as Senator Twomey did, to tell the truth and lay it on the line to the craft unions in the ESB. There are no endless free lunches. The public sector found out the hard way that there are limits to public patience and tolerance. A teacher told me the other day that she did not even know half the perks teachers were entitled to until she listened to a teacher on Pat Kenny's show. They have so many perks they do not even know what they are.
The public service went to the well once too often with the public. The craft unions in the ESB are going to do it now and I will warn them in the words of James Connolly. If they try that with a democratic Irish State, they will rue the day. As Connolly said to the employers of Dublin, if it is to be a wake, let it be a wake and if it is to be a wedding, let it be a wedding; we are ready for either. This State is ready for either prospect. We should not lie down under that kind of threat. Put an end to the bully boys.
I welcome my colleague, the Minister of State at the Department of Finance, Deputy Martin Mansergh, back to the Chamber. I note the Minister of State has spent much time in the Chamber over the past few days, weeks and months, as well as the Lower House. I understand the Minister of State has additional work because our good friend and colleague, the Minister for Finance, Deputy Brian Lenihan, is unwell and hospitalised currently. I take this opportunity to wish him a full and speedy recovery. It is probably a reflection of the amount of effort, work and personal commitment the man has put into his portfolio over the last number of weeks and months, much to the benefit of this State.
The budget and the emergency financial measures that the Minister, Minister of State and colleagues in Government have produced show that Ireland is capable of addressing its problems directly. The budget represents a comprehensive approach to addressing the problems faced by this country. I listened with interest to Senator Harris's comments and that is exactly what the Government is doing in a very courageous way. It is not alone what it has done this year but what it will do next year with the additional changes to be introduced. It will result in a more robust tax system which is more suited to the needs of a country with a young and increasing population and in which there will be many reasons to be optimistic, despite the current gloom.
We have suffered from a combination of internal and external negative economic factors. However, the business cycle is changing and the fundamental attraction of Ireland as a place to do business will return. The Minister has announced that the international economy has exited recession and that recent indicators suggest economic activity in Ireland is turning the corner, which is good news. The number losing their jobs has stabilised and the appalling job losses of the early part of 2009 have, I hope, come to an end. Ireland needs to ensure it maintains its attractiveness as a location for multinational investment, indigenous enterprise, jobs and export-led growth. It is only by doing this that we can earn our way as a country with profitable enterprise, increasing employment and the means for the State to provide services for those in need and jobs. The decision not to increase income tax is correct at this time, given the reductions in private and public sector pay rates.
Corporation tax yields significant revenue for the Exchequer. A total of €5 billion was collected in 2008, down from a peak of €6.7 billion in 2006. Foremost among the budget announcements was the commitment by the Minister to retain our 12.5% corporation tax rate. This is good news for existing foreign investors in the economy who might otherwise have had to explain to their head offices why they should stay in Ireland. It will also help us to maintain our rate of capturing new foreign direct investment and to give a confidence boost to the indigenous sector. The rate, as the Commission on Taxation and the Minister have both pointed out, is part of brand Ireland and part of our attractiveness as a location for high value export oriented manufacturing and services. The extension of the three-year corporate and capital tax exemption for start-up companies in 2010 is also welcome. Start-up companies are the acorns in the forest and should be supported and nurtured.
I have been a contacted by a number of people, including accountants, about the deadline for registration for the capital exemption scheme for nursing homes which is due to expire this month, with the completion of projects set for June 2011. Everybody faced issues this year, given the economic conditions, bank lending practices and the availability of investors. Projects in the pipeline have not reached fruition and will not meet the deadlines set for the scheme. We need the benefits that will accrue from the scheme because of our demographics. We, therefore, need beds in the system. Will the Minister of State kindly revisit the scheme and make an early announcement? The earlier, the better, but if cannot be done this side of Christmas, clarification should be provided early next year. I am happy the Minister of State may have to contact others, but I would like him to give an indication to the House.
The reduction in the top rate of VAT to 21% is a small but significant improvement. The reduction in the rate of excise on alcohol products will mean that there will be better value to be had in the South when compared to the previous situation vis-á-vis Northern Ireland. I support the calls made by others regarding excise duty. While this issue only affects wholesalers and I acknowledge there are swings and roundabouts, the benefits were not great during the years the budget was announced in January because stocks were not as high after Christmas as before it. I hope an amicable resolution can be reached on this issue.
Small businesses are being starved of credit for working capital and development purposes. In some cases, this is a reaction to the capital constraints on the banks, but in others it appears more to be an unwillingness to extend credit. Even though businesses may be trading profitably, their credit facilities are not being renewed or expanded, as was the case, and companies are at risk of failure because they cannot access credit, which is unacceptable. The credit appeals mechanism announced by the Minister in respect of SMEs, farm enterprises and sole traders is welcome. The facility will also enable a review of the credit policies and practices of the banks in regard to all SME sectors, with particular attention being paid to the retail sector, tourism and agriculture. That is welcome. Perhaps provision should be made for a review every six or 12 months to make sure it is working.
We must reduce the cost base faced by consumers and businesses. In particular, it needs to be ensured there are incentives to reduce costs and increase productivity and service delivery in all areas in the private and public sectors. This means, for example, that the semi-State sector cannot be immune from the pay adjustments throughout the economy. There is an enormous number of such bodies and a clear message must be sent to them that their rates of pay from the top down must not be excessive; the overheads such as rent that they incur must suit their requirements and that their manning levels and procedures must be compatible with the efficient and effective delivery of services. The message must be clear that all salaries and wages paid from the public purse need to be reduced in line with the reductions suffered by public servants and private sector workers through pay reductions and job losses. They are expecting it.
We need to encourage strong competition in any area in which there is excessive profit taking by opening these markets to robust competition. Our overall borrowing requirement is made up of structural factors which the reduction in public sector pay will address, international cyclical movements which are beginning to adjust, and capital investment requirements.
The Minister announced a new single scheme for all new entrants to the public service in the context of future pay costs, which is a necessity. The escalation in pay and pensions costs left no alternative but to do this. The potential effect of the changes proposed will be profound. It is estimated the changes will reduce the actuarial cost of public service pensions from an estimated €108 billion to €87 billion.
Apart from the economic aspects of the budget, I would like provision for additional support for the community and voluntary sector to be made in the finance Bill. These organisations play a vital role in the social fabric of Irish life. I propose a mechanism, whereby individuals could earn additional funding for their charity by doing unpaid work of between 50 and 200 hours per annum.
I welcome the Minister of State. No one is thrilled that the Bill has been brought before us, but we are realistic enough to know that what is being done has to be done. Every Oireachtas Member has suffered a reduction in income through salary and expenses cuts and levies. If one is human, one could not but dislike accepting a pay cut, but we must be responsible and accept that the Government has no choice. I am slightly worried by contributions to the debate in both Houses and some of the written commentary following the budget that we are deluding ourselves that the problems have been solved and will go away. We are still on the verge of national bankruptcy.
I hope the so-called green shoots will emerge and while the economic hope about which we read on a weekly basis must be welcomed, we still have to be concerned that we are on the precipice and cannot continue, as a people, to borrow €500 million a week. I agree with Senator Harris that the public fully understands the scale of the problem and, once again, we, the politicians, are playing catch-up. The public did not welcome the imposition of income and pension levies last year and people did not cheer about the fact that public sector pay was scheduled to be reduced, but they fully understand why this is happening.
I could spend the next five years giving a history lesson about the wrong decisions taken in the past ten or 12 years and how the Government's fiscal and budgetary policies have landed us in this mess, but that would not solve tomorrow's problems. The public will pass its own political judgment come the next general election. In the meantime, as I stated last week to the Minister of State when we were making pre-budget statements, the budget and the Bill are not about redeeming any political party; they should be about redeeming the economy and a future for our young people. I hope they will help in that regard.
The Minister of State is aware of Fine Gael's view on the Bill, in particular the proposed pay cuts. We acknowledge that at least €4 billion of adjustments were required as of last week and will still be required next week. However, we would have been much happier if those public and civil servants with incomes under €30,000 were unaffected. It would have been a much more moral basis for this penal legislation to allow those with incomes under €30,000 to have their income remain as is. That is what disappoints me strongly about the Bill.
My colleagues have spoken about public sector reform. As any fair person would, I welcome the fact that over the course of the past month it seemed the trade union leadership proactively engaged with the Government on the issue. The problems in the public sector which the unions recognised needed to be reformed during their intensive engagement with the Government two or three weeks ago remain and need to be reformed. I am very disappointed at the pronouncements from some of the senior officials who, because of the breakdown of the negotiations with the Government, are unwilling to engage in reform.
We have not just a political duty but a moral duty as elected Members of this and the other House to strongly ask of trade union leaders and demand of the Government that reform is put back on the agenda at the negotiating table. The public service is about serving the public. It is about the taxpayer and how his or her money is spent. We have a duty to ensure it is spent well. That was one of the great difficulties with benchmarking, an issue Fine Gael highlighted consistently in recent years, whereby the taxpayer was not getting value for money.
The question of public sector reform must be put back on the agenda. It cannot simply be a menu from which unions and Governments pick and choose. If public sector reform was necessary, appropriate and doable a fortnight ago, surely the same equation is in place today. The trade unions have a national and moral obligation to come back to negotiate the issue of public sector reform with the Minister of State and his colleagues. There is a demand among the public for this to be done. There is also a genuine appetite for it among the vast majority of public servants who work in every town, townland and village. On a daily basis, they can see the problems which could be solved through reform of their offices, how they do their jobs and are promoted. It must be a key to turning around the economy.
I agree with my colleagues who state we must address the issue of the semi-State bodies. It is not politically popular to suggest more people have to take a pay cut, but I have read the list of unaffected public bodies in the Schedule, ranging from the Dublin Airport Authority to the National Treasury Management Agency, Bord Gais, Bord na gCon, the Cork Airport Authority and the ESB, and we know, in our heart of hearts, that they will have to be re-examined. The wages of those who work in these agencies, the vast majority of whom do outstanding work and work very hard, are paid by the taxpayer and while we borrow €500 million a week to pay off these bills, matters cannot continue as heretofore. The issue has to be examined.
The concept of wildcat strikes throughout the utilities, in particular the threatened shut-down of our electricity sector, is entirely unacceptable in this democracy. One month or six weeks ago I expressed my concern on reading that the British trade union leader, Arthur Scargill, was on some type of tour of the country. Some of the unions were trying to describe it as an anniversary victory tour. It was utter delusion on the part of a man who had ruined an industry in Britain, split a nation and almost abolished his own union. It is very worrying and frightening that a man who almost brought a country to its knees should be seen as a hero. We need positive leadership from our trade unions and I look forward to it engaging with the Government and the political parties. This and the other House are where real debate about where the country is going, social partnership, wage rates and public service reform must stem. We need to engage in this regard.
We will debate on Committee Stage sections 6 and 9 and the exemptions and disputes which will arise. It is difficult to clarify whether a particular small group of companies is part of the private or public service. I have correspondence from a small company in this regard which I will pass to the Minister of State's officials for their consideration and we can return to the matter on Committee Stage. These companies did not benefit from benchmarking, as they were told they were private and, therefore, not eligible, but they were affected by the income levies.
I wish the Minister of State well with the Bill. It is very important for the future of the country that we get out financial house in order. I have a difficulty with how some of the cuts are being imposed but living in the real world I know that what is being done has to be done.
I welcome the Minister of State. It is a difficult time to be in government and with the downturn we have seen that the challenges facing us on many economic fronts are precarious, as mentioned by Senator Bradford. I listened with interest to what he had to say and found myself in agreement with much of it, as I did with Senator Harris. He put his finger on the problems.
At the end of this year our borrowings will be approximately €76 billion. This year we seek savings of approximately €4 billion. I have stated here and at parliamentary party meetings that we might have sought a higher figure than this, even though much pain is attached to the €4 billion. By the end of 2013 we will be nearer borrowings of €150 billion than €100 billion. Therefore, not only does what we do need to be very effective, but we must also build on it and plan for the future. I will make suggestions in this regard.
This year we will spend €56 billion and will have an income of €32 billion. Income will not rise in 2010, as predicted in the budget, and we must get back to that spend. We need to look beyond the figure of €4 billion at what we need to save and what the structural deficit is. We need to consider the structural deficit as being €13 billion. We spend €20 billion on pay and need to save €5 billion; the cuts we are discussing will amount to in excess of €1 billion. We need to save another €5 billion on social welfare payments and €3 billion on other expenditure items, bringing the total to €13 billion, which would be quite painful.
We have allowed our incomes and the cost of living to escalate, which happens in good times when money flows through the economy and we have very high rates of growth. It also happens in other countries. Now we have gone into reverse. Correspondingly, therefore, we must reduce those costs if we are to survive. Pay levels in this country are well in excess of what they are elsewhere in Europe in the private and public sectors. Some economists state pay levels in the public sector are approximately 22% ahead of those for comparable positions in the private sector. There are very strong challenges facing us.
The cuts in social welfare were unavoidable. Nobody likes doing them, no more than we like cutting pay. My pay has been cut and I certainly do not welcome that but I understand that if we do not do these things, the outlook will be dire for all of us. The impact of the social welfare cuts on the most vulnerable should be closely monitored. I suggest that perhaps a small group of officials from the Department of the Taoiseach, the Department of Finance and the Department of Social and Family Affairs should be established so that we can monitor these impacts on an ongoing basis. Social welfare is a very complex area and decisions taken often have unintended knock-on effects. The one thing we must do in this recession is to preserve some decent standard for the most vulnerable in society.
I mentioned the figure of €5 billion. This time last year, I said in this House that we needed to save 10% on public service pay, which is approximately €2 billion. We also need to take 15% of the numbers out of the public pay bill. If we do that, we will be close enough to the €5 billion figure. I appreciate that this is a gross amount, and the net amount against the tax take will be less than that. This is a start to provide some foundation. We had 220,000 people on the public service payroll in 1998, which included those working and those on pensions. According to information I received from the Department of Finance, that figure is now 370,000. In other words, there has been an increase of 150,000 in the interim. We need to reduce that figure by at least 50,000 in the hope that this will steady the ship for us. That represents a lot of people, but if we fail to address the issue we will have to reduce salaries again next year by an equally significant or even more significant amount. We need to look at that.
All this means we need to reform the public service. It means we need to increase productivity. There are very good people in the public service. I feel very sorry for people who are losing incomes in the private or public sector over the past 15 months and who are having difficulties meeting their commitments because of that. However, the real tragedy of this recession is the number of people who are unemployed, people who lost their jobs and who may find it extremely difficult because of age or because of the lack of skills required to get back into the workforce. That is a serious consequence to any recession and it should be a priority.
There is a huge cost involved in public sector pensions. I have looked at comparisons in the private sector, where I have worked most of my life, and one could not buy the public service pension. There is also what is called legitimate expectation. We need to change it, but we need to be careful and fair in the manner we do that. Nobody likes quoting the banks, but they changed from a defined benefit scheme to a scheme which provided defined benefit up to €50,000 in earnings, while any income above that went towards defined contribution. Most businesses changed to a defined contribution scheme only, but the banks' system is something that should be examined.
Suggestions have been made that the income of people retiring in the future could be based on an average of their career earnings. That is a very long time span, and it might be difficult when we go back to eras of inflation. Looking at a three to five year horizon instead of the last year might be the way to do it. I have been critical before about the Public Appointments Service and the Commission for Public Service Appointments, which operates within the local authorities. There has been a propensity in both of those bodies to promote people nearing retirement to enhance their pension. It is a very human thing to do to people who have given a lifetime of service. We should be getting away from promoting people based on seniority and promoting them exclusively on the basis of their calibre, merit and aptitude to do the job. That should be a very significant cornerstone of public service reform. Very few people in the private sector are promoted on seniority because it is not seen to be a very sensible way of doing things.
I abhor some of the irresponsible statements by people in the trade union movement who look to bring down the Government or bring the country to its knees. That kind of disruptive comment shows a mindset alien to the interests of the people of this country, especially to those who pay them good wages to represent and protect them. If we are to move forward, we need a much more enlightened approach from the trade union movement. Many of them who operate in the private sector have shown remarkable common sense and maturity due to the job losses in the 1970s and the 1980s, where they adapted to the new economic reality and now have a partnership with employers in resolving disputes. That is a good move and is one I would like to see operating in the public sector. We have nothing to fear from that in the public sector. It is really common sense.
Some of the professions have escaped much of this. This seriously needs to be tackled. I have been critical of successive Ministers for failing to take on two particular sectors. In fairness to her, the Minister for Health and Children has shown tremendous courage in what she did with the pharmacists. She has now done this in respect of the dentists. They will be seriously affected as a consequence. However, hospital consultants have got huge increases in order to rationalise the service. I know the wages have been reduced by 15%, but they need to be reduced by at least one third just to bring them back to what their peers in the neighbouring island are paid for similar jobs.
I also think something similar needs to happen to accountants, the Judiciary and particularly barristers. Claiming wages of €2,000 to €3,000 per day amounts to legalised larceny.
Whatever needs to be done should be done. The Government made a decision in September 2004. I have a motion on the Order Paper for some time that has not made the floor of the House which states that this decision should be implemented. It would bring a senior counsel to a rate of €969 per day and €650 per day for a junior counsel, which are very good rates for four hours in a court. If we are seen to be fair and honest in our attempt to tackle the serious challenges in this country, we will have a level of support and acceptance that might well surprise us. I agree with Senator Harris, Senator Bradford and others who have said that the people are aware of the serious nature of our difficulties. Provided that the measures being taken are done in an even-handed, fair and considerate way, people will buy into the changes we make to ensure the country is able to embark on a path of growth in the very near future.
I had anticipated being in a position to speak while the Minister of Sate, Deputy Mansergh, was in the House, but I would like to ask the current Minister of State to listen to what I have to say and take it to his colleagues in the Government. Having made his contribution, Senator Walsh should perhaps let the Minister of State listen to what is being said in the House as a matter of courtesy.
I ask the Minister of State, Deputy Finneran, to be a channel to the other Ministers involved in this Bill. I am deeply sorry to learn of the ill health of the Minister for Finance and I wish him a speedy recovery. He has been a very strong, decisive and clear voice in this difficult time and that has made quite a difference to the prolonged dithering of the Government until now.
One of the things that struck me about the speech of the Minister of State, Deputy Mansergh, was the language he used. This doom-laden language is very worrying. The Minister of State referred to the continuing threat to the economic stability of the State and added the following: "However, the magnitude of the adjustment required in the public finances and the budget decisions necessary to effect this process in 2010 have involved decisions which have adversely impacted on all sectors of society". The note of real alarm in confronting the situation is clear, if one analyses the texture of the language used.
While I have supported many unpopular decisions and would be prepared to support others, I cannot and will not support the extraction of 5% of salary from those earning under €30,000. This measure is wrong. The issue can be addressed in other ways, for example, as Senators Harris and Walsh noted, by taking on those at the top of the professions. Hospital consultants cleverly chose not to seek confrontation on the immediate issue, but they are claiming a 15% retrospective pay increase they believe they are owed. They must live in the real world in which the rest of us are stuck.
With regard to relations with the trade unions, as a member of three trade unions, I respect the trade union movement. I must differ with my distinguished colleague, Senator Harris, who made a remarkable and splendid speech in terms of rhetoric, in that I do not want to live in a world dominated by the likes of Rupert Murdoch and Margaret Thatcher. If I had to choose between that pair and the worst trade unions, I would take my chances with the latter. I know the Senator and I disagree on the issue, but that is my position.
I would like to know from where the leaks came because I believe the negotiations were, to a certain extent, sabotaged. I have my suspicions about who was leaking.
The situation is very difficult for the Government. I believe it realised during the negotiations that the figures did not stack up. We have been told there was a gap of at least €250 million between what the trade unions indicated they could deliver and what the Government estimated would be delivered. In addition, a question arose regarding the timescale. The unions did not do themselves any favours by allowing spokespersons to suggest on the airwaves that what they were getting was 12 days unpaid annual leave. That did not go down well. We must, however, understand the difficult circumstances for all sides.
The position is even worse than what has been suggested. Several speakers referred to green shoots. Regrettably, in this country the green shoots are provided by multinational companies. There is little in the way of green shoots from indigenous manufacturing or the export industry. I wish there were more that we could celebrate.
I am astonished that nobody, apart from me, has spoken out against Standard & Poor's and Fitch which are ratcheting up the moneys Ireland pays all the time. They are a completely discredited collection of crooks. These are the people who give a triple A rating to Iceland, a rating that has been cited in legal cases by various local authorities up and down the neighbouring island. It appears these rating agencies find it difficult to distinguish between Ireland and Greece. It is about time the international community took on board this shower and gave them all a bit of a dose.
To return to the issue of the trade unions, as a trade unionist, I was disappointed to hear union officials state the breakdown of the talks more or less marked the end of reform in the public service. It cannot be the end of reform because if it is necessary at this time of crisis, it must be delivered. Reform is not something that can be sold by trade union officials or members. I say this as a loyal trade union member.
With regard to the tables setting out the salary reductions for holders of certain offices, I welcome the fact that we are all taking a haircut. It is appropriate that people such as Senators should take even greater cuts in salary and I have no doubt we will have to do so eventually. Regrettably, the dithering about the cut in the Taoiseach's pay means it does not matter a tuppenny damn. The Government missed the boat because the public mood has changed. If the cut had been made at the beginning, it would have been believed and reassured the people. The Government may as well not bother doing it now because it will forever be "too little, too late", that phrase we hear on every morning chat show.
As I stated, my principal objection to the Bill is the 5% cut in salary for public servants earning under €30,000. I do not know how this group will be able to bear the cuts, given that they have been hit with the various levies and so forth. This cut will crucify them. We at the top should support those at the bottom.
I will address two specific groups to which I referred previously which should not have been included in the cuts for various reasons, some moral and some technical. The first group is research staff on contract in the universities. I am sorry the Minister of State, Deputy Mansergh, is not present because I raised this issue on the Adjournment some time ago. I return to it because the text of the Bill states the cut will apply to employees of public service bodies. Apparently, this definition has been stretched to include contract research staff in third level institutions. The proposal is unworkable because it does not take account of the unusual employment status and circumstances of these staff. It is also manifestly unjust and unfair.
The pay for research staff is an adjunct of research funding awarded by various grants and funding bodies, including private sources and non-profit foundations. In that case, pay to contract researchers is obviously not part of public sector salaries paid directly by the Government. Frequently, salaries for research staff are not supplied by the taxpayer. Even where such pay is provided indirectly by the State, it is usually the product of a competitive awards process linked with specific projects such as those funded by the IRCHSS, the IRCSET or SFI. What about philanthropy, the Wellcome Trust and other organisations which invest in third level? It is from these that we will get the next generation of innovative scientific ideas on which the export industry will be based. The fixed salary for researchers is stated in their contracts.
It would be a hell of a lot easier if I was not interrupted.
The second group to which I refer are employees of the Central Bank. While I know they are not popular, these employees have a strong moral and legal case. I understand that in the first draft of the Bill they were featured in the list of groups excluded from the measure. Why are they no longer excluded?
According to the preamble, the purpose of the Bill is "to provide for the reduction in the amount payable, or rate of payment, out of money provided by the Oireachtas or the Central Fund or the growing produce of that Fund to certain persons for certain services". The employees of the Central Bank and Financial Services Authority of Ireland are not paid from money provided by the Oireachtas or the Central Fund and do not provide, legally, public services on behalf of the State. When I raised this issue previously, I cited a legal precedent and warned the Government about the difficulties it faced. In 1997 the Supreme Court, in Central Bank of Ireland v. Martin Leo Gildea, held that Mr. Gildea was "not a civil servant of the Government" and was "employed by a body which has been created by statute, the powers of which, however essential they may be to the function of the State, can be removed from them at any stage by the Oireachtas". For this reason, Mr. Gildea was not in a different position from those employed in a vast range of what have come to be called semi-State bodies. I understand this group has briefed counsel and is engaged in preparing for a legal action against the State which may very well be costly.
Why does the Government not resolve these two important issues, both of which I have raised previously? They are obviously a source of doubt for the Government, as it would not otherwise have excluded one of them in the first draft of the Bill following my previous intervention.
By the way, I waited a long time to speak and, as noted by the Chair, others interposed themselves.
I am pleased to have the opportunity to speak on the Bill. My party and I oppose the legislation because we should not seek to have those who earn €30,000 per year or €600 per week take us out of what is, undoubtedly, an economic crisis. That is what we are dealing with. We can talk about ESB craft workers and the belief that talks on public service reform should resume, which I want to refer to in my contribution. When we examine the Bill, which is what we are asked to do as legislators, it is the starkest and most reprehensible legislation the Government has brought before the House to cut the pay of the lowest paid workers in the public service.
I am not a member of a trade union, nor am I part of the emerging winter wonderland that seems to pertain in the House this afternoon. People think the trade union movement is not relevant or should not be involved in negotiations and discussions on genuine public service reform. It cannot be achieved without agreement, discussion and negotiation unless we go for the jackboot approach that says this is how it will be done and there is no other way to make progress. That is not going to happen. I do not believe the trade union movement should have a veto or that trade unions, whether in the public or private sector, should have a veto on how the Government does its business. People can correct me if I am wrong but I understood there was a measure of consensus across all parties and most of the country that it was a good idea that hauling ourselves out of the shocking mess we are in would be attempted with some measure of agreement. If that is the basic proposition people adhere to, they must come into the real world.
There are two sides in any negotiation. It does not take place with empty seats on one side. That is not negotiation and it will not occur. Senators Butler, Bradford and Harris suggested the unions should return to negotiations. Senator Bradford suggested they should be asked back in and that they are under a moral obligation to do so. These are people who attended negotiations over a period of weeks with the Government and found, at the 11th hour, a gross breach of trust and they withdrew from those negotiations.
Even if one takes the view that the Government was entirely correct in what it proposed and the trade union proposals were wrong, if one lives in the real world and wants to ensure people come back to the negotiating table, one is seriously deluded if one thinks this can be achieved by coming in here late on Thursday evening and making a speech saying it should happen. What planet are people living on? Do they think the trade union leadership is lining up for further humiliation and that they will be available to be shafted again? Do people think this will happen?
If people have an ideological position against any discussion with trade unions and want to exclude trade unions, let them say that. Let people be honest about it by saying that trade unions should not be involved in these discussions. I have heard the point made indirectly in this House that these reforms should be implemented irrespective of what the trade unions think. The corollary of that is to exclude trade unions. If one thinks trade unions should be involved, one cannot have it both ways. One cannot have the trade unions on side and negotiate with them only when they are doing what they are told.
I respectfully disagree with a number of things Senator Harris said about social partnership and the recession. I have voiced my doubts about social partnership and the manner in which social partnership appeared to be becoming a proxy parliament. All of the big issues of the day were being dealt with through this so-called social partnership process. The role of Parliament has been supplanted to a considerable degree by social partnership. Some of the areas it wound into were inappropriate at best. However, in a narrower version of social partnership where one negotiates and attempts to reach agreement with trade unions on matters pertaining to their members, there is a serious role for negotiating with trade unions.
With regard to the recession and the inappropriateness of this approach, I refer to 1987. Up until six months ago we were sick of hearing people saying that what pulled the country back together in the late 1980s was the tripartite approach including trade unions and employers. Social partners were involved in a real national effort to turn the country around in 1987. The trade unions were centre stage then when we were in the economic crisis so it is not true to say they only have a role when we are not in a recession.
The debate on public versus private goes around in circles. I am not a particularly paranoid person and I do not take the view that stories are whipped up in particular newspapers and suddenly become what everyone is thinking. People are more complex than that and do not take their views on the basis of what they read in one newspaper or radio station. The public and private divide has not been whipped up by the Government and various commentators but there is a nasty undercurrent to some of the attacks on the public service. Perhaps Senator Harris believes what he said in his speech to the effect that people are underemployed in the public service.
The Leas-Chathaoirleach has discretion to add on time at the end of my speech.
These divisive attacks on public sector workers are not helping. I seldom have occasion to quote the former Member of the other House, Mr. Joe Higgins. I remember hearing him in a debate against Mr. Michael O'Leary at the time of the Lisbon treaty. Michael O'Leary made the point that he created many jobs. I praise him for that and such people are exactly those we want active in our economy and society. Joe Higgins very effectively pointed out that if Michael O'Leary was in a road accident, which he hoped he would not be, and was at the roadside in grave danger and someone pulled up in a car, jumped out and announced she was a nurse, one would not turn around and ask how many jobs she had created this year.
I welcome the Minister of State. Inchydoney is dead, long live Inchydoney. The cosy cartel on the beach is no more. Public sector workers have no friends in Government Buildings, especially public sector workers who earn less than €30,000 per year. There is an acceptance by all Members that there must be a rebalancing and that we need to correct fiscal policy to get out of this crisis. Any principle of social justice we believe in must be fair and balanced.
In his Budget Statement the Minister for Finance, Deputy Brian Lenihan, said we had turned the corner. He is right. We have turned the corner but we have turned into a corner of poverty, debt, loss of income and of families divided by tension and worry. There are families in my constituency of Cork who are living on their nerves and who go to bed at night and cannot sleep because of worry. These are not millionaires and people on large incomes, they are hospital porters, teachers and county council employees who provide a service. These are people who are hurting and who are prepared to make sacrifices, men and women, whom we all know and meet every day. This Government has gone to the well once too often.
As I said yesterday, I do not mind taking a pay cut. I am a single person and I can afford it. The cumulative effect of the public sector levy and the pension last year, the pay cut today and the knock-on effect in child benefit has people on the edge. We talk about mental health. I ask the Government to have cognisance of people. These are not cold budgetary statistics, these are ordinary people who may not be lucky to have a well-paid job. I disagree with the Government in regard to the unfairness of it. In his fine contribution Senator Harris spoke about the Irish people getting a crash course in recession. They have crash-landed with no parachute and no opt-out clause.
As a party we agree there must be a curtailment on the spend on the public sector pay bill disagree and we published our alternative budget. We made no secret of the fact that we would target the public sector pay bill to the tune of €6 million or €7 million but we said that those on lower pay would not be the first port of call and attack, because it is callous. Anybody who purports to be interested in people will understand that. We had at one point €2 billion to £1.3 billion in our savings. There was no reference whatsoever to efficiencies in the budget. Whether we like it not this budget has created a permanent divide in Irish society.
When walking up Molesworth Street this morning on my way to the Dáil I saw a group of school children and, being a former teacher, I asked how they were doing and where they were from. Their teacher asked if I was a politician and I said I was. She said, "we do not like you". I said I was not a Fianna Fáil politician, but a Fine Gael politician. She said that might not be too bad and said there is a misnomer that she is well paid. She said she loves her job but she cannot take any more of this and said her house is in negative equity.
I will give the Minister one small example of how daft the past ten years have been. For years we supervised in schools willingly and voluntarily. How can we justify saying to people that we will pay them to supervise when they did it for generations for no money? That is the Bertie Ahern school of economics of the past 12 years - throw the money out, give out the largesse, buy the election and keep power. I say that as a fan of social partnership. I might be in the odd-ball couple in Fine Gael when I say I am a fan of social partnership. I am a proud member of the ASTI and I believe in the need for a union to advocate and to represent its workers. There was a deal on with the unions and for the first time ever unions were prepared to take a pay cut on behalf of their members. They walked up to Government Buildings on the Friday and Senator O'Toole referred to Secretaries General earlier agreeing or almost agreeing to a deal. Then the plug was pulled and trust was broken. If trust is broken it must be re-established.
I accept Senator Alex White's permutation that one cannot expect the unions to go back. I appeal to the unions and to the Government in the interests of our people to re-enter talks and open dialogue because we need social partnership. We need to have dialogue and communication. Yes, there will be choices that none of us will like but we have to stand up for it.
I have great time for David Begg. The biggest mistake in social partnership was that it excluded the Houses of the Oireachtas. We need a new pillar in a new form of social partnership to include the Houses. I may disagree with Senator Harris, Senator Alex White or Senator Butler but I respect their right to have a view. We in the Houses of the Oireachtas were ignored and we should not be ignored.
Let us have a new pillar in social partnership. To quote the cliche, we have lost a generational opportunity for reform of the public sector. Senators Butler, Regan and I served on local authorities where there was roll-out of local government reform. What did it mean? We created no new posts only new directors in various positions. In certain places one goes beyond the switchboard which is the first port of call and get answering machines but not answers. Whatever one may say about the HSE, it will return one's call and say one cannot do this or that.
This budget is about choices and decisions and the Minister made the wrong ones. He cut from the capital programme. There is nothing in it for the Cork docklands, no stimulus and no jobs. We must get people off the dole queue and back to work. It is wrong that somebody would be better off on social welfare than in a job.
It is wrong. It should not be that way. We must tackle our competitiveness. Our exports have decreased for the past six years. We have become a service based, construction based economy. I am pleased the Minister of State, Deputy Mansergh, has returned. There is nothing whatever in this budget for jobs. We have put forward an alternative which is painful for some people. There is a genuine understanding by Irish people that we are in a mess, that it was the fault of Fianna Fáil, that we will pay them back but we want the economy to work again and for our children not to be saddled with debt, no hope and no opportunity. Sadly, we have no vision from the Government to say that far away hills are green, there is no Ronald Reagan bright lights ahead and no dawn tomorrow.
It is called a lack of appreciation, a lack of understanding and no protection of the vulnerable, the blind and the handicapped. The Government then takes the poorest paid worker and stands on him and allows its friends at the tent in Galway to go scot free.
It is fine for those in Government who have a State car, a driver or two and a group of advisers. They are living detached from reality. Would we live on €196 a week?
This budget is an attack on the decent people. It should be thrown out. The measure before us is an unfair penalty on people who deserve better from their leaders.
I wish to make two essential points on the legislation. Fine Gael has supported the economic discipline that is required to get our public finances in order. It has encouraged action to be taken on the expenditure front. On the specific proposals which are the subject of this Bill, Fine Gael produced an alternative budget which was fairer and more even-handed in regard to public sector pay.
There is one observation I would make on this issue. There are many people in the public service who considered that some cutback in remuneration was going to be part of the common effort to resolve the public finances. There was a realisation by many that this was something that would have to happen. However, that had to be done in a fair and even-handed way. Apart from that, what the Government did was to pillory the public sector and the people in it. There was essentially a media blitz denigrating people in the public sector, their work and their remuneration. There was similar adverse media comment on the pay of trade union leaders and so on.
It is the build-up to the decision, the delay in taking it and biting the bullet on what needed to be done to get the public finances in order which has created more of the problem than the actual decision itself. It has been done in a ham-fisted way. There was too much procrastination. The Government should not be surprised, therefore, if its decisions have got up the nose of public servants who are contributing to this economy and providing necessary public services.
The second point I want to make is in regard to the measures contained in the Bill, which are part of that wider economic and budgetary discipline which has been agreed with the European Union. The other element to this measure, which is collateral in a way, is the NAMA legislation. The Minister of State, Deputy Mansergh, was in the House back in November when we debated that legislation, which was broad framework legislation in regard to the bailout of our banks. The issue is that the Minister for Finance, Deputy Brian Lenihan, confirmed in a question I raised with him that details of NAMA had to be formally notified to the European Commission and approved before it could enter into effect. I asked the Leader a number of times when the formal notification to the Commission would take place in regard to NAMA and whether that notification would be similar to what we were informed was in the business plan for NAMA back in October.
As the Minister of State participated in the debate on NAMA, I ask him where we are on that matter in terms of notification to and approval by the European Commission. It is a fundamental question because while the measures contained in the budget are very significant, the most significant measure of economic policy to be adopted by the Government, which could bankrupt this country, is the legislation which we are not speaking about today, namely, the NAMA legislation. We should at least be transparent as to what exactly is happening in regard to that important legislation which was approved in November.
Martin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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I thank Senators for what has been a very interesting and worthwhile debate with a very wide range of views expressed. Senator O'Toole began the debate after I had spoken, giving a purported account of the breakdown of the talks. I say "purported" not to cast any doubt on his good faith but simply because he has a narrative from his own sources.
The reality is, just taking it as he described it, that there were discussions with three Secretaries General that seemed to be reaching a positive conclusion. I am afraid, however, as with any negotiation, particularly where aspects of negotiation are delegated, the stage one has reached must be referred back, in this case to the members of the Cabinet for them to form a judgment on it. It is not realistic to say, even if were true, and since I was not there, I am not in a position to comment on that aspect, that a degree of understanding or optimism about where they had reached with three Secretaries General constituted an agreement and that the Government then decided to dump on the agreement. The Government had some very clear criteria by which to judge the agreement, including whether it would achieve the savings required and whether those savings would be permanent and lasting. However, there was also another criterion, which is what would be the credibility at home and abroad of a draft agreement in the terms on which it had been reached. I do not have to repeat what the Taoiseach said. He has responded and commented on those trade union claims on a number of occasions. The Government came to a negative judgment of what was on offer and has explained in detail why it did not meet the necessary criteria.
I fully accept Senator O'Toole's point that the idea of unpaid leave was taken from the private sector, which is true. I am aware of many cases where that sort of formula was used in a different type of employment. We are not talking about classroom employment, for example.
What has taken place or is taking place is a change of culture. There was no desire to collapse talks, certainly not on behalf of the Government, but the results of talks had to meet certain hard realities. The regret is, without casting doubt on anyone's good faith, that it did not happen.
In respect of the specific points raised by the Senator, I will deal first with political increments. As someone who entered this House in 2002, I would have qualified this year for a long service increment. I did not regard it as hard that I had to give it up for an indefinite period. Perhaps there are younger people for whom the experience is different. I accept that, but it is a relatively light sacrifice being asked of politicians who have seen substantial increases in pay in the last decade.
Senator O'Toole raised the question of principal officers and principal teachers. The most recent benchmarking report recommended no increases for the vast majority of public service grades. For these two grades, however, small increases were recommended - the figure was about 1.1% for principal officers. A small number of other grades were also subject to small amounts. The Government took the view, in the context of the Towards 2016 negotiations, that the increases could be considered and implemented. However, this year it decided that Towards 2016 could not be funded and implemented and, therefore, the increases for principal officers and principal teachers would not be paid. A similar complaint could have been made by all review body grades when only the first part of the 2007 report was implemented and the remainder of it deferred until 2010. These have since been overtaken by the recommendations made in the most recent report. It is important to remember that savings on the pay bill must be real, not based on notional payments.
It was also suggested the Bill should only cover reductions that would help to reduce the public service pay bill. There have been specific queries in the last few days as to whose pay will be reduced under the legislation. It is important this is set out clearly as many have been concerned unnecessarily. If a person is employed by a body which everyone recognises as a public service body such as the Civil Service, the Garda Síochána, the HSE and so on, his or her pay rate will be reduced, just as it would have increased in previous years when agreement was reached on public service pay. As there is no income limit, all are affected. Where a person works part time, his or her part-time salary has regard to the equivalent full-time salary and the reduction applies pro rata.
There are other bodies funded in myriad ways by the Government from public money referred to in legislation as a subsidiary or a company set up by such a body. Because it can be difficult to determine in a particular case if a body can truly be counted as a public service body, the Bill provides either that such bodies are expressly excluded because they are listed in the Schedule to the Bill or that the distinguishing factor is whether a public service pension applies to or may be made by that body. There is the same definition of a public service pension as included in the legislation earlier this year that introduced the pension levy. It excludes the employees of most community and voluntary groups, about which there has been some concern. In those cases where there is a doubt, the Bill provides that the Minister can determine if the pay reduction applies. This is the correct approach because no Bill can deal in advance with all of the complexities of a public service employing well over 300,000 people and funding the employment of more.
Senator MacSharry asked about mortgage arrears. There are specific measures in the budget that extend mortgage interest relief until 2017 and, to some degree, address the problems faced by those who bought at or near the peak of the market.
The question of the Judiciary was raised; it was also debated in the other House yesterday. The advice the Government has received is that the deduction cannot be made consistent with the Constitution, as it stands. As a fall back position Fine Gael has proposed a constitutional amendment and that Bill, drafted by Deputy Shatter, will come before the House early next year.
I accept much of what Senator Twomey said. There is no doubt that many pension arrangements, particularly at the top of the public service, are, by any standards and especially by present standards, exceptionally generous. He spoke about our overpaying ourselves, a point I have made myself. There were huge improvements in pay, conditions and numbers that are no longer sustainable. He said people could not continue to expect to be paid at the same level as at the height of the boom and made comparisons between Ireland and Britain.
Senator Feargal Quinn is of a view I respect, but, although there is merit in the analogy between the Government and a business, I would not carry it too far. The Government must look after people in a different way from businesses. He is, however, correct to contrast our situation with that of Greece and point to the different approach we are taking. He is also right about what was done in the late 1980s on a bipartisan basis. That still has relevance to what we need today. I notice that, in contrast to some other Senators, he said we should not interfere in bodies such as the ESB, as they are commercial bodies. Does one within a strategic Government framework let them deal with matters, including pay, themselves, with the exception of chief executives, or does one try to absorb them into the public service?
Senator Boyle referred to the first benchmarking process as being shrouded in mystery. There was a good reason for that - it was meant to replace relativities. The judgment was made that to have published it would have led to renewed arguments and would have been self-defeating. It is possible to take a different view, however, with the benefit of hindsight.
The Senator also argued that Anglo Irish Bank should be treated as part of the public service and its employees as public servants. With respect, they are not public servants and do not have public servant security of tenure. If they were to be treated as public servants, presumably they would have to have security of tenure, which would make it difficult to undertake some of the rationalisation that may be necessary. Obviously, pay bill costs can be controlled in other ways, including through a redundancy programme. The outcome of the restructuring plan before the European Commission will determine the future of Anglo Irish Bank, including its staffing need, while its pay levels will be determined by the board of the bank accordingly. The Government does not propose to cut across any of these vital processes for Anglo Irish Bank and its shareholder, the State, with this legislation.
Senator Paddy Burke talked about FÁS. It is important not to confuse the FÁS board with FÁS operations. As far as I am concerned, it is not in any way a discredited organisation. I know the Senator was not saying that and I am not suggesting he was but it is important to underline the distinction.
Teagasc also gives rise to an issue in my constituency. There has been a certain level of rationalisation of agricultural offices and colleges. The Government was criticised in the other House for not doing more to shut down quangos, but I accept an agricultural college cannot reasonably be described as a quango. Teagasc, perhaps, is so described, but I do not really see it in that light. However, there has to be rationalisation of such offices.
As I dealt this morning with the question of wholesalers on the Appropriation Bill, I do not intend to go into that matter again. On the question of consultancy fees, I do not have specific information, but I make the general point, as emphasised by many Members in this and the other House and outside, that we are dealing with vast sums of money. Nobody is seriously denying that in what the Government has done and what it believes it had to do there are serious risks. As we cannot afford to make mistakes, I do not believe it is valid to make comparisons. As I am not at the coalface on this subject, I am unable to make comparisons between those who are managing these very sensitive, risky and important activities and people in more everyday types of employment. That said, consultancy fees, in general, are, with a lot of other professional fees - a subject raised by another Senator - exorbitant; they are one of the costs that need to come down. I have responsibility for the Office of Public Works and would be very slow to appoint consultants unless an overwhelming case was made. In my experience of consultancy studies over 20 to 25 years, they are generally very expensive and often of distinctly variable quality. I do not deny the necessity for them, but they certainly should not ever be a source of Government patronage. That is my conviction.
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We should try to focus on the main debate. I have replied to the Senator.
Senator Butler referred correctly to the 20% to 25% cuts made and the many job losses in the private sector. If one were to average out the job losses and the cuts, one would be talking about an even greater figure than the one with which he was dealing.
Senator Harris is an old sparring partner of mine, both of us in different ways being ideologists, but he probably engages in a good deal more ideological warfare than I do. At times he can verge a little on the apocalyptic; at the same time, however, he had the House gripped by what he had to say.
The whole point and purpose of social partnership when introduced in 1987 was to avoid the destructive confrontations that had taken place between Arthur Scargill and the Thatcher Government and which, incidentally, had led to the complete ruin of the British coal industry and its proud traditions. However, I still hope and I am cautiously optimistic, although I accept Senator Harris has vast knowledge, probably more than anyone in this House and most people outside, of the inner workings of and the cross-currents in trade union circles. One gets a taste of this in magazines such as Tribune. From time to time I read left-wing literature and one can see posters on lamp posts around the city at regular intervals for public meetings at which the usual list of suspects speak about smashing this, that and the other.
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No. That is the sort of thing one or two Fine Gael justice Ministers in the past might have done-----
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I am replying to Senator Harris, as I replied to Senator Twomey, if that is possible. My hope is, notwithstanding the different currents about which he knows and describes, that nonetheless sense will prevail among the majority of trade unionists. I have no sense in my constituency that the majority of public sector workers want to take a militant path. Many of them may, for reasons of membership and solidarity, go along with one or two token protests, as they have done in the past, but I do not think there are too many who want to take a wrecking militant path. I agree with whichever Senator said we will have to come back to the reforms identified.
Senator Callely raised a very specific issue about nursing homes and the extension of limits. I would treat it as a pre-finance Bill submission and I am sure it will be considered with other finance Bill submissions.
Senator Bradford but Senator Walsh, in particular, would be in favour of much tougher measures than the Government adopted. Not for the first time, Senator Walsh would have liked the Government to have gone at least twice as heavy on the public sector and social welfare recipients. Leaving aside the question as to whether in some abstract economic sense vis-À-vis international opinion that would have been the right thing to do, a Government, even one as unpopular as the current one, has to bring the people with it to a certain extent. Establishing a consensus on what has to be done is impossible to achieve.
Senator Harris set out in rather stark terms and in complete contrast to Senator O'Toole the reasons a realistic agreement could not be reached and it was simply a bridge too far in terms of the forces with which we were dealing. Even for a Government which is not particularly concerned about its current standing in the opinion polls, there is only so much it can do at a particular time. In terms of the budget recently introduced, the point was made that it would have been impossible to introduce it in December 2008. It is not possible to do everything all at once. Even Mr. Colm McCarthy accepted that the €5 billion in cuts proposed in his report could not be introduced at once or in one year and - I hasten to add - I am sure a certain number of them will never be introduced. On the other hand, other measures he did not identify will be introduced.
Senator Norris is a good champion of his constituency. He raised an issue that Deputy Burton raised in the Dáil yesterday about academic researchers employed on contracts. I have to declare an interest. One of my daughters in Trinity College is in exactly that position. She came home four years ago, is in negative equity and has the mortgage difficulties that have been regularly described in this House. I have every sympathy for her and will certainly inform her that Senator Norris has also been championing her cause.
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Yes. I was looking for my note and did not want to sit down before I had replied to them. The Senator raised the issue of the timing of the notification of NAMA to the Commission. There is no formal notification, but consultations are continuing. The notification will deal more with state aid issues rather than the business plan. The documents will, therefore, be different, although they will overlap to a degree.
The Dail Divided:
For the motion: 29 (Dan Boyle, Martin Brady, Larry Butler, James Carroll, John Carty, Donie Cassidy, Maria Corrigan, Mark Daly, Déirdre de Búrca, John Ellis, Geraldine Feeney, Camillus Glynn, John Gerard Hanafin, Eoghan Harris, Cecilia Keaveney, Terry Leyden, Marc MacSharry, Niall Ó Brolcháin, Brian Ó Domhnaill, Francis O'Brien, Denis O'Donovan, Fiona O'Malley, Ned O'Sullivan, Ann Ormonde, Kieran Phelan, Feargal Quinn, Jim Walsh, Mary White, Diarmuid Wilson)
Against the motion: 17 (Paul Bradford, Paddy Burke, Jerry Buttimer, Ciarán Cannon, Paudie Coffey, Paul Coghlan, Maurice Cummins, Pearse Doherty, Frances Fitzgerald, Dominic Hannigan, Nicky McFadden, David Norris, Joe O'Reilly, John Paul Phelan, Eugene Regan, Liam Twomey, Alex White)
Tellers: Tá, Senators Camillus Glynn and Diarmuid Wilson; Níl, Senators Maurice Cummins and Liam Twomey.
Question declared carried.