Financial Emergency Measures in the Public Interest Bill 2009: Second Stage.

Minister for Finance (Deputy Brian Lenihan)

I move: "That the Bill be read a Second Time".

As I said in this House last Tuesday evening, we are now fighting for the economic future of our country. The global financial crisis, the worst in 70 years, is having a profound effect on our banking and financial sector. As a small trading nation, we are exceptionally vulnerable to the serious worldwide recession with a contraction in economic activity on a scale not seen for many decades. Three successive years of economic contraction are in prospect, something we have never had to face before in our history.

The effect on the public finances is most serious. The Government must borrow €18 billion this year at far steeper interest rates to finance capital spending and also to meet the current budget deficit. In other words, we will have to borrow €4,500 for every man, woman and child in this State. Over a quarter of our current bills, including pay, will have to be paid for by borrowed money. The national debt is likely to rise to over 45% of GNP and spending on interest costs will come to €4.5 billion, or 12% of total tax revenue in 2009. This is dead money that should be going to pay for the public services we need. In short, this country faces exceptional circumstances and we must take exceptional measures in response. The Government cannot afford to delay.

The Government did achieve agreement with the social partners during our discussions on the scale of the problems we face and on the need for urgent and radical action to restore stability to our public finances. As the House knows, it was not possible for the unions to agree to our proposals for addressing our fiscal difficulties. In the circumstances we face, we have no option but to take clear and decisive action in the public interest to deal with these major problems. We are determined to remove the threats to the stability of the Irish economy and the long-term interest of the Irish people. The nature and scale of what confronts us are such that painful decisions must be implemented as a matter of urgency. Failure on our part to act now would lead to an unsustainable level of public debt.

It is difficult to understate the seriousness of the position. The budgetary difficulties are a severe challenge to us as a country and as a people. However, I can assure Deputies that the Government is determined that this challenge will be met. Without stability in our public finances, there is little or no prospect that Ireland will be in a position to take advantage of any future recovery in the world economy.

The framework we agreed with the social partners last month set out a shared perspective on the priority to be given to the stabilisation of the public finances through an equitable approach reflecting agreed principles in respect of both public expenditure and taxation. These include achieving an adjustment of €2 billion in 2009, measures to secure in the short term the stabilisation of the economy, maximising economic activity and employment, stabilising the financial and banking sector and helping those who lose their jobs. We will work together to implement a reform agenda involving building Ireland's smart economy, upskilling those in the labour market, delivering public service reform and finalising a comprehensive framework for future pension policy. The need to eliminate the current budget deficit by 2013 at the latest has been set out in the fiscal plan submitted to the European Commission.

As a first step in the process of adjustment agreed in the document, the spending reduction of €2 billion is required immediately. It was not possible to reach agreement on the details of the required measures and the unions were not in a position to agree to the pension-related deduction for public service workers. The Government, therefore, needed to take action in the national interest. For this reason, I am introducing the Bill.

The Bill provides for four of the measures to reduce or control public expenditure that were decided by the Government on 3 February and announced by the Taoiseach. These are the pension-related deduction of 7.5% on average on the total earnings of all public servants to realise savings of €1.16 billion in 2009 and €1.35 billion in a full year, the reduction in fees for certain professional services to realise savings of €67 million in 2009 and €80 million in a full year, the changes in the early child care supplement to reduce the payment from €1,104 to €996 per annum and to set a new age limit for payment of five years to realise savings of €51 million in 2009 and €77 million in a full year and the deferral of certain payments under the farm waste management scheme.

It is clear that the Bill calls on a number of sectors within the economy to make a contribution to the adjustment measures that are so urgently required. It is not just the public service that is being asked to contribute, as the burden is being spread more widely. Given its relative size, the public service pay and pensions bill must be part of the measures taken and the Government expects that the public service will be willing and able to play its part in the overall economic recovery.

Public service pensions are secure, particularly when compared to the recent severe loss in value suffered by many private sector pension plans. In light of this fact and the overall budgetary position, the Bill proposes that all public servants serving on or appointed after 1 March 2009 will have an additional pension-related deduction of their annual pay with effect from 1 March 2009. This change is estimated to raise €1.16 billion in 2009 and €1.35 billion in a full year.

Pension reform, both in the public service and among the wider working population, is one of the central policy challenges facing governments internationally and will remain so for the coming decades. Improved longevity has placed us in the welcome situation whereby Irish people now expect to enjoy longer, healthier retirements. However, those social benefits bring with them costs to the individual, employers and the Exchequer. These demographic effects are already placing a strain on our public finances. Over the next ten years, the number of people over the age of 65 years is expected to increase by approximately 50% and it is estimated that the ratio of workers to pensioners will fall from approximately 6:1 today to 2:1 by 2060. A smaller proportion of our population will be working and will need to bear a greater burden.

The issues surrounding long-term pension policy and the pressing problems of private sector pension schemes in the here and now are complex. The Government has published its Green Paper on pensions and has engaged in an extensive public consultation process that has served to underline the difficulties we face. The Government is at an advanced stage in its development of a new and comprehensive long-term pensions framework, which we aim to bring forward shortly and that will give greater clarity to future policy. Those broader pension issues are for discussion another day, but they serve to underline the importance for the Government of taking decisive action early to ensure that when Ireland emerges from the current difficulties, pension policy is on a sound and sustainable footing.

The Government values public servants and is committed to providing them with good pension arrangements. Such arrangements will continue to be a defining feature of employment in the public service. While there has been significant reform of public service pensions following the work of the Commission on Public Service Pensions, the process of modernising and restructuring the system must continue in light of demographic and budgetary realities that pose a future risk to the public finances. In 1997, expenditure on public service pensions was 1.6% of GNP. By 2027, it is expected to account for 2.6% of GNP and 3% by 2050. Of course, long-term projections are notoriously difficult to make, but the core point remains valid in that the costs of public service pensions, relative to national output, will double in the medium term and will continue to rise. It is both important and fair that public servants make a significant contribution now towards this cost.

The pension-related deduction is a reasonable and reasoned response to a critical and deteriorating situation. The measures we are taking hurt, but they hurt far less than other measures, including across-the-board pay cuts, large tax increases and redundancies. My Government colleagues and I are aware of the important role played by the public service and are conscious of the natural concerns of public servants regarding this measure. However, we must all be prepared to contribute.

The claim has been widely made that the pension deduction is unfair and falls too heavily on the lower paid. This is not the case, as the deduction is progressive. Those on higher incomes will continue to pay proportionately more than those on lower incomes. For example, taking account of all taxes and other mandatory stoppages — income tax, PRSI, standard pension contribution, the health and income levies and the new pension-related deduction — an unmarried civil servant earning €20,000 per year will pay 11% of his or her gross income in total deductions when the new deduction is introduced. This compares with 43% of gross income for an equivalent civil servant earning €100,000 per year.

It is claimed that the deduction should not apply to non-pensionable pay. However, we have taken the decision that it must do so to achieve the public expenditure savings that this country needs. I want to stress that no additional pension benefits arise from the deduction, but this decision does not alter the pensionability of these elements of pay.

There have been suggestions that due to the integration with the State pension, some public servants on lower pay will not qualify for any occupational pension in addition to the State pension. This is not correct. Following a recommendation of the Commission on Public Service Pensions, a new system of integration was introduced with effect from 1 January 2004 for public service pension schemes. The revised system improved the position for those on lower rates of pay and ensured that every person who meets the requirements of the pension scheme gets an occupational pension, regardless of income.

I wish to outline the detailed provisions contained in the measure. The Bill includes recitals that follow the Long Title and link its provisions to the current economic and financial challenges facing the State. Section 1 defines "public service body" as including the Civil Service, the Garda Síochána, the Permanent Defence Force, local authorities, the Health Service Executive, the Central Bank, the Financial Services Authority of Ireland and vocational educational committees. The definition also includes primary and secondary schools, third level institutions and non-commercial semi-State bodies where a public service pension scheme exists or may be made.

"Public servants" are defined as officeholders or employees of public service bodies. Members of either House of the Oireachtas, Members of the European Parliament and qualifying officeholders, such as Ministers, the Attorney General, the Ceann Comhairle, the Leas-Cheann Comhairle and Ministers of State are also covered by the provisions of the Bill. Under the Constitution, the President and members of the Judiciary cannot be included in this measure.

"Remuneration" is defined as total earnings, including allowances, over-time or any other like payment payable by or on behalf of a public service body to a public servant for his or her services as a public servant. This definition draws on the definitions in the Taxes Consolidation Act 1997.

Under these definitions, the deduction shall be made from the remuneration accruing from 1 March 2009 at the rates decided, those being, a 3% deduction on the first €15,000, 6% on the next €5,000 and 10% on the remainder. The deduction will not be paid by those with no entitlement to a public service pension. In this context, three conditions broadly apply, namely, a person must be a public servant, be working in a public service body and be a member of a public service pension scheme or analogous arrangement.

Section 4 provides that regulations are to be made in respect of deduction and collection arrangements and the deductions are to be paid into the Exchequer in accordance with the directions of the Minister.

Section 5 provides that, with the exception of members of the Permanent Defence Force who have particular terms and conditions, public servants who have fewer than two years service on 1 March 2009 may, before 1 April 2009, terminate their employment without giving notice if they do not wish to make the deduction. Deductions are to be repaid to those who leave the public service with no preserved pension benefit, namely, those with fewer than two years service.

The Bill provides that no additional pension benefit is conferred by the deduction. The Minister for Finance has power under section 8 to exempt certain groups from the deduction or modify the extent of the deduction if he is satisfied that they are materially distinguished by some particular aspect of their employment terms from others subject to the deduction.

The Taxes Consolidation Act 1997 and the Income Tax (Employments) (Consolidated) Regulations 2001 will be amended by section 15 to ensure the tax deductibility of the payment. Public servants who are making additional voluntary contributions or other pension contributions will not be brought above the relevant limits as a result of the deduction.

The Government decided that the new pension-related deduction would apply to local authority staff. It was also agreed that to realise savings for the benefit of the Exchequer, it is necessary to amend the legislation pertaining to the Local Government Fund. At present, section 4 of the Local Government Act 1998 requires that the Exchequer contribution to the fund be increased annually in line with inflation. Accordingly, section 16 of the Bill repeals section 4 of the Local Government Act 1998 and introduces a new provision under which the annual allocation is agreed between the Minister for the Environment, Heritage and Local Government and the Minister for Finance.

As I noted, the Government has decided that it is not just public service employees who should contribute to tackling the serious problem of the deterioration in the public finances through a deduction from their remuneration but that professionals who provide services to the Government also should contribute their fair share through an 8% reduction in fees. A twin-track approach will be taken to securing this reduction in professional fees. Administrative steps will be taken by Departments and public bodies who engage the services of professionals through a public procurement process to secure best value for money or who engage professional services on a scale of fees. For professionals such as those engaged under the general medical service who traditionally have had their fees and contracts determined through negotiation, this legislation provides for a separate process for reducing their fees.

My Department will write to all Departments requiring that they and all public bodies under their aegis revise the scale of fees for legal services downward by 8% from 1 March next. The Departments also will be required to review the notice and change provisions of all contracts for all professional services to give notice that there will be a reduction in fees for services of an amount equivalent to an 8% reduction from 1 March. Professionals who are unhappy with this approach will be given the option of withdrawing from their contracts and ending the provision of services.

Sections 9 to 11 allow for savings of 8% reductions in fees. The sections provide for a process of consultation which will allow the Minister for Health and Children or any other Minister to determine payments, taking account of the views of the professionals involved, their contracts, expenses and obligations and the ability of the State to continue to provide health or other services without a reduction of payments to the professionals concerned.

I trust that all professionals, who have and continue to enjoy the benefit of a substantial contribution to their income from taxpayer funds will co-operate fully with the steps now being taken by Government. I intend that the savings will be made by reducing the voted allocation of the relevant Departments and bodies.

Section 12 facilitates the payment of grants under the scheme of investment aid for farm waste management on a phased basis. The early child care supplement, ECS, is a direct, non-taxable payment paid to the parents of eligible children by the Department of Social and Family Affairs on behalf of the Office of the Minister for Children and Youth Affairs. The payment is designed to assist parents with the higher costs associated with caring for preschool children. When the ECS was introduced in 2006, it was payable in respect of all children eligible for child benefit who were under six years of age, the rationale being that six is the age at which school attendance becomes compulsory. The approach ensured that no child would lose eligibility for the payment before starting school. However, most children start school well in advance of their sixth birthday and it is considered that a more targeted approach is appropriate given the pressures on the public finances. For this reason, the age limit for eligibility is being reduced to five years, and the amount payable in respect of each child in a calendar year is being reduced from €1,104 to €996, to be paid in monthly instalments of €83. The savings resulting from these changes will amount to approximately €77 million in a full year.

An annual review of the operation of the measures in the Bill is provided for in Section 13. This will involve consideration of whether the provisions of the Bill continue to be necessary, and the making of findings as the Minister thinks appropriate. A report of the review will be laid before each House of the Oireachtas. Following the enactment of this legislation and the imposition of the pension-related deduction, I propose to make the necessary savings each year by bringing the proceeds to account as appropriations-in-aid in departmental Votes. The net Exchequer grants for the health and education sectors and the local government fund will be reduced by the amount of the contribution, with the proceeds of the deduction remaining with the relevant bodies and agencies. The funding of these sectors will remain unchanged. For 2009, the changes will be made in the forthcoming Revised Estimates volume.

This Bill asks public servants and other members of the community to contribute to the required expenditure measures. While the changes have been met with concern by many, we must ensure that the sectors covered in the Bill play their part both in pulling the country through the current difficulties and in ensuring that our long-term decisions are based on sound and sustainable policies. Now that the details are publicly available in the Bill I am confident those affected, though they may not agree with it, will understand why it is happening and why it needs to happen. This Bill must be seen in its short-term context in which all those who are able to do so must shoulder some of the burden of solving the current national difficulties. I commend the Bill to the House.

Deputy Richard Bruton

I move amendment No. 1:

To delete all words after "That" and substitute the following:

"Dáil Éireann declines to give the Financial Emergency Measures in the Public Interest Bill 2009 a second reading because:

(a) the Government has not set out a fair and balanced five year economic approach covering the correction of the public finances;

(b) the Government has not set out clear proposals to change the policies and personnel executing regulation of the financial services sector to usher in a new culture in banking; and

(c) the Government has not imposed an income cap on bank executives and has not insisted on new boards, new executives or new auditors in those banks that have or are to receive recapitalisation from the State.”.

As the Minister stated, we are indeed at a time of unique crisis in the economy. People seek a fair and balanced strategy from the Government to address the comprehensive range of challenges that we face. The Government has failed dismally to produce such a strategy, which is the reason it is in the dock and is suffering so much misunderstanding and abuse from people. No coherent set of proposals has emerged from the Government that would demonstrate there is a broad-based strategy that is fair in respect of sharing the burden fairly among different sectors, in respect of people's ability to pay and regarding the extent to which people were complicit in creating the problems we face. Nor has the Government articulated a strategy that would be perceived to address some of the sources of the problems that are the cause of our difficulties. I refer to the loss of competitiveness, the culture in the public finances that has damaged our standing and many other issues. This is the reason there is a sense of extraordinary frustration. As I have stated elsewhere, people perceive the measures under consideration today and on which Members will vote as one leg of a stool that has at least two legs missing. People perceive it to be neither coherent in terms of addressing the problems nor fair in the manner in which it is structured.

It is not simply Members in this House who hold such a view. I refer to a matter for which the Department of Finance must take a great deal of the blame and which can be seen by anyone who reads the addendum to the Irish stability programme update of January 2009. It constitutes our fiscal strategy at present and is all we have. It consists of a table with a few numbers that are not underpinned by analysis of any kind. One does not know from where these figures came, what is the basis for the tax and spending forecasts or which taxes will generate the projected revenues. It is simply stated that on the basis of this flimsy document, it will be €2 billion this year, €4 billion the following year and another €4 billion the year after. This is not a strategy and if the Department of Finance has sunk so low that it believes this constitutes a strategy with which one can go to our colleagues in Europe or before the Dáil, we are in a sad and sorry state.

Moreover, while the Minister denies the accuracy of the comments that were attributed to officials regarding the European reaction to this response, they summarise my view of it, namely, that these are not ideas that are developed in any shape or form. They are not convincing and we must move on. Equally, while the Government makes heavy play of its smart economy document, that document is pathetic. It is merely a bulldog clip put around documents that Members have seen for the past ten years. It includes no timescales or budgets and nothing underpins it. It is simply a hit and hope document.

The only document that contains chapter heads regarding what might be required is that which was presented to the social partners. While it at least contains chapter heads, it includes neither decisions nor even indications of decisions. Vague principles are set out but there was an absolute expectation that the Government, having failed to generate the hoped-for consensus from the social partners, would have document B, that is, its view, under all these various headings, of how to move forward and what will be done in year 1, year 2 and so on. Such a document would provide a sense of direction and would indicate there was a genuine strategy to deal with the various sections. Many would recognise that section heads had been set out. They included sections on stabilising the public finances, public expenditure reform, taxation, an equitable approach, short-term stabilisation, how the Government was going to deliver the five-year stabilisation framework, a reform agenda, a job retention agenda and so on. We are bereft of any of these.

There was an expectation that the Government had a strategy. Even though it had not secured agreement in this regard, we nonetheless expected to be presented with a comprehensive document that might instil confidence that the Government was moving in some defined direction and that notwithstanding scarce resources, certain issues would be clearly set out for prioritisation so that there would be a sense of where we were going. Even if the Minister did not propose to introduce taxation measures in year one, as he said he would not, we expected some indication of the changes proposed for years two and three. The crucial issue now is that people have the confidence to make investment decisions. However, the Minister knows as well as anyone that people will not make those types of decisions if there is great uncertainty as to the future direction of tax policy. An indication of the likely future trajectory of taxation policy would at least provide a framework within which investment decisions could be made.

I understand the anger of public servants at apparently being singled out. That is one issue. However, the greater difficulty is the lack of a balanced programme of measures to deal with all the challenges we face. When we were discussing the public finances yesterday, I asked the Minister several times what would happen if we are way off-target in year one. If we are unable to live within the borrowing limit of €20 billion, what then is the Government's strategy? Will we see the agenda of "Bord Snip" brought forward so that decisions on taxation can be taken straight away?

The public expected the Minister to set out clearly how he proposes to respond to the different challenges we may face. However, there is an unwillingness to face up to that. I am sure everybody in the House, including Members on the Government side, recognises that the figures published by the Department of Finance are likely to prove wildly optimistic. It seems certain that the savings of €2 billion will be insufficient to contain borrowing at €20 billion. That is the reality. More recent economic forecasts indicate a decline of 6% rather than 4.5%, which would add some €2 billion to public debt. We must get real in regard to where we are and how we should react to changing circumstances. My party has long advocated the introduction of a fiscal responsibility Bill under which Ministers would be obliged to account to the House for their Department's expenditure after the first quarter and, where it is off target, to set out their proposals to rectify that. Other countries have moved ahead with that type of legislation because they know that getting fiscal strategy right and putting it in a responsible context is vital to the survival of their economies. We have not done so.

What appals me as we debate these issues week after week is the failure of the Government to recognise any culpability on its part. It is as though terrible catastrophes befell us from abroad and blew us away, prior to which we were pursuing sound, sustainable and wonderful policies. If the Minister and those around him believe that, we are absolutely lost. We were not pursuing sound, sustainable and wonderful policies. It is not the case that a storm from overseas blew us off course. The reality is that the Government pursued policies that, as Fine Gael pointed out time and again, were destructive. It is not appropriate for a small, open economy to grow its building sector at the expense of destroying its export trade. It does not constitute sustainable management of public finances to grow public spending at twice the rate of growth of the economy, as was done in recent years. These are basic principles familiar to any first year economics student.

However, the Government dismissed the concerns put to it in this regard and claimed the economy was based on sound fundamentals and that everything should just go on as it was. Its entire general election campaign was built on the illusion that it had some magic formula to make water run up a hill.

Deputy Brian Lenihan

Fine Gael offered more optimistic forecasts than we did in the run-up to the last general election.

Deputy Richard Bruton

The Minister's comment indicates the complete dearth of understanding on the part of the Government. One need only compare the commitments made by the Government in the last general election campaign in regard to public spending with its actions in the previous five years. Therein lies the problem. The Government increased public spending at double the rate of growth for five successive years before saying, in the run-up to the general election, that it would now take a different approach by increasing public spending only at the rate of growth, as advocated by the Opposition parties. Now, however, the Government seems to be saying that parties on this side of the House were just as foolish as it was.

The reality is that we have been advocating for years something which the Government only took on board in a type of deathbed conversion, namely, the acceptance that the economy could not be run in the same manner as it was in the years leading up to the general election. The mistakes for which we are now paying are not to do with the policies tabled in the last general election campaign by Fianna Fáil, Fine Gael, Labour or any other party. The flaws that have caused our current difficulties are the policies the Government pursued from 2001 onward. They were reckless, foolish and have exposed this country to huge risk.

It is imperative that the Minister for Finance faces up to the need for change, beginning with the system under which the budget is put together. The Minister cannot disagree that the budgetary process is bizarre. It chiefly consists of fielding demands from agencies as to their expenditure requirements without any corresponding commitment to deliver services according to contract and on time. There is never any commitment in terms of what will be delivered for the allocated expenditure. We vote the Estimates through without any scrutiny as to whether they constitute the correct priorities. It is no surprise to find, at the end of the year, that the desired objectives have not been delivered. Nobody takes responsibility for these failures. Moreover, the budgetary system rewards failure rather than success. As Professor Drumm observed when he was appointed chief executive officer of the Health Service Executive, the agencies which through mismanagement create a crisis in their unit are more likely to attract funds from the budgetary system than those that are a success.

That is the level of chronic dysfunction in our public finances and it is little wonder we have the problems we do. However, the Government has persisted, year after year, in resisting changes to that system. An all-party committee chaired by Deputy Rabbitte put forward proposals some time ago that would have initiated a process of reform. Those recommendations were brushed aside. That is the problem throughout the system. We must focus on revolutionising the budgetary process and affording absolute priority to our exporting sector. We can no longer tolerate the current practices of public utility providers, with the State having the highest electricity, waste management and telecommunications charges in Europe. Any service that is regulated or managed by the Government is a source of significant difficulties in regard to competitiveness. This situation arose over the seven years of looseness in the way the economy was run. High costs have been built into a range of areas and they must be driven down. However, there is no sense that this is what the Government is about. There is no sense that the Government has a prioritisation in terms of the investments it makes and the pressure it applies to companies to deliver. For example, Deputy Coveney pointed out the inconsistences in the way in which the ESB is regulated, with the result that the opportunity for better and more competitive services is curtailed.

There is no sense of a commitment to change in any of these areas. If the Government showed a determination to abandon property and pensions as the pillars on which the tax system is based and to focus instead on enterprise and innovation, we could begin to have confidence that the necessary changes will be made. We could have hope that it would no longer be all about tax incentives the value of which is largely unknown and which are directed primarily, under the McCreevy dispensation, to pension and property investments which play no part in the resolution of the problems of a small, open economy. If that type of approach were articulated by the Government, we could be confident that it was, at long last, learning from the mistakes made in the McCreevy years. Mr. Rahm Emanuel, the enforcer appointed by the United States President, Mr. Obama, has remarked that we must be sure not to waste a good crisis. That is the challenge we face. This time of crisis must be a time for making radical change in the way we run our economy. The bank regulation system is at the heart of many of the concerns. People consider that the problems we are in stem from the regulatory failures that have occurred in the banking system and they are correct.

Adam Smith is the great father of economics and he taught a lesson that the people who regulate banks have forgotten. Two quotes from him are well worth restating: "It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest" and "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices".

The trouble in our banking system is that people from the same trade have been regularly meeting for merriment and diversion and they have conspired against the public interest. Limited liability is an extraordinary benefit that a society gives business and it has brought great benefits, but it has its duties and responsibilities. In banking we have gone further than that, recognising that banks are of such systemic importance to the economy that the taxpayer will step in when they get into difficulties. Governments of all hues have recognised the need to step in to support banking when it is under pressure because it is so vital to everything we do. How did our regulators not understand and take seriously the sense of duty and that they should be aware of the problems Adam Smith wrote about in 1776?

Deputy Brian Lenihan

Obviously, unlike Deputy Bruton and I, they do not read Adam Smith.

Deputy Richard Bruton

Perhaps they do not.

Deputy Damien English

I bet they read their reports.

Deputy Richard Bruton

The exercise of power in our society must be met with probing scepticism by those responsible for regulating. Instead, it was met with accepting faith. The whole system got far too cosy and they got sucked into believing, as Lord Denning believed, that the appalling vista that the system was perverse could not be contemplated. That is what motivated much of what went on, why people turned in the other direction when strange things took place, why they did not ask probing questions about legal advice and why information rested in the Department and was not acted upon. These are symptoms of a system that is far too close and cosy. It must be changed totally.

We do not want to get into a big debate about institutional architecture, of whether there should be joint, separate or combined boards and who reports to whom. What must change is the ethos, the culture, the people, what they believe, what they do and how they react to dysfunction. Ethics must be brought back into the system. I do not want the House to spend six months debating Bills, with institutional architecture changing, when the core issue is to get rid of the personnel, the policies and practices and make a fresh start. That does not need much legislation although it may need someone to set signposts and directions. This should be happening already and I deplore the delay. I am frustrated that the only body examining regulatory failure is the one that failed us, the Financial Regulator. This is not good enough. There must be a break and these things must happen together.

Fine Gael has recognised that public service pay must be addressed. Fine Gael does not support this pension levy but recognises that the underlying issue must be addressed. This must take place in the context of all other elements being addressed. In the Minister's defence of the Bill he states that the contribution by the low paid is fair. His statement refers to the move in 2004, to the effect that those on low pay would not be confined only to an increment over the social welfare pension and that they would get more benefit. I cannot recall the exact provisions made in 2004 but I am surprised that the Minister has not set them out. A porter will pay 4% in PRSI, a 6.5% pension contribution and now the 3% levy. If the Minister believes the arrangement made in 2004 compensates for this burden we need to see those figures presented. If that is the contention of the Minister, that this constitutes fair treatment of such low paid public servants compared to those higher up, let us look at the data and see if he can convince us.

The Department should also publish the actuarial cost of pensions in different categories. My recollection is that the actuarial value of the pension of low paid people was 6%, as calculated in respect of the contribution needed to fund the pension they receive. The contribution required to fund the pension of the Secretary General is approximately 40%. The Minister is asking people on low pay to accept that they pay 3% while the Secretary General pays 9%, with tax relief at 48%. That will not wash and people do not see it as fair. These actuarial tasks should be presented. If this levy is to balance the actuarial value of the pension we give people, we must see these tables as they apply to both sides. We could then begin to have a more meaningful debate about the fair allocation of the pension levy if this information was published.

Over the course of several debates, including the Labour Party motion on Private Members' time, the perverse interplay between the levy and tax relief has been raised. People earning €30,000 will pay a higher percentage than those on €45,000. How is this justified and what changes are proposed to allow for this? It is the amount that is taken out of people's pockets that matters to them and the net levy should be the basis on which one assesses the fairness of contributions of this nature. I do not know if the Minister is open to amendment; he seems to have given very little scope for it because he does not provide analysis of how he came to regard these elements as fair in the context of a pension payment. We must see change because people must have a sense that they are not being singled out and that there is fair play. This has not been conveyed.

There are two matters that I cannot figure out in the financial presentation. I cannot figure out how those writing the tax forecasts in January knew exactly what would emerge in February and built into their tax forecasts the correct buoyancy factor to compensate for these payments and the various cuts that were proposed in fees. Any other budget presentation has the gross cost or savings on one side of the measure and the tax buoyancy impact on the other side. They are presented on the same day and people can see them. For some mysterious reason, we are not seeing the tax buoyancy element and we are asked to believe it has been put into a flimsy document which has just one number as far as tax is concerned. It has not been justified.

Where did the saving go from deferring the September pay increase in the public service? This saving has not been recognised in any of the documentation. From a parliamentary question answer it was expected to cost €279 million but it has not appeared anywhere in the flimsy data with which we have been presented.

I will turn now to the fee restraint provisions in the Bill. Everybody recognises that this element of the Bill seems fair in that this is an opportunity to get savings in the various costs taken on by the Exchequer. I am unclear as to the full scope of this. If we are including professional fees, why are we not including rents or other elements of what the State contracts in services? It seems to have singled out certain categories and not others.

The more important question is whether the legal basis on which this money is taken is robust? In the past we have seen cases where a Minister is given the power to be a sort of judge and decide what is appropriate, and this has been challenged. The Oireachtas is the only body that can legislate for what is appropriate but we seem to be giving the Minister the power to decide what is appropriate, albeit after discussions and considering various issues. At the end of the day, the Minister will make these decisions by fiat rather than legislative authority. It is proposed that they will be tabled later and if they are not annulled, they will come into effect. I do not know if this is sufficient to give the Minister the right to rewrite people's contractual agreements. I notice there are many citations detailing how we are in a crisis and that there are greater problems. Perhaps that is designed to say the normal rights of private property are now balanced by public interest issues and, as a result, Ministers have the right to make certain administrative decisions.

I would like to ensure these will not be challenged. I have not had the time to consider the matter but I recall that when the HSE made similar moves to unilaterally alter the terms and conditions of pharmacists, there were very significant problems and the HSE ultimately had to back down on the basis that the matter was legally doubtful. The Minister should clarify the basis on which this power has been given to the Minister and whether it is adequately overseen by the Oireachtas in constituting legislation that is not vulnerable to challenge in the courts.

I will finish where I started. We recognise the country is in a deep crisis, that we must make significant savings in the public finances and that savings in the public service pay bill will inevitably be a part of this. We also recognise that the country will not be governable unless there is a sense that contributions are being made from people right across the range and there is a credible broader economic strategy, which will lead to people having the confidence to make decisions and spend their money. Until we get that in place, this measure will be seen as isolated and will not command the necessary public confidence. We must think again and put measures like this in a much broader and fairer context.

Deputy Joan Burton

Everybody knows there is a great and understandable amount of anger among public servants and their families. It is not that they are unwilling to share the burden but they resent being scapegoated and singled out by Fianna Fáil to share all the burden.

It is important to note that many public servants looked to Fianna Fáil as a one-nation party that considered the interests of both private and public sector employees. In terms of its policy making, it now seems set on driving a wedge between different categories of workers. In the example of a nurse married to a foreman on a building site, the nurse is the lesser being than the person in the private sector. From a social harmony perspective, that is a great mistake as we are facing into very difficult times as a country, and it is clear this Government lacks any comprehensive strategy on the economy.

The Minister for Finance is in many ways an apprentice and has been thrown in at the deep end. He does not induce confidence, particularly with the Opposition in this House. More seriously, his actions are not inducing confidence in the markets or the European Central Bank. The Minister may have talked the good talk yesterday in indicating the comments of the Commission relating to the stability pact were soft enough. They were soft enough but these are the usual comments which came from the Commission in the past regarding much larger and more powerful countries in Europe who parted from the strict guidelines set out in the Maastricht and other agreements relating to countries in the euro.

The Minister's speech today lacked conviction in proposing a coherent framework and programme that would get people back to work and money moving in the economy. By getting people back to work, keeping people in employment and getting credit flowing in order to get the economy off the ropes, we could get back to some form of hopefulness and forward thinking. Some 20% of the economy is now on the ropes and we need such action.

What the Minister has chosen as the key element of strategy is deflationary from an economic perspective. This will address part of the fiscal issue but not the key economic issues. To quote Bill Clinton, "It's the economy, stupid" and this is about job creation and credit flow. As a British politician used to say long ago, people must feel the pound in their pockets. In this case it is the euro in one's purse. People must have the confidence to do up their kitchens, paint their spare rooms or put down a new garden, when Dermot O'Neill comes on Pat Kenny's radio show talking about how to build a pergola or something like that. This money, which people should be very confident about spending, employs local people, buys goods from local shops and keeps the flow of VAT and other taxes jingling in the Government's cash registers.

The Minister's actions will not help in this regard, but instead will amount to classically deflationary economics. Perhaps the Minister and the top officials have read it already but, if not, they should read a new paperback on the Great Depression by Galbraith. It is only a short book. This Government is bound hand and foot to taking the same action as the Hoover Administration that made the Great Depression worse.

I found it ironic that in his first budget speech, the Minister for Finance quoted Roosevelt's famous dictum, which is now on the monument in Washington to him and his wife, Eleanor, that we had nothing to fear but fear itself. Fianna Fáil Members, displaying their herd instinct, jumped to their feet to applaud because, in their heart of hearts, they have a feeling Fianna Fáil is a one nation party that should be Rooseveltian. Everything in this speech and these arrangements, however, owes more to the Hoover Administration which made the Great Depression even worse.

Unfortunately, this is about deflation. I do not know if the Minister gets the chance to read the newspapers, but David McWilliams made the point in a recent article that no economy has ever deflated its wage growth and that the most important factor to bear in mind is that companies that close due to lack of demand do not re-open when times are better. The most crucial objective, therefore, must be to preserve employment.

The distinguished Irish man of letters, and great admirer and defender of Mr. Haughey, Mr. Anthony Cronin, quoted Mr. Micawber's axiom — annual income, £20, annual expenditure, £19/9/6d, result: happiness; annual income £20, annual expenditure £20/0/6d, result: misery. The Minister for Finance has a Micawberish cast of mind in the speech he has just delivered. Mr. Cronin, however, stated that shops and manufacturing businesses of all kinds were closing their doors, people were losing their jobs and some were looking forward with understandable dread to losing their homes as well. He noted that it is apparently easy to confuse fiscal problems with economic ones but by the grimmest and most cruel of ironies, the measures taken to cure the fiscal crisis may finally have the effect of killing the economy, decreasing the level of economic activity still more sharply. He continued by saying that every move that seems to offer alleviation of the one is a blow struck at the other; every euro taken out of the economy and, as in the Minister's speech, "saved" is a euro less in circulation.

This is the conundrum the Government is caught in but it is a bind of its own making. This Government inherited an economy set fair and doing well in 1997 when the rainbow coalition left office. Exports were thriving and employment was increasing at the rate of 1,000 jobs a week when Deputy Ruairí Quinn was Minister for Finance. The economy was set to grow and expand. When Fianna Fáil took over in 1997, until 2000 it broadly continued the policies of the rainbow coalition, which, in turn, owed a lot to the policies of the Fianna Fáil-Labour Government of 1992-4.

In 2000 and 2001, however, former Minister Charlie McCreevy got his head. The then Taoiseach, Deputy Bertie Ahern, decided to let him have his way while the Minister, Deputy Harney, and her former party, the Progressive Democrats, were at the height of their late blossoming before their ultimate collapse. What did they do? They caused a series of bubbles in the economy, creating the untold wealth of the bankers and exempting from taxation critical high net worth people in Irish society. They did not just want low tax, they wanted a no tax economy. So Charlie McCreevy fuelled the boom.

The irony is that when he went to Europe as our Commissioner, although he does not wear the green jersey like Pádraig Flynn, not only did he not regulate the financial markets as the storms gathered over the last three years, but he constituted a considerable barrier in Europe to the reform of regulation of derivatives and financial products. In the irony of ironies, it was unregulated trading in derivatives, of which CFDs are an important sort, that brought the troubles in the Anglo Irish Bank model to their sad conclusion, where the taxpayer is now carrying the brunt, particularly public servants, who are being asked to contribute a special €1.36 billion annually to the cost of bailing out that bank. The saying "in my end is my beginning" can be seen as Charlie McCreevy sits in Europe while the Minister reads out statistics on our likely borrowing. At a time when countries and banks across the globe are trying to borrow in international markets, we are trying to borrow with an incredibly impaired credit rating.

Where is Charlie McCreevy in this picture? Has the Commissioner regulated the credit rating agencies in any way? Has anyone heard him making a speech in which he called for regulation? The agencies, from Moody's to Standard and Poor, are those that during the last seven years of hyper-capitalism gave every kind of bank and venture involving derivatives and financial transactions that very few people could properly understand an AAA rating. Did they get it wrong? They got it wrong on almost every occasion.

Did that give Commissioner McCreevy pause to say to his fellow Commissioners that a framework should be put in place for these agencies? No. He is still a convinced apostle of total non-regulation, opposing detailed proposals from the Party of European Socialists in the European Parliament, of which the Labour Party is a member, for regulation to be put in place for markets, credit rating agencies and products such as derivatives and sub-prime lending, something the Taoiseach claims we do not have much of, although we have an awful lot of everything else. He is correct about that but we have a lot of everything else.

The National Treasury Management Agency did well when it tried to borrow some time ago because there was a fair amount of demand from the two big Irish banks to make the market. When the National Treasury Management Agency went to borrow, it got a good response but what will happen the next time it goes to borrow? What impact will these rating agencies have? They will have a very unfair negative impact on Ireland's ratings because Ireland is now a byword for a Government which is incompetent, has lost its nerve and its ability to govern and which is deflating its own economy. On every ranking, we are likely to get a very tough time from these agencies.

Now that he is in splendid exile in the Commission, does Mr. McCreevy have any sense of responsibility towards this country and the regulation of financial markets? The answer is "No". The same Mr. McCreevy, as the apostle of no regulation, is probably delighted that public servants will be asked to pay for the fiasco of this economy which Fianna Fáil has brought about and of which he and the former Taoiseach, Deputy Bertie Ahern, are the true architects. The Taoiseach must feel very sorry about his time as Minister for Finance. In fairness to him, when he came into office, the plot and the course had been set by those two captains, Deputy Bertie Ahern and Mr. McCreevy. I understand why he may feel hard done by at times.

I refer to the figures the mandarins put forward. They can try all they like to suggest that this levy is progressive but I wish to refer to a few figures. A teacher working for some time on €39,000 per year will have a loss of pay of €2,030 per year, which is 5.2% of his or her take-home pay. A civil servant on €43,000 per year — €4,000 more than the teacher — will pay a levy of only €1,711, which is 8.98% of his or her take-home pay. A civil servant on €48,000 per year will pay only €1,992, which is 4.15% of his or her pay.

Like Mr. Micawber, I do not know what is this Government's approach to misery, happiness and arithmetic. I do not understand it but in anybody's language, the civil servant on the higher income will pay the levy at a net rate of approximately 4% whereas the teacher on €39,000 will pay at least 1% more in levy in terms of his or her net take-home pay. That is unfair in anybody's language. For the Minister to fail to address that anomaly is to carry into the levy the imperfections, inequalities and inherent unfairness in our tax system.

In a fine piece of parliamentary parsing, the Minister stated further that the levy will apply to all income. The Bill states that remuneration is defined as total earnings, including allowances, overtime or any other like payment payable by or on behalf of a public service body to a public servant for his or her services as a public servant. That means all allowances, all overtime earnings and so on will be subject to the levy but, of course, very few of the overtime or other allowances public servants receive are pensionable or reckonable for pension purposes. Therefore, public servants will pay the levy, in theory, towards their pension. There is no doubt that reform is required in regard to public service pensions and that is a very serious issue. However, this levy will be charged on everything and, in effect, it is an additional tax on public servants.

The Minister stated, "I want to stress that no additional pension benefits arise from the deduction, but this decision does not alter the pensionability of these elements of pay." That is very fine phrasing and it must have taken somebody in the Department of Finance a long time to work out the wording of that paragraph. Basically, what it means is that one will pay the levy on all one's income, including allowances and overtime, but that one will get no additional pension benefits. It will not go into a fund or be set aside so that in, say, five or seven years' time, public service workers can say they are building up a fund which they loaned to the Government during the hard times but which secures their pensions for them. At least that would be reasonable and sensible. Instead, it will be used and it will be gone.

Not only that, but the Minister is obviously saying that, because overtime, etc., is levied but not pensionable, it is not an argument for making any of those payments pensionable. Given that the lower paid in the public service will pay more in terms of the impact of the levy on their take-home pay than those at the top level and that all income and allowances will be included, many public servants will rightly feel that is inherently unfair. They are right to hold that viewpoint.

I refer to the definition of total earnings, including allowances, overtime or any other like payments. Will the Minister clarify the situation for people working in the emergency services, the Garda, the fire brigade and the Defence Forces who take on special service duties in, for example, a flood or another emergency? They normally get some remuneration. Will that be levied, because that is what the Bill states?

I refer to soldiers in the Defence Forces who serve abroad and who receive additional UN payments. Is it proposed to levy the extra payments the soldiers in Chad receive arising from their UN duties? Is it intended to levy the additional payments soldiers receive for serving with the UN or other forces on peacekeeping and peace enforcement duties? They are important principles the Minister must clarify.

It is difficult, in the context of this levy, to understand how this is a proportionate response in terms of other sectors of society. Fianna Fáil Deputies, backbenchers and a couple of Green Party representatives have publicly beaten their breasts about the behaviour of bankers. Some have suggested bankers committed economic treason. The Labour Party proposed that the pay of people in the financial services sector and in institutions guaranteed by the Government's bail-out should be capped at the same level as the combined pay, emoluments, allowances and privileges of the Minister for Finance. The combined salary and expenses package of the Minister comes to around €260,000. He also has a chauffeur driven car and various other allowable expenses. If this measure were adopted the pay of bankers would be capped at around €300,000. I do not believe many bankers could picket and claim to have been reduced to poverty if their incomes were capped at a level comparable with that of the Minister for Finance. Why should they expect more?

If the Minister had a notion of social solidarity in mind he could have used this Bill as a vehicle to implement the arrangement suggested by the Labour Party. Instead we have been told that a committee consisting of the great and the good, all either Secretaries General of Departments or other eminent people, are looking at the issue of bankers' pay. Like a dog with no teeth chewing a bone, the committee has chewed on this bone for nearly three months and has not got to the meat and marrow of the issue. We have heard nothing from the committee.

The Fianna Fáil Party has become detached from reality. In my constituency some 1,200 people in SR Technics were told last week that they will lose their jobs and they do not know what sort of redundancy scheme will be in place. At the same time, some bankers have appeared in the media complaining that they will have salaries of less than €2 million this year. Fianna Fáil would like to pit public servants, including nurses and teachers, against their spouses in SR Technics; many workers in SR Technics are married to public servants. The Government is suggesting only public servants should help save the SR Technics plant and jobs along with it. If banks can be saved then the SR Technics plant can be saved.

The Government is silent on people in the financial services institutions who earn astonishing sums of money but made very bad decisions and got everything wrong. The Government's approach may be encapsulated by paraphrasing St. Augustine: "Lord we will reform the salaries of bankers at some stage, but not yet". The Government's delivery has been depressing and will deflate, rather than grow, the economy.

Deputy Michael Kennedy

I welcome the opportunity to speak on this important Bill, the title of which, Financial Emergency Measures in the Public Interest Bill 2009, sums up the current situation. It is a worldwide economic crisis that we now face and anyone who denies this is living in cloud cuckoo land. Occasionally I believe some members of the Opposition fit this description because they are not facing the reality that an €18 billion deficit faces us this year; that amounts to a minimum of €55 million per day.

I do not profess to be an economist, although I come from the business world, but this type of deficit is unsustainable. No person, company or organisation can sustain expenditure of €55 while earning only €37. To multiply this, Ireland could spend €55 billion this year and take in a maximum of €37 billion, or €38 billion if we are lucky. The Government has formulated a plan to get the public finances back in order; it has been proposed that we will save €2 billion this year and €14.5 billion over the coming four years.

Everyone in this Chamber must put his or her shoulder to the wheel, rather than apportion blame. The last time I spoke here on finance, a couple of weeks ago, I asked the Opposition to recognise the difficulties we face and for all of us to work collectively towards a solution to the crisis. What has happened has happened and it is not just an Irish problem, it is an American problem, a British problem and a European problem. I would have thought that at this stage, having gone through the process with the social partners, all political parties would recognise the severe difficulties we face. The Labour Party is still living in cloud cuckoo land by deluding itself that we do not have this problem. The unions recognise that we must save €2 billion this year and more in future years.

Talking down banks and the economy will not do us any good in Ireland or internationally. The reality is we must live within the financial confines laid down by the European Union. We rely on international investors and bankers to loan us money to allow us trade our way out of the crisis we are in.

I believe certain bank executives have broken laws and I want to see them brought to justice. However, I do not feel that we, as politicians, should make rash statements in this Chamber or outside it that might prove useful to legal eagles in defending bankers in future court cases. The Director of Corporate Enforcement and the Financial Regulator are carrying out investigations and I look forward to their findings as much as anyone in this Chamber. However, we must not make rash statements that could facilitate people in avoiding justice.

I agree with Deputy Burton on the salaries executives receive. Regardless of whether it is €2.9 million or €2 million, the amount of money is obscene in the context of how people are suffering at the moment. The Minister has given a commitment that salaries will be investigated and capped — I believe this is necessary and I look forward to the findings of the report. I cannot see how one can justify anyone, whether in Ireland or elsewhere in the world, receiving a salary more than twice what the Taoiseach receives. The report should recommend a salary cap across the board.

I am sick of comments in this Chamber in the past few days smearing the Taoiseach, the Government and backbenchers. This smear is that somehow we are involved in a golden circle. I remind the Opposition that in the past it has used the little inner circle quite well. While I hesitate to use the name of Dr. Garrett FitzGerald, a man I hold in the highest esteem, and I cast no aspersions on his integrity, he had a major loan paid off by AIB.

Deputy Joan Burton

Why does Deputy Kennedy not make the allegations?

An Leas-Cheann Comhairle

Deputy Burton had 30 minutes uninterrupted to make a contribution. I ask her please to allow Deputy Kennedy.

Deputy Michael Kennedy

I thank the Leas-Cheann Comhairle and I assure Deputy Burton that I have met the workers in SR Technics. I met the Tánaiste to discuss the issue. I spoke with various people about this very serious issue. What Deputy Burton and the Labour Party have to offer is zilch to help these workers. They have no constructive plans to do anything to get our economy back on track. They are bereft of ideas. Two weeks ago, the media asked the Labour Party to come forward with costed items to save €2 billion. So far, not alone has the Labour Party not costed anything but it can hardly come up with an idea.

I feel for the SR Technics people, 330 of whom are on the dole queues. We must support them but the way to do so is to get our economy and public finances back into shape. It will not happen through the waffle which is how the media described the Labour Party's programmes. At this juncture, we need to get public finances back into order. We need to get our banking system solidified.

Deputy Kieran O’Donnell

The Government needs to restore the integrity of the banking system.

Deputy Michael Kennedy

Yes, certainly we want the integrity——

Deputy Kieran O’Donnell

Deputy Kennedy is not doing it with this speech.

Deputy Michael Kennedy

Talking the banking system in general down will only do more damage. We need a stable banking institution.

Deputy Kieran O’Donnell

How is this a positive measure?

We must consider those who have lost their jobs, those whose jobs are less than secure and those who have lost a substantial amount of their pension savings.

Deputy Joan Burton

We know the Government considered the regulator and gave him a big pay-off of €644,000. We know it thought about the regulator losing his job.

Deputy Michael Kennedy

I did not interrupt Deputy Burton.

Acting Chairman

Please, Deputy Burton.

Deputy Joan Burton

The Government was very nice in that regard and it looked after the bankers who were leaving. They got their money——

Deputy Michael Kennedy

Those with no jobs or insecure jobs deserve the support of this House. I recognise that tweaking may be necessary regarding some public servants on the lower scale. I have spoken to the Minister for Finance and believe he will examine the matter. However, those on middle and higher incomes are making a contribution to their pensions and are not suffering salary reductions. The money being deducted is going into their pension funds. Most of these income earners are reasonable. I met quite a few of them last Saturday, I have spoken to them on the telephone and have received e-mails from them. They want everybody to play their part.

I suggest, particularly to the Labour Party and, to a lesser degree, Fine Gael, that we have the opportunity to get our country back on track. Inaction will let it slip further into the quagmire of financial instability. This Bill will allow us to make the savings of €2 billion, the minimum saving required at present. More savings may be required at the end of the year. Anyone who suggests a different figure is living in cloud-cuckoo-land.

Deputy Kieran O’Donnell

I am delighted to contribute to this debate. Deputy Kennedy's contribution was probably one of the most negative——

Deputy Joan Burton

It was sad.

Deputy Kieran O’Donnell

——Ballymagash, tripe——

Deputy Michael Kennedy

It is the reality.

Deputy Kieran O’Donnell

It is tripe and does this House no justice.

Deputy Michael Kennedy

The Minister has made a commitment to seek recovery of all debts.

Deputy Kieran O’Donnell

Deputy Michael Kennedy

That would be the net effect.

Deputy Kieran O’Donnell

No. We do not want taxpayers' money to be used to fund a business that is clearly not viable.

Deputy Martin Mansergh

On a point of order, the Bill has nothing whatsoever to do with banking and the entire contribution has been on matters that do not relate to the subject of the Bill.

Acting Chairman

I am sorry, but that is not a point of order.

Deputy Kieran O’Donnell

With all due respect to the Minister, I have 20 minutes to speak. Deputy Kennedy spoke for 20 minutes. He did not deal with anything relating to the legislation and I am entitled to a right of reply, nothing more.

Acting Chairman

Deputy O'Donnell should address his remarks through the Chair.

Deputy Kieran O’Donnell

How much time do I have left?

Acting Chairman

Twelve and a half minutes.

Deputy Kieran O’Donnell

I wish to deal with the issue in context. The cuts, which are emergency measures, are designed to restore financial stability to the economy. I will return to the measures, but first we must examine the matter in an integrated way. We must get funds flowing to small businesses and mortgage holders. We need an integrated approach because nothing happens in isolation. The banks, the public finances and small businesses all operate together. Otherwise, we cannot function.

It is critical that we get funds flowing to small businesses and mortgage holders. Equally, it is critical that we get control of the public finances. However, we should go about that in a way that does not hit the vulnerable. The pension levy leaves a lot to be desired in how it is applied to the lower paid. My view is that people are entitled to see a return for the contributions they make.

Deputy Kennedy's only comment on the legislation was that the Minister will consider tweaking the legislation in terms of the impact on the lower paid in the public sector. The Minister needs to elaborate on that. He must state what exactly he intends to do. He needs to explain the benefits of the levy. Currently, the lower paid in both the public sector and the private sector are suffering because of the cost of living and exorbitant mortgages. People are concerned about negative equity and being able to meet their repayments, and they have additional expenses.

I note that section 8 gives the Minister power to exempt a class of public servant from the need to make pension levy contributions. I hope that on Committee Stage the Minister will allow us to devise a scheme that is fairer. The Government is going ahead with the pension levy. We, as a party, feel it is unfair and unbalanced, given that people on higher incomes will pay a lesser contribution than people on lower incomes because of differential tax rates. In addition, a single person can pay less than a married person with three or four children because he or she is paying a higher rate of tax. Anomalies such as those need to be ironed out. Section 8 will need to be examined in depth on Committee Stage.

The Minister indicated the pension levy will result in savings of €1.4 billion. Will he confirm whether a freeze on increments due to public sector employees in 2009 is built into the sum of €1.4 billion? The increases would be of the order of €250 million. That matter must be clarified.

We also need to know whether the pension levy will be a short-term or long-term measure. He indicated the matter would be reviewed in the context of how the economy is doing. The pension levy is a financial emergency measure and the definition of emergency is usually something that is designed for the short term to deal with a crisis.

In addition, it is extremely important that we get clarity on a range of issues relating to the banking system. We need to know exactly what is happening in terms of Anglo Irish Bank, the Irish Nationwide Building Society and Irish Life and Permanent because the uncertainty is undermining the economy and the confidence people have in the Government and how the political process works. It is clear that the financial regulation system has failed. Currently, the regulation system is investigating itself. Major questions need to be asked in that regard. The ordinary person who is concerned about his or her job is asking why we are not getting answers and it is important that we do.

The savings in the overseas aid budget of €95 million is regrettable. The cut in that area is far more severe than cuts across other Departments. I hope the Government will live up to its commitment to provide 0.7% of GNP to overseas aid by 2012.

The curtailment of the early child care supplement is regrettable also. The payment is to be reduced by €100 and the payment will cease for children when they reach the age of five and a half years. That cut will affect those who are most vulnerable and have difficulties in making ends meet.

The Government has introduced two levies to date, namely, the 1% income levy that applies to everyone earning more than the minimum wage, and a pension levy that applies to everyone earning €15,000 or more. That is not a significant amount of money. Basically, the pension levy is unfair.

Fine Gael has proposed a different set of proposals to raise the €2 billion that is required. I accept they are tough and that we have made difficult decisions, but they are fair. We propose that no pension levy would apply but that there would be a freeze on increments and pay increases for 2009, which would save in the order of €500 million. We propose pay cuts for everyone earning more than €100,000 in the public sector and a saving of €200 million by ensuring pharmacists dispense generic rather than branded drugs. A windfall tax on energy companies would generate €300 million. In addition, various quangos cost €50 million annually and they should be abolished. Fine Gael has outlined straightforward measures but the Government has come up with ill-thought out, complicated schemes. The original proposals were published on the basis of gross figures to give them the appearance of being progressive because the more money one earns, the more tax one pays. However, the Government did not realise the major anomalies this would create. People on low incomes will pay a higher levy after tax than those earning a higher income and, ultimately, the level of benefit of the levy to the lower paid is questionable and the Minister must clarify this issue. Those who pay the levy must receive a return and he needs to tweak this.

The Government's measures are rushed. The Minister said greater value for money will be achieved in capital projects. Why will he not carry out a review of the projects and fast-track those that are labour-based to retain jobs? Proper job creation proposals should also have been made. Fine Gael proposed an employer's PRSI exemption to generate new jobs. Why will the Minister not examine other measures to retain and create jobs in various sectors? Reform of the social welfare system has been mooted but, instead, the Government parties announced half-baked measures, which inspire no confidence. They are also not moving properly to restore integrity and trust in our banking system, even though they are the custodians of the taxpayers' money.

The Government nationalised Anglo Irish Bank, which issued non-recourse loans totalling €300 million last year. The taxpayer will pick up the tab for them. Will the money be repaid to the bank?

Fine Gael put forward alternative proposals that are fair, tough and balanced and they do not target the low paid in a severe fashion similar to the pension levy. The Government must, as a matter of urgency, deal with the financial regulation system and provide clarity regarding the ten individuals who secured the non-recourse loans. Above all, it needs to bring forward a job creation programme, show leadership and begin to act as a government.

Deputy Michael Mulcahy

I wish to share time with Deputy Kelleher.

As the Title signifies, this is emergency legislation and it is deliberately drafted in this way because it is accepted by all parties that were things normal, such a Bill would not be required. If we begin from that base, we can acquire a better grasp and understanding of what the State needs to do. As the Taoiseach has made clear, the Government will have spending responsibilities this year amounting to approximately €55 billion while tax revenue is projected to be €37 million, which is an unsustainable gap. I am sorry if the Labour Party, in particular, and Fine Gael, to a lesser extent, cannot appreciate that this is a serious position for the State.

It is the job of Opposition parties to oppose and we would do no differently, but if we were in opposition, bearing in mind what has happened, we would be a little more responsible. Over the past few weeks, every Opposition party has engaged in a concerted attempt to talk down the State and undermine confidence in the business community.

Deputy Kieran O’Donnell

We are doing quite the opposite.

Deputy Michael Mulcahy

The more the business community is undermined and talked down, the more confidence in it will be destroyed. All public services require a vibrant business community to sustain everything. Without healthy companies and people setting up their own businesses and working hard to increase wealth, there will not be revenue for anything. Given the position in which we find ourselves, there is a serious responsibility on all Opposition parties and not only the Government parties to take their obligations to the State seriously. They have fallen short on that responsibility thus far.

Deputy Denis Naughten

We will not even try to measure the Government in this regard.

Deputy Michael Mulcahy

Part of the way they have done this is to spread the myth that the downturn is an entirely Irish creation.

Deputy Denis Naughten

No, it has been caused by Government incompetence.

Deputy Michael Mulcahy

They are sleepwalking through the fact that virtually every western industrialised country is suffering its most severe recession or near depression for the past 40 years. They think Ireland is a unique case and it has done something particularly bad. I invite Opposition Members to visit Japan, Britain or the USA. In January, more than 500,000 people lost their jobs in the USA and every leader, including President Obama, has declared the recession to be the most serious financial crisis facing Western economies since the Great Depression in the 1930s and yet, for naked political reasons, Fine Gael and the Labour Party are spinning the line that Ireland is in the worst position and so on.

The Minister for Finance has clarified, particularly in the context of our banks, which are crucial to the proper conduct of business in the State, that Opposition criticism in the House is undermining confidence in our banks and our reputation internationally in commercial markets and it could do long-term damage to the economy. It is high time the fightback started against these Members, who are completely irresponsible. It is about time they showed a little support to Ireland Inc. and stopped talking it down.

To give some credit where credit is due, as I recall it, the Labour Party voted against the bank guarantee scheme but Fine Gael supported it. There was absolutely no choice at the time but to support the banks and introduce that guarantee. There was virtually a run on the banks at that stage. Lest anyone give the wrong impression that it was just Ireland, they should consider the state of the banks in Britain, including the great Lloyds, Barclays and Royal Bank of Scotland. All of these banks have been brought to their knees by one of the greatest financial shocks the western world has seen perhaps in the past 100 years. We needed to take action and we took action.

We then had the case of Anglo Irish Bank where the Minister made it clear that if this bank failed there would be a systemic risk to the entire Irish economy. It was not just internalised in Ireland because there are counterpart banks all over the world. How would the Opposition like the headline: "Irish bank defaults on its international obligations"? Would any international businessman or businesswoman touch Ireland with a barge pole for the next 20 years? I fully commend the Minister for Finance on what he did on that occasion. It is about time that the Opposition parties started to support the Minister for Finance instead of niggling through every line out of which it possibly can get a cheap headline.

Of course nobody likes emergency measures. I sympathise with those public servants, the majority of whom do a great job. I sympathise with them being faced with the extra financial burden. However, the Government is committed to those public servants. It is committed to their continued employment if at all possible and to providing them with good pensions on their retirement. This is a mechanism necessary to provide them with those pensions. When people have come into my clinic and complained about this levy, I have looked them in the eye and said that I am sorry but that we will do what is necessary for the future of the country and for the future of their employment.

People should be aware that given the scale of that gap between €37 billion and €55 billion, we are in for even more difficult times in the future. The Taoiseach outlined a schedule, of which the European Union is fully aware. Next year there need to be cuts of €4 billion, with further cuts of €4 billion, €3.5 billion and €3 billion in the following years. That is a lot of pain, but that pain must be borne if we want to get Ireland back to a sustainable level and if we want to get people back in jobs, buying motorcars and houses, going to restaurants and enjoying the type of normal life we have had for so long. However, let us stick to the truth. I accept it is possible to say we should have done more with the property market in recent years. It is very difficult when we do not control our own interest rates.

Another myth that is promulgated is that nothing positive was achieved with all the surplus moneys we had from the Celtic tiger. People conveniently forget the great reduction in our national debt. The Opposition conveniently forgets the money put aside in the pensions reserve fund. It conveniently forgets all the great progress with the new roads, bridges, Luas lines etc. In this difficult debate I call for a little bit of honesty around this Chamber. Let us accept our failings, but let us have the decency, honour and integrity to be honest in one of the most difficult debates of our time. I commend this very important, serious and necessary emergency Bill to the House for the sake of our country.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher)

I again welcome the opportunity to speak on these issues. We are in very challenging times. The Bill is entitled the Financial Emergency Measures in the Public Interest Bill 2009. That title sums up the challenges facing the economy. Listening to some of the commentary from both within the House and outside, I feel sad that we do not debate the facts. We do not discuss the situation in which the country finds itself. People continually point internally and claim that everything we are now faced with has arisen because of mistakes we made ourselves. There is a reality that we are in a global recession. There is financial turmoil. The financial institutions of the world are under great stress. Major banking institutions in large economies have gone to the wall. Other countries, including Britain and other European countries, are even finding it difficult to sustain or find funding for recapitalisation programmes. We are facing very challenging times.

People are entitled to their own opinions but must deal with the facts of the situation. The consequences of the challenges facing Ireland are obvious and very painful. We have rising unemployment. In January alone 36,000 people joined the live register. Those people feel the pain of the difficulties in which the Irish economy finds itself and the world recession. Consequent on that is the falling revenue, which is creating great difficulty for the provision of services and sustainable public finances. That is why we are debating this Bill today. The Government and any political party making up Government takes no joy in asking people to make a contribution to their pension, making very unpopular decisions but for the right reasons. If it is explained properly I am convinced that people will respond simply because the country has no choice. We cannot continue to borrow in excess of €18 billion, as we will do in 2009 to fund our current and capital expenditure programmes. That is just not sustainable. A bit of honesty and integrity in the debates by commentators inside and outside the House would help us in trying to address the problems facing the country.

We have made enormous gains as a society and an economy. Until recently we had 2 million people working. We have initiated major capital investment programmes. We have made enormous gains in the areas of health, education and social welfare payments. I accept there are still challenges and difficulties in those areas. Nobody can deny that in the past 15 years of continuous growth we have not made enormous progress in those areas with the provision of social services and infrastructural developments. The improvements in infant mortality and life expectancy prove that we have improved the quality of life for most citizens.

We are now faced with this particular difficulty. I believe in the social partnership model. The social partners were brought in to discuss the particular problems facing the economy. While a framework document outlining savings was agreed, unfortunately the unions were unable to agree where those savings would be made. However, everybody at that table believed that we were in a very dire financial situation and serious difficult decisions needed to be made. Against the backdrop of no social partnership agreement the Government rightly needed to make these decisions. It stepped up to the plate at a very difficult time and made very unpopular decisions for the right reasons.

We were criticised by the Opposition and I understand the political thrust of parliamentary debate. We were criticised by Fine Gael for engaging the social partners and leading them in a dance for too long. We were berated by the Labour Party for not engaging with the social partnership process for long enough. Fundamentally the Government engaged and reached agreement on a framework document. I know the trade union movement is proposing a social solidarity pact. We will certainly consider all those issues, but fundamentally we had a financial crisis facing us affecting public expenditure in 2009, 2010, 2011 and 2012. We needed to introduce proposals to make savings in those years.

In effect we are here today to ask the public sector to carry a burden. Many public sector workers are angry about that issue. Fundamentally, I must ask people in the public sector to consider the longer term. The State is providing stable employment for those in the public sector. There is guaranteed employment and a guaranteed pension for those in the public sector. Many people in the private sector do not have that opportunity and neither will many tens of thousands in the months ahead. This is not about driving a wedge between the public and private sectors; this is about Ireland as a society and as a cohesive unit asking those who can carry a little bit more to help us get through this very difficult time.

Deputy Burton referred to the inscription on President Roosevelt's tombstone: "The only thing we have to fear is fear itself." We applauded that famous quotation when it was quoted by the Minister for Finance in the Dáil. If this Government is not resolute and is afraid to make the right decisions, then I fear for the future of our country. All Members of this House must be honest and stop playing the political game although I understand the reason people do this. However, in the hour of need, we need unity and support.

The banking sector is another area of critical importance. The analogy often trotted out in this House is that we are imposing a pension levy on public sector workers in order to put €7 billion into the banks. Everyone in this House is crying out for more credit to be made available to business and more mortgages to be made available to first-time buyers. This recapitalisation programme is of critical importance to the broader economy. It is essential that small business can access credit and overdraft facilities in order to carry out normal, everyday business. It is equally important that first-time buyers can access mortgages to purchase homes. Is the Opposition suggesting that we should not capitalise the banks? Is the Opposition suggesting we should not have put the guarantee system in place on 29 September when every Member of the House knows full well that the world financial system was collapsing?

Banks all over the world were folding, governments were shoring them up through central bank injections of capital and the Government made a critical and momentous decision on 29 September to guarantee the banks. The deposits of the banks were guaranteed which means the deposits of all the people with money in the banks. This is often forgotten by some in this House. The Government guaranteed the loans. How else would banks be expected to access loans on the international markets in very difficult times? Some of the comments in this House do no justice to the severity of the difficulties in the financial world. I hold no truck with the banks other than that I understand the reality that they are of critical importance in providing credit to first-time mortgage holders and for oiling the wheels of industry. A little bit of honesty in this debate would go a long way.

The Government could have made a populist decision, shirked its responsibility and jeopardised the future of the country. I acknowledge that Fianna Fáil has suffered because of it but we are not in the business of keeping our eye on the next election when there is a major challenge facing the economy. If we do not make the difficult decision, the next challenge will fall on the shoulders of the generations to come.

I find the slurs and innuendo made against the Taoiseach disgusting and distasteful. People in this House say they are not casting aspersions while at the same time fax machines and press offices are swirling out press statements to the contrary. This is disgraceful carry-on. The Fine Gael Party behaved very responsibly in the context of the bank guarantee scheme when it stood with the Government in supporting it. However, this sniping is being carried out at a very critical time when the eyes of the world are watching Ireland to see how we are dealing with our affairs and it does no service to the party that has a very strong and proud tradition.

I support the measures in the Bill because I know this is the right action in these very challenging times in order to address the needs of our society and country.

Deputy Denis Naughten

The previous speaker referred to the comments made in the House, the impact on the economy of those comments and the need for honesty. However, it is the lack of competence and reassurance from the Government benches that has led to the lack of confidence in our economy. Last weekend, the former chief economist with the International Monetary Fund, the IMF, was quoted as saying that the huge problem currently facing the world markets and causing the lack of confidence in Ireland is the lack of a plan. Since last July we have been promised a plan from the Government and we still have not seen one. At least if there was a plan laid before the House, we could debate it and argue its pros and cons. Instead we have the abacus economics of this Government on fundamental issues which will not only have an impact on the economy today, but also will mortgage our children's future. If this Government gets it wrong, we are also mortgaging the following generation's future.

I wish to compare the situation in Ireland to that in Australia. At the end of last month, Deputy Rabbitte and I met with a member of the Australian Parliament. She spoke to us about the Australian Government coming forward with a second stimulus package to try to support the economy amounting to €26 billion. Deputy Rabbitte and I asked her where the money was sourced and she replied that it came from their reserve. The Australian Government had put money aside in the good times in order to deal with future challenges. However, our Government squandered every cent it got and the only commitment given at the end of the year was to spend every cent in the bank. This is the reason there are electronic voting machines lying in a shed in County Meath and computer systems that do not work and issue weekly staff payment cheques of €1 million.

The rainbow coalition Government created 1,000 jobs a week and now we are losing four jobs every five minutes. This has been caused by the Government's greed and the failure to broaden the tax base. The Government fuelled the property bubble and failed to invest in broadband, education and training. Previous speakers have referred to the banks and that this is an international crisis. I agree there is an international banking crisis but this is because many of the banks around the world invested in the US sub-prime market, either directly or indirectly, but our banks did not do this. Our banks suffered from a lack of basic regulation of their day-to-day finances and this is the reason the country has ended up in the mess. Leaving aside the sub-prime situation, we were always going to have a problem because of the lack of regulation. It is really galling that the Financial Regulator, who was supposed to be policing the sector, is given a golden handshake, a reward for his abject failure and the abject failure of this Government to regulate the financial services sector.

We are debating the imposition of a public service tax. A total of 70% of the Government's €2 billion will be raised by this tax. The Government should at least be honest with the public servants and tell them it is a tax. Telling them it is a pension levy is misleading and wrong. We all know that a 12% discount was applied to public service employees in the second round of benchmarking as a result of their pension entitlements so this has already been factored into the calculation. That there is no evidence of the Government leading by example galls public servants, given its waste, bureaucracy and extravagance in the past 12 years.

Fine Gael has tabled an alternative mechanism to address the funding issues. For example, the urgently required overhaul of FÁS would save €150 million. The comments in yesterday's newspapers regarding its former director general were appalling. Following a vote of the FÁS board, he has been allowed to keep his luxury car in addition to his lump sum payment of €111,000 and a contribution to his pension worth €330,000. Every individual on the board should resign. Those who voted against Mr. Molloy getting a luxury car in addition to the amount of €441,000 should have resigned because their colleagues were not prepared to support them. Those who voted in favour should resign in shame, having used public funds to hand something to Mr. Molloy in addition to his golden handshake.

It is appalling that, according to the reports, between €50,000 and €70,000 was spent on a PR company to defend the indefensible concerning public funds that were squandered by that organisation in the past ten years. It is a national disgrace, but the Government continues to turn a blind eye to the matter and to the golden handshakes being given in banks.

At the other end of the pay scale, clerical officers and cleaners on €15,000 or €20,000 are suffering significant tax increases and additional charges. I am not just referring to this pension levy, but to increases in VHI charges and electricity costs owing to gross mismanagement of regulation. It is considerably frustrating for people to watch what is occurring and to see the Government turning a blind eye and being unprepared to lead by example on these basic issues.

Fine Gael has proposed a number of areas in which savings could be made. We could get rid of many of the quangos and save at least €50 million per year. Were we to introduce legislation on generic drugs similar to that introduced in the House a number of years ago by the now Tánaiste, the then Minister for Agriculture and Food, and apply it to the health service, our savings would amount to €200 million per year.

The Government is not prepared to consider areas in which we could rid ourselves of some of the squander of the past 12 years, but it is prepared to make clerical officers pay more in tax and levies than a consultant on €250,000 per year. This is a damning indictment of the proposals tabled in the House. We on this side find it unacceptable that the Government, while not being prepared to address the mismanagement of public funds, is penalising some of the lowest paid workers in the public service. Many anomalies have been articulated by my colleagues.

With regard to the issue of immigration, asylum accommodation costs increased by €15.5 million last year, but the number of people accommodated has decreased in recent years. The Refugee Appeals Tribunal, which Members on this side want to see abolished for being unjust and unfair, costs more than €200 million per annum. Every year, we will spend €6 million providing accommodation at Thornton Hall for those who will be deported to non-EU countries through our immigration system. The accommodation provided amounts to 17 times more than what is required, given the numbers going through the system.

There is plenty of room in which to save the €2 billion this year and the €4 billion next year referred to by the Government, but Ministers must take decisions and examine where public funds are being squandered. It is frustrating that on the Government side of the House, there is no respect for the fact that the money in question is being paid into the Government's coffers by workers for whom earning it is difficult. The Government is spending the money like it was snuff at a wake. How much time have I remaining?

Acting Chairman

Nine minutes.

Deputy Pat Rabbitte

Are these 20-minute or ten-minute slots?

Deputy Denis Naughten

They are 20-minute slots.

Deputy Pat Rabbitte

Is the Deputy continuing his 20-minute slot?

Acting Chairman

Deputy Naughten has 20 minutes. He will be followed by Deputy Coveney. Deputies Rabbitte and Morgan will then have ten minutes each.

Deputy Denis Naughten

I acknowledge the Ceann Comhairle's announcement last night regarding Oireachtas reform. I hope that in line with the commission's decisions, the Government will implement proposals on necessary savings. Some 11 of the Ministers of State have already volunteered to resign their positions. The Taoiseach should take them up on their offers, as it would save at least €5.5 million per year in additional costs. We must ensure that the Ministers reduce the large armies of staff in their constituency offices who are allegedly meant to serve constituents. Ministers would better serve their constituents by ensuring that funds were ploughed back into the Exchequer.

It is time to get rid of the electronic voting machines once and for all. The decision to spend €54 million to purchase them was crazy. Contracts lasting for as long as 25 years have been signed to house obsolete machines that will never be used.

It is clear that significant savings can be made across the public service. My colleague, Deputy Coveney, referred to the €300 million in carbon taxes taken from the public in electricity charges. Given the fact that those carbon credits were handed to the ESB for nothing and constitute additional profit for the company, there is considerable anger over the wage increases received by staff at the ESB. Surely, either the money should be clawed back by the Exchequer or electricity bills should be reduced by at least 10% for those individuals who are struggling to cope with mortgage repayments and the Government's additional taxes and levies.

My colleague and party leader, Deputy Kenny, highlighted the urgent necessity to focus on the real economy. Every five minutes, we lose four jobs. A significant number of people have lost their jobs in recent months. Since Deputy Cowen became the Taoiseach last April, my constituency and surrounding towns have lost the equivalent of 2.5 Dell companies. The retail sector is haemorrhaging jobs because of the Government's failure to reverse the increase in the VAT rate. People go north of the Border to do their daily and weekly shopping.

We have proposed the introduction of a PRSI exemption for employers who take on new employees during 2009 for 12-month periods. Every unemployed person costs the Exchequer €20,000 per annum in social welfare payments and lost taxes. The State is losing out.

It would make more sense to support the creation of jobs than to allow this to continue. Furthermore, 50,000 jobs could be created, were the renewable energy sector to be supported. While the Ministers for Communications, Energy and Natural Resources and the Environment, Heritage and Local Government talk the talk in this regard, the only development has been the announcement on insulation grants, which has decimated that industry and has ended up with hundreds of employees being laid off.

In the time remaining to me, I will focus on the issue of taking money from farmers' pockets. It is a disgrace that the Government entered contracts with farmers to inspect the work done under the farm waste management grant within nine weeks of completion and then to pay farmers within a further four weeks under the terms of the scheme but that this now has been ignored. We have reached this point because first, the Government designated the entire country as a nitrate-vulnerable zone, against which I argued at the time of designation. Thereafter, the Government introduced restrictive regulations including the new policy of farming by calendar. It then forced farmers into making significant investments and consequently, under the terms of the grant scheme, forced them into securing bridging loans. To draw down the grant, farmers are obliged to return receipts showing they have paid all the associated bills. Farmers genuinely believed they would be paid within 14 weeks. At present however, many farmers are repaying bridging loans to their banks, which is exerting great pressure on them. I know of one farmer who owes €74,000 to his bank. He has four small children, his only income derives from his dry stock farming activities and he does not know how to service the bank loan, let alone address the debt that hangs over him since the Government's statement that it will not pay until some time in 2011. Had the Government listened to Fine Gael's proposal on an extension into 2009 because of the poor weather experienced over the last two summers, €600 million would not now be owed to farmers, as the cost would have been stretched over a longer period.

It must be noted that the Minister for Agriculture, Fisheries and Food encouraged farmers throughout the latter half of the year to submit their applications and to get the work done. Having ensured that they incurred as much debt as possible, he then told them there was no money to meet it. His excuse was that he did not know that so many farmers would apply at the end of the year. All the Minister had to do was listen to my colleague, Deputy Creed, who, on 25 August 2008, highlighted the inadequacy of the funds available and that it would cost approximately €600 million to pay the 28,000 farmers whose grants were due. It was clear as long ago as last August that a problem existed in respect of funding. As the Minister is not accustomed to listening to Opposition Members, he need only pick up the farming section of the edition of the Irish Independent of Tuesday, 26 August 2008 and he would read the same point.

This has led to a crisis among farmers with their bank managers in respect of cash flow. The really frustrating point is that last week, €7 billion was given to the banks. Would it not have been better to give €6.5 billion to the banks and to put the outstanding €500 million towards the farm waste management scheme? This money would have returned to and recapitalised the banks anyway, because all of it is owed to them. Moreover, it would have had a major impact on the local economy. It is clear that the current Minister for Agriculture, Fisheries and Food has wound down the Department in a slow process over the past 12 years. Since the introduction of the single farm payment, 517 farmers in my native county have left agriculture, although it was meant to secure their long-term future. The present Minister, who is unable to do the basic mathematicss, encouraged farmers to get into significant debt before Christmas but afterwards came out with one arm longer than the other and stated that he has no money.

Deputy Paul Gogarty

I welcome the opportunity to speak on this not particularly happy subject. I have decided not to use notes, as I would rather speak from the heart to see what comes to mind. Sometimes, one would not say what comes to mind, were one being diplomatic. However, some tough things must be said.

As for the specific item of legislation, Deputy Mansergh suggested that Members should refer to the bona fides of the Bill itself. From that perspective, I am satisfied that my Green Party colleagues played a full and welcome part in that regard. It is not simply about the public sector pay element, to which I will return, but also pertains to other matters. Issues that were thrown into the pot because the situation is so dire included, for example, Christmas bonuses for pensioners and social welfare recipients. That would have been the most Scrooge-like measure to have been taken in the history of the State but things are so bad this was up for discussion. As for overseas development aid, some people assert that charity begins at home, although Members are aware that the conclusion of that saying is that it does not end there. Other groups have correctly observed that overseas development aid has been hit. I again am satisfied that through the input of the Green Party as part of the discussions, overseas development aid received more than otherwise would have been the case. The Green Party is playing its part in this respect and in acknowledging the tough decisions that must be made.

I have come in for much flak in recent weeks, as has every Government Deputy. The extant vehemence and anger to which I will refer later is completely understandable. However, if one wished to be popular, one would cross over to the other side of the House immediately. That is where one receives claps on the back and plaudits for taking brave decisions, blah, blah, blah. Unfortunately, however, having repeatedly wrestled with my conscience, the question is, what is in the country's interest? It is in the country's interest to have some form of stability and a message to go out to the international vultures that Ireland is open for business, although the shopfront is looking somewhat tattered. Our shop is open for business and we are becoming more competitive by the day in comparison with our European colleagues because of the measures that are being taken. Were they not taken, our lending ratings would have worsened and our ability to borrow might have disappeared altogether. Certainly, we would have been obliged to make punitive repayments and had the IMF come in, which was a possibility at one point, public service jobs would be lost. A diktat would have been laid down to the effect that Ireland was no longer a sovereign State and that cuts must be made here, here and here. For that reason alone, the Government must be commended on making the tough, responsible decisions.

Members from all sides of the Opposition have made some valid points as to how these cuts should be implemented. While such a debate is to be welcomed, no one disagrees that the cuts had to be implemented and had to be implemented on the day they were announced. I have tabled a rake of questions to the Minister for Finance in particular to try to ascertain the levels of fairness in respect of the public service levy. I tell constituents who e-mail me that they should not be misled. This is not a pension levy but is in fact a salary cut. That is how I take it but it is framed as and termed a pension levy to protect eventual pension payments. However, it constitutes a pay cut in reality. Public sector workers have been vilified over the years and in my last contribution in this House on the subject, I criticised this because when times were good and the cranes were soaring across the sky, the diggers were digging and the drills were drilling, people in the public sector got on with their work although the pay was not commensurate with that being made in the private sector. I do not refer to everyone in the private sector.

We should remember that there were people the Celtic tiger never reached. However, a large swathe of the population did very well. I am not talking about the people I referred to as "scum" in a previous debate, rather I refer to ordinary people who made good money during the Celtic tiger years. Workers in the public sector, on the other hand, although they enjoyed job security, perceived the unfairness of many private sector workers making far more money than they were. Part of the reason public sector workers are so angry is that they are effectively being asked to take a pay cut, even though many of them did not reap the benefits of the Celtic tiger. They saw private sector workers doing comparatively better, while they did not have their time in the sun or the time to re-balance. I have sympathised with public sector constituents and acknowledged that it is unfair they have not had the time to re-balance. The reality, however, is that with the economy declining as it is, the comparative strength of the public sector is rising rapidly. If all ships are sinking to varying degrees, it is of little solace to be told that one's ship is not sinking as quickly as others. People are naturally reluctant to face up to the reality of the figures. As the Minister for Finance indicated in response to parliamentary questions I tabled, it is now the case that remuneration in the public sector in general, including pension entitlements after retirement, exceeds that available in the private sector. As jobs are lost, the benefit of a public sector job increases. As pensions falter at the whim of international stock markets and as a result of global recession, the desirability of a public service pension rises. Nevertheless, it is harsh medicine for public sector workers to be told that while they may not have had time to re-balance, it is now time to do their patriotic duty by taking the pension levy hit.

The reality is that there is no other way to proceed. Opposition Deputies have tabled various proposals but I do not intend to go into the minutiae of what is right and wrong. There has been commentary in the media on Fine Gael's proposals and whether the figures add up. Valid questions have been asked about the fairness of the Government's proposals. Nevertheless, nobody is denying that action must be taken on public sector pay. However, there are anomalies that must be addressed. For example, a person on a comparatively smaller income will apparently take a greater hit as a result of the pension levy than his or her colleague on a higher salary. Likewise, a person who receives a pay increase €2 greater than his or her colleague will end up €10 worse off. These details must be tweaked. The Minister for Finance has indicated his willingness to address these anomalies provided the overall saving figure is protected. I am not privy to such conversations but it may well be that the tweaking will have to wait until the budget. The Green Party will emphasise the importance of addressing these anomalies and we expect the necessary action will be taken. This would address the general issue of fairness.

The other major issue is one that has no relevance in terms of Exchequer savings but which is powerful in terms of narrative and perception. We have all heard about Banker A whose remuneration may be reduced from €2.8 million to less than €2 million and Banker B who will have to cope with a decrease from €1 million to €750,000. This is Monopoly money. These are the sums we all have in mind when we play the national lottery. There is a general consensus that the people concerned have suffered no punishment. I do not refer to legal punishment. We all hope the legal process will follow its course and I do not wish to cast aspersions on anybody with reference to criminality. However, I am in agreement with my party leader, the Minister for the Environment, Heritage and Local Government, Deputy Gormley, that it is to be hoped certain individuals will be handcuffed. There are certainly those who are deserving of prison sentences. However, we cannot name individuals for fear of prejudicing any investigations. It seems immoral that some are earning so much while others, on much smaller incomes, are obliged to take a pay cut. There is something wrong about this. The onus is on the Cabinet to act. My colleagues, particularly the Taoiseach and the Minister for Finance, must accept their share of responsibility to address these issues. I understand there is agreement that the remuneration of high flying bankers and chairpersons of boards will be reduced significantly. I welcome this.

We can argue all day about whether it was necessary to nationalise Anglo Irish Bank. The debate has been ongoing since September. The Government's position is that if Anglo Irish Bank had not been bailed out, the banks would have fallen like dominoes as international speculators transferred funds rapidly out of the State. Regardless of one's view of the corporate culture at Anglo Irish Bank, there was a need to recapitalise the banks. Prior to that, there was a need for a bank guarantee scheme and, most recently, a need to nationalise Anglo Irish Bank. At the same time, there is a fair and balanced argument against all three of these measures. However, it is not evidence of incompetence, panic or any form of corruption for a sovereign Government to make these decisions. They were taken in the interests of the State. They may prove to be right or wrong, but they were made as quickly as possible in the circumstances. The Taoiseach and the Minister for Finance should be commended in this regard. However, the House must do more.

Deputy Mulcahy has stated the problems we face arising as a consequence of global factors. We are all aware there is a global recession. I am currently reading an interesting and informative book entitled The History of Money which has been adapted for a television series. There have been bubbles, speculation and crashes during the centuries. As we are always told, these events are cyclical. Just before the 1929 crash, there was a belief a plateau had been reached which would last forever. Likewise, those involved in the cosy cartels within the construction industry in the State assumed house prices would continue to rise indefinitely. The narrative was that we were all in for a soft landing, to be followed by a speedy recovery and the continuation of everything just as it was. For the past ten, 15 or even 20 years we have been engaged in what Ronald Reagan described as “voodoo economics”. I referred to this in one of my first speeches in the House in 2002. This is where no account is taken of the social and environmental cost of particular policies or the real wealth in the economy. That is what has happened in the State. Voodoo economics caused “bubble, bubble” and have now led to “toil and trouble”. Shakespeare proved himself to be a great soothsayer. There will be much toil and trouble for everybody.

People will knuckle down and take some pain if they see that there is fairness in the Government's approach. For example, there must be fairness in the remuneration to banking executives. There must also be fairness in political reform. In this regard, I was somewhat amused by Deputy Kennedy's contribution in which he had a good go at Fine Gael about its benefactors during the years. While his criticism might be deserved, it was a little disingenuous for a Fianna Fáil Deputy to be slinging mud in this manner. The attitude seemed to be that it was okay for Fianna Fáil to have engaged in such activities because Fine Gael was at it too. This ties into Deputy's Naughten's remark that the Government is not prepared to lead by example. However, the Opposition seems equally unprepared to lead when it comes to restoring faith in politics.

My comments on the culture of corruption and backhanders in the Fianna Fáil Party are on record. There is a sense of moral corruption associated even with the legitimate political donations in which Fianna Fáil Deputies have been dipped for many years. At this stage it is almost a state a mind or an illness like alcoholism. There is a culture of denial. Deputy O'Donnell has observed that accepting one has a problem is the first step in addressing it. Support groups helping those battling addiction often remind them of the old plea, "God grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference". If there is collective wisdom in the House, we will know the difference between a decision taken in the public good and one influenced unduly by the interests of bankers, developers, big business or trade unions. If we are wise, with the benefit of hindsight, we will make sure this does not happen again. Every time an Opposition Deputy accuses a Fianna Fáil Deputy of corruption, knowing that the Opposition party dips into the pot — however legitimately — that is moral bankruptcy. If we want to lead by example, Opposition Deputies should say there will be no more corporate donations, that they will be abolished. Deputy Michael Noonan did this before the 2002 general election.

Deputy Denis Naughten

The people thanked him for it.

Deputy Paul Gogarty

That is the problem and that is why the Green Party is suffering. It does not have the money and one can see what happens to the party. If it was across the board, one would have a level playing field.

Real leadership is required from the Government side. I do not wish to throw muck at the Labour Party or at Fine Gael, but I will do so to make this point. As a member of a Government party, at times I have felt that perhaps the national narrative of this Government needs to be cleansed and that it needs new thinking. Then I look across and see the same behaviour on the other side. If it is just as bad on that side, I would rather be on this side with some influence.

Deputy John O’Mahony

Deputy Gogarty should make the most of it, he will not be there for very long.

Deputy Paul Gogarty

In the interests of national stability, I will not be jumping. The last thing we want is another Iceland and we do not want to talk down the economy or this country. We must speak honestly and openly about the culture of corruption and how it was created. Why did this culture exist within banking circles? It was because the body politic was happy to take this, and the bankers assumed this was a nod and a wink. The same applied to developers and speculators, who were happy to give legitimate donations. I have figures for various Fine Gael Deputies in the Fine Gael investigation which found that there was no link between a donation and voting for a particular rezoning. Of course there was no link because most councillors are upstanding. Let us not say that everyone is corrupt because they are not. However, the fact that one accepts a donation leaves one open to the accusation that one might be corrupt or unduly influenced. For a population seeking leadership and sacrifice, is it too much to ask the political parties not to dip into the filthy pot but to make decisions in the interests of the country rather than the moral influence of bankers, developers, speculators and trade unions from whom we take the money? I have had my rant at the Opposition——

Deputy John O’Mahony

Deputy Gogarty should now start where the real problem is.

Deputy Paul Gogarty

The Government must introduce legislation. The Minister for the Environment, Heritage and Local Government, Deputy Gormley, is introducing legislation on local election reform, providing, for the first time, for a 60 day spending limit in local elections. This is a welcome measure, as is the move to tackle Members' expenses and the payment of the pension levy by Members. There will be other sacrifices and, while the public will not be satisfied with this, at least it can see that this shower is taking some of the pain. It is not just a case of whipping oneself on the back for the sake of it. When one is taking leadership positions, one must ensure that people are not scoffing behind one's back, commenting that the party has been dipping into the pot.

The Taoiseach is the only individual who can take leadership and ban corporate donations. They may have served Fianna Fáil and other parties well in the past, and it may be fair to say that people have a right to donate in the democratic process, but we must learn from this mistake and end it immediately. There must be no more dirt in the political system, no more. The Taoiseach is not in the House, and I do not expect him to respond to this idiotic Deputy's comments.

Acting Chairman (Deputy Charlie O’Connor)

He probably heard the Deputy.

Deputy Paul Gogarty

Members of the public are prepared to take the pain reluctantly only if they see those who are assumed to be the high flyers taking the pain as well. The bankers are definitely high flyers. Most politicians earn a good salary and have generous expenses but are not exactly flowing in it. At the same time we earn more than the average industrial wage and we must take our share. We must ensure that, in trying to promote our political persuasions, we are not being funded by other more sinister interests. That is what damaged the heart of this State in the past, the cause of the 20% separate from the global problem. It must end now.

Deputy Pat Rabbitte

I propose to share time with Deputy Morgan.

I do not know if the public servants are feeling better after that speech but I am sure Deputy Gogarty feels better, having got it off his chest. He is an honest Deputy, who believes what he says, but that was a fierce bout of self-flagellation and an unusual attack on his coalition partners, which he believes is richly merited.

Deputy Gogarty said that this measure is not fair and he is right. We have all received hundreds of e-mails from public servants detailing their personal circumstances, their personal outlays, the internal inconsistencies in the Bill, and detailing their sense of grievance at being singled out. They always come back to one theme, which is that it is not fair. Where is the fairness in this measure? They are prepared to make a contribution provided everyone makes a contribution according to their means.

Last Saturday, at my clinic, I met a young woman who explained to me in considerable detail that after paying her essential bills she has €11 left per week. The levy will cost €35 per week, so she is down €24. She asked me for suggestions on what she can do in these circumstances. Public servants are intelligent people and they acknowledge that we have been plunged into an incredible hole. They are willing to make a contribution but they want all sectors of society to make a contribution.

Deputy Richard Bruton dealt with the paucity of economic planning, the absence of a plan for recovery and the scanty information published by the Department of Finance. He referred to the fact that the only document resembling the bones of a plan was the document agreed with the social partners before talks collapsed. One cannot give credit to the Government for this document, which is essentially the work of the trade union movement. It has not been debated in this House, nor has it been read into the Official Report of the House, and I do not have time to do so now. The draft framework for a pact for stabilisation, social solidarity and economic renewal bears reading. It is tragic that the Government abandoned it. I am not saying the Government is responsible for the breakdown, which occurred because the Government put figures on this plan on the last day and the trade unions could not live with them because of their manifest unfairness and the way in which very low paid people were being asked to make a contribution beyond their means. The Government has abandoned the document. The Taoiseach comes into the House and tells us he is anxious to keep social partnership going but, at the same time, he has abandoned the document. The approach of the document is interesting and is markedly in contrast with what we have got since.

It states:

In developing a pact, the Government and social partners are fully committed to an approach in which all sectors of society contribute in accordance with their ability to do so, and conversely the most vulnerable, low paid, unemployed and social welfare recipients are insulated against the worst effects of recession.

On public expenditure the document indicated the adjustment would be achieved based on "ensuring a fair and equitable spread of the burden of adjustment". It goes on to list the number of headings that might be dealt with on public expenditure but again, they are not fleshed out and have not been referred to since. On taxation, the document states that, "Changes are to be fair and equitable, with a higher proportion falling on higher incomes while minimising distortionary effects between different forms of tax".

We are not minimising distortionary effects. For example, we know that taking the example of a person in the public service earning €38,000 a year, under the provisions of the Bill that person will pay €1,966 on the salary. If the person was on €48,000 per year, he or she would pay €1,992. A person on €38,966 — essentially €39,000 — will pay €2,030 but if that person earns €10,000 more per year, they will pay less as a levy. That is the kind of anomaly in the Bill that congress was providing against.

The entire document was based on the notion of social solidarity and it has gone out the window with this Bill. Public servants feel very aggrieved about it, particularly the conflict that has been whipped up between the public and private sectors. We all know that in real life the distinction is between people on high income and those on low income. That is the real divide in our society.

For public servants, the salt is being rubbed into the wound as they see this happening before their eyes. The take is huge and Deputy Gogarty is correct in stating it is an income levy. It is a severe pay cut for people on modest incomes. At the same time these people see what is happening at the top of the banks and the Government's timidity in dealing with the issue.

I have a quote from a current Minister of State, Deputy Conor Lenihan, who is my constituency colleague. Deputy Lenihan was giving the benefit of his thoughts on financial regulation at the time and bringing his entire brainpower to bear on it.

Deputy Alan Shatter

This morning Deputy Bruton dealt with the question of the privilege conferred by limited liability. In a company it is a very serious matter if the privilege conferred by limited liability is abused, leading to employees suffering. It is entirely more serious in the banking sector because if that sector abuses the privileges conferred by company law and the construct that is limited liability, it has an impact on the economy as a whole and all our lives. That is what has happened and rather than seeing us dealing with it, the public servants see us tolerating the same people in place and the timorousness of the Government and the Minister. In the meantime, the public servants are asked to pay through the nose.

There is no prospect of a recovery plan and although the basis of one was laid with the social partners, it now seems to have been abandoned. We are going forward slowly while putting our hands into the pockets of public servants and taking out significant moneys irrespective of their means or family circumstances, such as unemployed spouses, and so on. As Deputy Gogarty has stated, it is not fair.

Deputy Arthur Morgan

I thank Deputy Rabbitte and the Labour Party for sharing time with me. I begin by stating my complete opposition, and that of my party, to this legislation. The title of this Bill, Financial Emergency Measures in the Public Interest Bill 2009, is a fraudulent statement in itself. There is nothing in this Bill which is in the public interest and nothing in the Minister's statement which gives me any hope that this Government will address our public finance problems.

Fraud is a term I do not use lightly but there is a culture of fraud endemic in our banking system which has been part of every Fianna Fáil-led Government over the past three decades and has dogged each Fianna Fáil Taoiseach since Charles Haughey. When the identity of the golden circle finally becomes clear we will see once again that this Government is complicit in deceit and corruption.

The Minister has claimed that this so-called pension levy — I agree with Deputy Gogarty in that it is a wage cut and should be called nothing else — is a fair measure and that the deduction is progressive. This is a question of equity. Where is the fairness in a worker earning €11,975 per annum being made to take a wage cut without having entitlement to a pension? Such people would pay a pension levy with no entitlement to a pension, which is bizarre. Where is the fairness in a public service worker earning €35,000 paying a 6% levy when his or her boss on €350,000 pays only 5% in real terms? This is not equity. Where is the fairness in workers being taxed by means of a levy on non-pensionable pay?

It is disappointing that the Minister's statement clearly shows he has no intention of making concessions or accepting amendments. He will proceed without listening to anybody. Everybody in this country accepts that tough measures must be taken but we do not accept that low and middle income earners — the majority of Irish workers — should be made bear the brunt of our public finances while the wealthy and those vested interests who have poisoned our economy are left undisturbed.

We have seen that when tax relief is applied, the wealthy are refunded. This perverse measure means that the higher the salary the higher the relief. My party proposed last October that tax relief should be standardised as a fairer form of raising income. The Minister has continued to ignore this and seems to be determined to find revenue by taxing the working poor. The Minister, as well as IBEC and some media commentators, has misrepresented how public pensions are funded. The reality is that many public workers pay for their pension fund through their own incomes. For example, the HSE paid 6.8% of its total salary to this end, with 6.5% deriving from the staff salary bill. Therefore, if the pensions are for the most part paid by the workers themselves, it is a lie to call this a pension levy.

What are the Minister's ultimate intentions with regard to section 9 of the Bill? Under section 9, he provides for regulations to impose an 8% cut for health professionals. Does this include consultants, with whom his colleague, the Minister for Health and Children, Deputy Mary Harney, agreed a €250,000 a year contract for a four day week? If this is not the case, why not? That €250,000 per annum is merely starting pay, many consultants' salaries go up to €500,000 and beyond.

Since the Minister is going after health professionals' fees, why does he not address the scandalous private, for-profit hospital charges to the taxpayer for the use of their medical facilities? Why are clinics such as the Mater Private allowed to charge €1,000 a night for their bed and breakfast facilities, and how can private hospitals continue to charge more than €800 per patient for the same treatment under the National Treatment Purchase Fund, not to mention the vast, unquantifiable sums of money foregone in tax exemptions to private hospitals?

For the last six months Irish people have been looking for an economic recovery plan. People want to see a Government strategy to create jobs. With over 150,000 workers laid off in the past 12 months, jobs should be the priority. Retaining jobs and creating new ones will ultimately address the problems with our public finances. The Government has shown no initiative, no imagination and no indication that it has a clue what it is doing. While the Government robs €1 billion from public sector workers, it has not spent a cent to create jobs. While it is cutting back on 128 special needs classes, it has done nothing to open up credit for SMEs. While it was excluding parents from the early child care supplement, it has failed to halt the avalanche of factory closures that is destroying the lives of families across the State.

Besides taking a chainsaw to the pay of low and middle income earners, this Government has not done a single thing other than pour €7 billion of taxpayers' money into the black hole of the corrupt banking sector. As the Minister hands over these billions, he refuses to release information on the ten mystery men. This is public money and it was extraordinary that we, as the owners of Anglo Irish Bank, are not entitled to find out who these people are, when they will repay the loans, if they will even be asked to repay the loans or if the Minister will go after them.

My party has given numerous examples of where real waste exists, such as in the area of outsourcing. We must stop outsourcing, which is wasting millions of euro of taxpayers' money. We must rein in the CEOs of State bodies, some of whom are paid more than €500,000 per annum, and we must impose a new contract on Irish hospital consultants.

This Government is failing to deliver for Irish people, it is failing to restore confidence to people. Irish workers, public and private, must stay united in these difficult times. They must oppose the opportunistic measures the Government is trying to impose.

I wish ICTU well in the march planned for Saturday for justice, equity, solidarity and fair play, so that it is not just one sector of society that is being asked to deal with all the problems in the public finances and the economy.

Deputy Niall Blaney

I welcome the opportunity to speak on this Bill on the pension levy. It goes without saying this is a difficult time for all of the public sector. No one wants to see money being taken from his or her own pocket.

To give some of my own background, it is not long since I was a civil engineering technician in Donegal County Council and a former member of IMPACT. I am well aware of how this is impinging on people across the State, I know from people close to me and party workers. I am also well aware of the many workers who lost their jobs and who would do anything to get a job in the morning but the jobs are not there. I know others who have taken a pay cut of 25%, with one person taking a 35% cut, who are still happy to have their jobs. It is good to put things in perspective but that is not happening at present because the Opposition is blindfolded. We hear of parties arranging marches for the weekend. Some parties in this State will be remembered for nothing except arranging marches and I hope voters bear that in mind come polling day.

I remember when I started working for Donegal County Council just over 13 years ago. I was earning just over €17,000. If I was still employed there today, with different agreements with unions and promotion, I would be earning €41,000. That puts this in perspective. While times are difficult, we must recognise where we came from. When I reflect back on earning €17,000, I would never have imagined I would be on €41,000 if I was still working there 13 years later.

Perhaps it is unfair of me to try to compare the wage I am on now and what I could be on but we must look at the facts and recognise there has been a 25% increase in the number of public sector workers since then. I have taken that figure from the top of my head but I believe 25% more people are working in the public sector and it is important to keep that in mind.

This levy protects public sector jobs and pensions. Any cut in wages would affect everyone's pension entitlements. The one positive message that has to be sent out to balance this is that while a person is taking a cut in his wages to pay for his pension, his pension and his job are being protected.

We have been pushing hard in recent weeks to hear proposals from the Opposition parties. They have all the answers but no solutions. Some proposals have been to cut jobs, such as the Fine Gael proposal to cut 5,000 public sector jobs. The party said it quietly but it said it. That does not solve our problem, it goes less than a third of the way, but it is important that people realise the alternatives facing the Government. This is the best choice. Despite all the criticism, no one on the other side of the House has come up with a better option.

I would be the first to say it will be difficult for families but if we want to protect public service jobs in future, we must step up to the mark. While it would be easy to try to borrow our way out of this, we would pay for it in the long run. The Fianna Fáil-Green Party Government — the Green Party is very supportive and good in this Government — must be commended for the approach it has taken.

It is important we state the facts in regard to the amount of money people will contribute. Figures in the public domain are not factual and most are based on gross income. People have not factored in tax allowances. It is important unions give proper information to public sector workers because it is one of their roles. While I am not saying unions are irresponsible, they must be responsible and ensure their workers get proper information. The information workers have is based on gross income. They have no figures on what they will pay when tax allowances are factored in. The figures in the public domain are extraordinary and proper information must be filtered down to public service workers in order that they can get a true picture. It is a very frightening time for them and we are just adding to the upset.

I have received many e-mails from public sector workers in Donegal and throughout the country who have been told they will pay €40 to €50 per week. One husband and wife believe they will pay €400 to €500 per month. One would have to earn almost €200,000 per year to pay up to €500 per month. The facts and figures in the public domain are not correct. I do not believe it is fair for me to give figures today but public servants should equip themselves with proper information. There is tax relief in respect of the levy. Information is available and I believe all Deputies would be forthcoming with this detail, if contacted. I certainly would be and I would welcome anybody coming to me to find out the true situation.

In fairness to the social partners, I must give them credit for coming in and for spending so long with the Taoiseach, the Minister for Finance and the Tánaiste. We must give them credit for the time and effort they put in and for the fact they recognise that €2 billion must be saved. They also indicated they are willing to work with the Government in the future to ensure this country is in a good position to fight this global recession and is in a good position when the good times return.

I welcome the effort made by the social partners which was criticised by some in the Opposition. They asked why Fianna Fáil and the Green Party were negotiating with the social partners and said that we were the politicians and that we should make the decisions. Now that we have done that, they are saying we should go back and talk to the social partners again.

We must realise decisive action needs to be taken not only for the good of our books but for the good of the global market. We are being watched not only in Ireland but further afield. Stability is very important in Government. It is important we all recognise how reckless we can be sometimes by saying the wrong things. We have had examples of that. As I mentioned last night, a few comments about banks being bust or otherwise can be so reckless in terms of our markets. We must be smarter in the way we conduct our business.

I have watched the head hunt in recent days in regard to the circle of ten. I have said that I hope the circle of ten is not uncovered until such time as the authorities have investigated everything and are in a position to take things further. If criminal proceedings are required, so be it. However, I fear that if those people are named in this House, so much will be said in the Chamber and outside it that it will damage the prospect of making those individuals face prosecution, if necessary.

The public is rightly angry about the banking situation. The past number of weeks has not been a very nice time for Ireland but the Government is dealing very well with this issue and it is taking a very honourable approach to it. It is a damage limitation exercise in terms of how it is going about it but the next number of weeks will prove that its decisions in regard to the banking sector are correct, as is the way it is conducting its investigations. Ireland will come out of this in a very good light in a couple of weeks when matters come to a head, and I have no doubt matters will come to a head. While we would all like to see things happen quickly, there must be due process which, thankfully, is the case at present. I hope that will continue.

It is a very tough time for small businesses which have not been done any favours lately in regard to the availability of cash and small loans to keep afloat. The Minister for Finance is working very hard on this and I expect results from him sooner rather than later. I would like him to ensure those small businesses get the necessary funding because they are not getting a fair deal from some institutions and it is time they did.

A number of small businesses have fought hard to survive over the past six months. If they do not get help soon, they will have no option but to close. These small businesses are not only providing jobs for the public, but they are providing small contract jobs for the public service, including local authorities. They are getting contracts which are guaranteed, because they are Government funded, but the banks will not make loans available to them even though the money is guaranteed. I hope the Minister for Finance moves on that quickly.

I refer again to the pension levy. We all know many people who are facing tough times. I appeal to the public sector to look around to see who is proposing anything else which would add up to what is required, that is, €2 billion. If we had any other option, this would be the last one we would take. No suggestion or otherwise has been made by any other party or organisation in this country which would raise the €2 billion. It is easy to criticise. Perhaps some of those who are good at criticising should spend time putting their heads together to come forward with decent proposals on how €2 billion could be saved.

I do not know where the Labour Party gets its ideas, but much and all as we would like to do it, its proposal to go after tax exiles, which would, apparently, raise €150 million, is nonsense. The only way to chase after them would be through their passport numbers. We all know that vast numbers of Irish people live abroad, but most of them are not tax exiles. The idea of tracking down tax exiles through their passport numbers to get money from them is farcical. It is not possible.

It is time we got real and constructive. The people are not fools. While they may be sore at the current proposals, in the long run they will recognise the Government has taken tough, hard decisions, not for any short-term party political gain, but for the long-term benefit of the country. When people recognise this, they will realise they were right to elect this Government and will do so again.

Deputy John O’Mahony

I wish to share my time with Deputy Shatter.

Acting Chairman

Is that agreed? Agreed.

Deputy John O’Mahony

I have been listening all morning to this debate and find the comments of those on the Government side, particularly backbenchers, incredible. They say the Opposition is not acting responsibly, that the unions are providing false figures and Deputy Blaney has just said that public service members have inflated the figures with regard to how much they will lose as a result of the pension levy. If we were to believe what they are saying, only the Government is acting responsibly. My question is, why did it not act responsibly over the past 11 years, instead of wasting and squandering the money created by the people?

We are being told the Taoiseach, Minister and Government are now doing what is necessary for the country. Why did they not do what was necessary when the wealth was being created? We in the Opposition are told we have forgotten about the great work that was done, such as road projects. However, neither we nor the people have forgotten the teachers and parents of children in schools around the country, whose schools are falling down and have not been replaced over the past 11 years of squander mania. We have not forgotten about the parents who have had to go to court to vindicate their rights for their children with special needs while the Government spent hundreds of millions defending the indefensible.

Deputies on the Government side came into the House today to defend the indefensible in this Bill. I have only been a Member of the House for a short time, but I have worked with many successful people in the past. One thing successful people do is accept responsibility for their actions. Over the past three or four hours, we have listened to Ministers, Government Deputies and Green Party Deputies, but they have not accepted responsibility for bringing the country to its knees.

I am glad to contribute to this debate on the efforts by the Government to deal with the consequences of how it has mishandled, mismanaged and squandered the wealth of the country over the past 11 years. It now proposes to screw the people who helped create the wealth and ask them to pay a totally unfair amount in order to bail out those who created the problem. Ministers, bankers, speculators and developers made decisions that squandered, wasted and spent as if there would be no tomorrow and the good times would roll on forever.

Less than nine months ago, the Taoiseach and Ministers told us everything was fine and that although there was a slight downturn, there was no problem because we had a sound economy and would be able to withstand the downturn without too much pain. We remember that our former Taoiseach, Deputy Bertie Ahern, told people warning about a downturn not to talk down the economy but to commit suicide instead. How ironic and irresponsible that was from the position we are in today.

The hard-working lowly paid workers of the country knew differently when the Government was proclaiming everything was fine. They knew differently because they were unable to get jobs or were losing the ones they had. They knew differently because sales figures in their businesses were down. They knew differently because competition and costs were spiralling. They saw the train coming down the tracks, but the Government did not see it until it crashed through the front door.

The issue today is how to deal with the mess the Government has created. All those in their right mind realise that difficult decisions must be taken. However, they must be taken in a fair and equitable manner that will ensure those who can afford it will be asked to pay the most. The pension levy is anything but fair and equitable. How fair is it to ask someone on €25,000 a year to pay €1,000 of a pension levy while someone on the same amount on social welfare pays no income or pension levy?

The Taoiseach has talked about tweaking the levy, but it needs more than tweaking for lowly paid workers. Otherwise, he is telling thousands of workers earning under €40,000 per annum they should give up their jobs. If the measures are not changed, they will end up costing the State much more in social welfare benefits. I have the facts before me with regard to a husband, wife and three children who, between all their social welfare allowances, get €41,000 — and they are entitled to that. However, people earning €41,000 will now have to pay the pension levy and pay for children going to college, medical charges, etc., as they are not entitled to medical cards and do not have the supports provided to welfare recipients. Therefore, this levy asks lower paid workers to give up their jobs. If this Bill is passed, the lower paid would be better off on social welfare. Otherwise they need to earn €150,000 per year.

With regard to section 12 dealing with the farm waste management scheme and the recent decision to defer payment to farmers approved under the scheme, each time the scheme has been raised in the House over the past year, the Minister has told us about how much money the scheme has meant for farmers. It is only a good scheme if farmers are paid the grants to which they are entitled. Some 17,400 farmers await payments. They applied and were granted approval for the same scheme as those who were paid in full in 2008.

It is a distinct possibility that farmers awaiting payment have a legal entitlement to full payment. How can there be two methods of payment when the contract entered into by both sides was the same? Yesterday, I was speaking to a farmer who is owed €92,000. He has been given legal advice that he has an irrefutable case. It was stated in the contract for the scheme that farmers who were approved would be paid within 14 weeks. Surely, there has been a breach of contract. The least that should be offered to farmers now is that the extra costs incurred by way of interest should be met by the Department.

It is pathetic to see the Minister hold up his hands in despair because of the glut of applications last December, when it was his mishandling of the scheme and the imposition of his deadline that caused the avalanche of claims then. If he had extended the scheme, he would have saved money and would not now be looking for the €400 million immediately. Not alone that, thousands of builders would still have work and the dole queues would be shorter.

The farm waste management scheme was introduced in early 2007 to buy the farming vote in the general election. No costings were required and there was no care as to how many would apply for it. We had miscalculation after miscalculation and now this side of the House is being told to act responsibly. Remember these farmers took on these works not to make a profit or to put the money into their pockets. They were investing their own money as well as benefiting the environment. The money they borrowed from the bank was based on the premise that the grant would be lodged when it was received in full. The goalposts have been changed by the Government but the banks do not want to know and they are looking for the money from the farmers.

It is easy to understand why the people affected are very angry, cynical, desperate and disillusioned as a result of seeing the banks bailed out for billions. Surely the extra €400 million could be found to pay these grants which would then find its way into the banks anyway. This would be another way of recapitalising them and would help the farmers along the way. I call on the Minister for Agriculture, Fisheries and Food to announce immediately that the interest these farmers must pay will be met by the State.

Everybody accepts that financial problems must be confronted. Fine Gael has laid out its proposals clearly. It is not too late for the Minister to take on many of these proposals and I ask him to do so.

Deputy Alan Shatter

We all know in this House that the country is confronted by the gravest financial crisis in the history of the State. This crisis is made a great deal worse by the Government's complete incapacity to bring forward a detailed coherent economic plan and strategy to get this country through the choppy waters with which we are now confronted. We have seen the Government introduce a variety of piecemeal fire brigade measures to deal with the fiscal crisis but there is no overall vision of any description. There is no direction or hope held out for the people who reside on this island other than the promises of greater tax, cuts in services, collapsing property values and the loss of a great many more jobs.

We are confronted by a problem, the enormity of which I am not sure is yet fully understood. The Government's condition of denial in which it refuses to accept any level of responsibility or accountability for the disaster with which we are now confronted adds an extra layer of problem that affects every man, woman and child living in the country. Deputy Brian Lenihan, the Minister for Finance, said something of importance today and I wish to quote him. He stated:

The Government must borrow €18 billion this year at far steeper interest rates to finance capital spending and also to meet the current budget deficit. In other words, we will have to borrow €4,500 for every man, woman and child in this State.

The Minister goes on to refer to this as dead money which should be going to pay for the public services we need. Why are we borrowing this amount of money and in particular why are we borrowing it at far steeper interest rates? We are borrowing it at far steeper interest rates because our international credit rating has collapsed. We are paying interest at unprecedented levels for funds the State needs simply to keep it functioning.

There are two primary reasons for this. The first is the appalling misconduct within our banking sector, the bad decisions made with regard to lending and the utter collapse of credibility in the manner in which our banks are managed. The second reason is that there is no international confidence in the Government. Outside this island, the Government is deemed to be grossly incompetent, bereft of economic direction and addicted to producing all sorts of documents making all sorts of promises which are uncosted and which have no credibility of any description.

What people outside this House do not understand is that not until we reform our banking sector and remove from the boardrooms of every financial institution in this State those who presided over the disaster within the financial and banking sector with which we are confronted but also not until the Government is driven out of office will there be any chance that our credit rating will improve on international markets.

The Government's very position in Government is continuing to damage the country's international economic credibility.

The very continuing existence of a Government which lacks accountability and has not even the capacity to say "sorry" for the disastrous economic policies it implemented is exacerbating the problems with which we are confronted.

This particular measure dealing with the levy is unfair. It seeks to impose what is called a "pension levy" but is in reality a pay decrease for those at the very lowest levels of income who do not even earn the average industrial wage. Yes, we need social solidarity and coherence. However, what this Government has attempted to do is create a wedge between the public and private sector and by producing piecemeal policies is driving people onto the streets and producing ongoing and continuing social instability to the detriment of everyone in the country.

Many people who will be affected by this levy find it completely incomprehensible that those who caused and contributed to this problem and disaster in the banking and regulatory sector continue to get a series of golden handshakes and huge payments for continuing in their positions that go way beyond the expectations of any individual in an ordinary job in this country.

There are people who should be affected by this legislation who are exempt from it. As a lawyer I am fully conscious of the reality that our Judiciary is independent. As a Member of this House I am quite willing and accepting of any salary deductions that we must take. Many people outside this House on €30,000 or €40,000 a year who will be affected by this levy will look askance at the fact that the Judiciary, who are paid substantial sums of money, are exempt from it. Why are they exempt? If it was actually a pension levy there would be no difficulty in applying it to the Judiciary but the Government knows it is simply a wage reduction by another name and there could be constitutional difficulties. I am asking the Minister for Justice, Equality and Law Reform to engage in discussions with the Judiciary to bring it within the terms of this levy as every Member of this House will be. I see no reason it should be exempt.

Until such time as we truly clean up the banking sector and whatever investigations are necessary are conducted, no matter how much money is poured in it will continue to lack international credibility. By now the fraud squad should be investigating some of the events we know involved Anglo Irish Bank, Irish Nationwide and Irish Life & Permanent. The Government has a role in ensuring this fraud squad investigation takes place. If there is any doubt as to the capacity of the fraud squad to deal with such complex financial issues, if need be we should look for assistance from a respected outside investigative agency whether it be the FBI or any other agency that could be of assistance to us.

I listened to Deputy Gogarty of the Green Party speaking earlier. I look askance at the double act the Green Party is playing. It is sort of in the Government but apart from it.

Deputy Paul Gogarty

What? Saying that you are just as corrupt. That is not a double act. That is the sad fact. Deputy Shatter might have his integrity but a lot of——

Deputy Alan Shatter

People seem to forget that the Green Party has been in government since May 2007. The Green Party was part of an irresponsible budget produced by the then Minister for Finance, Deputy Cowen, in this House.

I would like to continue for a couple of minutes and then conclude. I do not believe Deputy Gogarty, who enjoys shouting and who, apparently, in the middle of a public meeting in his constituency felt the need to roll around on the floor and wave his legs in the air, deserves to be taken too seriously.

Deputy Dinny McGinley

We do not want to see that.

Acting Chairman

The Deputy should confine his remarks to the Bill.

Deputy Alan Shatter

The only regret is that there was no video of that event. We would have all got some enjoyment out of it.

Deputy Paul Gogarty

The video would have vindicated me.

Deputy Alan Shatter

I will conclude by dealing with an important issue. In restoring integrity to our banking system, those responsible for acts that have brought it into disrepute and responsible for engaging in fraudulent activities that may well require to be dealt with pursuant to the criminal law should be fully and properly investigated.

In the context of decisions made by the Government that have been brought before this House and which relate to issues such as the bank guarantee scheme, recapitalisation, and the nationalisation of Anglo Irish Bank, I am bemused by Green Party Deputies and a Green Party Senator who call constantly for investigations and talk about bankers. This is because two Green Party Members sit in Cabinet. What did they know about some of these events? Were they informed in Cabinet that €300 million was used to enable ten anonymous individuals to purchase what was known as the "Quinn overhang" in Anglo Irish Bank, that this money was provided by that bank and that this falsely and fraudulently held up the share price of the bank on the stock exchange? When did the Green Party Ministers discover this? Did they know it in July and were they informed by the Minister for Finance? Did they know it before 29 September when the bank guarantee scheme was announced? Did they know it before there was an announcement of recapitalisation, which ultimately evolved into the nationalisation of Anglo Irish Bank?

These are important issues and they go to the heart of our banking system. They go to the heart of the international financial community's view of our banking system and Government, the credibility and honesty of our banking system and the competence of those in Government who are now charged with tidying up the mess they are partially responsible for creating.

This is a very narrow debate and, unfortunately, I have only ten minutes within which to speak. There is a broad range of initiatives that should be taken now to create employment and protect jobs. We should be discussing these in this House. However, the Government seems incapable of producing a broad social and economic policy that gives people hope that we can climb out of the pit in which we now find ourselves. There is a need to go beyond levies and to apply fairness to the measures being implemented. There is a need to stop attacking the most vulnerable, such as the over-70s, the intellectually disabled and a broad range of others, whom the Government seems to have targeted to date and whom it seems to regard as the easy and soft target. It is in respect of these people that the Government has implemented measures that have saved or are designed to save small sums of money but which have no overall impact on or relevance to getting the economy working again. We need to have a working economy and to re-employ people. We need urgent initiatives so the unemployed, whose number is growing, can be retrained and educated such that they can be re-employed and not left on the dole queues over the coming years.

Deputy Seymour Crawford

I wish to share my time with Deputy Creighton.

I welcome the opportunity to speak on this Bill. It is unreal that, after 15 years of the so-called Celtic tiger, we are in a position in which we cannot meet our commitments and pay our bills. We are now asking the innocent people to carry the can while those who brought us into these circumstances walk free.

I condemn the inequitable nature of the pensions levy. It is hard for those affected to understand why they should pay while bankers and regulators walk away with hundreds of thousands of euro, and sometimes millions, in handouts. One cannot help but mention the cuts to child allowances at a time when a proportion of the fund for this purpose is being sent out of the country due to technicalities. This is completely unfair and it is no wonder people are very angry.

Section 12 relates to the farm waste management scheme. While the Government has stated there is a total of approximately €500 million to pay the 17,500 who were forced to have their farm waste management building projects completed and documented by 31 December, in real terms only an additional €300 million is needed to pay the remaining 60%.

Deputy Bernard J. Durkan

Hear, hear.

Deputy Seymour Crawford

In other words, 40% is to be paid up-front while 60% will be postponed. The Government proposes to default by paying the second 40% in 2010 and the remaining 20% in 2011. The Minister should compare this rescue plan for 17,000 farmers with the instant resolution of the Anglo Irish Bank share issue whereby ten individuals could release €300 million in borrowings from Anglo Irish Bank, which I understand we as taxpayers will write off without anything in return. It is very difficult to explain to 17,000 farm families that €7 billion can be found to recapitalise two banks while €300 million cannot be found for farmers.

I urge the Minister to reconsider this issue and accept the fact that the farm families signed a legal contract under which they promised to carry out certain works to a specific standard based on the commitment that they would be paid. One should remember that a similar number of farmers to the number affected, who had their work finished at an earlier stage, have been paid in full. Questions must be asked as to whether some of the unpaid applicants were seriously held up in the system because of a lack of personnel due to retirements and transfers. How can the Minister justify the fact that, in one area, applications were dealt with in the normal way and therefore subject to payment, while, in others, applicants were victims of the failure of the Minister for Agriculture, Fisheries and Food to provide sufficient staff?

The Minister, but especially farmers, are victims of the Minister's failure to extend the closing time for the scheme. If he had allowed those who had commenced work under the terms of the scheme to continue into the spring of this year farmers would have saved enormous sums of money, as they had to pay over the odds for their jobs, and there would not be the same pressure on the Department to pay grants.

An Leas-Cheann Comhairle

Approximately sixteen and a half minutes remain to the Deputy in his slot.

Debate adjourned.

Dáil Éireann debate - Thursday, 19 Feb 2009

Financial Emergency Measures in the Public Interest Bill 2009: Second Stage.

Dáil Éireann debate -
Thursday, 19 Feb 2009