STATE EMPLOYEES:STATE EMPLOYEES must accept new pension charges if the Government is to avoid major cuts in hospitals, schools and other services, Taoiseach Brian Cowen has said.
Speaking at a press conference in Government Buildings following his address to the Dáil, Mr Cowen said: “Last year, we expected to raise €49 billion. We raised €41 billion because of the recession. We spent €54 billion last year. The gap is €13,000 million.
“This year, we will be spending €55 billion and we expect to take in, at best, revenues of €37 billion. That is a gap of €18,000 million.
“In an ordinary person’s language we are borrowing one-third of day-to-day expenditure in the course of this year.
“People will know from their household budgets, business finances, that that is not a sustainable position. And it is no different for the country. For every man, woman and child in this country we will be borrowing €4,500,” he said.
At the press conference, where he was flanked by the entire Cabinet, Mr Cowen continued: “The important point today is that we don’t want the €2 billion savings that we are taking out of the system today to impact on services and on people who depend on those services: our elderly, our pensioners, the people who need our healthcare service to work for them.
“We don’t want to disrupt services to that extent and reduce the level of services that they will look forward to this year. Therefore, we have to ask those who are employed by the State, people who have a pension entitlement at the end of their working lives to see if they can make a contribution towards the cost of providing that pension.
The pension levy was preferable to “a straight pay cut” because the latter, if introduced, would have led to cuts in pensions for existing retired State workers.
Acknowledging the measure’s unpopularity, he said: “I recognise that this is an imposition, that it is an unpalatable decision, that it is one that people will not immediately like, but I also believe that there is a recognition in this country today by everybody, including people who work in the public sector looking at those in the private sector losing their jobs, or those who have seen their pension funds totally depleted as a result of the financial crisis and its impact.
“People understand that we all have to make an adjustment, that we all have to make a contribution commensurate with our ability to pay.”
Highlighting the scale of the challenges, he said: “We know that if we don’t make these decisions, if we defer, if we don’t have the necessary commitment to making those decisions, we go back to the cycle that we saw in the past in the 80s with a previous generation with higher unemployment, higher taxes, an uncompetitive economy, job losses and even forced emigration.
“We don’t want to go back there.”
The social partners all agreed, he said, that the exchequer had to cut €2 billion off the State’s payroll costs this year, even if the trade unions did not “agree the detail”.
Mr Cowen said: “We didn’t get full agreement on the detail, but everyone agreed that the bulk of the adjustment had to be made on the pay and pensions side.”
Trade unions would not welcome the pensions move, said the Taoiseach during what was the longest press conference he had held since taking office.
However, “they will also respect that government has to govern”, he added.
“We have to get on and make the decisions, but we do so against the backdrop of really sincere engagement with people whom I respect, trade union leaders, employers who are creating wealth and jobs in this country; people in the voluntary sector, the farming organisations who are helping to organise our rural communities. That is the way that we sort our problems in Ireland. That partnership process will continue.
“We have to continue to work in co-operation, rather than generating confrontation because that will only put at risk all of the adjustments that we have to take in the interests of all of us and in the interests of our children who are coming afterwards.”
Strongly defending his decision to spend a month in talks with social partners, he said: “We will not get over this problem by dividing into sectional interests.
“We can have disagreements, and we can have mutual respect in those disagreements but we must also get on with doing the job that we have to do because the people would not thank us if we deferred the necessary decisions now in their interests – not because I feel I am making anybody any happier by making those decisions but because I believe that the respect of the people will be available to those who tell the people that this is necessary.”
The extra pension charges will be incurred by top politicians and civil servants – but not judges.
Ministers and high-ranking civil servants had previously accepted a 10 per cent wage cut in the October Budget.
“That is as it should be. People in leadership positions have to lead from the front. Obviously, I am on a high enough income to do that. I very much recognise that people who are on lower incomes would see this as an imposition,” said Mr Cowen.