TAOISEACH BRIAN Cowen indicated that public service pay and pensions remained on the Government’s agenda when considering expenditure reductions.

He was responding to Fine Gael leader Enda Kenny who asked if the Taoiseach intended informing the social partners that it was the Government’s intention to cut public sector pay.

Mr Cowen said that every area of public expenditure on all fronts had to be considered. “All areas of the public sector have to be considered,” he said.

The Taoiseach added that “on the pay and pensions side of the equation, we will look at all ways in which that can be achieved”. The Government, he added, would listen to what others had to say about it.

Mr Cowen warned that “the suggestion that there are large categories which can be immune from consideration would not allow one to draw up the sort of budget that would meet the imperative in the situation that we face”.

Mr Cowen said that the Government, as an employer, must look at all the options which would minimise the impact on public services and public service jobs of unavoidable spending reductions.

“We have an objective. We signalled on a number of occasions that the pay and pensions Bill must be part of the equation,” he added.

He said that pay and pensions comprised a very considerable proportion of total public expenditure. The severity of the funding crisis, he added, had already brought about a reduction in the numbers employed in the public service.

The Taoiseach said that the public service was no different from its private sector counterparts facing a crisis in their business.“In the private sector, we have seen pay levels, pension arrangements, work practices and working patterns and hours featuring as part of the solution as employers, employees and union representatives work . . . to retain jobs and avoid redundancies.

“The same is true of the public service. Public servants have also experienced significant change in their net incomes as a result of the introduction of the pension levy.

“I acknowledge that public servants at all levels have already demonstrated a capacity for change. I believe that staff can respond positively and with flexibility to the continuing challenge of managing our way through the current economic difficulties.”

Mr Kenny said it was important to state that public sector workers did not cause the crisis.

“They have become a much maligned group,” he added. “Their value, capacity and potential is not being realised because of the structures in which they have to work.”

He asked Mr Cowen to confirm that it was not the Government’s intention to cut the pay of lower- and middle-income public sector workers.

Mr Cowen replied that the Fine Gael leader knew the scale of the crisis in the public finances confronting the country. “Stabilising next year’s deficit requires a considerable adjustment,” he added.

“Is it his contention that there are swathes of the population who can be immune from contributing to the necessary adjustment?”

Mr Cowen said that would not be a fair, comprehensible or accurate assessment of the situation.

Mr Kenny said the Taoiseach had said he wanted to put the Government’s views before the people.

“I am asking him what they are,” he added.