Seán Kenny (Dublin North East, Labour) | Oireachtas source

I wish to reiterate what the Government has been doing in the area of pensions, tax relief and public service pay, as I believe what the Government is doing in the area is being distorted by the Opposition.

The term "raid on pensions" is a reference to the pension fund levy of 0.6% that applies to the assets of pension funds for the period from 2011 to 2014. The money raised from the levy in 2011 amounted to €463 million, with about €490 million raised in 2012 so far and that money is being used to fund the Government's jobs initiative. The measures introduced as part of the jobs initiative include a new VAT rate of 9% on certain activities, the halving of the lower rate of PRSI and small amounts of additional current and capital expenditure. There is confidence the jobs initiative measures introduced by the Government in May 2011 are playing a role in creating and sustaining employment. Encouragingly, there are signs of stabilisation in labour market conditions and the standardised unemployment rate peeked earlier this year even though it is still far too high.

The Opposition has claimed the Government has threatened to change tax relief. The Government made no such threat. In his Budget Statement for 2012, the Minister for Finance stated he did not propose to do that. A broad consultation was undertaken with various stakeholders in the pension sector this year and that is still underway. The views of these stakeholders will be taken into account in the context of any decisions regarding an incentive regime for pension savings.

The Opposition claims this Government has not acted to address public concern about pay and pension costs. This is not the case and Opposition Deputies know this. Public service pay, as well as that of commercial CEOs in the public sector, has been reduced and capped. The Government, in its first act in office, reduced the salaries of the Taoiseach, the Tánaiste, Ministers and Ministers of State with immediate effect. All members of the Cabinet accepted reductions in pay immediately, with the Taoiseach's pay reduced to €200,000 per annum, with pro rata cuts applied to the pay of Ministers and Ministers of State and related office holders. These pay cuts will reduce the pensions paid to Cabinet members in future.

As everyone knows, public service pay has been reduced by 14% on average and considerably more for higher paid public servants through pension related deductions and the pay cuts.

Of course there have been progressive changes to the tax system which at the margin means PAYE, PRSI, universal social charge and pension related deductions such as mandatory pension contributions can amount to more than 60%. This is a mark of a highly progressive overall system. It is only right that those who are better paid should carry the largest burden.

Some individuals, such as those running the banks that are now in State ownership, have chosen to accept reductions in their pensions. This is welcome and I would like to see much more of it. Some people who are legally entitled to these ridiculously large pensions do not deserve them because of the mistakes and failures they made in the past. I call on others to follow the lead of the former CEO of AIB, Mr. Sheehy, and take meaningful pension reductions.

The scale of reduction in the future cost as a result of the new scheme is significant. The Department of Public Expenditure and Reform has estimated it will reduce costs by up to 30% when the scheme is in full effect in the middle years of the century. I welcome the long-term thinking contained in the scheme. I do not mind coming into this Chamber to engage in debate with the Opposition. However, I object to debating poor quality, spurious motions tabled for the sake of it. The Opposition could do better than this for the sake of a level of debate.

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