In April of this year, the Minister for Finance forecast that some €34.4 billion in taxes would be collected this year. The Minister later indicated that the Government was €2 billion shy of that forecast for the nine months to the end of September. The most up-to-date figures will be released in the next few minutes. What is the figure for the overall tax revenue for the year to the end of October? What is the likely impact of that figure on the projected annual revenue forecast for the year? How do the tax revenues for the ten months to the end of October 2009 compare with the figures for the ten months to the end of October 2008?
Leaders’ Questions.
I will start by responding to the Deputy's second point. Just over €26 billion in tax revenue had been received by the end of October. That figure represents a year-on-year decline of 17%. Against the profile, overall tax revenue was down 4%, or €1.074 billion, by the end of October. VAT and income tax continue to be the weakest tax heads against the targets that were set. In response to the Deputy's first point, the returns to be released by the Department of Finance at 4.30 p.m. show that there was an Exchequer deficit of just over €22.7 billion at the end of October 2009. The main factors in that year-on-year deterioration are the year-on-year decrease in taxes of just over €5.4 billion; banking-related payments, such as the payment of €4 billion to Anglo Irish Bank; and the increase of €1.7 billion in the National Pensions Reserve Fund payment, by comparison with the payment that was made in the year to the end of October 2008. A total of €3 billion in front-loaded contributions has been paid to the National Pensions Reserve Fund to date in 2009, compared to the payment of €1.3 billion that had been made by this time last year. When the Exchequer returns were published at the end of September, the Department of Finance signalled that there would be a shortfall of approximately €2 billion in tax revenues at the end of the year. That implied that there would be a year-on-year decline of approximately 20% in tax revenue. I understand that the data in the October returns is consistent with the earlier end-of-year forecast.
Deputy Bruton has pointed out on a number of occasions, particularly over the last 12 months, that one cannot tax one's way back to prosperity. What is the projected shortfall that the Government will have to deal with when it compiles its budget on 9 December next? Does the Taoiseach attribute the fall-off in taxes to the fall in employment? Does he now accept it was a mistake to impose taxes amounting to €6 billion last year?
It is difficult to accept projections of this nature from the Department on a year-on, year-off basis when that Department produced a NAMA business plan asking us to believe monetary values for ten years down the line. Clearly, the range of taxes imposed by the Minister for Finance is now creating very difficult circumstances. When the tax figures of the self-employed are submitted at the end of November, it will be discovered that circumstances are even worse.
Job creation must be central to our approach. Given that almost 500,000 people are out of work, and leaving aside the well-recognised problems associated with the public finances, the banking sector and the extension of credit to businesses, will the Taoiseach state the three main priorities of the Government to get people back to work? As he well recognises, the only way to deal with social welfare lists, to get capital moving again and increase revenue is to put people back to work. Everyone is very concerned and angry about the circumstances that obtain at present.
For the year as a whole, an Exchequer borrowing requirement in the region of €26 billion is forecast. This implies a general Government deficit in the region of 12% of GDP by the end of 2009. Continuing to borrow at a high level to bridge the gap that has emerged between revenue and expenditure is not a sustainable solution in the medium to long term. Our priority is to address this gap and stabilise the deficit in 2010. Central to the process of stabilising the deficit at this year's level are the adjustments to be introduced in budget 2010 on 9 December. The corrective action in budget 2010 will have to come primarily from the expenditure side as we have already increased taxes significantly. Further increases in the tax burden could have a negative impact on enterprise and growth prospects. The measures that must be introduced will undoubtedly be difficult but the imperative for action is clear and we must make the necessary adjustments now.
On the question of jobs, Deputy Kenny should note it is not a question of there being 500,000 unemployed. While 12.5% of people are on the live register, 70,000 of the 412,000 or 415,000 people on the live register are in part-time work and therefore must avail of social welfare for some part of the week. It is important to point out there are still almost 1.8 million people working.
The purpose of Government policy is to make the economy more competitive. We have seen a major contraction in the economy this year and we hope to see growth return during 2010, even if the first full year of growth is in 2011. It is clear from the European Commission, forecasters and commentators that there is a need to stabilise the deficit. That is the nature of the correction we are seeking to undertake in the forthcoming budget. I welcome the fact that Members on all sides of the House have indicated their support for that approach.
The Taoiseach has just given us the general outline of the deteriorating state of the Exchequer. It is now just five weeks before the budget, which we are told will be the harshest in history. I am quite concerned about the general mood in the country as we face the budget. Many are angry about their own declining economic fortunes in addition to the declining economic fortunes of the country. We are hurtling headlong into a period of conflict, strife and considerable social division. There are three contributing factors, the first of which is the Government's determination to proceed in its own way and unilaterally impose a range of so-called solutions in respect of matters ranging from pay to the general public services. The second contributing factor is the chorus coming from hardline commentators, many of whom got things very wrong in the past and who appear to be urging the Government to maximise the pain, as if pain itself were some kind of political or economic objective. Third, there is the threat of widespread strikes, including that threatened for 24 November.
Given these circumstances, the solution to our economic difficulties will require people to pull together. There should be an agreement for national recovery, underpinned by five pillars. The first encompasses getting people back to work, keeping people in employment and providing training and education for those who have lost their jobs. Second, there should be a guarantee that people will not be put out of their homes during the recession. I invite the Taoiseach to accept the Labour Party motion on the home protection scheme this evening. The third pillar is that the principle of fairness should underpin the budget. Fourth, there should be a negotiated agreement on the reduction of the public service pay bill which would include reforms and economies rather than an imposed cut across the board. Fifth, there should be industrial peace or the avoidance of strikes. Does the Taoiseach agree that such an approach is now necessary to get us out of the difficulty we face?
During Priority Questions today, I outlined to the House the current position on the effort to find an agreed way forward on negotiating a public pay position that would see a reduction in the public pay bill. That is ongoing and we have continued to work towards this. We have sat down with the public sector unions to examine what alternatives may exist to allow us to achieve this objective, apart from considering exclusively the cutting of pay. It would be remiss of any employer, most of all the State, not to do so. It would be remiss of the State not to discuss with employee representatives, over the coming days, what progress can be made in this area, without prejudice on either side, so as to enable people to consider all the various options and costings that need to be borne in mind. This process is taking place.
With regard to Deputy Gilmore's statement that there is no option but to hurtle headlong into confrontation, no one is seeking confrontation. All of us are seeking to communicate the seriousness of the situation in which the country finds itself. Anger is not a policy and does not provide a panacea. Everybody understands people's disappointment over the sharp change in our economic fortunes and the fact that people have lost jobs. Every public representative in this House is continually meeting constituents who feel this way. However, the issue is that the world has changed and we are in different circumstances, to which we must respond.
The Government has simply been outlining the fact that it does not have a policy to impose hardship, pain or difficulty, but to confirm that the current circumstances are not sustainable. In the interest of protecting people to the greatest extent possible, taking action now is unavoidable. This action must be taken in addition to the action that has been taken heretofore. The basis for doing this is to ensure that we make an adjustment that will effect recovery more quickly than it would be effected if we prolonged our approach over what could well be a prolonged period of stagnation rather than one characterised by a quick return to growth, as we all desire. In that respect, all of us, including all social partners and political parties, have the same objective. When people were asked about it in the media and elsewhere they accepted that there was a need for this level of adjustment, which is about stabilising the rising deficit situation for next year. It is not a question of Government seeking to impose unnecessary hardships. It is about Government seeking to avoid by way of inactivity the imposition of even greater hardships on the more vulnerable people in our community were action not to be taken.
Inactivity is the word.
That is the reason we have to proceed in this way. There will be an opportunity in this House for everyone to put forward his or her position in terms of pre-budget statements. On the issues raised by Deputy Gilmore or any other party on trying to maintain jobs, we are seeing twice as many people in activation programmes now than previously. We have introduced the stabilisation fund and brought forward the employment subsidy scheme, which we are seeking to improve as we go along. We are looking at reviewing the mortgage subsidy scheme to see in what way we can assist people, in addition to the 14,000 people who are already obtaining relief under that scheme.
We all know the exposure of banks in this country, as in other countries, to the residential property market, and we do no service if we suggest that we are about to see an avalanche of repossessions when the total number of repossessions we have seen in the covered institutions this year to date is 20. To give an impression that mortgage arrears are a greater problem than is currently the case is doing nothing in terms of trying to ensure funding to an Irish banking system that still depends on the international wholesale credit markets for funding.
We must ensure we assist everyone, in so far as we can, with the right policy responses in all of those areas, which do not have unintended consequences or knock-on effects, which in fact negative or take away from the validity of taking the initiative in the first place. We are committed to seeking to do that in as fair a way as possible. Fairness in some respects can be a subjective thing but it is also an objective thing. It is about trying to find a sustainable way forward at a level of provision that will seek to minimise hardship on the service users and to ask those who are providing the services, in the knowledge that they have already made a contribution, to see what further contribution can and must be made now in the interests of trying to ensure that the country comes through this particularly difficult time as safely and as well as possible so that we can build again for the future and reposition the country to take the upturn when it comes. It is a difficult time for the country and our people but we must face the problem, confront it and deal with it. I agree that must be done with as much collective action as possible, seeking agreement where we can but also not avoiding the obvious conclusions we all have to come to in view of the state of the public finances as they currently stand.
It never ceases to amaze me that every time the Taoiseach is presented with a few constructive suggestions from this side of the House that he responds with an Ard-Fheis style speech. People are angry. The Taoiseach is correct, anger is not a policy but it is very understandable given what he and his Government have done to this economy. What we need to focus on now is how the problem is going to be resolved. The situation we are in at the moment is that one can take the route of deciding, as the Taoiseach repeatedly comes in here to tell us——
Deputy Gilmore has exceeded the time for supplementary questions on Leaders' Questions.
What time is allowed, a Cheann Comhairle?
A limited time is provided for each question. There is a total of seven minutes for each, including Fine Gael and Labour.
How is that apportioned?
Equally.
Between the Opposition and the Government.
Deputy Gilmore is way over the limit.
We are not way over time because of what I am asking.
We need a man with a whistle.
I cannot control the length of the earlier reply.
Extra time.
The choice the Taoiseach is faced with now is between going down the route of confrontation — I know there are people encouraging him to go that route but that would be a disaster. We are already seeing considerable signs of the degree of conflict to which it will lead. We are beginning to hear quite disturbing noises from some of the Taoiseach's own people. A Minister described the relationship between two sets of workers in this country, namely, those in the private sector and those in the public sector as being in a state of civil war. That is not the kind of language that is conducive to getting co-operation and agreement on what needs to be done.
I hear it said all over the country that there is an opportunity for the Government to get people to pull together. That is preferable to having people ripping each other apart, as is being encouraged. That will require, not discussions between departmental officials and some of the public service trade unions but the Taoiseach and his Ministers directly engaged in talks to seek an agreement on national recovery. I have outlined to the Taoiseach the things that should form the pillars on which that national recovery plan should be built. He has that opportunity now. There is not a great deal of time in which he can do it, because the budget is approaching and some of the threatened industrial action is fast approaching. I again invite the Taoiseach to take that approach to try to reach a national agreement rather than to take the route of conflict and strife, which is not good for anyone. I thank you, a Cheann Comhairle, for permitting me to ask the question.
With respect to the Deputy, I was simply replying in substance to all the points he made. I was suggesting that there were areas where we had agreement and areas where perhaps we have a difference of emphasis. That is all I was doing.
On the supplementary points made by Deputy Gilmore, that is precisely what I am seeking to achieve. On all occasions I have sought to point out that the best way forward is an agreed way forward, one that is about solving the problems not avoiding them. All of us who are involved in the social partnership process have that major challenge to confront and overcome. It has been my approach throughout the course of this year, to seek out and obtain agreement. Where it was not possible to obtain agreement, ultimately, on the pensions levy I had to come to this House on the following day and put a proposal to the House and proceed with it.
The Taoiseach was not serious about it.
Excuse me, I was very serious about it.
No, the Taoiseach was not.
In regard to the framework that has been set up since February, we came back in June and put forward proposals on those issues. We have doubled activation during the course of this year despite the financial difficulties, and made efforts on the pensions framework, which we intend to publish before the end of the year. In a very difficult situation where there is very little room to manoeuvre I have been seeking to provide the sort of initiatives and responses that bolster the prospect of collective and concerted action among all actors in society to try to pull through this issue. That has always been my approach.
I have also been seeking to point out the scale of the issues involved. I have been involved personally and will be involved again in this matter in an effort to obtain agreement, knowing that on 9 December there are decisions to be taken and they are best taken with the greatest measure of agreement beforehand than not. That effort is being made and will be made on a continuous basis. However, we must also acknowledge the period of time in which we have to do this and the scale of the issue this year, regardless of that other question, it remains the same, that a correction of €4 billion is required. In fairness, Deputy Gilmore publicly agreed with that, as did Deputy Shortall, Deputy Varadkar and Deputy Bruton. From memory, the correction suggested for 2010 in the Fine Gael submission on the April supplementary budget was in the region of €5.4 billion. Those are the facts. The way we spend our money is made up as I have set out.
That is the way the Taoiseach spends it all right.
A contribution has to be made on all sides to achieve it. That is what I am seeking to do. Any suggestion that I am seeking out confrontation or taking encouragement from people who seek confrontation could only be made by people who do not know me. Since my first ministry, as Minister for Labour, I have sought progress by way of agreement. I also know it is ultimately the responsibility and duty of Government to make the decisions that we have to make. I would rather them to be made on an agreed format than on a non-agreed format.