Timmy Dooley (Clare, Fianna Fail)

I welcome the opportunity to contribute to this Bill and like my colleague, I acknowledge that this Bill was initiated by our late colleague, the former Minister, Mr. Brian Lenihan, who had a clear picture of where the reform agenda needed to go in recognising that what one might call the excesses that exist within the public services were not sustainable in the present economic climate. While the pension levy was the first iteration of a process that set about reform, clearly the passage of this Bill is a culmination of that debate, putting in place a platform for a sustainable level of pension payments that can be met from within the capacity of the State as we deal with this economic crisis.

Some on the other side of the House have sought to apportion blame for the way in which our spending on pensions had got out of kilter when now viewed against the current economic situation. There was certainly a disparity between what was available by way of private pensions and what was available to those public servants who had the benefits of a defined benefit scheme and were able to retire in a particular fashion. There was an effort by some who sought to apportion that blame to certain civil servants who resigned in recent months, which was entirely inappropriate. That the system was no longer in parallel with where the economy was should not be blamed on any one individual.

The Bill seeks to provide a pension on the basis of average career earnings, which is much more justifiable and will be more sustainable for the State in future. We must recognise, however, that many people who worked in the public sector have done an excellent job on behalf of the State, have worked hard and to a certain extent have put aside their capacity to have earned much greater amounts of money in the private sector. They have given their service to the State and it is right that they would be rewarded in an appropriate manner, but clearly change is needed and we welcome that.

One of the previous speakers suggested that this reduction should be applied to existing public sector workers, which would be a retrograde step. While I accept we are going through some difficulties in the economy at the moment, doing that would set a new precedent which would not be welcome in the long run. When it is applied to new entrants, everyone knows from the start where they stand and what ultimate pension will apply to them.

The necessity to increase the pension age is fraught with difficulty but it must be done recognising that people are living much healthier lives and living longer. There is a requirement for people to participate in a working environment for as long as possible and those limits are now established in this legislation. We need to be careful to ensure that when a person suffers ill health, we have the appropriate mechanism to allow people to retire early on bona fide health grounds. Such caveats should be addressed at an early stage.

The general pension situation was addressed in a recent RTE programme which sought to give some insight into how private pension funds are administered. The Government needs to act in that area, recognising that very considerable fees are deducted from pension funds which are clearly not justified in the current, or any, economic climate. I hope the Government moves quickly to address what has now become a crisis in that area.

On a number of occasions I have spoken about the private pension levy the Government introduced as part of its jobs initiative. When we are talking about pensions, it would be wrong not to address that. It has not worked and I never thought it would work. It was introduced as a stimulus initiative to create some activity in the tourism sector. That sector was already going through a period of recovery. Tourism activity is measured against an exceptionally low level last year, largely as a result of the ash cloud from the Icelandic volcanic eruptions. To suggest that the tourism improvement can be attributed to the VAT reduction is farcical. I understand the IMF and EU advised the Government at the time that it had problems with the introduction of such a levy, but clearly that was not heeded. The pension advisory board also advised the Government that it was not without problems from its perspective. We now see, following the introduction of the pension levy, that pension funds are becoming further indebted and some of them are on the verge of being no longer viable, which is very serious. While I understand the VAT reduction is supposed to be for a three or four-year period based on the application of the levy on private pensions, I appeal to the Government to address it as part of the budget. It should put up its hand and accept it was a mistake and move away from it. If the Government continues to raid those private pension funds in the way it has set out, it will lead to much greater problems down the road.

The Bill represents part of a reform programme the Government intends to initiate across the public sector. My colleague spoke about the reforms needed in certain areas. The Government needs to address the McLoughlin report without delay. The sooner it addresses the inefficiencies in local authorities, the better. I understand the McLoughlin report identified approximately €500 million in cost savings to be achieved there. We frequently hear Ministers say that most of the low-hanging fruit has already been reaped by those on this side of the House when we were in government, but that is not true. We took some really tough decisions, including the introduction of the universal social charge, the introduction of the public service pension levy and the reduction in levels of pay to public and civil servants, which were not low-hanging fruit. There is still low-hanging fruit according to the report produced by Pat McLoughlin, which clearly sets out how the Government should restructure certain sectors of local authorities through shared services and various other measures. I appeal to the Government to make that report an integral part of its budgetary process because real savings can be made in that area. It is not just about the financial savings. The structural approach to the management of those services can only have a beneficial impact on the customers of our local authorities. As part of any reform process we must move to put the citizen in the position of being the customer or consumer. Sadly that culture does not exist and some of the Government's approaches fail to change that culture or set that change in train.

I am glad to see the Labour Party Minister of State, Deputy Kelly, in the House. The Minister for Health has indicated in recent days that his idea of reform is to have a private management company run hospitals in the mid-west and west. Quite apart from the ideological component of that debate, which must cause rancour for Labour Party Members, it certainly does nothing for the morale of the 110,000 people who work in that sector. While there is a need for culture change, it must be led from within and from the ground up, drawing upon the skill set and knowledge across the entire organisation. It will be interesting to see how the high-handed approach of putting external consultants into a hospital environment, regardless of how good they might have been in the private sector, works. It does nothing for the morale of people who work in the public sector. If this is the start of a path to privatisation in the delivery of health care, workers across the public and civil service must be wondering where they stand. Will health and nursing care now be delivered by agency staff? Will we see a privatisation of the health service by stealth, block by block? Perhaps there is nothing in it, but we need a greater flow of information from the Government. It does nothing to boost morale.

Making significant changes to individuals' personal finances, whether it be through pension, pay reduction or otherwise, needs significant buy-in. People need to feel part of the process and need to know they are part of a plan that is going somewhere and has some capacity to achieve. We need a more holistic approach to the area of reform and rather than just considering the impact of the financial component on the State's fiscal position, we must see it in terms of the overall delivery of the service.

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