Leo Varadkar (Dublin West, Fine Gael)

Before attending the Chamber, I watched the Greek strikes and riots, which are occurring as we speak, on the "Six One" news. Given what I have seen on television, I am not convinced the Greeks have received a better deal. I would be interested in seeing what happens. If a country wants to be a guinea pig and default or exit the eurozone, I would rather it be someone else's country and not mine. Let us see how it works out, as I am unsure that it will be as rosy a picture as Deputy McGuinness suggested.

I am delighted to speak on the jobs initiative. Yesterday was a good day for the new Government and a very good day for the people. For the first time in three years, a Minister for Finance stood up and had good news to impart. There has been a strong focus on tourism, which falls under my responsibility, through the reduction to 9% in the VAT rate on tourism-related services, such as hotels, accommodation, restaurants, catering and the sports and leisure sector. There has been a reduction in employers' PRSI in respect of people working in low pay sectors, many of which are connected with tourism. There will also be a radical reform of the joint labour committee, JLC, system later this year. Approximately 200 tourism internships will be organised through Fáilte Ireland, a number I hope will be increased if the programme works well. An offer has been made to the airlines concerning the abolition of the travel tax, a revised growth scheme at the Dublin Airport Authority, DAA, to reduce airport charges for additional passengers this year and a marketing campaign funded jointly by the DAA and Tourism Ireland to promote certain routes. We await the airlines' response with interest.

On the transport side, approximately €60 million has been transferred to road maintenance from other projects that did not proceed this year. This is to be spent on improving roads that were badly damaged by the winter weather. Some €14 million will be spent, mainly in the cities, on improving public transport, for example, cycle ways, bus lanes, bus stops and other low cost measures. I welcome the €1 million to be spent on renovating approximately 20 train stations around the country through low cost measures.

I do not want to spend too much of my time discussing the jobs initiative, which has been debated all day and will be debated during the coming days. Instead, I will address a number of points that have been raised during this debate. Regarding the 0.6% levy on pension funds, it is worth stating, if it has not been stated already, that the money in these pension funds was invested tax free and, in most cases, enjoyed a 40% tax subsidy. The levy represents a small clawback of that 40% tax expenditure paid to people who invested in private pension funds. It is also worth pointing out that the capital gains made by private pension funds are tax free and remain so. When one removes money from a private pension fund, the lump sum element is also tax free. It is worth reminding the House that this proposal was contained in the Fine Gael election manifesto. We made it clear that we intended to fund the PRSI and VAT reductions in this way. Indeed, the proposal was used against us in a number of debates during the election campaign. With these facts in mind, we have a mandate to introduce the levy and intend to do so.

It is worth extending some words to the pension industry, which applies large charges to people's pension funds. It is typical for a pension fund to take 2% of contributions annually in addition to a 0.5% charge on the value of the total fund. These charges are much higher than in other countries. If the pension industry is so concerned about this levy - I have seen many among it shedding crocodile tears today - it should bring its charges into line with those in the UK and elsewhere, in which case the levy would have no impact whatsoever on the consumer. Given the way in which it is structured, it will have no appreciable impact in any case.

Regarding personal retirement savings accounts, PRSAs, it is also worth pointing out that the maximum charge a pension fund can impose every year is 1% - many of them do - and they can charge up to 5% of the initial contribution. I agree with the comment of Deputy Ross this morning that we should consider those issues and perhaps impose lower maximums on how much they can take out of people's pension funds every year, which they have been doing consistently since pensions were invented.

Deputy O'Dea said earlier that a line had been crossed and that the next thing the Government will do is to impose a levy on bank deposits. However, a line has not been crossed. Money that is put on deposit in a bank is already taxed. Before a person puts money in the bank, he or she has paid income tax and PRSI on it. That is not the case for money put into a pension fund, which is put in tax-free, with a 40% tax subsidy, 0.6% of which is now being clawed back. It is also the case that money on deposit is subject to deposit interest retention tax. People already pay tax on the profit they make on their bank deposits; that is not the case for pension funds. No line has been crossed here. The only thing that is being done is that a small proportion of the tax-free bonus allowed to people who invest in pension funds is now being recouped to invest in job creation through the jobs initiative.

The jobs initiative is modest, but it represents a real stimulus to the economy. It is as much as we can afford in the current circumstances. A package of something close to €500 million - the figure used by my colleagues in the Labour Party in their proposal for a jobs fund - will provide a stimulus to the economy and generate a higher level of growth and employment than would have occurred otherwise.

I would like to address another issue that has come up in this debate and in articles written in newspapers in recent days. A number of Deputies have alluded to the macro picture. They have pointed out quite rightly that this jobs initiative is modest and that it is only a first step. That is what those of us on this side of the House have said. They have also pointed out, on the opposite side of the House, that this does not solve our budget deficit, which is true, and that it does not solve the problems in the banking sector, which it certainly does not. We must accept that this is a first step, although an important one, in restoring employment to our economy.

There is a bigger picture, which is being discussed today in other chambers. I was interested to read at the weekend an article written by Professor Morgan Kelly about the situation we face. It is important to listen to what Professor Kelly has to say because he called it right; he was one of the contrarians to whom people would not listen in the past, but they should listen to him now. That does not mean that what he says now must be true, because what he said in the past was true; that is not how it works. His essential contention was that the burden of our public debt added to the burden of our banking debt will be too much for this State to service. It is important that people get the figures right. Our current national debt is in the region of €100 billion, and €6 billion of that is because of banking. Most of our national debt is public debt - money borrowed to pay salaries and social welfare payments and build public buildings. Even when one takes a bigger figure including promissory notes - our general Government debt, GGD - only €60 billion of the €160 billion is banking debt. That is debt we should not have, I agree, but it is important to understand the context. While people may argue that it is the banking debt that will tip us over, anywhere between half and two thirds of our total debt is public debt - debt borrowed by Irish Governments to spend on Irish people.

There is one area in which I think Morgan Kelly is very honest, and I challenge the Members on the left and the Independent Members on the right to be as honest as him on this matter. He has stated that in order to act unilaterally, Ireland must balance its budget and do so immediately. We cannot act unilaterally when we are dependent on the EU and the IMF to pay nurses, teachers, pensioners and people who are dependent on welfare payments. His contention is that we can only act unilaterally, in the way that some people on the far left and far right in this House demand, after we have balanced our national budget, which would require an €18 billion adjustment in one year. This would mean trebling the universal social charge and implementing cuts of 40% in pay and welfare. This is the Morgan Kelly prescription, plan B to current Government policy. I challenge Members on the left and right who sit on the Opposition benches to be honest in saying whether they support the view of Morgan Kelly - that in order to act unilaterally and dump the Irish banking system on the ECB, the first thing we must do is to balance our books - and to state whether that is what they are really advocating.

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