Minister for Public Expenditure Brendan Howlin will bring a memo to Cabinet within two weeks on public sector pay.

Mr Howlin said he has not yet opened dialogue with public sector unions on restoring pay but will after he goes to Government with initial proposals.

Some unions have said they want a reversal of the successive cuts but are refusing to increase productivity in return. Mr Howlin is standing firm on the need for changes to working conditions in return for pay restoration.

“There is conflicting demands that we need to balance including pay. All of that will be done in a dialogue with public sector unions,” he said.

“Public sector unions have contributed enormously to the recovery. We need now to map a way into the future that will sustain the significant gains we have made but will also ensure people will have a few extra bob in their pocket aswell.”

The Minister wants to undo the two, and in some cases three, pay cuts staff in the public service have experienced since 2009.

He said productivity is an essential part in the way people do business but said people should not be fixated by it.

He said: “Innovation, doing things differently, using technology that is part of every public and private innovation right now and that will continue to be the way.

“My department is a department not only of public expenditure but also of reform.

“I am not going in any conditionality in relation to it.I am saying that doing things differently, looking at innovative ways to deliver services, looking at rosters in a creative way...That is everyone’s interest because the public sector unions obviously want pay restoration but they obviously want more resources.”

The Haddington Road Agreement runs until July 2016 and as part of that deal pay is frozen until the end of 2015.

Mr Howlin will set out the Government’s stall at Cabinet within weeks and subsequently in his forthcoming talks with trade unions.

Government sources said this will not form part of the Spring statement, which will be outlined next week.

The announcement, due on Tuesday, will touch on it but will not go in to detail about what the proposals will be.

It will instead be a map of the taxation system over the next five years and set out where the general Government forecasts lie.

Mr Howlin also stood firm on proposals to cut the bankruptcy term to one year.

He said this had the backing of the entire Labour party amid speculation Fine Gael is wary of the move fearing it will cause a surge in repossessions.

The Minister said this would put the State's system on an even level with that in Northern Ireland and the United Kingdom.

Speaking to reporters as he turned the sod on a new Garda station at Kevin Street in Dublin, he said: “There is a view that why would some people be able to decant to the United Kingdom for a year and avail of more favourable bankruptcy terms.

"The real import of the proposal from Willie Penrose is to leverage the banks into action because there are some in the banking are who have not stepped up to the plate and who have not cut deals in the manner they should.

“We need to ensure either through this mechanism or through other mechanisms live up to their responsibilities. They were on death’s door and they were given life support by the people of Ireland through recapitalisation.

“Now as Ireland recovers, we want to ensure every citizen recovers. It is an absolute imperative that this Government want to ensure people retain ownership of their own homes and a roof over their heads.”

Mr Howlin said the department was working on a suite of measures to tackle the mortgage crisis. He said it would not be one single action but would be a range of proposals across different departments. The mortgage arrears plan will not be unveiled until the end of the month.