Brian Lenihan Jnr (Dublin West, Fianna Fail)

Let us assume that we have no banking crisis. We must and constantly do discuss that in this House. I am not taking away from that fact. Even without the banking crisis we would still have a substantial public finance crisis because the volume of our expenditure is at unsustainable levels. Our taxation receipts fell to unsustainable levels. That problem exists independent of any banking crisis. It is a problem which any Government will have to address.

Telling the citizens that they must pay a pension levy to fund the banks or the mistakes made by bankers is simply incorrect. It is wrong. That is not why the pension levy was introduced. It was introduced to rebalance the public finances. Until we recognise that, that our day-to-day expenditure is being funded by borrowing and that on the current account of the State expenditure we must fund it through borrowing, our discussions in this House will make no progress because that means that we must adjust our expectations and expenditure accordingly. I look forward to the publication of the reports of the Commission on Taxation and the McCarthy group which will inform expenditure and taxation decisions.

I said in my budget speech, and most Members will agree, that in considering expenditure and taxation figures in the next few months we must view the targeted figures for taxation in the next budget as the maximum and the figures for expenditure as a minimum. Deputy Bruton alleged that I took the soft option in the supplementary budget in April. I did not take the soft option but I brought income tax to the highest level possible consistent with the security of the economy. That had to be done because our income tax receipts fell to unacceptable levels. We had to plug that hole in our revenue base and we did so. However, there are definite restrictions on how much more of this we can do and it is clear that if we are to make further adjustments they will have to be on the expenditure side. That is the entire position of our expenditure and taxation.

We have fundamental decisions to make this year to maintain the country on a sustainable basis. We must ensure the passage of the Lisbon treaty, which was discussed in the House earlier today, and I welcome the constructive approach taken by the Opposition parties in that regard. We must examine the NAMA legislation and I will be most anxious that in advance of any parliamentary debate on this matter it will be debated fully at a meeting of the Oireachtas Committee on Finance and the Public Service. We will also have to formulate a budget that complies with our obligations under the Stability and Growth Pact. All of that lies ahead of us during the next seven months. These are important decisions for the country. The Opposition must hold us to account but it must also face up to the reality of the position in which this country finds itself.

We can argue about whether the causes are domestic or international but it is clear that a huge international component is involved when one is dealing with a small globalised economy such as Ireland. That has been recognised by all of the commentators who have examined the position in Ireland and the decisions the Government has had to take and who, by and large, have supported the approach taken by the Government.

A fiscal contraction of 5% of GDP is not an easy route and when Deputy Bruton speaks about value for money does he refer to all public expenditure or to a few select items of public expenditure to which he consistently refers in public discourse? If one seeks value for money on the totality of public expenditure then one cannot exempt any head or subhead of expenditure from one's consideration. I understand the position of the Opposition parties but that is what the Government will have to do during the coming months.

Deputy Burton referred to the crucial issue of changes to the remuneration of Deputies and Senators. There will be a 10% reduction in all expenses and I am preparing the relevant statutory instrument. A 25% reduction has taken place in mileage rates. Deputies will no longer receive long service payments or increments. They will be abolished from the next election and an immediate 25% reduction has been made on the advice of the Attorney General and it is not open to the Government to vary or depart from the advice of an Attorney General. The ministerial pension arrangements will be discontinued from the next election with an immediate 25% reduction. The question of teachers' pay is being addressed, the allowances are being halved, the payments to Whips and committee Vice Chairmen are to be abolished and the various proposals of the Oireachtas commission on expenses are under consideration and will be implemented over the summer.

All of those measures will be implemented and, more fundamentally, the review body on higher remuneration in the public sector is undertaking a fresh review of top-level pay rates. That will be crucial, along with the other two reports, in informing the thinking of the budget this year.

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