Pat Gallagher (Donegal South West, Fianna Fail)

I am pleased to have the opportunity to contribute to the debate. It is one of the most important debates to be held in the House since my election in 1981. Since I entered the House I have witnessed and participated in many debates of major significance to the country and to my constituents. During these years difficult decisions were taken in the best interests of the people, especially after 1987.

After the general election of that year and following the doubling of the national debt, all parties realised we could not continue to spend. At the time, interest rates were at unprecedented levels and the unemployment rate was spiralling. A decision was taken by the Government to try to create an economic atmosphere conducive to investment in the country. Strikes, work stoppages and demonstrations were common occurrences. There was a slowdown in foreign direct investment to the country. The Government at that time was a minority Government and I acknowledge that the former Deputy, Mr. Alan Dukes, through the Tallaght strategy was very supportive and put his country before his party. We created that economic atmosphere and established social partnership. All those involved in social partnership along with the Government of that time laid the foundation stones for the new economic Ireland. There followed throughout the 1990s unprecedented economic growth. Unemployment figures dropped and we almost reached full employment in economic terms.

Some people may be critical that we did not put more of the surpluses generated throughout the years towards the national debt. However, those surpluses were used to lower the tax rates. In the late 1970s the highest rate was 77% and people have forgotten this fact. The rates have been reduced now to 41% and 20%. Many surpluses went towards major capital projects, increases in the numbers of public servants, reductions in pupil-teacher ratios and the provision of child care facilities. If hindsight were foresight then perhaps a further €500 million each year could have been put towards reducing the national debt. That would have insulated us from the period we are experiencing now.

At that time there were substantial net transfers from the European Union, whether for roads, infrastructure, water investment programmes, agriculture or social programmes. As a Deputy representing a Border county, I am conscious of the role of INTERREG III, the International Fund for Ireland and the peace and reconciliation programme. Ireland was an Objective One area at the time and I am very proud that the income per capita at the time of our entry into Europe rose from one of the lowest in Europe, that is 55% of the average, to in excess of the average. Instead of being net beneficiaries we are net contributors to the European Union. Throughout the period when there were no surplus funds, the Government ensured that matching funds were provided to draw down the maximum funding from Europe. My peers and I never dreamt that we would experience the 1980s again, or worse. It is difficult for young people who have experienced the affluence of the Celtic tiger, and a high disposable income because they do not have the 1980s against which to benchmark this experience.

While there are internal factors at work here we are not immune to the worldwide credit crunch. We are not immune either to the despicable behaviour of our banks which competed with each other offering loans in excess of 100% to young couples. I do not blame those young couples while the banks were throwing money around as if it were confetti. They have contributed to the problem. Like every other Member of this House I welcome the clear signal sent out today by the fraud squad's entry into Anglo Irish Bank.

Recognising the financial situation confronting us the Government acted quickly last summer by making adjustments to the tune of €440 million, the early budget in October, and the decision to find the €2 billion, €1.4 billion of which is coming from the pension-related contribution. Unfortunately, it appears that much of that will go towards funding the additional people receiving social welfare payments and not to the purpose for which it was intended.

I find in speaking to Members from around the country, meeting with lobby groups and individuals, and reading their e-mails that they are of the view that we all have a responsibility to do something and play a part in turning the economy around. We all accept that we have a serious problem and that we must play our part. The people are prepared to do that but in a fair and equitable manner. There should be no anomalies in this legislation. Whether we call this a contribution to the pension, a levy, a tax, or whatever, it is a reduction in the income of the public servants.

A fairer and more equitable system, with a broader base, should exist and those responsible for the situation in which we find ourselves, not those who are not responsible, should pay for it. Is there any point in telling those who must pay a levy from 3% at the low end of the scale to 9.6% at the top, young people or married couples whose children are going to university that this will protect their pensions? They are not interested in that now. They are interested in meeting their obligations, whether mortgages, car or education loans.

The Minister is a fair-minded man. He and his colleagues in Government must, over the next 24 hours or sooner, examine the anomalies I have detected in this Bill, such as people earning €20,000 being asked to pay 3.8%, or possibly those paying no tax having to pay €750. Those on much higher incomes will pay less because this is tax deductible. I hope the Minister will consider that anomaly.

There are other people in the country besides civil servants. I appreciate that the public servants have secure jobs but it is no use telling them that their pensions in 25, 30 or 40 years' time will be secure and that their contribution is lower than that in the private sector. We should all play our part across the board. While the public service pension rates are generous they become effective only when the public servants start to draw down their pensions.

I had an opportunity to listen to, and address, a meeting of IMPACT in Donegal last week. It was interesting to hear people share their personal situations and what their positions would be after this deduction when they are paying crèche or higher education fees and trying to meet their mortgage payments. This affects not only individuals but also many couples. It was heart-rending to listen to them share their personal circumstances in public.

I hope that over the next few hours of debate on Committee Stage the Minister will examine the anomalies in the deduction and do something to broaden its base as quickly as possible. I have strong views on this matter and it was suggested to me at various meetings that the only way to demonstrate my opposition in principle was to vote against it. I am realist and a loyal member of my party and I prefaced my remarks wherever I went by saying that whatever I did within the confines of the House I would do within the parliamentary party but would impress my view on Ministers in my bilateral meetings with them. They are also public representatives as Deputies before becoming Ministers and are aware of the major issues and the problems that everyone in the public service and others are suffering. I know that the Minister will do his utmost to reduce the impact of this measure.

I fully understand the anger outside the House. It was palpable at the public meetings which I was pleased to attend because, like other Deputies, I have always described myself as the eyes and ears of the people I represent. I come from my constituency in south west Donegal, and my county, to impress on the Minister and the Government the seriousness of this for the many individuals affected. I realise, however, the difficult situation in which the Minister finds himself but let those who have caused this problem suffer and the people will contribute to the resolution. We will work with the Minister but the method must be more fair and equitable.

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