Drastic cuts of up to 20 per cent in top ministerial and civil servants' pay will form a central platform of Finance Minister Brian Lenihan's Budget speech on Wednesday, as he also prepares to cut child benefit, social welfare and public sector pay, the Sunday Independent can reveal.
In the wake of the pay talks collapse on Friday, Mr Lenihan is to plough ahead with an aggressive programme of pay cuts and expenditure reductions in the most eagerly anticipated Budget in history.
Taoiseach Brian Cowen is to have his salary slashed by over €57,000, while all lower-level workers in the public sector will be hit with cuts of up to 6 per cent.
The Government is set to inflict some pain on all sectors of society, but it has decided to lead from the front with significant pay cuts for cabinet members, top civil servants, university heads and semi-state body CEOs.
Mr Cowen will see his salary reduced by €57,117, or 20 per cent, to €228,466, bringing him back into line with average salaries paid to other European leaders.
Ministerial salaries will be reduced by €33,779 or 15 per cent to €191,417.
However, the impact of the cuts for cabinet members is cushioned by the fact that part of the reduction of their salaries -- a 10 per cent cut -- was introduced in the October 2008 budget, and the impact of the pay cuts on their pensions has not yet been finalised, according to senior government sources.
As a result of the pay talks collapse on Friday, there will now definitely be pay cuts of up to 6 per cent for all public sector workers other than the senior grades covered by the Review Body. The Government has restated its aim to protect the most vulnerable from the worst of the cuts, but said everyone must shoulder some pain.
It has been confirmed to this newspaper that child benefit payments are to be cut by 10 per cent -- €16 a month for those with one child.
Given the huge spend of €21bn on social welfare, the unemployed are also to see their benefits cut from Wednesday. There is to be an €8.50 per week or 4.1 per cent cut in social welfare payments, it has emerged.
Sources close to the government pointed out yesterday that this will happen against the backdrop of falling prices, and that social welfare spending increased by 3.5 per cent in 2009.
The overall burden of taxation is to remain unchanged, but there are to be certain changes within bands, while the only new tax to be introduced is the carbon tax, at the insistence of the Green Party.
Speaking to the Sunday Independent yesterday, Mr Lenihan said: "The €4bn in savings will be achieved in a credible, realistic and fair way. That's it. The €1.3bn expenditure reductions will be also done fairly."
Sources close to the minister said yesterday that he was greatly heartened by the backbench revolt, saying the deal "blew up in the faces of the union leaders".
Mr Lenihan was impressed by many of the comments made to him at the parliamentary meeting on Thursday. One of the strongest contributions came from Tipperary South TD Mattie McGrath, who said he was "tired of the bearded heads of the unions calling the shots all the time.
"They came out of government buildings looking like Santa Claus".
While Mr Lenihan received the report from the Review Body on Higher Remuneration several weeks ago, he has kept it under lock and key as it will form a central part of his speech. He has vowed to implement the report in full, and it is expected to achieve €300m in savings, which have already been factored into final budget calculations.
The review body found that in comparison with other European countries, the higher up the salary scale in the Irish system, the greater the inequality with similar positions elsewhere.
Top level secretaries general like Dermot McCarthy and David Doyle will see their pay cut by €42,801 to €242,540, while lower grade SGs will have their pay reduced by €38,045 to €215,590.
UCD President Dr Hugh Brady and TCD Provost John Hegarty will see their pay reduced by €35,668 to €202,117, while county managers will take a hit of €12,005, making their new salary €138,064. The Government was right to reject the 12 days' unpaid leave deal proposal, according to the vast majority of the public, a Sunday Independent/ Quantum Research nationwide poll conducted yesterday has revealed.
Three out of four voters feel Mr Cowen has performed less than capably over the past week. Sixty-one per cent thought that Mr Cowen was right to walk away from talks, saying the proposal was merely a fudge by the unions on the issue of public sector pay and pensions.