For quite some time, on behalf of the Labour Party, I have been urging the Taoiseach and the Government to conclude an agreement which would provide for a reduction in the public service pay bill and reforms in the public service. I have here seven documents which were signed off, as agreed, last Friday between the public service trade unions and the Government. There is a document on the health service which contains 15 specific reforms, including a change to 8 a.m. to 8 p.m. rostering five days over days, significant savings on overtime premia, weekend working. I have one for the education sector which provides for increased hours for those working in the education sector and a revision of teachers' contracts. I have one for the local government service which includes reductions in the numbers of directors of service and directorates and arrangements whereby one local authority could provide services for another. I have one for the Civil Service which gives management the right to redeploy staff across Departments. I have two specific documents relating to redeployment and how it could be achieved, that it could take place within a 50 km radius, the number of sick leave days that would disqualify a person and quite specific details which would have provided the Government not only with the €1.3 million in savings, which it would achieve, but also much need reforms of the public service.

The Taoiseach and the Minister for Finance met the public service unions on Tuesday when the Taoiseach told them it was game on, so to speak, for this agreement and on that basis they called off their one-day strike. Discussions continued right through lunchtime on Friday and on Friday, the Cabinet decided to pull the plug——

Mattie McGrath.

——on the agreement.

Mattie has clout.

I ask the Taoiseach to explain to the House why he has thrown away an opportunity to get long term reforms in the public service for a quick one-year fix for next year, purely, it would appear, on the basis of Fianna Fáil's political need.

That is completely at variance with the facts. As the Deputy said, we met with the ICTU representatives on Tuesday morning. A proposal was put to the Government which I said would be considered by Cabinet. It was considered by Cabinet but unfortunately it did not meet the first requirement on the amount of savings that would be required. We reserved our position with regard to it. We notified the unions on that matter. They wanted to see if they could develop the proposal further and I was agreeable to that request because it is important to continue discussions. Some of the sectoral discussions took place right up to Friday morning. Some excellent work has been done which provides for a common positive vision as to how we can proceed with transforming public services. The immediate problem related to the fact that savings of the order of €1.3 billion would have been required, not only in 2010 but thereafter. Unfortunately this was not possible to confirm with the detail that would be required beyond 2010.

Issues were also raised with regard to the proposal for 12 days' unpaid leave. The Deputy will recall that the portrayal of this proposal in the public domain during the course of Wednesday on the basis of the strike not proceeding on Thursday, met with a very strong public reaction and certainly made the task of agreement infinitely more difficult. That question of unpaid leave was central to the consensus on the public sector trade unions side about offering pay reductions while maintaining pay rates. They offered an extended period during which that leave would be taken. However, the other problem, the second issue, related to uncertainty about how precisely the savings would be continued in 2012 and beyond. I agree there are various transformation measures which can be significant and which would not have generated savings of the order of €1 billion but we would have to discuss again next year what steps might be taken to help reduce the pay bill. It is unfortunate that an agreement was not possible which would command wide support especially in the context of other elements of the budget to be announced tomorrow and the three tests, which I set out on Wednesday morning last, were not met.

I recognise the level of engagement entered into by all sides and that genuine efforts were made. It was not possible to conclude an agreement, to the disappointment of many people, but the bottom line is there are strategic gains arising out of all those discussions in that there is an agreement, a realisation that savings of the order of €1.3 billion are required for 2010 and beyond and that there is a common positive vision about how we might transform public services in the future were we to be able to go back to those issues on another occasion.

It seems the Government and the unions were within touching distance of concluding an agreement which would not only have provided the savings but would have delivered public service reform, a better deal for the public in terms of delivery of services and industrial peace in the time ahead.

At best, it is incompetent that the Government could not conclude that agreement and at worst it is devious. The bottom line is not what the Taoiseach said but rather that he has a Minister for Finance who is now so anxious to get his hands on the Taoiseach's job that he was prepared to sink this ——

Deputy Gilmore wants the job.

——agreement.

Allow Deputy Gilmore to speak without interruption.

He clearly does not subscribe to the Taoiseach's view——

——that political loyalty is a virtue. From early last week, from the time there was an agreement in prospect, he had his representatives out on the airwaves doing his damnedest to undermine the work that was going on. This was stupid and short-sighted because the fact that an opportunity to achieve serious reform in the public services has now been thrown away and turned down by Government is something we will all regret next year.

Deputy Gilmore said something different last week.

I completely reject that view. It is unfortunate that it is usual practice to introduce personalities into the situation. In any discussions I have had with the Irish Congress of Trade Unions on these matters the Minister for Finance accompanied me to all those meetings and full and frank discussions took place between all the parties concerned.

The Government was at one with regard to the one proposal put to us on Tuesday, it did not meet the first test which was, as I outlined on Wednesday morning to the House, the question of quantum, the need to get the required amounts. My view, and that of the Government, has always been that, having communicated that message to the public sector unions, they wished to continue to develop the proposal while recognising that the amount was not sufficient to meet the needs of Government, we would continue with those discussions in good faith——

By Friday morning they had found the money.

I do not wish to go over everything again but unfortunately on Wednesday it was stated in the media that morning, and subsequently, that a deal had been done——

That is what happened on Wednesday.

That was not the case and it was never the Government position

The Lenihans were out.

The Government discussed this matter on Tuesday at Cabinet and conveyed our position which was the Government position. I had stated time out of number that the amount required was €1.3 billion. I also made the point——

That amount was found.

I ask the Deputy to allow me to reply to his leader. I made the case on Wednesday morning in this House that we required permanency ——

The Taoiseach should acknowledge the fact that the amount was found.

I ask Deputy Stagg to allow the Taoiseach to reply without interruption.

The Deputy must listen while I explain the situation. The negotiations developed. I want to make it clear that the Government had a view on this matter. We were prepared to continue with those discussions. I outlined the Government position clearly to the House on Wednesday and I stated that we needed permanency and a sufficient amount, and we needed to ensure there would be no disruption of service in respect of how we would proceed.

It is in the documents.

These were sectoral discussions that took place between management and public sector unions. I know about the documents to which Deputy Gilmore refers. In fact by reason of continuing with the talks, one was able to develop the very sectoral documents to which the Deputy refers.

The Taoiseach threw them out.

They relate to the agenda for transforming the public service which is a continuing item on the agenda and which will need to be addressed.

They provide for——

They provide for nothing now.

Deputy Gilmore does not wish me to speak uninterrupted although he spoke without interruption. Deputy Gilmore made a very politically charged comment and I wish to respond without interruption, but the continuing interruption is to suggest that I am not to be allowed to do so.

I ask the Taoiseach to continue.

The Minister for Finance can present his proposals in the pay area in a stronger position tomorrow morning because we have come to an understanding that this is the sort of figure that is required for 2010. The problem was that the public service unions had to come with a very restricted mandate which was not about being in a position to negotiate a pay cut so they proposed a deduction for 2010 and the requirement for the unpaid leave to come thereafter. That was the reason the unpaid leave issue came up in the first place because the unions did not have the mandate with which to negotiate a permanent reduction in the public sector pay bill. I understood that difficulty.

I was prepared to continue to discuss it to see if there was a way forward which would meet with the requirements of the situation, would have found a deduction for 2010, one which was permanent thereafter, and would have dealt with the public reaction there was right across the board on the issue of unpaid leave. Unpaid leave was an issue the unions could not de-link from the deduction proposal. While I understood the position from their point of view, as of Friday afternoon, it left the Government in a position where it was unable to state with sufficient certainty that it had the savings beyond 2010.

The Government had the savings and they were costed.

What we had was a commitment on the basis that everyone agreed and understood——

The Government had costed savings of €978 million with an additional €100 million in overtime savings.

——that the transformation agenda would not provide us with €1 billion in 2010, were one to proceed with it. What we had was a commitment to continue to discuss that matter in 2010 but no clear way in which the balance of savings could be found. Those are the facts of the position.

The Government had the savings.

The Government side stated it had them.

Allow the Taoiseach to continue without interruption, please.

The Government had to make a decision on what we believed would be the right thing to do in the circumstances. Clearly, what we have to do is ensure that there is a reduction in the public service pay bill that will be sufficient and permanent for the circumstances we are talking about. That is what we did.

What will the Government do now?

That is the truth and it was the consistent position that emerged.

The Taoiseach had an agreement in his hand and he blew it.

No, we have in place today a long-term agenda to transform services which will still be available when we return to it. While there is considerable unhappiness at the moment, we should seek to re-engage on the change agenda against the background of a measured agreement reached last week.

With whom will the Government re-engage?

It is clear that unless we do this over the coming years, we will put at risk the ability to maintain current remuneration levels without further reform.

The Government blew it.

That is what we need to get down to. The fact of the matter is we have an unsustainable position in relation to welfare and public sector pay.

With whom will the Government engage?

There are a number of ways in which we can seek to reduce this expenditure in the coming years. I ask that people look to this positive agenda for the future rather than seeking to engage in industrial action which will not achieve anything other than continue to defer what could be provided if we were prepared to work on the progress that has been made thus far.

The Taoiseach deferred the issue by making an absolute mess of it.

He was not so tough on the bankers.