Seanad debates

Tuesday, 14 December 2010

Financial Emergency Measures in the Public Interest (No. 2) Bill 2010: Second Stage


Question proposed: "That the Bill be now read a Second Time."

8:00 pm

Photo of Conor LenihanConor Lenihan (Minister of State, Department of Education and Science; Minister of State, Department of Communications, Energy and Natural Resources; Minister of State, Department of Enterprise, Trade and Employment; Dublin South West, Fianna Fail)
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The Bill gives effect to the decisions of the Government to reduce the public service pensions bill by approximately €100 million in 2011, to apply a substantial reduction to the pay of members of the Government and to allow the Minister for Enterprise, Trade and Innovation to set a new lower national minimum wage. It is the Government's strongly held conviction that to reduce the deficit and continue on the road to economic recovery, Government spending must be reduced. The cost of providing public services must be brought into line with sustainable revenue levels. Without a correction, the current pattern of spending is simply not sustainable.

The Government has not decided to reduce pensions or the national minimum wage lightly. All of us wish Ireland was not in this position and that our society did not have to face such difficult choices.

The serious threat to Ireland's economic well-being has, if anything, been further underlined since last year when this House passed the two Financial Emergency Measures in the Public Interest Acts. Senators will see that the recitals to the Bill show this policy background in some detail. We are facing a very serious disturbance in the economy and a serious deterioration in revenue levels. As Senators will be aware, the crisis is such that Ireland must now avail of financial assistance programmes provided by the IMF and the European Union.

It is important to stress that the Government is also sharing the burden. In asking others to accept income reductions, the Bill shows that the Taoiseach, the Tánaiste and Ministers are accepting significant reductions in pay. Pensions for Government members will also be reduced as part of the measures being introduced for the whole public service.

While the public service pay bill has been reduced by 8% since 2009, public service pension costs continue to rise and pensions now account for almost 15% of the total public service pay and pensions bill. Overall, the pensions bill has increased from €1.35 billion in 2005 to over €2.7 billion in 2010, representing more than a 100% increase during the period. The Comptroller and Auditor General's 2010 report shows that the number of public service pensioners increased from 113,384 in 2008 to 123,954 in 2009, while the accrued cost outstanding of pensions has risen from €108 billion to €116 billion in that time, an increase of 7.4%.