Mr Cowen was speaking at a press conference last night following the announcement of savings of €2bn this year, including €1.4bn from the public payroll.
“Today we are starting to fight back in bringing order to the public finance,” said the Taoiseach.
Mr Cowen added that he recognised that the pension levy was an “unpalatable decision” and “one the people do not immediately welcome”. But he said there is also a recognition by everyone in the country that “we all have to make and adjustment and we all have to make a contribution”.
He said by working together “we have a better chance of getting out beyond this recession as we will, and work together for prosperity”.
“I want to make it clear that we are getting that €1.4bn. If people want to discuss it further with me it will be discussed,” he said.
“If there was a tweaking that would help to bring them on side with their approval, of course I would listen attentively. But I make the case that the overall position is at is and I intend to proceed on that basis,” he said.
“We are taking some steps back so as to go forward again knowing that if we don’t take these decisions or if we defer them we go back to that cycle we saw in the past, in the 80s and previous generations, of higher unemployment, higher taxes, uncompetitive economy, more job losses and needless forced emigration. We don’t want to go back there,” he said.
He said that high earning public servants — including himself and his ministers — who took a 10% pay cut, will also be subject to the pension levy announced yesterday.
This is the sum to be cut from the public service pay bill. The bulk will be saved through a new pension-related payment to be made by all public servants, including those who work in local authorities.
This sum will amount to €450 per year for someone earning €15,000, 2,750 a year for someone on €40,000, €6,750 a year for someone on €80,000, etc.
Also, pay rises already agreed for September 1, 2009, and June 1, 2010, will now not be paid.
A small part of the savings in public service pay will come through reductions in travel expenses and subsistence rates, with a small element to be secured through cuts in travelling and subsistence rates.
The 2009 budget for infrastructure, roads and other capital projects was €8.2bn and is being reduced to €7.9bn. The Government said it expects to keep up the current level of projects and the savings will be achieved because tenders for projects are coming in at between 10% and 20% lower. “We are achieving far more output for less money than was the case in the past,” Taoiseach Brian Cowen, said yesterday.
Details of the capital allocations per department and the implications of the reductions will be announced by individual ministers in due course.
This was set at €891m at Budget Day or 0.56% of GNP. This is now being reduced to €796m, or 0.53% of GNP. The Government has committed to providing 0.7% of GNP in overseas aid by 2012.
Irish International Aid agencies including Goal, Concern and Trócaire said the move will be very bad news for the world’s poor. However the Government said: “Even after this adjustment, Ireland’s ODA rate exceeds that of the UK, the US and most other EU countries, and is surpassed only by the Nordic States, Luxembourg and the Netherlands.
The annual payment per child will be reduced from €1,104 to €996, or from €92 per month to €83 per month. It is slightly below the €1,000 rate paid when the scheme was introduced in 2006.
The age threshold for children receiving the payment will be lowered from five and a half years to five years of age. It was already lowered from six years in last October’s budget.
The new rates will come into effect this May.
Minister for Children Barry Andrews said the cuts “represent the most equitable approach to delivering the requisite savings”.
The Government spends more than €1bn annually on a range of professional services, for example, legal, medical, veterinary across all departments. The Government said it will pursue an 8% reduction in fees paid to professionals and “this process will be carried out by engaging in consultations through appropriate channels”.
The savings will be made in what has been described as “greater administrative efficiencies” in government departments both in pay and non-pay areas. This means the curtailment of overtime, deferment of filling of vacancies, non-replacement of staff on term-time and suppression of posts.
It’s planned that €25m will be saved in advertising and public relations campaigns and consultancy and a further €25 on procurement.
In Budget 2009, it was decided that the additional costs of the pay increase due to workers on September 1, 2009, under an agreement with the social partners, would be met through administrative efficiencies. The Government said that because that pay increase has been deferred, €50m of those efficiency savings are being retained for the exchequer.
Savings of €15m will be found in defence expenditure, including equipment purchases.