The Croke Park II deal, negotiated by the Tánaiste's party colleague Deputy Howlin, was overwhelmingly rejected by the public sector trade unions, many of which are affiliated to the Tánaiste's party. As a former trade union official and a lifelong union member the Tánaiste will fully understand that the nurses, teachers and firefighters who rejected the deal did not do so lightly. They did so because they understand that the deal was bad for them and for their families and for the public services on which we all depend and for our domestic economy. Yesterday, after its meeting, the Irish Congress of Trade Unions made it very clear that it would oppose any attempt by the Government unilaterally to impose pay cuts through legislation. Yesterday, the Taoiseach refused to say whether he would respect the outcome of the union ballot and he also refused to rule out legislating for pay cuts.

Will the Tánaiste, as leader of the Labour Party, respect the outcome of the trade union vote on Croke Park II? Will he, as a lifelong trade unionist, oppose any unilateral attempt to introduce pay cuts through legislation?

As everybody is aware just over two years ago this Government inherited the biggest financial and economic crisis ever to face this State. We determined that we would fix the problem. We have made a lot of progress in that respect. We are now 85% of the way there. There is a piece remaining to be completed, approximately €3 billion in savings in public expenditure. The pay and pensions bill of the State is approximately 35% of expenditure so we took the approach that a third of the remaining savings to be made in order to fix our problem should come from the pay bill.

In negotiations a set of proposals was developed which provided for reductions in pay for those employed in the public service at the higher end of the pay scale and some additional working hours for those on the lower amount of working time. Approximately 87% of employees in the public service who earn less than €65,000 would not have their core pay reduced under those proposals. We felt that the proposals were fair and reasonable but they have not been accepted in a ballot of trade union members. That is disappointing but it is a reality. It is also a reality that the savings must be made. A saving of €300 million needs to be made in the payroll this year, and €1 billion between now and 2015.

We now have to reflect on the decision made. We need to hear from the trade union movement about the reasons for the rejection of the ballot and the Government will have to consider those. It is important that we do not put at risk what has already been achieved. We are now seven months from exiting the bailout. If we had not done what we have done, and certainly if we had taken advice from Deputy Ó Caoláin's party, we would be seven months from entering a second bailout. This is a time when we should not put at risk what has been done, either by failing to complete what needs to be completed or by walking into conflict and confrontation. This is a time for calm, reasoned, reasonable reflection on the outcome of the ballot and that is what the Government will do.

Very clearly the Tánaiste has not taken the opportunity to give clarity on his and his party's position on the possibility of legislation to impose cuts in public sector pay. He has taken exactly the same position as the leader of Fine Gael. I am hugely disappointed because I fail to understand why he would continue to act as a crutch for a party whose policies he is assisting to implement and that are very bad for the interests of the ordinary people. I ask the Tánaiste again to make it clear that no Deputy of any party will be asked to vote in this House on a Bill that would further punish low to middle income public sector workers who have already taken major pay cuts and many of whom are struggling to pay excessive mortgages, to heat their homes, to provide for their children's education and for health care.

That is the reality we are in. I am talking about what the Tánaiste has taken as a fall-back position. Any time Sinn Féin asks him a question, he refers to fairytale economics. There has been a list of fairytales coming from him in recent times but the most clear one was Labour way's or Frankfurt's way.

It was not as bad as Sinn Féin's - the gun in one hand and the ballot box in the other.

That was surely one hell of a fairytale and the Tánaiste has come up with many more. I ask him to answer the question. Will he give an assurance that there will be no legislation to cut public sector pay further? The answer must be either "yes" or "no".

Hear, hear. Answer the question.

Deputy Ó Caoláin gives the Sinn Féin game away too easily.

Does the Tánaiste think so?

Sinn Féin wants to play politics with this and the party has wanted to play politics with this from the beginning. Its spokespersons were out condemning the deal before they had even read it and-----

Answer the question.

Will the Tánaiste not note that the membership of the trade unions have rejected it?

Will Deputy Ó Caoláin and his colleagues please allow a reply to the question he asked?

The Minister for Public Expenditure and Reform should be ashamed of himself.

Now, in the wake of the result of the ballot-----

The Tánaiste got it wrong.

The Minister for Public Expenditure and Reform should be ashamed of himself and he should resign.

-----Sinn Féin Members are more interested in how much of a hit they can score against the Labour Party than in either public sector workers or the interests of the country.

Answer the question.

Deputy Ó Caoláin said that I have some experience. Many of my colleagues in the Labour Party and I have some experience of dealing with these matters. Let me give him the benefit of that experience.

They have lost touch.

It is not the first time that an offer on pay or a proposed agreement has been rejected by trade union members.

That is because the Government threatened a 7% pay cut.

What happens when that happens is that the trade unions concerned talk to the employer - in this case, the Government - about the outcome of the ballot.

They are talking to themselves.

And the Government compromises.

Will Deputy McGrath stay quiet for a minute? Allow the Tánaiste answer the question.

An assessment is made of the reasons involved and thought is given to finding a way forward. The problem that the negotiations were aimed at addressing has not gone away. Deputy Ó Caoláin might want to wish it away. That is the kind of fairytale, fantasy type of economics Sinn Féin promotes.

The Tánaiste lived in a fantasy world.

The Tánaiste is the J.K. Rowling if that is the case.

Will Deputies settle down please and listen to the reply?

Sinn Féin might think it can go away but it will not go away. The reality is additional savings have to be made and that reality has not been changed by the outcome of the ballot. What will now happen is there will be calm, reasoned reflection on the ballot.

And more taxes will be introduced.

Will that be between the Tánaiste and Deputy Keaveney?

Will the Tánaiste answer Deputy Ó Caoláin's question?

The Government will consider what has to be done, and while we are doing that, Deputy Ó Caoláin might tell us whether he would legislate for the 100% cut on public service incomes in excess of €100,000 that Sinn Féin proposed.

I have never heard such nonsense in all my life but clearly the Tánaiste is in the Taoiseach's pocket and that is where I believe the vast majority of the Labour Party do not want to be.

We miss the Deputy.