We apply a spherical harmonic analysis to the Point Source Redshift Survey (PSCz), to compute the real-space galaxy power spectrum and the degree of redshift distortion caused by peculiar velocities. We employ new parameter eigenvector and hierarchical data compression techniques, allowing a much larger number of harmonic modes to be included, and correspondingly smaller error bars. Using 4644 harmonic modes, compressed to 2278, we find that the IRAS redshift-space distortion parameter is $beta = 0.39 pm 0.12$ and the amplitude of galaxy clustering on a scale of $k=0.1 Mpch$ is $Delta_{ m gal}(0.1)=0.42 pm 0.02$. Combining these we find the amplitude of mass perturbations is $Delta_m(0.1)=(0.16pm0.04) Omega_m^{-0.6}$. A preliminary model fitting analysis combining the PSCz amplitudes with the CMB and abundance of clusters yields the cosmological matter density parameter $Omega_m=0.16pm 0.03$, the amplitude of primordial perturbations $Q=(8.4pm 3.8) times 10^{-5}$, and the IRAS bias parameter $b=0.84pm 0.28$.