Kieran O'Donnell (Limerick East, Fine Gael)

Deputy Bruton, on behalf of our party, tabled an amendment to this motion which states:

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

"—accepts the need to reduce borrowing in 2009 by €2 billion, as outlined in the Revised Stability Programme;

calls for a detailed review and amendment of the measures announced by Government on 3 February 2009 to secure a fairer balance;

calls for major reform and restructuring of programmes and agencies to get maximum value for the taxpayer;

calls for the presentation of a credible five year economic plan; and

calls for a fresh package of initiatives to address the issues of job loss, competitiveness, credit and new economic opportunities."

I wish to expand on a number of the matters to which this amendment refers.

The difficulty with the package announced by the Government yesterday is that it amounts to another in the series of fits and starts that have been made in respect of dealing with the problems the economy faces. The Government does not appear to understand that the economy relies on the integration of a number of areas, namely, the public sector, business, the banks, education, health, etc. Yesterday's announcement related to the public sector but did not address the issue of getting small business moving again, nor did it deal with a range of other matters.

The pension levy announced by the Taoiseach yesterday is nothing more than another form of cut and there are major anomalies attaching to it. The Department of Finance's website contains information relating to the net cost, after tax, of the levy for public servants. The cost varies and the net percentage moves all over the place. Why is that the case? It is due to the fact that some will obtain tax relief while others will not. The lower paid will not get a fair deal under what is proposed.

The figures provided by the Department indicate that a single person who qualifies for a full contributory old age pension of €230.30 per week — based on an average contribution of 48 stamps annually over a 40-year period — will qualify for a State pension of just short of €12,000. If he or she is employed in the public sector and is in receipt of a salary of €24,000, he or she will be entitled to half of that amount — approximately €12,000 — by way of a pension. He or she will, therefore, obtain no benefits from the contributions he or she makes to the State. He or she will pay an additional 4% for a public service pension but he or she will never benefit as a result.

Let us consider the position of a married person in his or her early 30s who has been working in the public sector for ten years, who is the sole earner in the family and who has young children. If he or she is on the average public sector wage of €45,000, when he or she reaches retirement age he or she will qualify for a pension in the same amount as the State pension. As a result, he or she will not benefit from the contribution he or she is making to the State pension. That is a major problem. Furthermore, over a period of 40 years he or she will have paid almost €73,000 into the public sector pension scheme but will only receive €68,000 back. He or she will, therefore, be obliged to endure a net loss.

Single people who earn below €25,000 and married people who earn €45,000 should not be forced to pay the pension levy. The Government must re-examine the levy because it is extremely unfair to the lower paid who, effectively, will be subsidising public sector pensions for those whose incomes are much higher.

The pension levy is merely another example of the Government rushing its fences and not examining the impact. An income levy was already introduced in the budget and people over the age of 65 are supposed to be exempt from this if they earn less than €40,000. Persons whose annual income exceeds €20,000 pay the levy and must apply for a refund at the end of the year. The Government's statements to the effect that the levy does not hit the lower paid are incorrect. It is pursuing a policy of disguising tax increases and cuts as levies. This was also true in the case of medical cards. The Government's proposal to remove medical cards from people aged over 70 years was rushed and ill thought out.

In the case of negotiations with the social partners, the Government produced a pension levy at the 11th hour. Its proposal has clearly not been worked out in detail as the levy will apply to people who do not pay income tax. For example, it does not make sense that a single person earning less than €18,300 who does not pay income tax will pay the levy. A married couple with one income earner working in the public sector who earns less than €31,950 will not pay income tax but must pay the pension and income levies. Similarly, a married couple with two incomes earning less than €36,600 is also exempt from income tax but must pay the pension and income levies.

The Government has also reduced the early childhood supplement from €1,100 to €1,000 and reduced the age threshold from five and a half years to five years. Employees in their early 30s who have been working in the public sector for around ten years and have large mortgages and children attending crèches will be hit hardest by the measures announced yesterday. In addition to the child care measures, those in this group will pay a pension levy from which they will not benefit. I ask the Government to review the pension levy and consider making it fairer for single persons earning less than €25,000 per annum and married couples with an income of less than €45,000.

The Government plans to invest €8 billion from the National Pensions Reserve Fund in the banks. The NPRF was established to pay public sector and social welfare pensions. The fund has lost value and is currently worth approximately €16 billion. The Government plans to invest €8 billion of pensioners' money in the banks, while asking public sector employees to make pension contributions. This is not fair. The Government has not explained how it proposes to ensure funds start to flow to the small business sector and houses are not repossessed by the banks, nor has it explained how it proposes to curb remuneration to bank executives.

A short time ago, the combined value of the banks was approximately €57 billion. This figure has fallen to less than €1 billion. It appears, however, that top executives in the banks continue to receive the same salaries as previously. This does not make sense. Once again, the ordinary citizen is paying for the mistakes of the banks and Government.

The Government does not know how to run the economy. It has still not produced a credible economic strategy to get Ireland out of recession. This morning, the Taoiseach acknowledged recent job losses, which is easy to do. His job is to ensure jobs are not lost. The number of people on the live register has increased by almost 150,000 in the past 12 months. If the increase of 36,500 in the live register recorded in January is replicated in February and March, the number of people on the live register will reach 400,000. Despite this, the Government has not shown a sense of urgency and does not appear to know how to address the problems. This is clear from the manner in which the pension levy was introduced. It appears some people in the public sector pension scheme will not benefit from the contributions they are making. It is incumbent on the Government to provide a detailed breakdown of how its pension levy plans will work and how people will gain at the various levels.

Unlike the private sector, where negotiation takes place on occupational schemes, the Government has decided to impose draconian charges of 3.8% on people on low incomes. I ask the Government to produce a credible plan. We know savings must be made but this must be done in a structured manner which avoids deflation and further job losses.

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