Minister of State for Trade and Commerce John McGuinness renewed his call for public sector reform.
He said it was "the elephant in the room; the old order that has to change".
"We and the trade unions are requiring public service personnel to provide services to a modern economy within a system and a culture that are completely out of date and inefficient."
Mr McGuinness said it was time for all the stakeholders in the public sector to come together to help create a modern state-of-the art public service system.
The system should enable people within it to realise their full potential, thereby giving Ireland the vibrant, creative, confident, competent and professional service it required to maintain its success and to continue to grow.
"Pretending that Ministers can change systems and mindsets in months, or indeed years, is a political game that takes up too much time in this House.
"Last week Labour and Fine Gael sought to blame Mary Harney for a system that everyone in this House knows has been slowly falling apart for the past 25 years."
He said companies and individuals in the private sector were demanding change, as were many, quietly, within the public service whose potential remained untapped.
This was due to a culture which drove out initiative and restricted the desire of individuals, indeed the need of individuals, to have some measure of control over the work they did.
Mr McGuinness was speaking during the resumed debate on a Fine Gael Private Member's motion accusing the Government of failing to retain the State's economic competitiveness.
Accusing Fine Gael and Labour of failing to resist "the call of the headline and the lure of cheap publicity", he said he had no difficulty in admitting that mistakes had been made. But he accepted the mistakes as the natural consequences of a steep learning curve.
Michael D Higgins (Labour, Galway West) said the "unchecked speculative tendencies, supported by the large parties of this House, have gone like a dose of salts through the economy, making it impossible for two people on modest incomes to afford even a first home".
He asked if anybody would speak "about the immorality of non-executive directors of banks and other companies rewarding themselves with outrageous salaries".
He added: "Do not ask the hundreds of thousands of low-paid civil servants, many of whom are drawing family income supplement, to watch on while these slobber at the trough and the media admires them."
A Government amendment, endorsing its policy, was carried 74 to 66.
