Financial Emergency Measures in the Public Interest (No. 2) Bill 2009: Committee Stage (Resumed).

SECTION 2.
Question again proposed: "That section 2 stand part of the Bill."

Is there any reason why Anglo Irish Bank is not included in the Schedule to the Bill? It is not included in the Schedule and I understood that the Minister for Finance may be talking to the boards of the other 23 bodies. If that were the case Anglo Irish Bank would be treated differently. Is there any reason why it is not included in the Schedule? Anglo Irish Bank is a semi-State body.

It is clear that quite specific wording was used in this section to include everything rather than what is suggested. This includes salary and additional payments. Remuneration is the widest possible word to include all payments. This is absolutely correct. Gratuitously offensive remarks by the Opposition do not help. I refer to the words used by Members opposite, who referred to huge numbers of public servants earning less than €30,000. Their own words explain the need for the 5% reduction. It is because there are only hundreds who receive large pay, while thousands are earning €30,000 or less. In the UK, people on £8,000 pay tax. We have had a negative tax wedge for those on low pay for years. Those who can understand complex political concepts, such as the d'Hondt arrangement, fail to see the very obvious, that only hundreds of people are on very large salaries and that we cannot get €1.3 billion in savings from these. It is impossible.

I am sure the Minister of State is well aware of the number of people earning under €30,000 and under €100,000. It is important to correct the information presented in this House. It is not the case that hundreds are on large salaries; thousands are on large salaries. Some 15,000 public sector workers earn over €100,000 per annum. Some are earning up to €500,000 and it is scandalous that we decide not to reduce significantly those incomes at a time when we target a 5% reduction in incomes under €20,000.

It is incorrect to say there is no way we can achieve €1.3 billion in savings. I have articulated this in the Seanad. We may disagree on the methods and Fianna Fáil may feel that we should attack low-income earners. That is Fianna Fáil policy but I completely and utterly disagree with it. The Minister and the Government have proposals costed by the Department of Finance that could be implemented tomorrow morning. These would make the same savings. It is disingenuous and misleading to say there is no other way of making the savings. Other proposals have been made but the ideology of the Government parties means they do not want to tax the wealth. They do not want to introduce a wealth tax, nor do they want to standardise discretionary tax reliefs or introduce a third rate of tax. They want to cut the incomes of over 20,000 public sector workers in Donegal who work in our schools, hospitals and public services and attack their wages, which damages the local economy instead of taxing the wealthy. It is disingenuous to say there are no other proposals, as it is disingenuous to say there are only hundreds of high earners in the public sector when there are thousands. I am not only talking about salaries but also the massive bonuses paid to those such as Professor Brendan Drumm of the HSE, who received €70,000. This is like water off a duck's back. Like everything in the budget, the Government is targeting the lowest incomes in society.

We have heard figures bandied about. I refer particularly to the figure used by the Shell to Sea campaign, which is Sinn Féin, that €540 billion of gas exists in the Corrib field. The figure for the number of fish taken from Irish stock waters was cited as 50 billion, 60 million or 70 billion. One can take any figure one likes, add ten and multiply by 100. To suggest we can get €1.3 billion savings by targeting the 15,000 public servants who earn more than €100,000 involves taking all of their salary, amounting to €1.5 billion. It is the economics of ruin and it is impossible when someone refuses to see the truth.

We are discussing section 2 and we do not want a discussion between two Members.

Section 2 deals with the cuts we will impose on public sector workers. I appeal to the Minister of State that it is not about making savings in the public sector. Sinn Féin has never argued for cuts of €1.3 billion. I urge the Minister of State to amend this section accordingly. Sinn Féin does not believe that €1.3 billion of savings should be made in the public sector. We disagree with Fianna Fáil, Fine Gael and the Labour Party. Sinn Féin believes the €1.3 billion in savings should be made elsewhere. Some should be made in the public sector by reducing salaries but not by taking entire salaries from people. That would be crazy. Pay levels should be reduced to €100,000 and no one in the public sector should earn more than that figure. That would save in the region of €400 million. This is not voodoo economics; these figures have been costed by the Department of Finance. If Senator Hanafin has a problem with any of these figures he has a problem with the officials in the Department of Finance who presented the figures. The figures are accurate, the figures we received in response to parliamentary questions are accurate and the work done by the departmental officials is without question.

This is about choices that have been laid before the Minister. Choices have been presented in the form of amendments to the section and we should not cloud the issue. The Government can reduce the incomes in my county of over 20,000 public sector employees or we can examine other approaches whereby we introduce other measures to close the gap. This is not about making €1.3 billion in savings in the public sector and if Senator Hanafin took me up wrong he should listen more carefully. I do not represent Fine Gael, which believes this should be done along with the Labour Party.

Sinn Féin does not believe this should be done. Sinn Féin values workers in the public sector and understands that it cannot drive down wages. There is no capacity to make those savings in the public sector unless one drives down the wages of the lowest income earners in the public sector. That is wrong and is not something we tolerate. We must find savings elsewhere in the economy, which means taxing the wealthiest in society and adopting measures submitted to the Government and costed by the Department of Finance. Whether one agrees we should take these measures, they show there are ways to make the savings in the Irish economy so that we do not have to undertake the measures about to be adopted by this legislation.

I do not want this debate to involve repetition from one side to the other. We have spent over one hour and 20 minutes on the section.

I wish to respond to three points. Senator Alex White is simply misreading the Bill. The Chief Parliamentary Counsel has been extraordinarily careful to use different terms in each of the tables in order to achieve the effect sought by the Government. Table No. 1 refers to officeholders such as Taoisigh, the Cathaoirleach, Secretaries General etc and remuneration refers to the way officeholders are paid through a combination of basic salary and allowances in most cases. The reduction applies to the total remuneration, including salary and allowances. Tables Nos. 2 and 3 refer to public servants rather than officeholders and the term salary is used.

Concerning Anglo Irish Bank, I have made the reasons clear. Owing to its redundancy programme and so on, its staff will not be treated as public servants and, therefore, are not included in the Schedule.

Regarding public sector workers generally, the mantra is that since they did not cause the problem, why should they be affected by the situation that has arisen? The reality is that public sector numbers, pay and allowances improved substantially, especially between 2000 and 2007. This was partly as a result of the benchmarking process. To be fair to Fine Gael, that party has been consistent in its criticism of the process. The size of the public sector pay bill is being reduced. I wish it were true that the public service unions at all levels, including right up to the top where the worst offenders in terms of higher remuneration were located, did not contribute to the problem in the public finances in any way, but that is not the case. This is not to say that public service pay is the main cause of the problem we are facing, but almost all of us overextended and overcommitted ourselves in an unsustainable way during the prolonged period of the Celtic tiger.

Many people outside the public sector do not enjoy anything like the income of even the lowest paid full-time public sector employee, namely, small farmers, small businesses and the self-employed. I am aware of no full-time public employee who is paid the minimum wage. I do not have the statistics on minimum wage workers to hand, but public sector workers' pay and conditions at every level are not at the bottom of the pile.

Regarding the 5% cut in the lower level, we must recall the fact that we have had deflation of 5% or more. Before Senator Doherty entered the Chamber, I stated that we have had previous pay cuts, but they were disguised by inflation and devaluation. This time, people are being paid in a strong currency, the euro, that does not lose its value. Therefore, the reductions are more obvious. Many of the problems we are facing owe to psychology. For example, in the talks between the trade unions and the Government, one could say that the 12 days of unpaid leave that caused so much controversy would have disguised the reduction in pay for one year.

If one excludes people earning less than €30,000, one will interfere with progressivity. There are not too many young single workers with heavy mortgages. Generally speaking, people buy houses when they are hoping to establish families. With the exception of the single worker, anyone earning less than €30,000 would not be paying taxes. As we know, 50% of the population does not pay taxes bar the levies. Owing to the recession, last year's figure was 40%.

The argument that someone on €20,000 will take a larger absolute cut than someone earning much more is unsustainable. I will refer to example 7 of the 2010 budget supporting documentation. By definition, self-employed people do not count as they are not public servants. If one is a public servant, one is employed by the State. For a part-time worker earning €15,000, the total loss in income under the budget will be €332 or 1.17%. Incorporating the changes since the 2008 budget, there would actually be a small gain of nearly the same amount. Someone earning €150,000 will lose approximately €5,272 or 6.42% and the total change in after tax income will be €21,149 or 21.58%. I do not know from where Senator Doherty gets the argument that, somehow or other, persons higher up the scale will pay less. The majority of the e-mails going around the place are from middle income earners, not people earning starter salaries. Typically, middle income earners have overborrowed and are overcommitted. This explains the background to the situation.

I apologise, but I want to go back through my earlier point. Perhaps the way in which I articulated it was not clear enough or the Minister of State has deliberately not understood my comments. I will try to make it simple.

Regarding the cuts in section 2 specifically, I want the Minister of State to clarify something for me. From the figures furnished to us by his Department, two thirds of public sector workers in County Donegal earn less than €20,000. One such worker will, as a result of section 2, take a 5% cut. Let us imagine the person, like 50% of the population, is outside the tax net. Let us imagine a public sector worker in County Donegal who earns €160,000. As a result of this section, he or she will take an 8% cut. Since the second person is in the tax net, however, the net decrease will not amount to 8%. A comparison between this and next month's net pay would not show a reduction of 8%, as 41% of that percentage will go to the State in the form of taxes, never mind the other levies. Some of the reduction is a reduction in the amount to be paid to the State. We can acknowledge this.

In a comparison between the two Donegal workers' pay this and next month, the reduction in respect of the person on less than €20,000 will be 5%. There is no doubt about that because the person does not pay any tax to the State. The reduction for a person who is earning €160,000 will be less than 5%. I want the Minister of State to tell me whether I am wrong or right in this.

I simply ask the Senator to refer to the budget tables.

This is crucial. I have to cast a vote on this legislation.

The Minister of State asked the Senator to refer to the tables.

To be fair, the Minister of State has asked me to refer to a table that is dealing with self-employed people.

We are dealing with legislation——

We are dealing with legislation. I am just pointing out what the Minister of State said. He has outlined the position. We are on section 2. We can keep repeating ourselves and stay here until tomorrow, if some Members wish. I feel we have given section 2 a long time — we have been on it for an hour and a half now. The Minister of State's reply to the Senator referred him to the Budget Statement. I can do no more.

I understand that. The Cathaoirleach is chairing proceedings in a very fair way. This is about fairness. The core of this legislation is what is in these tables. It is a simple question I have asked. I need to understand, with regard to the difference in pay between this month and next month as a result of this section, whether the person earning under €20,000 who is outside the tax net takes a higher decrease than the person earning €160,000. It is a yes or no answer. I know the answer. The reality is that the person on €160,000 will take less of a percentage decrease than the person under €20,000.

The Minister of State is embarrassed to stand up and say that. This legislation is completely unjust and unfair. It is attacking the lowest income earners. It is not about their income. I understand they will take a larger decrease in terms of euro but in terms of percentage, when we compare one pay cheque against the next, the fact is the higher income earner is paying tax at the higher rate and will take less of a percentage decrease than those earning under €20,000. That is the reality. If the Minister of State wants to defend and pass the legislation, he should stand up and say "Yes. We have done it, and that is it."

Of course I am standing up to defend the legislation. What else does the Senator think I am here for? The net effect on income is perfectly clear, if the Senator cares to study the supporting documentation. The actions of the Government over the past two years have been highly progressive. They have not been regressive. The Senator made reference——

Will the higher income earner pay less or more in percentage terms?

There should be no interruptions.

I have told the Senator that the net——

That is not the question I asked.

I am giving the Senator the answer, which is that the total change in net income will be far higher at a higher level. I have nothing——

That is not the question I asked.

That is the answer I am giving the Senator.

The Minister of State is ashamed to answer the question I have asked him.

Senator——

He should acknowledge that the higher income earner will take less of a percentage decrease than the person on €20,000 in Donegal.

The Senator must respect the Chair.

The Minister of State should not answer a question I did not ask him.

The Senator must respect the Chair. I am putting the question. The Minister of State has replied on numerous occasions to all the questions asked.

To be fair, he has replied to questions I never asked. He and the Government are ashamed to acknowledge that the higher income earners will take less of a decrease than lower income earners.

I emphasise that the Chair has no input into or control over any replies given by a Minister. The Minister of State has given his replies. At this stage, I am putting the question.

Question put.
The Committee divided: Tá, 27; Níl, 20.

  • Boyle, Dan.
  • Brady, Martin.
  • Butler, Larry.
  • Callely, Ivor.
  • Carroll, James.
  • Carty, John.
  • Cassidy, Donie.
  • Corrigan, Maria.
  • Daly, Mark.
  • de Búrca, Déirdre.
  • Ellis, John.
  • Feeney, Geraldine.
  • Glynn, Camillus.
  • Hanafin, John.
  • Keaveney, Cecilia.
  • Leyden, Terry.
  • MacSharry, Marc.
  • McDonald, Lisa.
  • Ó Brolcháin, Niall.
  • Ó Murchú, Labhrás.
  • O’Brien, Francis.
  • O’Malley, Fiona.
  • Ormonde, Ann.
  • Phelan, Kieran.
  • Quinn, Feargal.
  • Walsh, Jim.
  • White, Mary M.

Níl

  • Bacik, Ivana.
  • Bradford, Paul.
  • Burke, Paddy.
  • Buttimer, Jerry.
  • Cannon, Ciaran.
  • Coffey, Paudie.
  • Coghlan, Paul.
  • Cummins, Maurice.
  • Doherty, Pearse.
  • Donohoe, Paschal.
  • Fitzgerald, Frances.
  • Hannigan, Dominic.
  • McFadden, Nicky.
  • Mullen, Rónán.
  • Norris, David.
  • Phelan, John Paul.
  • Regan, Eugene.
  • Ross, Shane.
  • Ryan, Brendan.
  • Twomey, Liam.
Tellers: Tá, Senators Déirdre de Búrca and Camillus Glynn; Níl, Senators Pearse Doherty and Liam Twomey.
Question declared carried.
Sitting suspended at 2.10 p.m. until 2.45 p.m.
Amendments Nos. 16 and 17 not moved.
Section 3 agreed to.
Amendments Nos. 18 and 19 not moved.
Section 4 agreed to.
Sections 5 and 6 agreed to.
Amendment No. 20 not moved.
Section 7 agreed to.
Sections 8 and 9 agreed to.
Amendment No. 21 not moved.
Section 10 agreed to.
Amendments Nos. 22 and 23 not moved.
Schedule agreed to.
Amendments Nos. 24 and 25 not moved.
Preamble agreed to.
Amendment No. 26 not moved.
Title agreed to.
Bill reported without amendment.

When is it proposed to take Report Stage?

Sitting suspended at 2.50 p.m. and resumed at 3 p.m.