Lenihan to cut cost of political pensions
Minister considers 10 per cent pay cuts across all major public offices
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The Minister for Finance Brian Lenihan, in a sweeping reform programme, is proposing radical measures to make the political system cheaper and more efficient, including the abolition of the payment of ministerial pensions to serving members of the Dail and Seanad.
He is also considering cuts of a further 10 per cent in the pay of senior and junior ministers and top civil servants, including judges, the governor of the central bank, heads of state agencies and secretaries generals of government departments.
In tandem with such a move, Mr Lenihan will announce substantial improvements in the banking and financial regulatory systems on budget day on Tuesday week.
It is not clear whether or not there is full support for the proposed pay cuts in cabinet, which meets today to nail down key elements of the toughest budget in modern political history.
"I must emphasise that these proposed pay cuts have not been agreed," said a source close to the minister yesterday.
"If they are adopted, a plan for pay reductions for senior office holders throughout the State and the political system will be part of the dramatic reforms to be announced on Budget day."
Another source close to the Government said: "If these further pay cuts are brought in, it will really hurt those affected. For instance, I know of one cabinet member who is already a net €30,000-a-year worse off as the result of cuts and levies recently introduced."
Senior Government sources have confirmed that Taoiseach Brian Cowen and his cabinet are hoping the wage sacrifices will provide the necessary political response to public anger over the tax increases and cuts in services, if they are get the emergency budget passed.
As part of his banking reforms, Mr Lenihan, along with Mr Cowen, is attempting to restore public and international confidence in the "battered" Irish banking sector and its regulatory system.
Their efforts are being seen as trying to avoid the need to nationalise Allied Irish Bank and Bank of Ireland, which remains a possibility.
Today's cabinet meeting is the third in less than five days -- a clear indication of the arduous nature of the discussions -- and it is expected that Mr Lenihan's reform plans will be high on the agenda.
The minister's spokesman yesterday acknowledged that things within the department had been more difficult because of the increased workload since the banking crisis started and the early budget in October, but he denied there was any issue over the arrival of Dr Alan Ahearne, as special advisor to the minister.
Dr Ahearne's arrival was "very welcome", at a time when the work load had increased so dramatically. However, in terms of the pay cuts, the spokesman for the department said: "We don't comment on budgetary matters but all things are on the table and things are being discussed."
Since the first 10 per cent cut last October, Mr Cowen receives a salary of €257,024. The Tanaiste Mary Coughlan's salary is now €220,792, while ministers and the Ceann Comhairle John O'Donoghue currently get €202,676, and junior ministers and the Leas Ceann Comhairle now receive €139,266.
Mr Cowen refused to accept the €38,000 increased awarded to his predecessor Bertie Ahern and had the cuts not been implemented, the Taoiseach's salary would now stand at €310,000.
Last Thursday, Mr Lenihan told the Dail the projected tax-take for 2009 would be €34bn, down from the €37bn he projected just 8 weeks ago. Tax revenues in 2008 were €41bn and in 2007 they were €48bn. Despite the horrific slump in tax revenues, government spending this year is set to top €58bn, meaning a terrifying shortfall of €24bn. It has also emerged that the working relationship between the department and the Revenue Commissioners has "broken down", with officials reportedly refusing to cooperate with each other.
- DANIEL McCONNELL Chief Reporter
