Last week, Ireland took on the Presidency of the Council of the European Union but we acquired another title, too. Ours is now the most expensive country in the EU for housing, healthcare and electricity. Housing costs are double those of the EU average and rising fast, as today's MyHome.ie report confirms.

The cost of healthcare is a staggering 85% higher than EU averages.

In that context, it is astonishing to see this Government’s inaction on pay talks for hardworking public servants. The last public sector pay agreement expired at the end of June. SIPTU tells us that exploratory talks on a replacement have provided zero basis for meaningful negotiations and so the unions representing public sector workers are consulting their members. Their next step will be to ballot for strike action. This is a move that nobody wants to take but public servants need to be able to make ends meet. This is DEFCON 1.

The Minister needs to respond and to do so substantively. The Minister has already described the unions' course of action as a "surprise". Most people will be surprised by the Minister's surprise because thanks to the political choices made by the Fianna Fáil and Fine Gael over the past decade, Ireland was already expensive before now and lacking in quality public services. However, now inflation is skyrocketing. The cost of living is crushing households and the Minister and his officials have known this was coming and knew the current agreement was expiring. As SIPTU general secretary John King has said: "Public sector workers have carried this country through crisis after crisis. They deserve fair pay, respect and meaningful engagement ..."

Did the Minister forget about public sector workers or is this in keeping with this Government's attitude to PAYE workers, in general? We know the Minister is dealing with finite public resources but by creating uncertainty around agreeing a new public sector pay deal, he is risking public finances. He is projecting prudence but finding the money to spend where it suits in a profligate fashion.

As the existing public sector agreement expired, the Minister's wrong-headed VAT cut for hospitality came into effect. At an annual cost of €681 million, the Government directly took money from the pockets of PAYE workers and put it in the hands of Supermac's and Burger King. Earlier in the year, the Minister announced measures to support sectors vulnerable to fuel hikes but nothing for the 500,000 households now in arrears on their electricity bills.

The Minister must now reckon with the political choices he has made and he has new political choices ahead. If he makes the wrong choices, the people with least to give will pay the highest price again and will pay the price for the Minister's unsustainable management of the public finances. Will the Minister stop scapegoating the unions and, as Minister for public expenditure and reform, will he engage in good faith and use the public sector pay talks to back and support PAYE workers and to spend in a sustainable manner, to invest in quality public services, to invest in the delivery of social and affordable homes, and to build an active State that communities need?

I thank Deputy Bacik. I reject the Deputy's characterisation, which I think is unfair. If she thinks of the scale of public service growth in this country in the past five-to-six years, which this Government took positive action on, we have an additional 70,000 public servants working across health, education, disability services and many other areas of public service, which matter to all of us across our constituencies and we want to continue to build a public service that works and provides better inputs for the people we represent right across the country.

That is why the last two pay agreements have delivered fair, equitable and sustainable pay agreements for both the Exchequer and for public servants. That is why we rightly put an emphasis on lower paid workers. From 2019 pay has increased for the lowest paid in the public service by 30.7%. I can go through many different areas of the public service where we rightly protected and enhanced the pay of public servants.

The Government has been clear that we want to have a new pay agreement. We want to accommodate that in the context of budget 2027. It is important we have industrial peace and are able to plan for a new pay agreement with public service representatives. We have been concluding local bargaining, with which the Deputy is familiar, with many of the trade unions across different sectors over the past number of weeks and we want to have engagement without preconditions. That is what has happened over the last number of agreements. We have had engagement and exploratory discussions. That has built consensus around what is possible and that has formed the basis for an agreement.

I say to every public servant listening today: we want to ensure they are paid fairly, equitably and are given a fair deal in the context of a new pay agreement. That has absolutely been the case over the past number of years and nothing has changed in that regard. We want to see the public service unions engage. I think potentially balloting for strike action is unnecessary when we are a Government willing to engage with them. On the general question on the cost of living, we have been clear there will be an income tax package to reward work and support workers across the economy.

We want to ensure budget 2027 delivers on housing and infrastructure and that we protect the capital investment we have progressed in the last number of years, but also that we make a real impact in improved public service delivery and reduce the cost of living, with a priority around childcare, disability services and other areas as part of budget 2027. We must ensure that everything we decide to do is sustainable, affordable and within the fiscal parameters we have set out in the medium-term fiscal and structural plan. That creates trade-offs where we have to be realistic about what is possible in any budgetary cycle.

We want to see an agreement and engagement and I expect that will happen over the next number of weeks so that we can accommodate a new pay agreement in advance of budget 2027.

I am glad to hear the Minister say that he wants a new national pay agreement but it certainly does not sound as if his rhetoric is matching the reality. It sounds as if he has something against nurses, teachers and gardaí because we are not seeing-----

That is terrible.

-----the sort of meaningful engagement that people need. The reality is that far too many of the lowest paid public servants in this country are now being priced out of living in this country. They simply cannot afford to make ends meet. They cannot afford to buy their own homes. I am sure the Minister, like me, is meeting people in his own constituency who are telling him they cannot afford to buy or rent a home. Indeed, many people, particularly in a younger generation, cannot even see a way in their immediate future to aspire to own or even rent their own home. Far too many public servants are still living at home with their parents, well into their 20s and 30s. That is not sustainable and they are seeing that wrong-headed VAT cut the Minister announced. That is the choice the Minister made. We are asking him to make a different choice. Will he guarantee that vacant posts in the public sector will be filled, that public sector jobs will be saved from outsourcing and that pay increases will at least-----

The Deputy's time is up. The Minister to respond.

-----rise in line with inflation in the new deal?

I am not going to negotiate a pay agreement with the Deputy in here. That is not going to work for anybody. What I would say is that our record stands clear. Since 2019, a teacher and a nurse starting their careers in the public service will have seen an increase of 26.9% and 31%, respectively. A clerical officer in the Civil Service will have seen an increase of 32.8%. That reflects a Government that cares about public servants and public services, and it stands through to today and to a new agreement, which we want to reach with public servants across our country. I am absolutely clear about that when I look at how we are prioritising public pay and recruitment in the overall budgetary context, and rightly so. I want to see services work better for people and that happens through improved recruitment in health, education and disability services and ensuring we deliver for people across our country.

It is similar in regard to affordability in housing. That is why we are continuing to protect capital investment in housing and infrastructure so we build more homes and ensure we reduce congestion through our improved transport systems. That will be a key part of budget 2027 as well, how we better deliver infrastructure across our economy and do it a lot quicker.

The public service pay agreement expired on 30 June with no successor in place. SIPTU has now announced that it may ballot over 80,000 members for strike action across the health, local authority and education sectors. The Irish Congress of Trade Unions, ICTU, public service committee has said that it has no basis for any formal talks to begin. Unions have pointed out, and rightly so, the inflation at 3.6% in May, which has already wiped out the 1% increase from February and the 1% increase since June.

As the Minister is aware, grocery bills are up by on average about 40%. Our energy bills are hitting the point where they are up by about 60%. We have approaching 500,000 people in arrears when it comes to ESB and gas bills. We have rent at record heights, unthinkable almost a decade ago, with 80% increases in some areas across the State. This directly affects the nurse, the garda, the hospital porter, the educator and those on low salaries in local authorities. They are the people who get up early in the morning, the people the Minister's Government claims to represent with great gusto.

The Minister and his Government say they want an agreement but not at any cost, as I understand from reading reports today. They have said that there can be no preconditions. However, it is seven days after the deal expired and there is still no date for substantive talks. We are looking at a country in the middle of an EU Presidency with a real possibility of industrial action across the health, education and local government sectors throughout the summer.

Will the Minister tell the House what the Government’s action and timeline is for opening formal negotiations with the unions and looking after public sector pay? Does his Department intend to bring a concrete pay offer to the table? When will those table negotiations start? Will he continue his approach, which we have already worked out has no basis for talks whatsoever?

I will repeat what I have said. We have been clear and consistent in our position. We are willing and ready to engage with staff representatives with a view to reaching a new public service agreement. We want to engage now. We want to see a fair, equitable and sustainable agreement to ensure we reward workers across the public service, many of whom have been recruited over the last five years. The Government considers that reaching an agreement as soon as possible is the best way to provide stability and certainty for public servants and ensure we can accommodate a new pay agreement within budget 2027.

In the first instance, like other pay agreements, we have sought to have exploratory discussions without preconditions. They are intended to provide a forum for both sides to raise concerns and explore respective solutions around the next phase of an agreement, rather than predetermining outcomes before meaningful engagement has taken place. The Deputy asked me what pay offer are we tabling. That is never how pay discussions are concluded or advanced. There has to be wider engagement around what is possible and what the respective asks are on all sides to try to put a structure around a process of engagement, which can take a period of time.

I am clear that we want to accommodate a new pay agreement within the budget. We have done that over the last series of budgets and correctly so, given the increased recruitment across the public service. The public pay bill of €31.2 billion in 2026 is a reflection of that. It reflects a Government that is advancing and expanding public services across the State and ensuring that we are remunerating our public services in accordance with the pay agreements. That is reflected in €12 billion of expenditure around public pay in the health sector, as well as nearly €8.5 billion in education and more than €2.5 billion for the justice Vote group. Those figures reflect the strength of Exchequer support for public services and the public servants who work to deliver across the front line.

We are seeking to have those exploratory discussions. Local bargaining has been concluding over the last number of weeks. Again, we want to use the period over the next number of weeks to provide that stability going into 2027 and conclude a new pay agreement.

I thank the Minister for his reply. I have had relative success in business throughout my years. I can confidently say that if I ran my business the way the Government is approaching these negotiations, I would probably be out of business today. That is the reality. As I said, we are now seven days after the expired deal. We should have been at negotiation tables about six months ago to ensure a smooth transition, particularly when this country - with great gusto as the Government has said - is supporting the Presidency of the EU, and to ensure there would not be strikes or anything.

We are now putting the horse before the cart yet again. The Minister is playing catch-up continuously. This is affecting nurses, doctors and staff in hospitals. It is affecting gardaí, front-line workers and those lower paid people on whom we depend in local authorities. As one of the Members already said, these are the people who are not coming back. They are leaving in their droves because there is no future or stability. Without a plan in place for them, where they know what the plan is and the funds available to them, they cannot plan for the future. They are not going to come back.

We are seeing strong levels of recruitment right across the public service this year, which is a very different story from what the Deputy has described.

We had the conclusion of the pay agreement with a 1% increase over the last number of weeks. Usually, when there is a conclusion, we engage in exploratory discussions. Typically, in the past, that happened in the December-January period. Obviously, the pay agreement that concluded finished at the end of June. We want to engage in good faith and in a constructive way to ensure we have an agreement we can afford in budget 2027 that supports workers right across the public service.

The Government has a strong track record in the expansion and improvement of public services, be it in health, education or disability services. That will continue as part of budget 2027. It is just a matter of getting this engagement going over the next number of weeks and ensuring we get an agreement that is fair and supports many of the workers the Deputy referenced, such as nurses, teachers and gardaí. We need to ensure they have a fair deal in the context of a new pay agreement.

That is something this Government is committed to delivering.