Willie O'Dea (Limerick City, Fianna Fail)

The Minister said pensions were built up as a result of generous tax relief. That is true. The State went to people and told them it needed them to provide for themselves because the State could not afford to do so. For that reason, the State gave tax relief. The offer was made and accepted in good faith. The State cannot say, years later, that it offered too much and wants to take some of it back. In any event, pension holders will pay tax when their pensions are paid out.

Another Government argument is that much of the money is invested abroad, as though the investors are unpatriotic people who decided to invest outside Ireland. The Government is well aware that the rules under which these people operate are set by the Government and can be changed by it. I do not mind who I offend when I say we are very lucky they invested most of their funds abroad in recent years. I can just imagine what the situation would be if they had not.

I trawled the record to find a precedent for this type of imposition in the history of the State. I found none. The closest a Government came was the proposal by the minority Fianna Fáil Government in 1988 to impose a levy on the capital gains of pension funds. The levy was not on the capital but on the capital gains. In 1988, substantial capital gains had been made by pension funds over the preceding two or three years. The Opposition finance spokesperson at the time was the Minister for Finance, Deputy Michael Noonan. That levy was designed to raise £15 million in 1988 when times were better. The current levy is designed to raise €1.9 billion. In 1988 Deputy Noonan said: "I always understood that the rule in regard to the taxation of pension funds was that the funds were taxed on the way in or on the way out but not taxed during the term", which is precisely the point. Deputy Noonan went on to say in regard to the proposed £15 million imposition, which was intended to and did only last for one year:

I am not sure whether all pension funds can bear this imposition ... we need more information about this ... it ... will bear very heavily on some pension funds. I sincerely hope that it does not drive some of them into insolvency.

While that is what Deputy Noonan said about a £15 million levy in 1988, he has no concern now about a €1.9 billion if not €2 billion levy, although the £15 million levy was actually on capital gains and not on capital itself.

There are many other issues I would address but, unfortunately, time is against me. In regard to the jobs initiative generally, which this Bill is bringing into law, I wish it well. I hope it succeeds in its objectives and hope it is the beginning of a process of economic recovery in this country. However, I could not help noticing as a I read Deputy Noonan's speech from 1988 another quote referring to the 1988 budget brought in by the then Minister for Finance, Mr. Ray MacSharry, where Deputy Noonan said: "This is a budget of addition and subtraction when the nation is interested in multiplication and growth rates which would lead to jobs." Scratch around as I might, I cannot think of a better epitaph for this budget, initiative or whatever one might wish to call it. Nevertheless, I wish it well and I hope the objectives set out by the Government are achieved.

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