Richard Bruton (Dublin North Central, Fine Gael)

I will. I thank the Labour Party for tabling this motion and facilitating this timely debate. If we are to have a proper perspective on the decision to cut the minimum wage, we need to reflect on the entire crisis this country is facing. I do not doubt that we have embarked on a hard road that will last many years, as we try to come to terms with the crisis that has been created by the catastrophic mistakes of policy makers. As people make sacrifices, it is important for them to see that the burden is being shared fairly. That is why the Government's decision to cut the minimum wage, as its first act in trying to confront this country's competitiveness problem, is such an affront. Not only is it cutting the minimum wage by €40 a week, but it is also bringing the minimum wage into the tax net. The new universal social insurance contribution will cost a person on the minimum wage €11.10. He or she will also have to pay income tax of €5.07. It is clear that the combined effect of these changes will lead to a devastating 14% reduction in the standard of living of such a person.

I am sure the Minister of State, Deputy Kelleher, will argue that we need to retain the incentive for people to go out to work. Is it not somewhat ironic that on the day the social welfare payment to someone who is unemployed was cut by €8 a week, the take-home pay of someone on the minimum wage was cut by €48 a week? The authors of the Government's literature on this subject have argued that the replacement ratio - the ratio between social welfare payments and payments at work - is most important. In one stroke, the Government has increased that ratio by 10%. It is now 10% more attractive to stay at home, compared to going out to work on the minimum wage, than it was a couple of weeks ago. That makes no sense as an economic policy or as a social policy.

When one examines this country's competitiveness problems, one should not focus on the least organised section of the workforce, which comprises approximately 3% of those at work. One should focus on the powerful interests that are sheltering huge areas of uncompetitiveness. However, one does not hear a word from the Government about what it intends to do about costs in areas like power generation, legal services or rents. It suggests such areas are out of reach while legislating to sting people on the minimum wage. A recent survey in The Irish Times compared pay levels in the major professions on either side of the Border. It found that there is a huge gulf between what is paid in the North and what is paid in the South. According to the newspaper's figures, there is a difference of €100,000 in the earnings of consultants on either side of the Border. The differences in the earnings of workers in all professions - The Irish Times surveyed nurses and doctors, etc. - were generally in the order of €10,000 or €20,000. The Government is not introducing a legal stroke to cut rates of pay in those instances, however, because the groups in question are powerful.

I would like to conclude by speaking about the continuing rip-offs in this country. People are being charged more here than in other countries for the same services. Many of the problems that are undermining this country's competitiveness are managed by the Government. I refer to water and waste charges, for example. There is an issue about trying to create more work at low pay. Fine Gael has made two concrete proposals to that end. First, levels of employers' PRSI should be cut by 8.5%, thereby making it cheaper to employ people. Second, VAT should be cut by 1.5% in labour-intensive activities. Those steps would open employment opportunities. People who are on social welfare would have the real alternative of going out to work at low pay. That is the way to deal with it. The introduction of legislation that targets the most vulnerable people in society serves to undermine the social support for the difficult adjustments we are having to undertake.

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