Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Tuesday, 17 Feb 2009

Vol. 675 No. 1

Irish Economy: Motion.

I move:

That Dáil Éireann:

believes that:

the measures required to deal with the current economic crisis must be based on the principles of fairness and equity;

those who contributed most to the crisis should be required to contribute most to a solution and that people should be asked to contribute according to their ability to pay;

irresponsible lending practices by the banks and reckless speculation made a major contribution to the economic problems we are now facing and that the Government has failed to take required measures to remove senior bank executives and board members responsible for this and to adequately cap pay and remuneration packages; and

measures should be taken to end the practice whereby people living and conducting business in this country can avoid paying taxes by a phoney tax exile status and to end the various tax shelters and relief schemes that facilitate tax avoidance by wealthy individuals;

deplores the attempts to scapegoat public service workers and to create divisions between those who work in the public and private sectors;

regrets the manner in which the negotiations with the social partners were handled by the Government and particularly the failure of the Government to table specific proposals on public service pensions until the eleventh hour, leaving no time to reach agreement;

believes that the pension levy unilaterally announced by the Government is unfair in that it places an unacceptable burden on public servants on modest incomes, including those who are so poorly paid as to qualify for family income supplement;

notes that no account is taken of the differing arrangements for pension and social welfare contributions in the public sector and that anomalies in the way in which the levy is structured will mean that some public servants on low pay will lose a greater proportion of income than somebody on higher pay;

regards the decision to impose the levy on all income, including income which is not reckonable for pension purposes, to be fundamentally unjust;

recognises that public servants are willing to play their part in economic recovery and in the stabilisation of the public finances on a basis that is fair and equitable; and

therefore calls on the Government to suspend the introduction of legislation to impose the levy and to re-enter negotiations with the social partners with a view to reaching agreement on a fair and equitable set of proposals that would meet the adjustment of €2 billion already agreed between the Government and the social partners in the draft Framework for a Pact for Stabilisation, Social Solidarity and Economic Renewal.

I wish to share time with Deputies Shortall, Sherlock, Jan O'Sullivan and Morgan.

Is that agreed? Agreed.

Nobody in this House would deny that we are at the beginning of what may be the worst economic crisis in living memory. All around the country tonight, around kitchen tables, people are wondering just how they are going to get through it. How will they manage with less take-home pay, but the same bills? How will they pay their mortgage, and what will happen if they cannot? How will they keep their business afloat? How will their retirement be now that the pension they saved so long for has evaporated along with trust in the banks?

How will they cope now that they have lost their job? In January alone, 36,500 people found themselves asking this question for the first time. These are people who just 12 months ago had good jobs, reasonable incomes and hope for the future but now find themselves queuing along the street at the dole office. They are bewildered by their first ever experience of seeking assistance from the State, embarrassed and humiliated by their new fate.

My thoughts tonight, first, are with the 140,000 people who have lost their jobs over the past year. Those people have seen the doors close in SR Technics, Ericsson, Waterford Crystal and Dell, to name but a few. There are as many untold stories about businesses closing down, redundancies and reduced hours as there are new people signing onto the live register. I say this because now is the time for solidarity. Now is the time to recognise that what happens to our neighbours, our colleagues and our fellow citizens matters to each and every one of us.

There has been, since the start of the economic downturn, a deliberate attempt drive a wedge between those who work in the private sector and those who work in the public sector.

It has suited some people, including Ministers, to imply that public and private sector employees exist on separate planets and public servants were, in the insulting headline-chasing words of Minister of State, Deputy John McGuinness, "featherless but still plump State hens". The implication is that public service workers are impervious to this recession while all the pain is being felt in the private sector.

This is rubbish. Of course, public servants are not indifferent to the plight of private sector workers. In many cases, they are married to them. They are their brother, their sister, their parents, children and friends. Now, more than ever, they find themselves struggling to support a household that in many cases has suddenly found itself with only one income. The real wedge is between those who were responsible for our current mess and those who were just getting on with their lives.

These people worked, reared a family and paid taxes until the rug was pulled from under them. This is a global financial crisis on a massive scale. The global boom — which made our own Celtic tiger possible — has now become a global bust and no country is immune from its impact.

Ireland is different. This economic storm is battering Ireland harder than our fellow EU member states because, by the time it arrived on our shores, we were already extremely weakened. For the past six years, our economy had been artificially propped up by a construction boom. Addicted to the revenue that concealed our economy's deep-seated weaknesses, Fianna Fáil again and again failed to intervene in runaway property speculation and unsustainable lending practices by the banks. It has failed to hold those in the golden circle to account and now working people are paying the price.

Working people are paying the price but not fairly, equally or according to their role in the crisis. The thousands losing their jobs every week did not inflate the property bubble and the children losing their special needs teachers did not cause it to burst. Those paying through the nose for health care, medicine bills and care for their elderly parents now that home help hours have been cut did not buy land banks for billions of euro in the hope that they would sell them on for even more billions. Public servants, just by doing their jobs, did not cause the problem in our public finances. They were not borrowing millions of euro from a bank to invest in the same failing bank. And yet, who is asked to take the pain and to "readjust"?

It is some irony that nurses, teachers, gardaí and county council workers are now being asked to pay more into a pension fund, half of which is to be handed over to banks, whose top executives are still paid in millions of euro. In their haste to take money from public servants to give to the banks, the Government chose to unilaterally impose a so-called pension levy on every worker on the State's payroll. No other adjustments were made and there were no changes to the cost of living, just to how much public servants would have in their pockets to pay for it.

As with any unilateral, late-night, back-of-an-envelope proposal, it was not thought through. It took two days for the Taoiseach and the Minister for Finance to get their story straight on whether the levy was on gross income or net of tax. Now we know the levy is net of tax, we are left in the dark as to how much it will actually raise. One thing is certain; it is unlikely to be the €1.4 billion announced initially by the Taoiseach.

Most of all, this pension levy is unfair because it singles out one category of worker in our economy for a unilateral pay cut. It is unfair because it will be levied on income that will not ultimately be reflected in many public servants' pensions. It is unfair because it fails to take into account the differing contributions public servants already make to their pensions. It is unfair because it places a disproportionate burden on low and middle-income public servants.

It does not take an economist to work out that a clerical officer on €25,000 will find that she feels the pinch of €1,000 missing from her pay packet more than the Minister for Finance earning €250,000 would miss the €14,000 missing from his. She is paying an additional levy of 4% of her gross income towards her pension while he is only paying a levy of 5.6% on his. In some cases, lower paid public servants actually pay a higher levy than those on higher pay. How is it fair that a person on €39,000 will pay €2,120 when their colleague on €44,000 will pay only €1,858?

Despite what some would like to imply, the majority of public servants earn a modest wage. Nobody signs up to be a clerical officer or primary school teacher because they want to make big money. Most of those who have contacted me earn between €30,000 and €40,000 a year. They are working people who must pay for everything. Many have made considerable sacrifices to save up enough money to buy their own home at a crippling cost.

These are not the cosy, cosseted elite that it suits some to caricature. Last week, I received an e-mail from a separated mother of four teenagers. She works for the HSE and earns €31,000 a year. The Government deems this family's income low enough to be eligible for the family income supplement but the same Government also wants to levy €1,480 from her take home pay. Another woman told me how, after her mortgage, child care, life assurance and petrol, she, her husband and their three children had €450 per month to live on, even before she is required to pay the pension levy.

A nurse in a hospital wrote to explain how, now that her husband was unemployed, all of her income was consumed by keeping her family afloat. Like many of the public servants who got in touch, she accepted the pay freeze. She accepts this, like she accepts the HSE staff embargo that has put her and her colleagues in the emergency department under great strain. She simply cannot absorb another pay cut.

There are many others, with hundreds of stories that reflect the high cost of living in Ireland, whether one works in the public or the private sector. There are stories about spouses or partners losing their jobs, the cost of medicine and about fear of not being able to make ends meet. There is even fear of losing one's home.

Almost every single public servant who got in touch with me indicated that they appreciated the public finances were in trouble and they were willing to contribute to fixing the economy. They just wanted that contribution to be fair. Many said they would be willing to contribute more to their pension.

This is why, when the Taoiseach abandoned partnership negotiations, it was a missed opportunity. If public servants were willing to co-operate with a reduction in the public service pay bill and if the trade unions had agreed a €2 billion adjustment, why did the Government decide to effectively collapse the talks and unilaterally announce badly thought-out cuts and levies? As time goes on, it seems this Government is more concerned with public perception — with being seen to be tough — rather than taking the right and fair decisions.

What is fair about taking money from an employee on €15,000 but asking nothing of banking executives or super-wealthy developers? What is right about a move which does nothing to reduce the cost of living, or to restore consumer confidence, or a decision which offers nothing in the way of new jobs, and only vague promises about retraining? Our economy hinges on jobs. Job losses, business closures, the drop in consumer activity and the consequent loss of tax revenues have caused the critical problem in the public finances, not the other way around.

Every job lost in the economy costs the public purse €20,000 between social welfare payments and less tax revenue. That does not include secondary benefits such as rent allowance and mortgage relief. The cost to the Exchequer for January's job losses alone is therefore €730 million, more than half of what the Government hoped to raise in the pension levy. If unemployment rises to 400,000 by the end if the year, as the Taoiseach predicts it will, that will be another €2 billion.

This is why the fixation with cutting public expenditure alone will not solve this problem. The more jobs that are lost, the more that will have to be cut to pay for them, which in turn shrinks the economy, until we reach a point where there is nothing more that can be cut.

This is not to say that the public finances are not important, or that public servants have no role to play in our economic recovery. They do, and they have signalled that they are willing. Ultimately, however, saving jobs and putting people back to work is the only sustainable way out of this economic crisis. There is no public-private sector divide, just citizens who desperately want to know that their sacrifices will have a purpose.

I, and my party colleagues, have been arguing for some time that we need a national recovery plan, a road map which describes where we want the country to be at the end of this recession, and how we will get there. There must be a clear understanding that everyone will be required to contribute according to their means and that there will be no more hiding places for those who think tax is for the little people.

I am calling on the Government tonight to suspend the introduction of legislation to impose the pension levy on public servants and to re-enter negotiations with the social partners to reach agreement on a fair and equitable set of proposals that would meet the adjustment of €2 billion already agreed.

That is just the start of what must be a national effort. We in Labour are proposing a new national agreement for economic recovery, negotiated not just between Government and the social partners but involving the whole of society. Such an agreement should be framed over at least a three year period and would address jobs, pay, tax and public services. The time for incremental approaches, which only chip at the edges of these questions, is past. This would be a deal between citizens. There would be no room for scapegoating, no room for finger pointing and no place for those not willing to put their shoulder to the wheel.

There will be no room for the kind of reckless, arrogant behaviour that has destroyed our banking system and the reputation of our country with it. The first principle of a national agreement should be a cleaning out of the boards of the banks. If people in that golden circle are found to have committed a crime, let them account for their actions before the courts.

This is a time for pulling together, for working together, for unity among working people in the public and private sector. It is a time for understanding each others' fears and risks, for refusing to be divided and for determining that we can come out of this recession to a better place.

I disagree with the Taoiseach when, in the Four Seasons Hotel, he told Dublin businessmen that the future might not be as good for our children as it has been for us. That is defeatist talk. The future can be better for our children if we are all willing to make it so. Better, not measured in material things and consumer goods, but by the quality of their lives, by the fairness of society and by the sustainability of both our economy and our environment.

I commend this motion to the House.

There are umpteen aspects of the proposed pension levy that are worthy of discussion tonight: the way the levy was presented to the social partners at the 11th hour; the way the public service has been singled out by Government and some of the media; the anomalies within the proposed system; the way that those who are actually to blame for the economic mess will be unaffected by this proposal; and the fact that most public servants already make very significant contributions to their pensions and their pay is reduced to take account of their pensions. I want, however, to focus on fairness because fairness is at the heart of this.

The Government has made great play of the fact that "we are all in this together". Clearly this is not the case. If we are all in this together, then why is the public service alone being asked to clean up the mess left by Fianna Fáil, the financial institutions and property developers? If we are all in this together, then why have the executives and boards of those banks engaged in fraudulent accounting not been removed and referred to the fraud squad? If we are all in this together, then why does Brian Goggin still get a salary of almost €2 million, and how come he does not have to pay a levy while a public service worker earning one eightieth of his salary must pay €1,000? If we are all in this together, then why is the Government not touching the 6,500 self-administered pension schemes in the private sector that attract huge tax breaks? The truth is that unless a national consensus can be reached on how our economic difficulties can be solved, there is no prospect of recovery for this country.

I want to read into the record one of the several hundred e-mails I received from public servants in the past week. For me this one best sums up the unfairness of this levy. It states:

I work mornings in Dublin City Council earning the princely sum of €20,000 a year and my husband is a cleaner in the VEC. We have a mortgage of €1,500 a month, we have no car, we do not go on holidays, all our furniture has been donated to us — because all our money goes on our mortgage for our three bedroomed house, courtesy of the greedy property developer who pushed the prices up so high that it is now a noose around our neck. We have a young child and if this pension levy goes ahead we will lose out on around €300 a month, which means we cannot afford our house.

I know that a lot of people are losing their jobs but how is our family losing our house going to help anyone? I have never claimed one penny from this country and neither has my husband, we are responsible, decent, tax-paying citizens and we do not deserve this.

For this family and many like it, the levy is unfair and downright reckless because it takes no account of ability to pay. Yes, civil and public servants have, in most cases, secure pensions but a secure pension in the future does not necessarily mean that they can afford to make extra contributions now. Yes, civil and public servants have, in most cases, secure employment but they have based their mortgages and outgoings on this employment, and security is worthless if the wages do not pay the bills.

Picking on easy targets is not the act of a leader; it is the act of a bully. The Labour Party motion urges the Government to call a halt to this proposal and to go back into talks with the social partners. An agreed, unified and fair approach is the only way forward for the country. There is now an onus on Government to work to achieve that consensus because it is only through consensus we will see recovery.

I was raised with the notion that the taxation system should be progressive, based on equity and one's ability to pay. This is not a pension levy; it is a levy on income. It is completely and utterly contrary to any canons of taxation and to the republican — I use that in the widest sense of the word — ideals to which we subscribe in this great little liberal democracy of ours. I wish to reflect the anger of one person in north Cork who wrote to me and whose voice is reflective of thousands of others. I wish to read into the record an e-mail I received from him. It states:

I am appalled at the proposed levy of 7.5% being imposed on me by the Government. I am a committed public servant who works hours far in excess of those required by my work contract, for nothing. In December 2008 alone I worked forty hours overtime for which I neither claimed nor was given payment. During my twenty-three years of public service I have worked about ten hours a week overtime without pay, on many occasions I have worked far more than that. Last year my conditions of employment were varied and I was obliged to pay Eighty Euros additional tax per week. I did so without complaint. This year in January an employment levy was imposed on me that took an additional Twelve Euros plus per week. Now in February 2009 I am being told to pay an additional Ninety Euros pension levy for which I will receive no benefit whatsoever! My deduction prior to the imposition of any of these additional taxes were as follows: PRSI [approximately] 3.25%, Superannuation plus Widows and Orphans 6.5%, Notional service 7.28% totalling 17.03% plus VHI of [approximately] fifty Euros as my PRSI contributions entitle me to nothing while my wife and I are both alive. I recently put two members of my family through third level college and received no grants whatsoever. My weekly deductions after this levy is applied will total approximately four hundred and sixty Euro per week. I have always felt that it was my duty as an Irish citizen to give a contribution above and beyond that called for by my work contract. I have done so willingly and have even enjoyed doing so. I paid my taxes and did so without complaint. I felt that I was doing what every loyal Irishman or Irishwoman should do and that every other working Irishman or Irish woman was doing the same. Now, however, I feel that I am being singled out as a soft target because of my position as a public servant and that my contribution to Irish society and the country has been demeaned. I would not object as vehemently if the load were spread out evenly among all contributors. However, if and when we get back on our feet in this country, I will still be paying this levy, whereas if it were income tax I would be treated in exactly the same way as other taxpayers and when taxes were reduced all round again I would also benefit. [This] is not to be the case, however, and I will remain a victim of this unjust imposition for the rest of my working life. You will understand why I feel that my commitment and dedication are not appreciated, why I feel that I am being singled out as a scapegoat for the economic collapse and why I will not feel in the future that I should go that extra mile, as I and many others do every week of every year without acknowledgement or expectation of it. This is taxation without consultation, a punitive measure directed at a section of Irish society that has contributed to Irish economic growth without receiving a commensurate reward.

The Government must seriously rethink its strategy on what I call this income levy. We are all willing to share the burden but if we are to spread the burden, it must be done on the basis of equity and fairness.

Of all the people I have met in the past week and who have sent e-mails to me and every Member of this House, there is not one who is not willing to play his or her part in sorting out the mess the country is in but they are not willing to be used and abused to turn this country into a two tier society, those who pay and those who do not pay. That is the bottom line in this regard.

I refer to those who are paying. I have an article from the Irish Independent about a mother of six who was jailed for debt. She was thrown into Mountjoy for a debt of less than €1,000 because she could not pay it. That mother of six, struggling to pay a mortgage with her husband, was thrown into Mountjoy with nowhere to hide but those who made billions on the back of this country and the property bubble and whose huge gambling debts are being paid for by the taxpayers and those rich people whose companies are part of the so-called bad debts of the banks can walk away scot free while the people of this country are left to pay.

There has been much talk about delinquent bankers in the press but there has not been enough talk about those people who are responsible for the so-called bad debts in the banks. Many of those people have money which is hidden. They have companies behind which they have hidden and they are getting away scot free.

The banks should be forced to go after all those so-called bad debts. Those people should be named and shamed. The ten people referred to earlier, and about whom the Taoiseach said he did not know, should also be named and shamed because they are as responsible as the Government and the bankers for the children with special needs who are losing their classes and for the young people who will not get a life saving vaccine. Those people are morally responsible and they should not be able to go away and hide.

In fact, the entire golden circle, who stashed their gains where they cannot be seen, should be named and shamed and they should be forced to pay these so-called bad debts. This woman who was sent to Mountjoy had nowhere to hide so why should those responsible for the huge debts to the banks be unidentified and free to go away and enjoy a lavish lifestyle? That is basically the source of the anger among the people.

An attempt is being made to pit public against private sector worker. We must not fall into that trap because this is not about public versus private. The nurse who is struggling to pay a mortgage and the family described by Deputy Shortall are on the same side as the Dell workers in my constituency who are losing their jobs. They are the ones being asked to pay. Thousands of people who are well able to pay are being allowed to get away without doing so. That is basic inequality and that is the two tier society into which we are being asked to buy with this levy.

Many people in the public sector pay towards their pensions — in fact, I believe practically everybody pays towards their pensions. Not everybody has job security. I know many people in the health sector, for example, who are temporary, who are on contracts, who have no security in their jobs and who do not know if they will have a job in six months' time. Those people are also being asked to pay. Somehow or other they are being tarred with this brush of having security and of not being willing to play their part. Everybody I know is willing to play their part as long as it is done fairly and in a way that people can see they are not being scapegoated while others are being let off the hook.

That is why in this Labour Party motion we ask that the Government go back and negotiate again with the social partners and that it present us with a full, complete plan on how we will get out of this mess, how we will create jobs, how we will get the rich to pay and how we will ensure everybody can see they are getting fair play. If President Obama can cap the higher incomes in his country, I do not see why we cannot do so.

We need a total change of culture. Looking at the northern European countries, there is a much smaller divide between the well off and the less well off yet they are successful economies and societies with excellent health and education services.

We need to bring about that kind of society where we narrow the gap between rich and poor instead of what seems to be happening here where the less well off people on €15,000 to €20,000 per year are being asked to pay this levy while the rich get off scot free. We need to bring about a fairer Ireland and close that gap between rich and poor. We need to cap higher incomes and see the likes of Mr. Goggin and others in the banks having their incomes capped rather than simply a percentage taken off. We need to channel all the anger to change the culture of greed, access and privilege to one of solidarity and fairness.

I thank the Labour Party for sharing time with me and for giving me the opportunity to contribute to this important debate.

I begin my contribution by expressing Sinn Féin's support for the motion. The Government decided to amend its original amendment to include the words "the principles of fairness and equity". These are principles Fianna Fáil and the Green Party easily forget. However, it is the motion as put forward by the Labour Party that we are here to discuss. I affirm Sinn Féin's total opposition to the pension levy. We have consistently stated that any measures to address our public finances must be done on the basis that those who have the most, pay the most. Instead, all we have got from the Government is a punitive, mean spirited and fundamentally unjust attack on working people in the public sector, while the pals of Fianna Fáil in senior management in our banks and other institutions continue to get off scot free.

Through the pension levy, which is in reality a pay cut, the Government has asked public workers to pay for the boom from which they never really benefited. While the Minister for Finance has, by his own admission, spent nearly all of his time on our banks, thousands and thousands of workers throughout the country have been let go. It is not just all his time the Minister has spent on the banks, he has spent all our money on them too.

For the past five months there has been one revelation after another on corruption and fraud within our banks, one botched Government initiative after another to try to restore confidence to our financial institutions, and interview after interview that demonstrate that the senior management in our banking institutions are on a different planet and are incapable of changing their ways.

We heard again today of another scandal involving Seán FitzPatrick fraudulently moving money from Irish Nationwide and Anglo Irish, but nothing has been done by the Government to seize the money embezzled by Mr. FitzPatrick and there are no signs of criminal proceedings being brought against him. Compare that with the example just given by Deputy Jan O'Sullivan. Despite all of this, Mr. FitzPatrick still had the brass neck to refuse to come before an Oireachtas committee to answer questions from public representatives on these matters.

These banking executives will have to be dragged here, undoubtedly kicking and screaming, and made to account for their criminal behaviour. Today, I called for legislation to be introduced to compel the likes of Mr. FitzPatrick to appear before the Oireachtas or to face imprisonment. Enough is enough. People are sick and tired of the bankers getting away with it while ordinary people are being made to pay.

The claim by the Minister for Finance last week, when he handed €7 billion of taxpayers' money to the banks, that bonuses had been done away with is nonsense. Bonuses are not gone, they have simply been put on pause for 12 months. The banks will then be free to use whatever is left of the €7 billion to start paying themselves outlandish bonuses again. All we are getting for the €7 billion set to come out of the pockets of ordinary workers is a token 25% holding on the board of directors. We have already seen how ineffective the Government can be from its 25% holding on the board of Aer Lingus.

While the Government may claim that the corporate malpractice which was endemic in our banking system is rooted firmly in the past, there is no evidence to indicate change to our regulatory system. It is wrong to suggest that was then and that things have changed now. Most of our banking executives are still in place and the culture of crony capitalism, which was championed by Charlie McCreevy with his deregulation dogma, still forms the basic structure of our financial system.

While we are preoccupied with the banks, the real problems affecting the people are being ignored. We have all received hundreds of e-mails, numerous telephone calls and visits to our constituency offices from public workers who are dismayed at what is happening. The pension levy has demoralised thousands of our public sector workers and has shocked the country at this time of crisis. What Fianna Fáil and the Green Party have effectively done is to reduce the people on modest incomes to the point where they are struggling and to make already struggling families even poorer, not to mention the thousands of workers who, for a variety of reasons, have been unable to qualify for a State pension, but who must still fork out hundreds of euro every month to a pension they will never receive.

I recently received an e-mail from a woman who will now double her contribution to her pension because of this levy, but will not avail of that pension because she spent a number of years raising her family at home. These are ordinary people with modest salaries, not like the former Financial Regulator, Mr. Patrick Neary, who got a golden handshake of €630,000 for standing by while our financial system was almost destroyed through corruption.

Ordinary workers are right to feel disgusted at the Government's decision to make them pay for its mistakes and those of its friends. Apart from the damage the Government has done to my constituents and constituents of every Deputy in the House, this proposal will prove futile. The so-called €2 billion the Government has announced it will save will be completely wiped out if our unemployment continues to grow at the same rate as it did in January.

The cutbacks so desperately sought and that the Government is now implementing will do nothing to stimulate the economy or to create jobs. It is investment and planning that will create and stimulate job creation and retention, not cutbacks. It is job retention and creation that will address the public finance deficit. My colleagues and I in Sinn Féin accept that there is some wastage in the public sector, but we do not accept that it is low and middle income earners who are the cause of the difficulty. Rather, we see the outsourcing which has grown with the culture of deregulation promoted by Charlie McCreevy as the real waste. When we finally get a clear picture of how much money is being used to subsidise these corporate raiders operating on the back of our public services, it will become clear that privatisation is the biggest waste of public money of all time.

It is important to point out that this blunt object which is being used to divide public and private workers and which will lead to a reign of psychological terror on our public servants did not just happen in the past three months. The psychological war against our public servants began a long time ago, when the likes of IBEC, Ministers, certain parts of the media and, unfortunately, Fine Gael, began kicking lumps out of our public services. These forces have used the economic crisis to attack public sector workers and services.

It is opportunistic in the extreme for Fine Gael Deputies to claim they are opposed to the levy when their own leader said only last September that the public service is "bloated and inefficient". That is language very similar to language used by the Minister of State, Deputy John McGuinness, when speaking to Deputy Gilmore. The Fine Gael spokesperson on finance also used similar language and called for radical reform. We all know what he meant by that with regard to public services. It is disingenuous of Fine Gael, the Government and certain parts of the media to claim that no reform of work practices in the public service has taken place over the past ten years. What Fine Gael and IBEC are really after is not an improvement in work practices but cutbacks.

We will continue to oppose the pension levy. We will also support public sector workers in their national day of protest. We will continue to be the one party on this side of the House to call for a job creation strategy based on realistic and achievable proposals.

The effort to divide public and private sector workers did not happen by accident. It is a strategy devised to separate the working movement across the country. Never was it more important for workers to unite, whether public or private sector. As sure as night follows day, the private sector will be next to face the onslaught. This should not be accepted. It is disingenuous of the Government to take all this taxpayers' money and pour it into the bottomless pit of the banks without any control or regulation of that sector. Doing that is scandalous. It is time to put an end to this and end the attack on low and middle income families. It is time for the Government to work its way out of the economic mess created by itself, the bankers and speculators. It is time we produced a plan to work together to do so.

I wish to share time with the Minister of State, Deputy Michael Kitt.

Is that agreed? Agreed.

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"—affirms that all measures required to deal with the current economic crisis must be based on the principles of fairness and equity;

supports the proposed pension-related deduction as a reasoned and measured step which is necessary to help restore balance in the public finances;

recognises the need to apply this measure without delay to assure all concerned of Ireland's resolve to tackle the financial position facing the country in an expeditious and determined manner;

acknowledges the extensive efforts of the Government to secure solidarity among the social partners and support for specific actions and the fact that the Government is acting within the framework agreed with the social partners; and

expresses its confidence in the Government's measures to stabilise the banking system, reform the tax system on the basis of the report due from the Commission on Taxation, and to place the economy on a sound footing for the future through the implementation of the framework for the restoration of sustainability in the public finances over the medium term as set out in the Addendum to the Stability Programme Update and the economic strategy of ‘Building Ireland's Smart Economy' published in December 2008."

It is no exaggeration to state that this country is now fighting for its economic future. Unless we demonstrate the will to restore stability to our finances, there will be no economic recovery. The world is looking on. We need to persuade international markets and opinion that we are capable of taking the decisions now to put our house in order. If we cannot do that, we are in danger of losing all the gains we have made in the past two decades.

There are three inescapable facts that we must all face: this year we will have to borrow €4,500 for every man, woman and child in the State; more than one quarter of all our current bills, including pay, will be paid for by borrowed money; and the interest on the money we need to borrow will use up one third of all the income tax receipts we expect to take in this year, dead money that should be going to meet our public service needs.

Nothing will make these facts go away. No amount of e-mail campaigns or protests will change them. The problem is that we have an €18 billion hole in the public finances. We are experiencing an international recession of unsurpassed severity. Every major world economy is suffering or will suffer this year. Our problems have been compounded by unhelpful exchange rate movements and by our reliance in the recent past on the domestic market and the housing sector as the driver of growth.

Yes, mistakes were made, as other Governments worldwide made mistakes. Of course, if we could have foreseen the extent of the international crisis, things might have been ordered differently. However, as I stated here two weeks ago, I do not recall much of a clamour from the Deputies opposite for less spending, lower social welfare increases, higher taxes or higher levies. On the contrary, the Opposition fought tooth and nail against every tough decision made in the recent budget.

We did not cause the problem.

It is about responsibility for problems. Problems are about the responsibilities——

The responsibility rests over there.

Allow the Minister to speak.

——that all of us owe to this country, to do our best in difficult circumstances.

It is also about competence.

Throughout the month of January, we sought to reach an agreement with the social partners on an approach to manage the challenges we now face. We did achieve agreement on the scale of the problem facing us and on the need to take urgent and radical action to restore stability to the public finances. We were criticised for engaging with the social partners. The Deputies opposite argued that it was a waste of time, that it was outsourcing decision-making and now the same Deputies want us to re-enter talks with the social partners. This is proof if ever it was needed that the Opposition is more interested in political mischief than the future of this economy.

What is the Government interested in?

Unfortunately, the unions were not in a position to agree to our proposals for addressing the difficulties and in the end, the Government, as we said we would, took the decisions that we believe are in the best interests of this country. We know the pension levy will impose a burden on public service workers and their families.

It is not a pension levy.

Many of my constituents are public service workers and I know the challenges they face. I know how hard they have to work. However, it is in everyone's interest that we deal responsibly with the problems we face and protect this country's future prospects.

The steps we are taking now, together with the framework for recovery published before Christmas, plan a way forward to restore us to the path of growth. That is our position. What is the position of the Labour Party, which tabled this motion? Its position just a month ago was that there was no time to wait, no time for talks with the unions.

That is not so.

That is nonsense.

That is just not true.

Yet in the motion it has tabled, it wants to go on talking, amending and fine-tuning. The truth is the Labour Party has no alternative proposal. Putting our finances in order to inspire investor confidence and——

The Government is not doing very well at that, is it?

——cutting our cost base so that we are in a position to compete when the world economy recovers are strategies beyond a party whose only plan is to borrow and tax our way out of this downturn.

Where did the Minister get that?

The Government has done more damage to confidence than anybody else.

Nothing has changed for the Labour Party since the 1980s. After a brief two and half year period of grown up political behaviour in the 1990s, the Labour Party has returned to a position of economic delinquency.

That is cheap rubbish. You are the Minister for Finance.

Who is the delinquent?

The Labour Party tabled this motion.

The Minister should be on this side of the House.

Allow the Minister to speak.

A few months ago, its former leader, Deputy Quinn, told an interviewer it was not his function to outline a way forward for this country.

A couple of weeks ago, Deputy Gilmore refused to outline an alternative to the expenditure measures proposed by this side of the House.

Then belatedly, last Saturday, in a column in a daily newspaper, a strategy emerged——

Is that what the Minister spends his time doing, reading the newspapers?

Nearly two thirds of the Labour Party's proposed €2 billion in savings are, in effect, tax increases which will impact widely on a weakened economy. Several of the actions proposed by the Labour Party have already been taken into account by the Government and are in the 2009 Estimates and the revenue pencilled in for some of the measures is highly speculative. For example, where does one obtain a figure of €186 million for lowering the pension cap tax relief from €150,000 to €100,000?

From a reply to a parliamentary question three months ago from the Minister.

Perhaps the Minister did not read that either.

Allow the Minister to make his contribution.

The real figure for this saving is now estimated by my Department at €85 million.

See no evil, hear no evil.

From where is the figure of €175 million for full tax rates on tax exiles plucked? As I understand it, if someone resides outside the country one cannot levy tax on him or her. I took the opportunity in last year's Finance Bill to abolish the rule that anyone could maintain that he or she was not in Ireland on one day because he or she left before midnight. This rule was abolished in the Finance Act last year. Now we are speaking about people resident outside Ireland being taxed inside Ireland. Further questioning, I understand, has led to the revelation that this tax could be levied on a passport. I do not believe such a revenue practice has ever been successfully implemented in any part of the world. How does the Labour Party propose to get over the legal difficulties involved in taxing people twice?

Deputy Burton refers to the fat cats. Let us look at the fat cats.

You are the Minister for Finance.

Are we talking about the 1% of all income tax earners whose income is more than €200,000? These earners contribute 20% of the total tax yield. Are we talking about the 3% who earn more than €150,000? They contribute 28% of the tax yield. Are we talking about the 9% who earn more than €100,000 because they contribute 47% of the entire tax take.

Let us consider the income levy we introduced in the budget. This is levied on all income. Those earning more than €50,000 pay 52% of the yield. Those on the minimum wage pay no contribution to the levy. This is a highly progressive income tax system. Those with high incomes pay most.

Except those who do not pay any.

Those who get compensation rather than salary.

Those on low incomes pay least and those on the minimum wage pay nothing at all. That is not to say that we will not have to raise taxes. The Government has already indicated several times that we need to broaden the tax base and that increased taxation will have to form part of our return to fiscal stability. Equally we have said and many commentators agree that now is not the time to increase taxes further. We will await the advice of the Commission on Taxation which has been examining our tax system for more than a year. Its report, which is due in early autumn, will inform our decisions for next year's budget.

We will not hold our breath.

It was and is open to the Labour Party to make a submission to the commission.

We have no intention of returning to the bad old days of tax rates of 65%. We have more ambitions for this country and its citizens.

The Government does and we know what they are.

We do not want to mire us all in mediocrity——

Another cheap piece of nonsense, "mire us all in mediocrity".

——and to treat the past 20 years as some kind of aberration.

A great deal of the contribution from the other side of the House is to suggest that the past 20 years were some kind of aberration and that we can return to the land of happy misery. This is not the case.

Who was in control?

We need to make firm decisions now to lead this country out of the financial difficulties it is in.

Your golden circle destroyed the country's reputation.

Allow the Minister to make his contribution.

Resorting to platitudes about change and getting the economy moving again will not do it. We need to have a plan——

Yes, the Minister needs a plan.

——and the plan is to save €2 billion this year and a further €4 billion next year.

That is a tough plan, something the Opposition will not address. Of this €6 billion, we have already identified €3 billion.

That is not a plan.

This is our plan to return the country to growth. This is a battle for our economic survival, as I pointed out already.

When will the Minister get the economy moving?

We will get the economy moving when we establish order in our finances, restore our cost competitiveness and re-establish the international goodwill we threw away in the Lisbon treaty result and everybody knows this and knows it well.

The Government has taken €2 billion out of the economy.

Why does the Government not reduce fuel bills?

Allow the Minister to speak.

The Government is fully aware of the importance of investment for Ireland's future economic well-being. The goal must be to maintain our position as an attractive destination for investment. This is why the Framework for Sustainable Economic Renewal published in December shows our determination to meet the severe short-term challenges we face and to introduce the changes which will ensure that Ireland emerges from the global downturn in a position to benefit strongly from revived international growth.

This document sets out clearly the measures we are taking to support a return to sustainable growth and jobs in the medium term, with specific steps to do the following: maximise the potential for growth by building on our strengths in innovation and research and development; address the huge market for environmental and energy-related products, services and innovation; invest in critical infrastructure and support more employment-intensive activity; and reform the Government's programme to have a more efficient and effective public service supported by good regulation.

We have already taken steps to implement these measures with increases in tax credits which will increase Ireland's attractiveness as a location for research and development activity.

Protecting jobs and supporting those who become unemployed is of fundamental importance. The Government will continue to work to help minimise the impact of the credit crisis and the severe downturn in global markets on employment prospects. Access for unemployed persons to search for job opportunities, training and employment programmes is vital to this task. The relevant Ministers and their Departments are working with all relevant parties to ensure people will have more options when new job opportunities arise. We will bring forward other measures in these areas to ensure we will obtain the maximum impact from resources available and that innovative approaches are used to maintain people in employment in addition to assisting those who have lost their jobs.

It must also be pointed that the Government is maintaining the largest capital investment programme in Europe. Our spending on capital is over 5% of GNP. That is the appropriate stimulus package for a country facing the difficulties it is experiencing. We are determined we will continue to invest in roads, public transport, schools and social housing. This is a major investment to support future development and it provides a necessary stimulus for the economy.

There is no doubt that the pension-related deduction in public service pay is difficult. I can assure Deputies that the Government did not take the decision to introduce this measure lightly. We know it calls for a measure of sacrifice but it is worth calling for it so as to avoid a worse fate. The pensions-related deduction is not seeking to single out the public service. The deduction is a reasonable and reasoned measure to deal with the serious imbalances which have emerged in the public finances. There was simply no alternative but to make savings in the pay and pensions bill given its relative size. The Government believes the fairest way to do that is to ask public servants to make a higher contribution towards the cost of their pensions, which, in the current economic climate, have become a very valuable asset. Public servants enjoy significantly better pensions than the majority of workers in the private sector.

That is debatable.

Public pension benefits, in particular, are secure. It is entirely reasonable that a deduction should be made to reflect this reality.

That is debatable.

What about those who do not have any pension?

For many of those private sector workers who have pensions, the turmoil in financial markets over the last year has seriously affected the value of their pension schemes.

The greatest tragedy of this recession is joblessness. Every day, workers in all our communities are losing their jobs. Each day last month, 1,000 workers became unemployed. Many others are maintaining their jobs only by taking large cuts in their pay. Public servants have secure jobs and will continue to retain relatively generous pensions at a time of great upheaval in the Irish economy. The deduction decided by the Government is a reasonable contribution by the public service to the measures now required to tackle our budgetary problems.

On the issue of banking, raised by Deputies opposite, the Government is tackling the problems surrounding the financial system. There is no question but that the inappropriate and highly suspect actions of certain individuals and institutions have significantly undermined our reputation as a financial services centre. The public is understandably outraged by these actions. There is also no doubt that our regulatory system has proven inadequate, as it has in many other countries. A reputation that has taken us years to build up has been significantly impaired in recent years and months. It is my intention to bring forward proposals for reform of the regulatory system as a matter of urgency. A new chief executive of Bank of Ireland will be appointed within three weeks and a cap will be imposed on the new executive's salary.

The salary will be capped at a figure that is well below the figures mentioned by the current chief executive.

Does the Minister remember the concept of regulation with a light touch?

Remuneration in banks is an important issue. It is the Government's belief that current levels of remuneration at senior banking level are not commensurate with the size of our economy or the institutions therein. As I announced last week, total remuneration for all senior executives in the banks benefiting from state capital — AIB and Bank of Ireland — will be reduced by at least 33% and no bonuses will be paid to these senior executives and no salary increases will be made in regard to 2008 and 2009.

The report of the remuneration oversight committee is expected shortly. The committee's role is to consider the remuneration plans of all six institutions covered by the Government guarantee. I will be writing to the chairman of the committee, Mr. Eddie Sullivan, to ask him to examine whether an overall cap on executive remuneration can be introduced for the banking sector, in the light of the significant Government support that is now being provided to the sector and the pay restraint that is now a feature of other areas of the economy, including the public sector. The banking sector will need to play its part in reducing our cost base to ensure our competitiveness in the years ahead.

I will believe it when I see it.

Ireland is facing major economic and budgetary problems that must be dealt with. The Government recognises that the future prosperity of the country will be determined by the actions we take now. The step we are taking regarding the public service levy cannot be judged in isolation. It is part of a series of measures to restore order to our finances, enhance our competitiveness and enhance our position for investors in other countries in addition to our own.

It has nothing to do with competitiveness.

This is essential if we are to progress as a country. The public service provisions and services are part of the competitiveness we must observe as a community and nation.

This is not a matter in which we have options. Were we to believe the Labour Party, we would believe there are other options. I analysed them earlier and pointed out——

No, the Minister did not.

——how they are illusory, how they relate to tax exiles who cannot be taxed because they do not live in Ireland, how they rest on inaccurate figures——

They cannot be touched, nor can the Minister's golden circle who destroyed this country's reputation.

Allow the Minister to conclude.

I know the Deputy comes from the constituency of Galway West but I have never visited the famous tent I hear so much about from the Deputies opposite.

The Minister was evicted also.

The Minister could not get in because it was so crowded.

I missed something in those glorious 12 years that perhaps the Deputy did not miss; I do not know.

We will act fairly and firmly in the national interest.

The tent is gone, anyway. It blew away.

We have a strategy to deal with the problems we face. The strategy will ensure that Ireland will effect a real reduction in the very substantial borrowing we must undertake this year. It would be a brave person who would predict what will happen in 2011 and 2012——

I hope the Minister will not be around in the Department of Finance.

——but it is essential for the survival of this country——

The Minister sounds like old Hanrahan: "We'll all be rooned".

"‘We'll all be rooned,' said Hanrahan, ‘before the year isout.'"

——that firm decisions be taken and implemented at this stage. That is the task facing anyone in Government. If the Labour Party wants to check out figures on any particular options, the doors of my Department are open. My officials will advise them on those figures at any time.

What about five or six years ago? Why did the Minister not extend that invitation then?

Deputy Durkan will have an opportunity to contribute later.

We will take the decisions that are necessary for the future welfare of the country. We will not shirk from making very difficult decisions. Of course I acknowledge the difficulty of the decisions and, above all, the tremendous contribution that our public sector workers make. I acknowledge the long hours for which they work and the hard sacrifices they make.

The Minister has a funny way of showing it.

I know they will go the distance with us and that we will be able to restore financial soundness and lay a foundation for economic recovery in the future.

I compliment the Minister on what he has said tonight and on providing the bank guarantee.

It is a very small standing ovation, Michael.

I compliment him also on his support for the process of ensuring stability in the banking system and allowing banks to get on with their business. What he said today about the placing of a cap on the salaries of bank executives and the steps he intends to take is very welcome.

Building Ireland's Smart Economy: A Framework for Sustainable Economic Renewal, published last December, was a good basis for the negotiation that started with the social partners, as was obtaining their views on the financial adjustments required in light of the end-of-year Exchequer returns. It is important to point out the financial projections were submitted to the European Commission and that a very good discussion took place with the social partners. There was an endorsement of the need to adhere to the financial plan submitted to the Commission.

The most important point made by the Minister for Finance and the Taoiseach was on the savings of €2 billion required in 2009. The unions decided they were not in a position to agree on the full-year saving of €1.4 billion through the introduction of a pension levy but I do not believe the engagement with the social partners was a failure. There was general agreement on the need for the €2 billion adjustment and there was agreement on the overall framework. There is a definite link between the economic renewal strategy published last December and the contribution to be made by the public service to achieve the €2 billion adjustment. That is an important point.

As one who believes in social partnership, I am pleased we had that process, which was about engagement and sharing the issues to be discussed. The process went very well. Social partnership has shown us that major challenges face the economy. It also shows us the direction in which we should be going. For that reason, the partnership process has been very important.

I understand ICTU and other social partners have indicated that they are available to continue discussions on a range of issues based on the framework agreement. I hope we can continue to discuss the issues involved, which are very important. One such issue is support for enterprise. The Minister for Finance referred to that tonight and on many occasions previously. He emphasised the need to stabilise the financial and banking sectors and employment projects. I was pleased to hear the announcement last week on the allocation of an extra €75 million for school buildings and another €75 million for building insulation and energy efficiency projects. That development is especially welcome and the great interest in those projects is encouraging. The insulation of internal and external walls and ceilings is being progressed throughout the country. Measures on heating, boilers thermostats and ancillary areas are also welcome.

I attended a useful meeting last Thursday with representatives of the trade union, IMPACT. My two Fine Gael colleagues in the constituency also attended. While the representatives were critical of some aspects of the pension levy, they were more critical of Deputy Varadkar of the Fine Gael Party who has advocated laying off 10,000 public servants. They described him as a maverick. They were certainly not happy with some of the proposals he made. I have attended a few such meetings at which queries are raised about the pension levy proposals.

I look forward to a response from the Labour Party to the Minister's interesting point about the proposal on tax exiles that it made. One aspect of the pension levy that has been welcomed is the fact that it does not apply to people on pensions, contrary to a rumour that circulated initially. The deductions are charged in a graduated way and are less for those with lower incomes than for individuals with higher incomes.

Does it apply to people who have their pensions paid?

On average, the deduction will be 7.5%. I said at many meetings I attended that we would like to hear whatever proposals other parties, Independent Deputies or other stakeholders have to make on the issue. We can discuss these matters in a co-operative way. One issue raised at many meetings is the divide that has been promoted between the private and public sectors. I very much regret that this element has entered into the debate. IMPACT represents people who work in both sectors and it has said that clearly at meetings it held in Ballinasloe, Galway city and Roscommon over the weekend. At every meeting it stressed strongly that it does not want to see that trend emerging.

Many people in the private sector have lost their jobs while others have taken cuts in salary or reduced working time such as a three-day or four-day week. It is good to know that people are making an effort to retain employment. It is most important that we seek to preserve employment and create jobs wherever we can. I have given examples of where that is happening. Three industries in Tuam have been secure for many years. I refer to Transitions Optical, Valeo Vision Systems and Logstrup, a Danish company. They are on short-time work but they are confident about the future. In fact, Transitions Optical employed 25 people on a permanent basis as recently as one month ago. That is a strong effort which is aided by the Tuam Chamber of Commerce to try to ensure that we have employment into the future. I am happy that small industry has always been a strong feature of the economy in Tuam and that the picture is replicated throughout many other villages and towns in County Galway.

If we can use some of the €8.2 billion we are borrowing for infrastructural projects, for example, to provide more water and sewerage schemes, we will be able to make more progress on the provision of necessary infrastructure that will, in turn, create jobs. We have good infrastructure in many towns. There is a tremendous roads programme throughout the west and the rail corridor is coming into Athenry. We need to concentrate on the water and sewerage programme. I am pleased that my Department has an extra 19% in the Estimate for that infrastructure in 2009.

Many public servants, including nurses, teachers and civil servants employed after 1995, already make a payment towards the cost of their pension. The Minister referred to that aspect. It is important to point out that the pension levy attracts tax relief. Many of the figures quoted in the media overestimated the amount to be paid by individual public servants. An issue arises in regard to people employed in the fire service with whom I often have occasion to deal. I pay tribute to them because they have a difficult task. They have raised the issue of their link with Garda pay and pensions and that is worth examining.

They have some chance in the current environment.

I would like the issue addressed. We know why the link arose between pay and pensions and that changes came into play after 1995.

I hope we can confront the challenges facing us. We are facing a global recession and difficult decisions must be taken. The Minister for Finance has shown he has the courage to do that. He has certainly has put his best foot forward in terms of stabilising the public finances and that is the most important issue that faces us. If we do not make these decisions, it is possible we might not be able to borrow money to pay current salaries and if that is the case, we can forget about future pensions. I commend the Minister on his actions. I hope he will be successful in the work he has to do in the future.

I wish to share my time with Deputies McCormack and Durkan.

Is that agreed? Agreed.

I am delighted to speak on the Labour Party's Private Members' motion on the pension levy. I specifically wish to speak to the Fine Gael amendment. The Minister for Finance referred to the pension levy as being fair. However, for something to be fair people are entitled to get a return on what they are paying. It is akin to another income tax on the low paid. Many young married public servants whose partners stay at home will only qualify for the contributory old age pension and they will not receive a benefit from their contribution to the pension levy. A Minister of State said last Sunday on RTE that the Government would tweak the levy but the Minister did not mention this in his contribution. What is meant by "tweaking"?

I refer to another anomaly. A public servant on a low income will pay a higher contribution after tax than somebody on a high income. When this proposal was announced, the Taoiseach said the Government would save €1.4 billion but, after tax relief, that amount will decrease to approximately €800 million. The overall package announced by the Government will save probably €1 billion and not €2 billion as it claims. The Government parties are portraying themselves as the great saviours of the economy but the principal measure proposed is grossly unfair and unbalanced. Low paid workers in the public and private sectors are having difficulties making ends meet. Companies such as Dell and Banta in my constituency are closing with many job losses. Many other jobs are being lost in the private sector, particularly among the low paid.

The pension levy is grossly unfair and I would like the Minister to outline his proposed tweaks. A Minister of State cannot go on the airwaves saying the Minister will change the levy while the Minister makes no mention of changes when he comes into the House. It is extremely important that this issue be clarified by the Minister tomorrow night.

The recapitalisation of the two main banks will cost €7 billion and it is intended to improve the flow of credit to small businesses, mortgage holders and mortgage applicants and to ensure people's houses are not repossessed. However, it also appears the funds will result in business as usual for the banks. The chief executive officer of Bank of Ireland said he would earn the paltry salary of €2 million this year. However, last week the Government introduced cutbacks totalling €7 million affecting 127 special needs children and his salary is approximately one third of that amount. How does the Minister expect public servants to think that is fair? A cap on salaries should have been introduced. The Minister said the salaries of bankers would reduce by 33% in 2009 but the guarantee scheme extends to September 2010 and he provided €7 billion to the banks last week. The Minister has told bankers that after this year, they can take whatever salaries they want. He said nothing to the contrary in his contribution.

The Deputy must not have been listening.

The Minister stated a cap would be introduced but he did not specify what it would be. He must speak in absolute figures because the people are entitled to that.

It is time for that.

It is time for fair play. The Minister also said that Opposition Deputies were clamouring about Government expenditure over the past number of years. Criticisms have been made about money wasted on PPARS, e-voting machines and e-government. Millions of euro have been squandered on systems that are not even functioning.

During the good years, the Government should have set up a sinking fund, similar to those adopted by fund management companies. The National Pension Reserve Fund will be raided to the tune of €4.5 billion to recapitalise the banks while approximately €3 billion of taxpayers' money will be borrowed to fund the balance. Meanwhile, a punitive measure will be introduced for the low paid in the public sector who will not receive a return, which is grossly unfair.

The Minister needs to outline his five-year economic plan. People need a road map because we are currently subject to government by fits and starts. When proposals are made, they have to be reviewed and amended. The pension levy should be reformed. Fine Gael put forward tough but fair measures, including a pay freeze in the public sector and the provision of generic rather than branded drugs, which would save €200 million.

Fine Gael opposes the Government's proposal to introduce this so-called pension levy for public sector workers. It is an income tax, as it is a levy on the gross income of all public service workers. The motives for introducing the levy were not above board. They were more political than aimed at revenue raising. Approximately 350,000 people are engaged by the public service compared to 1.7 million in the private sector. The Government assumed the public sector was a soft target and it would be more politically correct to penalise these workers than others.

I attended public meetings of concerned public service worker earlier this week, comprising mainly local authority, HSE, and fire service staff and gardaí or their spouses. They are very angry and I do not know why the Government does not recognise this. They are not only angry about having to pay the levy but also about the unfairness of placing this tax burden solely on them. Speaker after speaker at these meetings said he or she was willing to play a part in sharing the burden if it was spread fairly. Deputy Sherlock read a letter from a constituent into the record, which highlighted this issue. The constituent, who is a public servant, said at the end of the letter he was willing to play his part if everybody else was asked to do so. We have all received such letters from concerned citizens about this.

We are in the sorry state we are in because of the mismanagement of the State finances by Fianna Fáil and its partners in Government over recent years and not because of international factors, which is the spin put on this by the Fianna Fáil press office. Fianna Fáil has been in government for 19 of the past 21 years and it has mismanaged the taxpayer's money to fund pet projects such as voting machines, which cost €60 million and a few million euro a year to store but which are now being abandoned altogether, the Bertie bowl, which cost €200 million but was never built, and PPARS, which cost several hundred million euro but was never used. Fianna Fáil has become arrogant over the past 15 years in office and its Ministers are out of touch with the ordinary people. They felt there was no harm with a few million here and there, with support for the developers, speculators and bankers without minding the rest. That was a very dangerous mentality for the country.

I will give an example of the unfairness of this tax. A person in the public service earning €40,000 a year will pay a 7.2% levy amounting to €3,250 per year leaving a net salary of €36,750. However, a person on €300,000 a year will only pay a 9.6% levy of €28,750 leaving a net salary of €271,250 a year. How could that be fair? The Government is penalising the family person on ordinary wages, who will not qualify for a medical card or higher education grants. This is the person being penalised all the time, without any penalty on bank executives earning €2 million to €3 million a year who get a golden handshake when forced to leave their positions and a pension of €150,000 a year perhaps five or six times what the ordinary nurses, teachers gardaí and others in the public sector earn. Those are the people the Government wants to penalise.

Fine Gael is opposed to this so-called pensions levy on public sector workers. We have made proposals for how the Government could raise the necessary €2 billion. Our deputy spokesperson on finance, Deputy O'Donnell, and our spokesperson in finance, Deputy Bruton, have outlined them for the past month. Before the Minister left the House he said his door was always open. It has not been open since this crisis began. However, now that the Government is in "Queer Street" it wants to open the door; it wants to take everybody in and claim it is an all-party thing. We are willing to play our part, but we will not be sucked into taking the blame for the Government's mismanagement in recent years.

Tomorrow night we will have a vote on this motion, but that is not the important part. The important part will be when the legislation comes before the Dáil later this week. That is when people will be called upon to give an account of themselves. Fianna Fáil backbenchers and other supporters of the Government have been down in their constituencies talking out of the sides of their mouths outlining all that they will do. Let them stand up and be counted on Thursday when we vote on the legislation. People will not be fooled any longer; they know what is going on now. The Government has much to answer for having brought us into the sorry state in which we now find ourselves.

I congratulate the Labour Party on tabling this opportune motion at this time. I also congratulate Fine Gael on its amendment. This debate contributes to focusing on a serious issue facing the country. However, I must compliment the Government for its imagination and ingenuity. Government Members point across to this side of the House and ask what we are doing and why we are not suggesting how to lambaste the public and private sector in coming years.

A year and a half ago the ship of State was sailing before the winds. Everybody on board was happy. The captain and crew were dancing around the deck and they were laughing all the way to the bank. All their friends were with them clapping them on the back and telling them how good they were. They repeatedly said they had tested the economy and the fundamentals were sound. The captain and the crew celebrated on the basis that the engine room was perfect. The fundamentals were sound. The oil pressure was right and nothing could go wrong. Away they headed.

Then all of a sudden the ship came to a juddering halt — the Minister's own words. Everything fell around on deck. The captain and the crew are in a dazed state. What are they doing now? They are calling on the passers-by and asking them to do something. What would one have done? They failed to recognise that when they were cruising wildly before the storm the Opposition in this House called on the captain and the crew on countless occasions to take stock of what they were doing and because the fundamentals were not right there was a grave danger that they would come unstuck. Now that the ship is well and truly placed on the rocks and holed below the waterline, they come along and say, "Help us to bale it out. Help us to do something. Help us to beat the public over the head." To which we reply "No."

I reject the notion that the Opposition should be expected to lambaste or flog the unfortunate public who have done no wrong. The private sector has it coming to it as well because it is also going to get it shortly. It does not know it yet. As my colleagues have said, this is not a pensions levy — it has nothing to do with pensions. It is an income levy. It is the first step in beating down the people who allegedly were the cause of the problem. The public sector was certainly not the cause of the problem. The Government was the cause of the problem. It allowed some sectors to inflate costs to such an extent that nobody could stay on board. I do not know why in God's name the Government could not understand that.

At this stage the public sector is being blamed. The question is whether it has done wrong. The answer is "no." People in the public sector were merely trying to survive and who can blame them for that? They did not ask for an increase in the number of personnel in the public sector. They did not ask for a 33% increase in the number of personnel in the HSE, which is half-public and half-private. Nobody stood up and asked for more people. The Government brought them, sat them down and said: "Listen, this is a great economy. The fundamentals are right. Come on in and join the club." However, now the public sector will be hammered because the Government has gone off course.

The problem is as follows. Those in the public sector will undoubtedly be the victims in the first instance. However, what will happen next year? What is the Government now promising? It is promising €4 billion in cuts next year. Who will take the hit there? Are the guys on the Government benches for real? Have they studied the impact that would have on the economy? There is no possible way that can happen without bringing the country to a halt.

What will happen is as follows. First the people in the public sector, who are going to take this lambasting now, will find themselves between a rock and a hard place. They will need to take this hit on top of the 1% or 2% levy and need to pay their mortgages. They cannot change their mortgages, which are fixed. They have many more set payments and have set out a budget for the next 12 months. When this thing suddenly comes looming at them from across the horizon, where do they have to go? Sadly many people will be forced out of their homes. They will hand back the keys and the houses will be left empty. If Ministers opposite think it is bad now, it is going to get worse. They are creating problems and adding to the problem. They are kicking the people when they are down — and they did not cause the problem in the first place.

I have listened to those on the Government side for the past five or six years shouting about the high-wage economy. We all heard them on this side of the House. We have job losses all over the country at present, including some in my constituency. I cannot understand what economics the Government has been reading, where it got its inspiration and how it has led the country so far so wrong. This has happened because those on the Government side kept telling everybody, "It's all right. It'll be all right on the night. Sure, we never let ye down yet. Weren't we good for ye all the time. Didn't we win two elections in a row?" They never said they bought them at a massive cost to the country. There was irresponsible bargaining in the run up to the two elections in 2002 and 2007. Nobody can claim that a year and a half ago it was not clearly obvious to everybody what would happen. It could not continue as it was. Lo and behold, at the end of the day having got elected, the Government first proposed to hammer the public sector and then tried to divert blame on to all of the public representatives as if they were responsible for the dirty tricks it did to the people.

I ask the Deputy to move the adjournment of the debate.

In doing so I make this plea to the Government. I ask that before long they would resign en bloc if possible.


Hear, hear.

Debate adjourned.