Willie O'Dea (Limerick City, Fianna Fail)

The difficulty is whether this would create jobs. What is the linkage between this considerable expenditure from the Government, which is in straitened circumstances - that much we all accept - and job creation? Would the money not have been better spent on sectoral, targeted areas to create employment? I believe it would have been but there is no guarantee of it at present. The Minister will recall the efforts of the previous Labour Party Government in the United Kingdom which invested a vast amount of tax foregone on substantial reductions in VAT. It did not receive the concomitant response from the jobs market or from revenue yield and that Government finished up worse off than it started.

The method of funding leaves me bemused. Today, I heard the well-known authority, Eddie Hobbs, on the radio describing it as "theft Tuesday". He said it was bizarre. Basically, the position is that this country has an ageing population. The number of people over the age of 65 years is growing remarkably and it will have trebled during the course of this century. As there is absolutely no way the State can provide for these people, we must try to encourage them to provide for themselves. I recall Fine Gael spokesmen before the general election referring to the proposal included in the four year plan to reduce the payment of tax relief on pension contributions from the top rate to the standard rate of 20%. The word was that they had a better way and a much less painful way of dealing with the matter, by introducing a levy such as this. What are they now doing? They are doing both. When we take the double whammy of the sum of €900 million a year in the EU-IMF agreement and this levy, taking into account the cost of annuities and poor returns, I do not know how many will take out private pension plans from now on. The cost will fall back on taxpayers.

There is no doubt that 80% to 90% of private pension schemes are insolvent. This is, basically, a levy on funds held by insolvent organisations, the liabilities of which exceed their assets. It will mean - the Government is legislating to enable this to happen - that those participating in defined benefit schemes, elderly people, those living in very poor circumstances and on fixed incomes because indexation had to be got rid off owing to the collapse in the markets will see their pensions being reduced as a result. Many pension schemes, because they will be unable to meet the minimum funding requirements, will be forced to wind up. The losses crystallised at that point will fall on those who have contributed; they will receive no pensions and only get back only a fraction of what they have put in. It is very unfair.

Towards the end of his contribution the Minister mentioned there had been massive tax relief for pension contributions. That is true, to encourage people to provide for themselves, but tax relief was also available to public sector workers, as well as to those in the private sector. This arrangement is confined exclusively, apparently, to the private sector. If this is compensation for the tax relief given in the past, it should be spread equally across the board.

We have a practice whereby we tax economic activity arising from deposits which yield interest payments that we then tax. People save for pensions and we tax payments from these funds. However, this is the first time in history the capital is being targeted. Pensioners' savings are on a par with deposits. A line has been crossed. Does this mean the Government feels free, with its huge majority if it gives itself the power, to target savings? The principle is the same. Some of those who will suffer reduced pensions as a direct result of this measure are those who have lost their jobs and are relying on their reduced pensions. It is hardly fair. This is the biggest smash and grab raid since Nero got rid of half of Rome to build a pad for himself.

There are alternatives as pointed out by the pensions body which wrote to the Minister. He says he wants to meet it now; it is a shame he did not meet it before now. There are innovative alternatives that could give the Government access to the €72 billion in pension funds to create jobs in the economy, especially when credit is in such short supply. We are suffering a 14.5% unemployment rate. Behind the cold official statistics there is human misery, desolation and despair. I welcome any attempt by any Government of any hue to deal with that issue, but this is not even, to use Churchill's phrase, the end of the beginning. The Government is barely scratching the surface. There was once an election slogan, "A lot done, a lot more to do". The slogan tonight could be, "Very, very little done, an awful lot to do".

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