Vol. 742 No. 3
6 Deputy John Browne asked the Minister for Finance if he is preparing his budget 2012 on the basis of achieving a deficit of 8.6% in 2012 or if he intends to target a lower deficit percentage; and if he will make a statement on the matter. [27610/11]
The general Government deficit target for 2012, as set by the ECOFIN Council in December 2010, is 8.6% of GDP. The Government is fully aware of the importance of achieving this target in the context of the 2012 budget as well as the views of those who have called for a more ambitious deficit target. The Government is committed to implementing the necessary adjustment package to ensure we continue to meet our targets. I have stated that an adjustment above the €3.6 billion amount already signalled may be required if the 8.6% of GDP deficit target for 2012 is to be achieved. The necessary budgetary adjustment will be implemented through a combination of further reductions to public expenditure and additional revenue-raising measures and will take account of the comprehensive reviews of both current and capital expenditure, which are currently being finalised, as well as the most up-to-date economic and fiscal data available.
The estimate of the 2012 deficit and the level of budgetary adjustment required to meet our deficit reduction target will be set out in the pre-budget outlook, which is scheduled to be published later this month. That document will set out a medium-term consolidation plan for 2012 to 2015 which will indicate the overall composition of revenue and expenditure adjustments for the period. The 2012 budget will be published in early December, as is the norm. Quarter 2 economic data released in recent weeks and budgetary data for the first nine months of the year which were released yesterday were both broadly consistent with expectations. My Department is currently assessing what implications the latest macroeconomic and budgetary data might have for 2012 and beyond. Such assessment will, along with later data, inform Government in the context of its budgetary preparations over the coming months.
I thank the Minister. Has a final date been set for the publication of the pre-budget outlook and the multi-year plan? Will the Minister clarify whether it is a plan to the end of 2015, which appears logical given that the 3% target has now been linked to 2015 rather than 2014? Will he publish a new four-year plan or a three-year one?
Is it the Minister's view that we should aim to achieve the 8.6% target or does he believe we should do better than that? There are counter arguments — one is the need to reduce the deficit as quickly as possible while the other is the risk and the damage to the domestic economy of imposing a greater adjustment than we are committed to in terms of €3.6 billion.
We are in a better position going into 2012 than might have been expected given the very welcome interest rate reduction which will yield approximately €900 million next year. Looking at yesterday's figures, the Exchequer position is close to €1 billion ahead of profile at this stage. It appears the Minister's starting position is quite good but the great unknown and the variable is growth next year and that projection is being finalised. What is the Minister's view of the 8.6%? Is it the target he wants to achieve or does he believe Ireland should achieve a lower deficit?
The 8.6% target is in the programme and is the one we are working towards in preparation for the budget. We do not have the full data yet which would allow us to make full decisions. Yesterday's figures were helpful but there were things in them which were unhelpful as well. The Deputy will notice VAT was below profile. When one comes to the end of the year, it will probably be still below profile so as we go into 2012. We will have to build in a lower figure for VAT than was expected in the multi-annual programme.
There was a dramatic improvement in yesterday's unemployment figures, the largest reduction in the month of September since statistics began. If that is maintained up to the end of the year, one may be putting in a lower figure for unemployment benefit than anticipated for 2012. There are swings and roundabouts. We do not know yet but the working target is 8.6% and we will achieve that. There are all sorts of arguments as to whether we should go beyond that.
Can the Minister give the House a date for the publication of the pre-budget outlook and the new plan? Is it a four-year plan to the end of 2015?
The plan is 2012 to 2015. Like all these plans, it gets less precise as one goes forward to the third year or fourth year. We will give as accurate an estimate as we possibly can. My intention is to publish towards the end of October but I cannot give the Deputy a date yet.
Yesterday the Central Bank projected growth rates of 1.8% for 2012, which is significantly lower than the Government's projection of 2.5%. If the growth rate turns out at 1.8%, what will that mean in terms of an adjustment? Where will the €3.6 billion end up? I am glad the Minister continues to assume an adjustment of 8.6% because there is no sense in the €4 billion that others, including the leader of Fianna Fáil, Deputy Martin, have called for. What type of adjustment would be required if the Central Bank's projections are accurate?
The figure from the Department of Finance is not comparable with that of the Central Bank because our projections were made in April, when the situation was entirely different. Clearly, we will also be making a downward adjustment to our projection because the countries to which we export are not growing as fast as anticipated. We will have to mark down our growth given that it is export led. The general rule of thumb is that a 1% reduction in GDP translates into about €800 million in revenue, although I ask Deputies not to tie me to the last euro in terms of accuracy because that is a rough but useful mnemonic for calculations. As Deputy Doherty will agree, however, it is a big blow.
7 Deputy Éamon Ó Cuív asked the Minister for Finance if he will provide details of the proposed new unit in the National Treasury Management Agency which is being established to manage shareholdings in a number of State companies; the way the unit is being structured; the terms of reference; when he expects it to be up and running; and if he will make a statement on the matter. [27639/11]
42 Deputy Dessie Ellis asked the Minister for Finance if he will provide further details on the announced strategic investment fund including the amount to be drawn down from the National Pensions Reserve Fund; the date at which the fund will be established; the date at which it will start funding strategic initiatives; and if the establishment of this fund is consistent with the programme for Government commitment to establish a strategic investment bank. [27677/11]
I propose to take Questions Nos. 7 and 42 together.
On Thursday, 29 September, following a decision by the Government, I and my colleagues, the Minister for Public Expenditure and Reform, Deputy Howlin, and the Minister of State at the Department of Communications, Energy and Natural Resources with responsibility for the NewERA project, Deputy O'Dowd, announced the establishment of NewERA and the strategic investment fund under the National Treasury Management Agency.
Dr. Eileen Fitzpatrick, who is currently the director of NTMA with responsibility for alternative asset investments within the National Pensions Reserve Fund, has been reassigned by the NTMA as director of NewERA. NewERA is a commitment in the programme for Government and is central to the Government's plans for job creation and investment and for reforming how the Government manages its semi-State companies. The press release issued on 29 September gives details of the functions of NewERA along with a biographical note on Ms Fitzpatrick.
The policy objective behind NewERA is to modernise the manner in which Government manages its shareholdings in the semi-State companies and oversee the corporate governance of commercial semi-States from a shareholder perspective. In this regard, it will report to the relevant Ministers with responsibility for the ESB, Bord Gáis, EirGrid, Bord na Móna and Coillte. Its operations will be overseen by the Cabinet committee on economic infrastructure. In this capacity, NewERA will have responsibility for reviewing the capital investment plans of these commercial semi-State companies from a shareholder perspective and will identify possible synergies between the investment programmes of the different companies. Where requested by the Government, it will also advise on and, if appropriate, oversee any restructuring or disposal of State companies. It will work with the Minister for Public Expenditure and Reform on the disposal of State assets.
Following appropriate legislative changes to the investment policy of the NPRF, the strategic investment fund, which will be the forerunner of the strategic investment bank, will channel commercial investment from the NPRF towards productive investment in the Irish economy. As well as money from the NPRF, the fund will seek matching commercial investment from private investors and target investment in areas of strategic significance to the future of the Irish economy. It will comprise a series of sub-funds targeted at commercial investment in critical areas of the Irish economy, including infrastructure, venture capital and provision of long-term capital for SMEs. The NPRF will take a lead role in the development and implementation of each sub-fund.
These decisions are an important element in the Government's strategy to create jobs and promote economic growth. Through NewERA and the strategic investment fund we will maximise our resources to enhance growth in the Irish economy and improve key infrastructure to maintain Ireland's attractiveness as a place to do business and to create jobs. In these times of scarce resources, NewERA will seek to offer a new means of facilitating investment in our economy.
NewERA has been established on a non-statutory basis as a shareholder executive within the NTMA. I expect NewERA and the NPRF to come back to me shortly with proposals for establishing the strategic investment fund. NewERA will bring forward proposals by mid-2012 for consideration by the Government of options for moving towards a full holding company status which could own the shares in commercial semi-States.
Last Thursday's press release raises more questions than answers. Many of the functions NewERA is taking on are already performed quite well by the semi-State companies concerned. Requirements for corporate governance and reporting to the relevant Ministers are already in place and a number of them are already successfully implementing ambitious capital investment plans. It is difficult to avoid the conclusion that NewERA is merely a sales agent for the assets of which the State intends to dispose.
How many staff will NewERA employ? When will the legislation establishing the strategic investment fund be brought before the Oireachtas? Will the new agency be able to access the full amount of money remaining in the National Pensions Reserve Fund? When does the Minister expect it to be up and running?
The press release makes reference to the possibility that it will develop into a strategic investment bank, presumably as a sop to the Labour Party. When does the Minister expect that will happen?
The Deputy will appreciate that while we are in the programme with the IMF and EU authorities, we can only borrow enough to meet the day-to-day running of the country and a small capital programme. To get movement in the economy and put people back to work, we need to think outside the box. NewERA is in effect an exercise in thinking outside the box in terms of putting a demand stimulus package in place through the provision of new infrastructure and using parts of what is already in place.
The staffing of NewERA will in the first place be done through reallocation of staff from the NTMA group of companies and the new director, Ms Eileen Fitzpatrick, was already employed in the NTMA. In regard to the amount of money to be spent, it will be project driven in the early stages and the intention is that the State's investment will leverage a considerable amount of funds from the private sector. In regard to when legislation will be introduced, NewERA will be set up on a non-statutory basis at the outset but we have asked the NTMA and NewERA to bring forward proposals by the middle of 2012 on the establishment of a holding company. That, of course, would have to be established on a statutory basis.
Is it envisaged that the €5.7 billion left in the NPRF will be made available to the strategic investment fund? I ask the Minister to enlighten the House as to the remuneration to be paid to the new CEO. Where will the buck stop in regard to NewERA and the strategic investment fund? Given that it is currently located in the NTMA, will the buck stop with the Minister?
It is a cross-departmental initiative. Clearly, if a State company comes within the ambit of a particular Minister, he or she will be involved in the consultative process. If it involves the disposal of a State asset, the Minister for Public Expenditure and Reform will have responsibility. The primary responsibility for the NTMA lies with me, as Minister for Finance, and at the end of the day I will be responsible for answering questions on overall policy.
I understand Ms Eileen Fitzpatrick has been reassigned at the same salary. Nothing in my notes would suggest that her salary position is altered given that she was a senior executive in the NTMA. I can supply that information to the Deputy but I do not think an issue arises.
I asked about the €5.7 billion in the NPRF.
We are not going to allocate a great budget. In the first instance they should come up with proposals and projects they think are worthwhile to grow the economy, provide modern infrastructure and get people back to work and then we will see what the allocations of money are, but they can draw on the pool of money.
Will the Minister clarify whether the strategic investment fund can begin to identify appropriate investment projects once the legislation has been enacted allowing it to access what is left in the National Pensions Reserve Fund, NPRF, or does it have to await until mid-2012 when the holding company is set up for NewERA? Essentially, when does the Minister expect the fund will be up and running and start identifying appropriate investments which could lead to job creation?
The Minister did not reply to my question on the strategic investment bank. When does he hope the fund will develop into a fully fledged bank, as pledged?
It is an evolving situation. This is a significant first step in what we think will be a significant approach to the provision of infrastructure and the creation of jobs. As I said in my reply, the NPRF will come back to me shortly with proposals for the establishment of the strategic investment fund. My understanding of the nature of the fund is that people will apply to it. Entrepreneurs will apply to the fund. Like any investment bank there will be an assessment of their proposal and business plan and they will get an advance of venture capital on that basis.
The question partially relates to an earlier question and also follows on from the Minister's response. Has he carried out any serious assessment of whether bringing in private capital into the strategic infrastructural investment programmes is effective and will lead to higher levels of investment, job creation and growth? The ICTU and UNITE, among others, which studied those matters are strongly opposed to the Minister's plans to privatise in part or in whole companies such as the ESB. They indicate that where State enterprises are privatised elsewhere in Europe once private capital gets involved the level of investment falls because giving a return to shareholders starts to take priority. Has the Minister carried out an assessment in that regard and how can he guard against that likelihood? Do we not have our own history of Eircom and broadband to bear out that fact that once the private sector gets involved, investment in developing infrastructure falls rather than increases which defeats the whole purpose?
The principle the Deputy enunciates is not a general economic one. It is one enunciated by people who decide they are against the project and then proceed to do the research to support that theory.
I am talking about what is happening in Europe.
It is not an objective analysis. The principle is that this country is in a bad state. Thousands of our fellow citizens are out of work. There is no money available to the Government to stimulate the economy in the traditional new deal type of roll-out. As a result we are trying to find new ways of doing things. NewERA is a new way of doing things. In simple terms, if we can get €1 billion from the disposal of assets or take €1 billion from the pension fund, if there are willing private sector participants that €1 billion should be able to leverage approximately ten times that amount. It would be normal to leverage by a multiple of ten. Therefore we would get economic work to the value of €10 billion if we could raise €1 billion. That is it. We are not getting into the ideology of it; we are simply trying to get people back to work.
It is ideology.
8 Deputy Brian Stanley asked the Minister for Finance if any staff from his Department or within the National Treasury Management Agency, Central Bank of Ireland or other agencies have assessed or are currently assessing the impact of a collapse of the euro on the Irish economy. [27671/11]
There are many risks in the broad economic environment at present, which I must take into account in conjunction with my Department and the agencies that report to me. The euro is a firm and solid currency currently trading well against all the other major currencies. There is clearly no market expectation, and there is certainly no Irish Government expectation, of any collapse in the euro.
I thank the Minister for his reply. To be clear, has anyone in the Department, the Central Bank or the NTMA looked at the possibility of the collapse of the euro? Obviously, it is something we would not like to see happen as it would have devastating consequences for the economy. I assume, given the level of debate among many economists throughout the world who do not have a vested interest in those matters who are talking about the potential or the possibility, it is not an issue that is as alien as it was a number of years ago. Has any analysis whatsoever been done in terms of what would happen if such a scenario were to unfold? There has been much talk about Greece and how the European Financial Stability Fund has been structured and some of the flaws within that. It is not talk to the effect that the euro is going to collapse tonight or tomorrow but if such a scenario were to arise it would have devastating consequences for the economy. I hope the Minister for Finance, his officials or someone within the NTMA or the Central Bank is at least looking at all the scenarios and possibilities that could occur regardless of how remote they are. Could the Minister confirm that nobody in the Department, the NTMA or the Central Bank have looked at such a scenario?
If the Deputy will accept the distinction, the problem is not with the euro, the problem is with the eurozone. The euro is a solid currency. Since it was established 12 years ago it has gone up in value against all the main currencies of the world. It has increased trade in Europe by 50%. It has kept inflation below 2% for 12 years in a row. When the Swiss had difficulties a fortnight ago and they decided to benchmark their currency, they did not benchmark against the yen or the dollar or go back to the gold standard, they benchmarked it against the euro. If one wants a vote of confidence in the euro one should think of the clever people in Zurich making a decision to benchmark against the euro.
The euro is as solid as a rock. The issue is who is in and who is out and whether everyone can stay in. That is what the debate is about. Everyone has to get their economies into shape so they can continue to participate in the eurozone and this strong currency. Of course we think, talk and look at possibilities. An issue we must examine is what to do if there were further contagion from Greece. Every time I go to Europe I tell the authorities that if there is further contagion from Greece that Ireland must be protected, as indeed bigger eurozone countries would have to be protected, by some form of firewall that would stop contagion from spreading.
I take it from the Minister's response that these matters have been examined. Could he satisfy me that there is a plan sitting on a desk somewhere that would protect Irish interests if we were to see a scenario unfold such as I have outlined where the euro would collapse or this country, for example, could be pushed out of the euro or we could have a two-pronged euro with a stronger euro in Germany and other peripheral countries left with a different currency? It is not unique for a currency to fail or to be remodified. A number of scenarios could evolve. We are trying to prevent that from happening but we must also consider what could happen in the future. Are there plans somewhere drawn up by someone that will protect the interests of the Irish economy if such a scenario were to arise?
As well as the difficulties individual countries have, speculators in the market are targeting banks and sovereigns. To say too much about these things would make one a softer target than one might be. The Deputy can take it that we are aware of his concerns and that we will take them into account.
Does the Minister not agree that it would be more sensible for the Swiss to benchmark themselves against the euro rather than the yen or dollar because they are worried about their currency being too highly valued? If, for example, the euro goes to €1.25 against the dollar, for example, the Swiss would not be bothered by that. It would not be a problem for them. If the euro floats down a little more it certainly would not be a problem for them because they were not very happy with the over-inflation of their currency.
Does the Minister not agree that most of the experts in Europe and even the German and French finance Ministers are of the opinion that the euro in its present form will not survive unless we have total fiscal union? It is debatable whether that is in our interests. Does the Minister not agree that fiscal union would signal the end of our financial sovereignty?
What I want to know, and what people would like an assurance on, is that the Department and the authorities do contingency planning on an ongoing basis on all possible eventualities in the eurozone crisis, including a Greek default and a Greek exit from the euro.
Print a few punts up in Sandyford.
It would not be helpful for us to go into any more detail, except to ask the Minister for an assurance that the Department looks at all eventualities and plans accordingly.
We do not plan against all eventualities but we have some contingency planning against what might be probable rather than what is improbable.
Deputy Wallace is right on the money when he speaks about Switzerland. His analysis is absolutely correct.
It is also true to say that it suits Ireland to have the euro weakening at present because our main customer countries are dollar countries and sterling countries. If the euro comes down, that will restore some of the growth that we are losing in our export markets into the UK and into the United States, our two biggest customers.
9 Deputy Seamus Kirk asked the Minister for Finance his views on the proposed European financial transaction tax; and if he will make a statement on the matter. [27634/11]
The European Commission last week published its proposal for a financial transactions tax, or FTT. It also published its impact analysis to accompany this.
We will analyse the detailed proposals in the draft directive. The draft directive will now be subject to detailed discussions at EU level and, as always, we will participate constructively in those discussions. There is no consensus as yet among European member states on this issue, either about whether a financial transaction tax should be introduced or what precise form it should take.
It is important that any proposal does not have the effect of encouraging relocation of activity or damaging the EU's competitiveness in financial services. It is for this reason that there is an emerging view that the EU and other international groupings, such as the IMF and G20, should move in tandem in a global manner to avoid the danger of financial sector business gravitating to jurisdictions where taxes are not levied on financial transactions. The Commission has indicted that it sees its proposal as part of a wider development in this area.
Any tax would be best applied on a wide international basis to include the major financial centres. I also think it important that the proposed directive would apply on an EU wide basis to prevent any distortion of activity within the European Union.
The Commission is proposing that the FTT should be an "own resource" tax imposed centrally to fund the EU and will develop proposals in the context of the future of the EU budget. However, we will need to assess the impact of this on our contribution vis-à-vis any system based on gross national income, as is the current system.
I thank the Minister. He has touched on the key point in his response, that is, that any such tax would have to apply on a global basis otherwise it will only serve to disadvantage the countries in the eurozone or, if it is applied across the 27 member states, the European Union.
There was an excellent presentation this morning by Financial Services Ireland about its plans for the future. It raised concerns about the Commission's proposal for this financial transactions tax. Given the importance of financial services in Ireland, with 33,000 employed, more than 7% of GDP and the ambitious plans for the future with a target of an additional net 10,000 jobs in the sector in the next five years, we need to tread carefully. Particularly in the context of the resolution fund which is being set up under the Central Bank and Credit Institutions (Resolution) (No. 2) Bill 2011 that we discussed last week, is it better that we would deal with the issue of having an appropriate fund domestically rather than having a tax across the European Union which will only serve to disadvantage us and the other members?
It is, I suppose, the beginning of a debate. The Commission is charged, as part of its legal responsibility, to bring forward policy proposals for the Europe Union and it does this from time to time. Sometimes the proposals get legs under them and they are discussed quickly at political level. Other times they merely lie there and they are not activated.
This seems to have a push behind it from certain European countries but it is equally strongly opposed by others. For example, the UK has come out against it already. That seems to make it difficult for Ireland because if there is a financial transaction tax down town here which does not apply in London, there is a big risk of displacement. By the nature of that business, even if it applied euro wide, there would be a displacement effect into places such as New York, Singapore, Hong Kong and Malaysia, which is increasingly becoming the Asiatic centre for Islamic money and where Kuala Lumpur is the centre for its management.
There are many issues to be looked at. We must protect our interests.
10 Deputy David Stanton asked the Minister for Finance his plans to make changes with respect to tax issues affecting charities; and if he will make a statement on the matter. [27642/11]
There are several provisions in the tax code that provide tax relief for charities and charitable giving. These include income tax relief on donations, capital taxes relief on inheritances given to charities and special treatment under the DIRT regime.
The Commission on Taxation made a number of recommendations, some of which would cost the Exchequer in terms of tax foregone. However, officials from my Department, the Revenue Commissioners and representatives of the Irish Charities Tax Reform Group have been meeting, with a view to bringing forward proposals that would reduce the administrative burden on charities in operating the donations relief scheme as it exists currently. The work of this group is ongoing and, if successful, should help charities.
In addition, the Government recently reconvened the Forum on Philanthropy and Fundraising. This body has met over the summer months and will produce an interim report shortly, which I expect will contain recommendations on several matters including tax reliefs for charitable giving and philanthropy.
The Deputy will be aware that all tax relief and incentives are subject to regular review as part of the annual budget and Finance Bill process. Any significant decisions taken by the Government to change such relief or incentives in this regard would normally be announced on budget day.
I thank the Minister for his response.
Does the Minister agree that there is a significant benefit to society from donations to charities? What is his view on PAYE and the self-employed being treated in a similar way, with tax relief going directly to the charity, for instance?
Will the Minister comment on data protection issues for charities re PPS numbers? Is there any consideration being given to reducing the €250 threshold introduced in 2001 to, say, €100? Will the Minister comment on VAT on donations? The Minister will be aware that, for instance, last year one organisation paid €4 million in VAT. Will the discussions the Minister mentioned include a compensation scheme for charities operated under European Commission rules similar to the scheme in operation in Denmark?
All of the proposals being put forward by the Irish Charities Tax Reform Group are being taken into account at the meetings between officials of my Department, the Revenue Commissioners and the Irish Charities Tax Reform Group. If proposals come forward that we think are appropriate, they will be considered in the context of the budget.
There is a wider report which will emanate from the Forum on Philanthropy and Fundraising, which has been meeting over the summer months. I understand it will report shortly.
As the Minister brought it up, will he confirm that the issue of philanthropic donations being decoupled from other tax relief is one of the issues being addressed?
There is no restriction on the issues with the Irish Charities Tax Reform Group or the Forum on Philanthropy and Fundraising can discuss. We will see what they report and then we will examine it.
I add my voice in support of the Irish charities, with their proposals on lowering the threshold to €100 and also some type of compensation fund scheme to reimburse a portion of the fundraising that has been lost to VAT. The latter is something I remember raising in the Seanad. It is not right that people who raise money to buy a piece of equipment for a hospital then must pay VAT on it, and the State benefits from the fundraising drive. In reality, perhaps the State should have been doing it in the first place.
What would be the loss to the Exchequer — the Minister may not have the figures with him but he could present them at a later stage — if the threshold was reduced from €250 to €100, and if the VAT was foregone in the case of fundraising efforts?
I would need notice of that question.
11 Deputy Derek Keating asked the Minister for Finance if he will consider introducing a new super tax to address the bonuses, generous severance packages or large pensions being paid to senior civil servants, senior public sector workers or any person who comes under his jurisdiction; and if he will make a statement on the matter. [27391/11]
The issue of remuneration, which includes the granting of performance-related awards schemes, severance payments and pensions to senior public servants and public sector workers, is a matter for the Minister for Public Expenditure and Reform in the first instance. I have been informed by my colleague, the Minister, Deputy Howlin, that performance-related award schemes were available in the past to certain posts in the following areas of the public service: the Civil Service, the Permanent Defence Force, An Garda Síochána, the health service, the local authorities and a number of non-commercial State agencies. Against the background of the deterioration in the public finances, it was considered that such schemes were no longer appropriate. In this context, the schemes for the Civil Service, the Permanent Defence Force, An Garda Síochána, the health service and the local authorities were suspended in 2009. No awards were made in 2009 in respect of 2008 performances. This remains the position. I do not believe the tax code should be the preferred mechanism to deal with bonuses, severance payments and pensions paid to senior public servants. If performance-related bonuses or severance payments are neither justifiable nor affordable, they should not be paid in the first place rather than being super-taxed after the fact.
In recent times, I have tabled a series of parliamentary questions to give exposure to the payment of vast sums of money, in some cases, to a small number of senior civil and public servants. It strikes me not only that we can ill afford such amounts of money, but also that we are setting a bad example by making such payments. It sends a bad message to the many people in this country who are suffering because they cannot pay their mortgages or meet the cost of living. When I attended the launch of the Disability Federation of Ireland's pre-budget submission in the Mansion House earlier today, I noticed there was fear on the faces of many people who are concerned about whether services will be provided to them in the future. I appreciate that the Minister and the Government inherited some of the arrangements governing the bad practices of the past from the previous Administration. I am concerned about the bad message that has been transmitted on foot of some of the recent exposures in the media, as well as the cost of these payments to the Exchequer in the current climate.
My colleague, the Minister for Public Enterprise and Reform, has taken rigorous action to change things for the future. As a result of arrangements that were made in the past, it is very difficult to deal with certain legal entitlements. Special provision was made for Secretaries General whose terms of appointment included the top level appointments committee exit terms. These terms are currently being reviewed by the Minister, Deputy Howlin. He is changing them completely. When I first came into politics, the Secretaries General of Departments were appointed until the retirement age of 65. That arrangement was brought to an end by the late John Boland when he was Minister for the Public Service. Secretaries General are now appointed under a contract for a specific term. If someone is appointed as a Secretary General at the age of 45 and leaves that position at the age of 53, he or she could receive additional payments on retirement if they were included in the package when it was being negotiated. That is why things have run so big, as in the case of the former Secretary General of the Department of the Taoiseach, which was well publicised recently. All of that is being changed by the Minister, Deputy Howlin. Deputy Keating will have noted that many public servants objected loudly to the new pensions arrangements for public servants when they were published last week. Under those arrangements, the pension levels that are paid will decrease. We are having to make adjustments of this nature as a result of the difficulties we are facing. It is not easy for any beneficiary to have to live under a new regime. It is very hard to make any of these things retrospective.
I will conclude by saying such reviews and changes are to be welcomed in the circumstances. I thank the Ministers, Deputies Noonan and Howlin.
I am glad Deputy Keating is advocating Sinn Féin policy. Perhaps he is considering changing his party once more. The Minister said changes will be made to future pensions, lump sums and bonuses. When he and the Minister, Deputy Burton, were on this side of the House, they argued in favour of a special charge on bankers' bonuses. Bankers are legally entitled to such bonuses, but they should not get them. Deputy Keating has placed such a proposal before us today. Sinn Féin has been advocating it. There is a legal mechanism whereby we can deal with this retrospectively. We are advocating the introduction of a charge such as the bankers' bonus charge, which is a 45% charge on incomes above a certain amount. I put it to the Minister that it is within his capability as Minister for Finance to introduce such a charge in the next budget. It could deal with anything that went before his term of office, including the pensions and bonuses to which certain people are legally entitled.
I welcome Deputy Keating's question. He is pointing to an important issue — the obscene salaries of many people in the top echelons of the civil and public service, who are paid with public money. I do not know if he agrees with me when I suggest his proposal could be extended to cover the obscene salaries at the top of the corporate and private sectors. The Minister and the Government should explain why some sort of super-wealth tax cannot be imposed on people at the top of the public and private sectors at a time when many people are being slaughtered with the universal social charge and various cuts and attacks on their incomes. We need to ensure high earners take some of the pain from people who simply cannot afford it.
It was the tradition that the lump sums paid to public servants as part of their pension schemes were tax free. That has been changed. They are now tax free to a certain level only, and then fully taxed after that level has been reached. The last tranche of the former Secretaries General emolument or lump sum would have been taxed at the marginal rate of tax. We tax it at 52%.
Written Answers follow Adjournment.
