Darragh O'Brien (Dublin North, Fianna Fail)

In response to Deputy Ó Caoláin, SR Technics is slap bang in the middle of my constituency, in Swords in north Dublin. I assure the Deputy it is not true that the Government is not being effective in trying to examine every avenue it possibly can, across the parties. With regard to the Joint Committee on Transport and a meeting of colleagues from Dublin North and adjoining constituencies, all of us, regardless of party, are doing our level best to ensure we save as many of those jobs in what I agree is an absolutely viable company that we need to do everything possible to save. I assure Deputy Ó Caoláin that both the Taoiseach and Tánaiste have been involved on a daily basis with regard to SR Technics. I remain quietly confident we can step back from the brink on this matter and retain many of the jobs in SR Technics.

I am pleased to be given the opportunity to contribute to this debate on the upcoming budget of 7 April. The Government has rightly taken the decision to introduce a supplementary budget. The challenge we now have is to set the balance between cutting spending and raising taxes, on one hand, and not over-taxing the economy, on the other. The worsening Exchequer returns discussed earlier today mean the Government needs to act now to further address the situation and to bridge the gap between Government income and expenditure.

We have taken very difficult decisions in recent months, many of which are understandably not popular, particularly with those who have been directly affected in their pockets. However, every decision taken by the Government has been in the interest of the country as a whole and for Ireland's future economic prosperity. The cornerstone of this budget and our economic strategy has to be that we get the public finances in order, continue to sort out the banking situation, protect and create jobs and, most importantly, do all we can to support the thousands of people who have lost their jobs in the past eight months in particular and get them back into viable employment.

The global economic situation has led to a severe loss in confidence and a drastic decrease in the public finances which needs to be addressed. In doing so, however, we must remember from where we have come. As I stand here today, more than 1.8 million people are at work in Ireland, nearly double the number at work only 20 years ago. This budget must ensure we do everything in our power to protect current jobs and to continue to attract foreign direct investment to grow jobs in areas where we have been successful, such as the pharmaceutical and technology sectors. It is important to state that in 2008 alone more than €4 billion of foreign direct investment was secured in the research and development sector. I put it to Members that much of this is directly related to Government policy in this area.

To protect jobs and create new jobs, we must ensure our cost base is competitive. While I welcome the recent reductions in energy prices for homeowners and businesses, we must do more in this area to reduce costs further. We must continue to reduce red tape for business, thereby reducing administration and the costs associated with it. We must continue to work to ensure businesses have access to lines of credit to keep them in business through these difficult times. This was one of the cornerstones of our decision in regard to the capitalisation of the two main banks and the nationalisation of Anglo Irish Bank.

I welcome the recent announcement by the Taoiseach of the establishment of the €100 million fund for viable and vulnerable businesses. This scheme needs to be brought through quickly in the budget and needs to be expanded upon. We should retain our competitive edge in regard to the area of corporation tax, where we should retain the 12.5% rate. Any increase in this rate would be a retrograde step.

The budget also provides an opportunity for stimulus. It will be not just about cuts and taxes but must be also about stimulating the economy. One of the tragedies of this recession has been the thousands of people who have lost their jobs. A priority within the upcoming budget must be to help those who are unemployed regain employment and to continue to assist them financially while they are out of work. The recent announcement by Hewlett Packard clearly shows that Ireland continues to be a place for multinationals to invest and to create jobs that can be filled by very well qualified people who have recently lost their jobs.

This budget will be tough but it also will be fair. The Taoiseach has said that those who can bear the burden best will bear it most. The overriding principle of this budget must be one of fairness. The general public know that we are in the midst of the worst global financial crisis since 1929. Ireland, as an open economy within Europe, is not immune to this crisis and has in some areas suffered worse than some of our neighbours. However, we have the ability to come through it.

I firmly agree that we need to continue to invest through our national development plan to improve both our physical and social infrastructure. It is right that we will spend in excess of €650 million this year in providing new schools and refurbishing existing ones. It is also right that we will spend 5% of GNP in the coming year, double the European average, in making sure we are investing in Ireland and retaining jobs. We need to ensure that in all of these projects we get value for money. We must continue to examine Government expenditure across all Departments. Any budget changes must be seen in the context of zero inflation. Increases which we have seen in the past number of budgets will not be seen this year but I would ask all parties and commentators to be fair in their assessment of the budget proposals.

The Dáil should take the lead in considering how it can reduce costs. It is now time to bring forward changes to pension arrangements within the Dáil. I agree with many others that former Ministers across all parties should not draw a pension while serving in the Oireachtas. I ask here this evening that changes be made in this area.

I know many public servants still feel aggrieved with the pensions levy, on which I spoke in the House, but I still believe it was the fairest approach. It was also right that the impact of the levy was felt by Members of this House.

One area in which I take a particular interest is that of pensions. In 2007, €2.9 billion was allowed in tax relief on both private and public sector pensions. There has been much comment in the media about what changes should be made in this area. I would not like to see a change to the system that would mean a reduction in tax relief, allowing it only at the standard rate. This would be a retrograde, short-term step that would do nothing to bridge the gap between people who do not have adequate pension provision and those who do.

The area of directors' pensions needs to be examined in great detail. A disproportionate amount of tax relief is paid to company directors who can roll up their salaries for pension purposes in the ten years prior to retirement and benefit greatly from corporation tax relief and the reduction in capital gains tax liability. I have sent proposals to Government on this matter and I personally would reduce the maximum allowable fund from €5 million to €3 million, thereby reducing the tax free cash amount that is payable.

I genuinely hope — I have noticed a change in this regard in the past couple of weeks — that all parties within the Opposition will present viable proposals for this budget and not just disagree with Government proposals for the sake of it. I welcome many of the proposals I have seen from the Opposition parties in recent weeks. This is the forum in which to discuss them and I ask the Opposition to look in detail at the budget proposals and take them on their merits. It is clear, based on the Exchequer returns, that further measures are needed to ensure we remain within the 9.5% of GDP target agreed with the European Commission as part of the plan for the stabilisation of the public finances. It is only right and proper that this be done in the interests of the country. I know these decisions are tough and not all of them will be immediately welcomed by the public. However, in time, people will see they have been necessary to ensure the future prosperity of the country.

The Government will continue to work on areas where we can stimulate growth, protect those currently at work and ensure our policies in regard to tax and savings are fair and balanced. The Government will not shirk its responsibility to its citizens. I know people will recognise that these decisions, while difficult, have been taken for the good of the country as a whole and for our future generations.

See this speech in context