Kieran O'Donnell (Limerick East, Fine Gael)

-----the cost of living does not go down. The Government will take €8.30 per week from a widow or widower. This shows a complete lack of understanding and that the Government is completely out of touch. We all agree there was a need for €4 billion of savings but the problem is the way in which it was done.

Another question put by the Taoiseach was whether the budget is fair. It is not fair. Let us consider the issue in terms of the public sector. Regardless of income, public servants will be paid 5% less straight off. There are 55,000 people in the public sector earning €30,000 or less. When the banks were handing out mortgages it was said these people were gilt edged and many such young couples have 100% mortgages they can ill-afford. They have taken a significant drop in income.

We seek fairness and our party agreed there was a need for public sector reform. We considered savings of €1.2 billion. However, we proposed the first €30,000 of income for a public servant would be exempt and that it would be graduated thereafter. If someone earned €40,000, only €10,000 of their income would be subject to a pay cut. That is fair whereas this is grossly unfair, shows a lack of understanding and it is divisive.

Will the Taoiseach put on record what exactly happened at the pay talks? Why were there talks over several weeks but five days before this critical budget, the Taoiseach walked out from them? The problem is the Taoiseach is eroding trust and to govern properly, one must have trust. The Government has suddenly produced a public sector pay cut that hits everyone from the first euro. Not only that, the Government had the cheek to state that Ministers would take a 15% pay cut. They will take a 5% cut but workers in the public sector will be subject to a 5% pay cut and further cuts thereafter. The Taoiseach did not refer to the cut from pension levy they took previously. If we group these together it is clear the Taoiseach should have referred to a pay cut of up to 10% or 12%. He did not do so, but the members of the Government calculated it this way for themselves. We need honesty and proper, effective joined-up thinking. We do not need a Government stumbling from crisis to crisis and basically engaged in spinning. The key point is this budget is not fair.

The third question put by the Taoiseach was whether the budget would assist recovery. It will not. The fiscal stimulus consists of reducing the excise duty on alcohol and a change to the VAT rate. I repeat that there is nothing in that. The Taoiseach referred to the employers' PRSI exemption for taking on new employees. It is welcome but what about those currently struggling to retain existing employees? Why did the Taoiseach not consider our proposal to cut the lower rate of PRSI by a half, to 8.5% for an employer, and to cut the top rate by 2%? That would have cut costs for employers while retaining the minimum wage for employees. However, there is no joined-up thinking. It appears the Government has carried out a book keeping exercise with no thoughts of bringing the economy out of recession.

I refer to NAMA. The Taoiseach remarked that he took a systematic view in terms of dealing with the banking crisis and that the Government was dealing with the banks. However, the former chief executive of AIB was before the Oireachtas Joint Committee on Finance and the Public Services last week and stated NAMA would make no difference. He also stated AIB would not use the NAMA bonds to access cheaper funds from the ECB to provide a stimulus to the economy. The Taoiseach, the Minister for Finance and their colleagues, came out and sold NAMA to the public as a fiscal stimulus that would get credit flowing. They stated they would make the banks face up to the scale of their problems but it is a case of the tail wagging the dog. There has been no change to top management or the practices of the banks.

We have travelled throughout the country with Deputy Enda Kenny to meet business people. The diaspora are very welcome but the people who will get the economy going are the small business people throughout the country, the person who employes two, three or four people. Many such people cannot take out of their businesses what is necessary to pay their employees. They wish to keep people in employment, to stay alive and they seek supports for existing employees which is not being provided.

The Taoiseach referred to tourism. One of the greatest issues in tourism at present is the travel tax. It did not yield any great income for the Exchequer but the Government did not see fit to remove it. Such countries as Holland realised the error of its way and removed it. The problem with bringing the economy out of recession is that it must be considered in a strategic way. One cannot sell a line to the effect that the troubled waters have passed. 2010 will be a very difficult year for people. We must give people hope but we must also give them a sound basis in terms of policy, to deal with the cost for employers for existing employees as well as new employees.

The Taoiseach referred to reducing the VAT rate, which is welcome but it should not have been increased. Once again, the same mistakes have been repeated. The VAT rate was increased. There is a rule in business that one never increases prices when business is going badly but the Government did that in the previous budget. The logic of that defies description. Now that the Government is reversing the decision, the change will not be effected until 1 January. That gives consumers and retailers no possibility to benefit from the change in the Christmas period. We suggested that the lower rate of VAT should be reduced. That would not be as costly as reducing the top rate and hugely labour-intensive businesses once again would provide a stimulus.

How can the Taoiseach use the words "fairness" and "understanding" in the context of taking €8.30 from widows and people on invalidity pensions and €8.20 from carers? The drug refund scheme has been increased by approximately 40% to €120 since I became a Deputy in 2007. The most vulnerable are affected. Once again, the Government has gone for the easy targets.

I accept that everyone has to pay his or her fair share. An anomaly exists currently in the PRSI ceiling for employees. If one is currently employed and earning €75,000 or less, one pays 4% PRSI on the full income, but if one earns more than €75,000, one pays no employee's PRSI on income above that amount. Why did the Government not see fit to reduce that anomaly and make the higher earners pay their fair share to get the economy moving again?

The Taoiseach made a threat in terms of the public sector in his speech in the context of further pay cuts. The Minister for Social and Family Affairs referred on the radio this morning to further pay cuts for the public service. The Taoiseach should be mindful of the old adage that one catches more flies with honey. Bully boy tactics and pulling out of talks five days in advance of the budget does not inspire confidence. We need to spread the load and get everyone working together. A coherent plan is required to move the economy forward but the budget is sorely lacking in that respect.

If we were allowed to have a proper budget debate we would be able to consider the budget provisions in greater detail. The devil is always in the detail. I note that the Government has introduced cuts across a raft of areas. Deputy Kenny has referred to the local government fund and the roads budget. In my constituency of Limerick a significant cut has been made to the housing budget, it is down from €1.1 billion to €800 million. The Minister of State, Deputy Finneran, is aware of that.

See this speech in context