Dáil debates

Wednesday, 4 February 2009

Stabilisation of the Public Finances: Motion (Resumed)

 

The following motion was moved by the Minister for Finance on Wednesday, 4 February 2009:

That Dáil Éireann:

supports the expenditure measures announced by the Government to restore greater balance between revenue and spending;

affirms its confidence in the economic strategy of the Government to restore the economy to growth as soon as possible;

calls on all sections of our country to follow the lead of the Government and show the social solidarity needed to tackle this unprecedented economic downturn.

3:00 pm

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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The great bulk of the saving will come from a new pension-related payment which will be paid by all public servants including Deputies and Senators. Those who have already made a voluntary surrender of salary, among them some Members of the Oireachtas may discontinue that surrender and continue to make their contribution through the new pension payment. For their part the members of the Government have decided to continue with their 10% voluntary surrender in addition to the pension contribution of 9%. We believe that those in positions of leadership in all parts of the country should and must lead by example. The remuneration of politically appointed advisors to the Government will also be adjusted in line with the pension contribution.

The payment will be on a graduated scale with the average payment being 7.5% of total earnings. This payment will apply to all elements of the public service pay bill with the exception of employers' PRSI, including both pensionable and non-pensionable — for example overtime — items. This payment is in recognition of the fact that public service pensions are significantly more favourable than the generality of pensions in the private sector together with the need to reduce net public service pay costs. This change will require new legislation which will be introduced as a matter of urgency. A much smaller component of the total pay-related savings will be achieved through reductions in travelling and subsistence rates and other savings.

In addition, the increases provided for under the review and transitional agreement with effect from 1 September 2009 and 1 June 2010 will not now be paid on those dates. Further discussions on these increases will be held in 2011, without prior commitment. This will save a total of €1 billion 2010.

The pay-related savings will also apply to local authority staff. To that end, it will be necessary to amend the existing legislation on the local government fund. Again, it is proposed that the necessary legislative amendments will be introduced as a matter of urgency.

Public servants paying the new pension contribution will be treated for tax purposes in the same way as those making pension contributions in the private sector. Contributions will be deducted from gross pay by employers before income tax, PRSI and health levies are calculated and as such pension contributions will be effectively relieved of tax at the marginal rate.

Flexibility in responding to changing service demands will have to be pursued determinedly. In this context I am establishing a mechanism via the Public Appointments Service and the Commission for Public Service Appointments to facilitate the redeployment of surplus staff in several areas and the matching of vacancies at all levels across the civil and public service. The redeployment of staff across different sectors of the public service organisations — for example the Civil Service, local authorities, HSE, and State agencies — gives rise to technical, legal and human resource issues that will require consultation with local management and staff unions. Discussions have already been taking place with relevant Civil Service unions about the redeployment of staff into social welfare offices.

I consider it important that the pay-related savings measures across the public service should be implemented as part of the comprehensive national effort to adjust incomes, with the aim of restoring competitiveness in national incomes generally. Let us be clear, this is not about targeting the public service. We are simply asking public servants to make the same adjustment that is taking place across the economy.

Savings will be vigorously pursued in all appropriate State payments to individuals, including fees payable to medical and legal professionals. It is possible that the need to engage in consultation with professional interests, and the delays that may ensue which will be kept to a minimum, may limit the scope for securing the full savings we would like in 2009. Here again, I appeal to all sections of our country to put their shoulders to the wheel and share in the national effort to deal with this unprecedented economic downturn.

The Government is determined that it and the Oireachtas play their part in reducing the cost of our democratic and political systems. We aim to achieve substantial savings in 2009 through a range of changes in Government and Oireachtas funding. The Houses of the Oireachtas Commission will be asked to contribute to this process and we invite the co-operation of all political parties and Independents to show clear political leadership across the political system. In this context the approach to foreign visits of Oireachtas committees, the funding of the Houses of the Oireachtas Commission and the system for expenses and allowances will be considered. The costs of the offices of Ministers and Ministers of State will also be reviewed.

The following supplementary measures are required to realise the full €2 billion. There will be a modest retrenchment on overseas development aid this year in view of our diminishing resources. This still leaves our ODA spending rate among the highest in the world. A small reduction in the early child care supplement to €1,000 per year and a lower maximum age of five years will save €75 million in a full year. A further €140 million is to be pruned from administrative and other spending on staff, advertising, travel, procurement and the like, and a reduction of €300 million across the board in spending on capital will leave our spending rate as a percentage of GNP still over 5% and among the highest in Europe.

Within this revised capital envelope, a sum of €150 million is being reallocated — half each — to labour-intensive spending on schools building projects and energy-saving measures, which is being funded from all parts of the capital programme, including education. With falling construction prices, we should be able to maintain a high output of projects even with reduced allocations. Tender prices in a variety of areas such as national roads, schools, higher education and social housing tell a consistent story. We are getting a bigger result from capital funding. Even with reduced allocations, careful and proactive management of capital allocations will enable the priority high-return projects to be delivered.

We are already well on track to complete the major inter-urban routes next year. We will continue to invest in public transport. We will continue to expand the commuter Luas network and invest in other suburban rail services such as the Cork-Midleton line, the Kildare line upgrade and phase one of the Navan line. We will continue to support the development of the smart economy and direct capital investment in science and technology, foreign investment and indigenous enterprise. The total saving comes to €2,090 million in a full year. This is in addition to the saving of €1 billion in 2010 as a result of not paying the pay deal next year. In announcing these measures, we have focused not just on short term needs, but also on the vital necessity of preparing the ground for economic recovery. We have protected the vulnerable and we have sought to maintain capital spending in real terms and redirected some of it to areas that can protect jobs. We have sought to make a firm start now to keep us off the path of high borrowing and job-destroying tax rises that would cripple us before long.

More needs to be done in a planned way in 2010 and 2011 and beyond. The Government's economic framework published before Christmas provides the guiding light to show the way. We have a competitive advantage in the knowledge and skill base of our people and in our flexibility in responding to change and to challenges. I assure the House that we will use that smart advantage to rebuild and recover under the leadership of this Government which is also actively examining measures in a special Cabinet group to search out opportunities for job creation, to encourage exports, to assist consumers and the retail sector and to promote more vigorous price competition. The fruits of this examination will be announced in the next few months and a stream of decisions will issue from the Government on all these matters. The fiscal position we take this year and next year is of fundamental importance to the future of this country. We need to stabilise and reduce the total amount of our borrowing in a substantial way in this two-year period in order to command credibility among ourselves and in the wider markets which observe us. I am convinced that we can achieve this as a people if we put our shoulders to the wheel, recognise the extent of this problem and address it.

4:00 pm

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I move amendment No. 2:

To delete all words after "Dáil Éireann" and substitute the following:

"—accepts the need to reduce borrowing in 2009 by €2 billion, as outlined in the Revised Stability Programme;

calls for a detailed review and amendment of the measures announced by Government on 3 February 2009 to secure a fairer balance;

calls for major reform and restructuring of programmes and agencies to get maximum value for the taxpayer;

calls for the presentation of a credible five year economic plan; and

calls for a fresh package of initiatives to address the issues of job loss, competitiveness, credit and new economic opportunities."

No one can doubt the truth of the Minister's statement that it is crucial to get our public finances right. Equally we have seen today a serious wake-up call to anyone who is concerned about the future of the economy in that a total of 35,500 extra people have been added to the live register in one month, representing 2% of the private employment workforce. I ask the House to consider if this were to be the situation for another six months, 12 months or 18 months because it is a vista too appalling to consider.

This is the reason the Fine Gael amendment to the motion includes a request for a coherent economic plan for the next five years. I cannot accept the reheated stew of measures that have peppered every document for the past ten years and which the Minister produced before Christmas as the smart economy. This is not squaring up to the crisis we now face, a crisis in which jobs are melting away. I agree we have to look at the opportunities and we must make investments now which will allow opportunities materialise but we also have to look very critically at what is happening in the here and now, at the competitiveness we have lost and its impact on the leaching of jobs.

Last night, I described the Government's programme as announced yesterday as a stool with just one leg and this is the problem. The one leg is the Government's action on public service pay, predominantly, with a few things tacked on. However, this is not a strategy that will get us out of this situation and I will return to that point. The truth is we now need a serious strategy to look at the loss of jobs. Last night, the Minister talked about electricity price reductions being reviewed some time in the future. We need those reductions to have happened last week and last month. The notion of regulators sitting around and having reviews and waiting is not acceptable. The price that public bodies charge to people competing abroad is a crucial ingredient. We have to pull those prices down at every possible opportunity. We must freeze them and pull them down where we can and this should be a concerted task of Government.

We need to see targeted credit measures. I do not for a moment underestimate the gravity of what the Minister is trying to deal with in the banks. However, there is no sign of the targeted credit measures that would get small business going and this is what we are all hearing. I do not underestimate the problems but we have to target credit. Other countries are looking at targeted vehicles to do this, but we are not. I refer to the significance of reskilling but I must ask the Minister if he believes that putting 95% of the funding for this project through FÁS is the best way to get a reskilling programme attuned to modern needs. I have grave doubts about this, as do many people.

Anti-competitive practices exist in parts of the public sector which the Government has tolerated for years, for example, in the electricity and transport systems. These cannot be tolerated any longer while there is a haemorrhage of jobs in the private sector.

In the past, Enterprise Ireland would have considered putting preference shares into companies with viable, long-term plans but which were experiencing temporary difficulties. Is this still a vehicle that Government regards as a means of dealing with export companies going through temporary difficulties? Perhaps the Government should take genuine shareholding in such companies. We have to start thinking about how we protect the crucial element that will keep our economy strong in the long term, that is, jobs in the trading sectors of the economy. All the talk is about some cutbacks in the sheltered sector, which I agree are needed, but we also need to pay attention to the trading sector and deal with it.

The country needs confidence now and we need a Government that is plotting a clear course, a Government that is credible and has a road map of actions. There is no other government other than our own that thinks the right action is to announce cuts in the public sector pay bill and which outsources this action to some group chaired by Colm McCarthy, who is no doubt a worthy man, and which will make decisions about delivering efficiency in our system and a Government which outsources action on taxation to some other group. The Government's job is to govern and the Dáil is here to consider options, and I suggest we have a debate about options, such as how efficiencies can be achieved.

The Minister knows as well as me that he has persisted with an appalling budgeting system that denies this House any opportunity to scrutinise what is being done. He will not even produce the targets proposed for public spending until three or four months after the Dáil has voted the money. He will not hold anyone accountable for their failure to deliver on those targets when we eventually see them. The budget is blanket voted on budget day which is a complete farce. There is no scrutiny of public spending. That is the reason it has produced these appalling decisions. I will not go into the issue of the electronic voting machines and all the other appalling problems but there is no serious scrutiny in this House.

We are not doing our job because Government is now allowing us do it. That is a deep fault line in the way we make decisions about money and it has created the crazy carry-on we see all around us where people who are grossly incompetent in the public service get huge golden hand shakes and walk away. People are furious that is still going on and they do not see in anything the Minister did yesterday an indication that there is an end in sight to that culture of the cosy group, where Ministers are protected from having to admit that they failed and where senior public servants can deliver only 40% of what they said they would deliver six months ago and get a bonus. They failed to deliver 60% of what they were responsible for and yet they get a bonus under the Minister's system. The Minister protects that pool of money to give these people bonuses when they are already on a salary of €300,000 or whatever, which are not linked in any way to serious performance targets. The Minister and I know that is the system and it must change. That is the reason people are so frustrated.

There will be a backlash against these partial proposals because people do not see the other side of the agenda. They are not eager about paying but they will live with taking pain if they thought it was balanced, that the political system was changing, the highly paid public servants were made earn their money and, if they failed, that there are consequences, and that senior people in the banks, who we now support to a huge extent, equally take the consequences of their bad decisions. If we started to see that in place, people would have find it much more credible that there is a broad based strategy in place but the Minister has only one leg of that stool. There is no reform agenda either in terms of making us more competitive to protect employment or making the system more transparent with regard to the way it spends money and guards every halfpenny of public money in order to get value from it. That is not what is happening in this system. We must get back to that.

There was a lucid moment in the Taoiseach's speech last week when he asked how clearly is the problem understood and how clear is the strategy designed to address it. In responding to the first question he said we should forget about looking back at the past. We must get real. The Minister's Government has not been implementing good policies that have been ruined by some calamity from abroad. There were deep flaws in the policies that have been pursued. There have been deep flaws in the fiscal policy, in the attitude to property, through the regulatory and Government system, and in public service management and getting results for public money.

The system we have been operating is not fit for purpose and unless Government, from the Taoiseach and the Ministers down, admit that and that it must now change, we will not get change. We might get through a few years and get back to the practice but we will be failing the people who elected us to this House. This is a crisis and there must be real change that is much more far-reaching than anything the Minister has suggested. It disappoints me that a clear strategy is not being outlined that is balanced and that addresses the problems we face.

The Government invested all its political capital in the discussions with the social partners. I can understand that. It would be welcome to have the social partners backing this measure but what the Minister has failed to do is convince the members of the public that he has a credible strategy. They do not see it. I do not see it, and I am closer than most to the issue. The combination of a few pages issued by the Department of Finance on the stability programme, a document full of hope but with no time lines produced before Christmas, and what the Minister produced yesterday does not amount to a strategy to get us out of this hole. That is what is sorely missing and is what must be put in place. That is the reason Fine Gael has called for a credible five year economic plan.

I accept the Minister has to reduce borrowing by €2 billion in this year but that is not delivered in this measure. The Minister's figures mention €2.09 billion. He has admitted that €277 million of that will not be realised in 2009. That brings the figure back to €1.7 billion. On top of that there is tax buoyancy——

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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The figure is €1.81 billion.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Regardless of the figure, tax buoyancy has to come out of that. If €1.81 billion is taken out of the economy, approximately 25% of that comes out in reduced taxes.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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We factored that into the calculations for——

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Where are those calculations? It is appalling that we are having a debate which is tantamount to a revision of the budget and the Estimates. We still do not have any tax forecasts or tables spelling out the tax buoyancy impact, nor do we have any analysis of the new forecast. The Minister has abandoned the forecast he had at the time of the budget and we do not have any analysis of his new forecast for tax or for spending. The few pages published in the depths of a Friday night is all we have seen from the Minister's Department to give us a revised framework, even for 2009, let alone for 2010 and 2011.

There is no credibility in what the Minister is offering. How can we have confidence when his Department, as the Minister said, having failed three times last year to get its tax forecasts right has now produced a new one and we do not even see the basis of the forecast or how it has disaggregated between income tax, VAT and stamp duty? That is not good enough. The Minister cannot come into this House and call this a serious debate about the need to find €2 billion when all the i's are not dotted and the t's not crossed. We must see proper analysis to allow us have a mature debate about this and reflect on it. Our job is to criticise, scrutinise and try to get the best from this measure, and I do not see that.

We need something that is available in other countries, namely, a fiscal responsibility code where there is independent assessment of the fiscal policy and an obligation on the Minister, if it is going off the rails, to come back into the House and tell us what has gone wrong and the corrective measures that will be introduced. We have not had that in this country and it is about time we introduced it.

It appears that the pension levy is riddled with unfairness in the way it is being structured. People on low income derive no pension benefit from the public service pension now. They get their social welfare pension and on co-ordination they get a very small amount of extra benefit yet they will pay the levy at 3%, even though they are on the minimum wage. In key income ranges the rate of the levy goes up and down because of the impact of tax relief. For instance, at €30,000 people pay a 4.6% levy net, at €40,000 it drops to 4.1% and at €35,000 it is 5%. It drops by a full percentage point between €35,000 and €40,000. Many people are in those ranges and having a topsy-turvy system that imposes more burden on the lower paid in those ranges does not make sense. We must see the pensions benefit profile to determine if that is fair.

If one were to do an actuarial calculation the pension benefit of someone appointed Secretary General is probably 40%. The pension benefit of someone who is a porter in the same office is perhaps 6%. He or she is already paying 6%. The person who is getting the 40% is paying 6%. The Minister is asking the person already paying the full amount to pay an additional 3% and he is asking the person at the top to pay 9% more. There is no equity regarding the pension benefit in the way the Minister is allocating this burden. Calling it a pension levy when it is not related to the pension benefit is very difficult for people to stomach.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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When I heard the Minister's offering earlier I was reminded of a song that was often sung when I was a child, God save Ireland said the Heroes. God needs to look kindly on Ireland because what the Minister for Finance offered today and what the Taoiseach offered yesterday is so incomplete and lacking in vision. It is so unsure and uncertain because we have been down this road of adjustment, saving the banks, early budgets, rescue plans and recovery proposals so many times since that night in late September 2008 when the two Brians rushed to save Anglo Irish Bank, Irish Nationwide and the others. With so many rescue bids I have, unfortunately, concluded the lack of a strategy or a clearly thought out programme by the Government will bring this country into a lost zombie decade, reflected in the unemployment figures announced by the Taoiseach this morning.

I remind the Minister that last September I proposed the banking rescue should follow the Swedish model.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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The first action the Swedes took was to provide a state banking guarantee and Deputy Burton opposed that.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I warned against the Japanese model. In the early 1990s after the Cold War, Japan's economy was devastated by a burst property bubble with house and land prices tumbling and undermining the property-related assets and loan books of many Japanese banks. Rather than encouraging their banks to come clean on their balance sheets and write off their bad debts, the Japanese Government facilitated an asset quality cover-up whereby the bad debts were not written off. The result was that the problems were stored up for the future and multiplied to the point where the banking system all but collapsed under the weight of this unacknowledged toxic debt. The result was Japan's lost decade.

The Labour Party will not commend Fianna Fáil, or the two Brians, as it leads our young people into another lost decade, based on a Japanese model rescue plan. What the Government delivered today and yesterday is a disgrace. It does not give people hope and confidence for the future. Before lunchtime today, the Taoiseach suggested with the bank recapitalisation programme of €8 billion next week, he would get tough with the banks' top guys who will see a 25% reduction in their salaries.

The top guys in the banks do not earn salaries like public servants. They get compensated in a variety of ways. Their compensation packages have fallen from between €4 million and €6 million to between a mere €1 million and €2 million. We do not know the full details because they are confidential even though we are bailing them out. Is the Minister claiming that the big plan is to reduce these guys' salaries by 25% to between €750,000 to €1.5 million? Public servants, the nurses, the gardaí, the teachers, after ten years' service, earn a basic of €45,000 plus various allowances. Does the Minister expect them to cheer him when they are subject to a 7.5% levy while the bankers' earnings tumble from €4 million to €1.5 million? On what planet is the Minister living? In America they say, "God bless America". We need God to bless Ireland to get out of this mess.

After the 1929 great crash and the tsunami of 4,000 bank failures across the United States, the then US President, Herbert Hoover, came up with a cunning plan to restore the economic fortunes of the US. He slashed Government spending to balance the books. The result was the Great Depression. After immense human suffering and the enlightened intervention of his successor, Franklin Delano Roosevelt, with some false starts, a path out of the Great Depression was charted for the US.

Ireland needs a new deal, not a bum deal like those we have had to listen to yesterday and today with short-sighted spending cuts. We bail out our banks while not providing any hope for credit resuming to small and medium-sized businesses. While the Minister allows the banks to hide the levels of their property loans by one device or another, the size of those loans on their balance sheets will freeze the banks' genuine capacity to lend or expand the economy. One developer, Mick Wallace, said on "Prime Time" last week that he is not paying interest on his loans. The implication is that his bank is rolling up the interest and capitalising it into the loan. If the Minister is contemplating allowing our banks to do this, does he realise it will take all the resources of the banks and completely kill their capacity for new and fresh lending to small, medium and large businesses employing people?

The US President, Barack Obama, has been in office 16 days while the Taoiseach and the Minister for Finance have been in office for 273 days. We have had 273 days of indecision, prevarication and steady economic decline. Many of their early days in office were wasted by their baseline desire to help the friends they had made in the build-up of the Celtic tiger property bubble.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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The first step taken by the Swedish Government in its bank rescue plan was to guarantee its banks. Deputy Burton was not prepared to do that last September.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I am sorry. The Minister was prepared to do it on an emergency basis with Anglo Irish Bank being the centre of the rescue, not the system. Not only that——-

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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The second step taken by the Swedish Government was to nationalise banking institutions. The Deputy should study the facts.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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The Deputy's insinuations are as preposterous as always.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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As Minister for Finance, Deputy Brian Lenihan knew from the minute he stepped into office that there had been extraordinary dealings in the shares of Anglo Irish Bank by one of the largest industrial companies in the States.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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The authorities will deal with that, not Deputy Burton.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Minister also had a weak Financial Regulator. I do not believe he could have eyeballed the office cat in the banks. Yet, the Financial Regulator was asked to eyeball some of the most powerful and richest people in the country to tell them what they were doing did not seem quite right. Deputy Sherlock listened to one bank auditor yesterday at a committee declare that although he was aware of large loans to his bank's former chief executive, he was not aware what they were. This is crazy stuff and the Minister was knowledgeable about it.

The Minister will some time soon introduce a further rescue package for the banks. At the same time, in the Dublin West constituency, which we both share, I have a case of a former civil servant married to a garda with a family of four children. They bought a larger house for the family and she gave up her job when she had a fourth child because she could not afford the cost of child care. The current cost of her mortgage is €1,450 per month. From yesterday she is losing money from the child care allowance and her husband and she will have a levy costing them 6.5% to 7% gross, or approximately 4.5% after tax. That is in addition to the extra €2,000 the emergency budget cost them.

This is a middle income family living in Blanchardstown in the heart of my constituency and that of the Minister. She is part of the coping classes, those who work all their lives and who do not really blow it on debt. They like a nice holiday and want their kids to go to college. They have the same aspirations as many in this House. She stated: "The very poor have a voice, the very rich do not need a voice, but the middle incomes have no voice because nobody is out to help or assist [her]."

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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That is not true.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Is it not? I will tell the Tánaiste——

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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There is mortgage interest relief amounting to a couple of hundred euro a month, the cost of utilities will go down and we will ensure, through the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, a reduction in her ESB bill. We are the backbone of everything.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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Deputy Burton, without interruption.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I will tell the Tánaiste how incompetent her Government is.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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Thank God Deputy Burton's party is not in power anyway. It has no ideas at all.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Yesterday the Tánaiste could not discuss the Exchequer figures because she was so unknowledgeable about the state of the public finances.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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The Deputy should watch it.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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The Deputy and the Minister should stop the argy-bargy and allow the debate proceed.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Ceann Comhairle very nicely moved in to protect the Tánaiste then. He will probably do the same now.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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The Ceann Comhairle has advised me——

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Minister, Department of Finance; Dublin West, Fianna Fail)
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The Ceann Comhairle does not protect anybody in this House.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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I do not.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Yesterday he protected the Tánaiste. She did not know the answer to a basic and very reasonable question.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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The Deputy should proceed.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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Perhaps the Ceann Comhairle should remind us of Standing Orders pertaining to the Order of Business, none of which anybody seems to know.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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To be fair, I am even-handed with everybody.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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This Government is intent on scapegoating the public sector.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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I ask Deputy Burton to withdraw the allegation that the Chair was protecting anybody. It is not true.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I apologise deeply and humbly——

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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Good, but the Deputy does not need to be humble.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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——to the Chair if I misinterpreted his actions yesterday.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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The Deputy does not need to be humble at all about it.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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A bit of sincerity would be helpful.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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All the Deputy must be is sincere.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Ceann Comhairle was every bit as nice to me as he was to the Tánaiste.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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I will continue to be and always am.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Thank you. This Government is scapegoating the public sector. Public sector reform, pay and pensions are certainly part of the solution but the public sector did not create the property crash. It did not create the tax breaks that the then Minister for Finance, Deputy Brian Cowen, continued and expanded to keep the bubble growing. The public sector did not create the crash; Fianna Fáil and Fianna Fáil-led Governments first blew the bubble to ridiculous proportions, which caused the crash.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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What of the extra resources and services we provided? What about them?

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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When the Government wants to scapegoat the public sector, it should think again. In my own constituency, approximately a quarter of the population are immigrants. If it were not for our teachers, operating under quite difficult circumstances in my constituency and that of the Minister of State, Deputy Trevor Sargent, we would not have been able to deal with the integration of a significant number of immigrants who were attracted to Ireland by roadshows by the former Taoiseach and former Tánaiste, Deputy Harney, in places like South Africa. They encouraged people to come to Ireland.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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We needed them.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Government should not scapegoat the public sector, which is a very soft target in this case.

Photo of Trevor SargentTrevor Sargent (Minister of State with special responsibility for Food and Horticulture, Department of Agriculture, Fisheries and Food; Dublin North, Green Party)
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Nobody is scapegoating those people; those are the Deputy's words.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The sector needs reform, as well as the payments system. In terms of reform, what we need is a fresh Government and a fresh start for the country.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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Is that the Deputy's contribution — a call for a general election?

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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My contribution has been consistently informed by trying to find out the facts——

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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Innuendo and accusations.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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——about our economic position. I am angry that the Government has nothing positive to offer the more than 300,000 people now on the dole, bar a very small expansion of training places. I noticed that earlier this morning the Tánaiste indicated she had solved the apprenticeship crisis.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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Yes, I provided money for redundant apprentices.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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She should come out to visit my constituency and that of the Minister. There are young boys, in particular, aged 17, 18 and 19 who were hoping to start an apprenticeship. The Tánaiste is talking about rescuing the poor guys becoming unemployed, which is good, but what about the army of kids who thought they would become apprentices later this year? Where are their opportunities? They are looking at the dole queue.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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The Deputy has exceeded her time. We must move on.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Not only that but we have 26,000 graduates coming out this year — the best and brightest that we have invested in. The Government's message is one of almost no hope for them. The Tánaiste is a disgrace.

Photo of Mary CoughlanMary Coughlan (Tánaiste; Minister, Department of Enterprise, Trade and Employment; Donegal South West, Fianna Fail)
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I will not rise to some of the derisory comments which are personal in nature. In due course and at the next election we will deal with them.

The reality of the current global economic downturn has again been brought home to us with confirmation that the number of people now on the live register stands at just below 328,000. The rate at which this figure has increased over such a short period of time is disturbing and I assure the House that the Government is determined to do all in its power to tackle the rise in numbers of people finding themselves without work or with reduced working weeks. Our approach in tackling the issue is multi-layered and centres on restoring our public finances, protecting employment across the economy, retraining those without work, and attracting new investment and jobs to our shores.

In my contribution to last week's debate in the House, I highlighted the importance of restoring competitiveness to our economy and placed particular emphasis on addressing the issue of energy costs. In that regard I welcome the confirmation from my colleague, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, yesterday that he has asked the Commission for Energy Regulation for an immediate review of energy pricing and an analysis of options for bringing down electricity and gas prices for householders and businesses. Such action sends out a clear signal that in Government we are addressing issues of real concern to employers who need to get costs down in order to compete effectively in the global marketplace, resulting in more jobs being protected across our economy. It is one example of the many steps we are in the process of taking to best protect the long-term sustainability of our economy.

One other such step was yesterday's announcement by the Taoiseach aimed at stabilising our public finances and reducing Government spending. The decisions taken were not easy but they are an example of the tough decisions that have to be made to bring the economy back on track. In doing so, however, I want to assure the House that we will continue to target expenditure and tax measures at those most able to bear the cost, and that we will continue to support those who are most vulnerable in our society.

In the time available to me this afternoon, I want to concentrate on some of the steps we are taking to ensure that those without a job can get reskilled and back in to the jobs market with the skills necessary for the jobs that our economy will create over the coming months and years. I want to focus specifically on our reactivation efforts.

The Department of Social and Family Affairs and FÁS are working closely to respond quickly to the rise in unemployment. In particular, FÁS employment services, together with local employment services, are putting in place measures designed to provide increased capacity for the rise in referrals from the Department of Social and Family Affairs and the increased number of unemployed seeking job search assistance voluntarily. The implementation of these measures has increased capacity from 6,500 per month to 12,250 per month.

The Government is also working to significantly improve access for unemployed persons to maximise opportunities for upskilling and reskilling so that people will be better placed to avail of new job opportunities when they become available. A number of programmes are already in place and it is intended to expand greatly the frequency and range of these programmes over the coming months.

I recently announced the availability of 51,000 new training places under the FÁS training initiatives strategy. These places are in addition to the 27,000 previously planned for 2009 under the bridging foundation training, specific skills training and traineeships programmes. The strategy enhances the traditional mix of course offerings and will be delivered through three core training initiatives of short courses, night courses and on-line courses.

The courses are for highly employable people who wish to add to their existing skill level and improve their prospects of re-entering the labour market. The night courses offer further flexibilities and the on-line courses provide an excellent option for those who need a fast and flexible intervention and who prefer a self-directed e-learning and blended learning environment.

There has been a significant downturn in construction-related activity since the beginning of 2008. As a result, there has been a major increase of the number of people within that sector who are out of work. There has also been an increase in the number of apprentices being made redundant.

In addition to the usual resources it provides to redundant workers, FÁS has established a training fund to enable it to provide a timely response to identifying training and retraining needs for low skilled and redundant craft workers from the construction sector. It is intended that this will enable individuals to secure a speedy return to work or, where this cannot be achieved, to provide relevant upskilling opportunities in order that jobseekers can obtain employment in alternative sectors. FÁS is also focusing on providing retraining opportunities for redundant construction workers in emerging areas such as the installation of energy-efficient and renewable technologies, environmental activity and compliance and regulatory work.

With regard to redundant apprentices, my Department and FÁS have put in place a series of actions to facilitate the completion of their studies. These include redundant apprentices being allowed to progress to their next off-the-job phase of training without being obliged to complete the next on-the-job phase. A register of redundant apprentices has been established by FÁS and the institutes of technology in order to identify these people at the earliest possible opportunity. FÁS has prioritised the need to locate an employer to sponsor the completion of apprentices' off-the-job training.

Last year I announced the launch of FÁS's employer-based redundant apprentice rotation scheme. The scheme, which will operate for this year, aims to provide up to 500 redundant apprentices with on-the-job training with certain approved employers on a rotation basis. The Government and the key organisations with responsibility for apprentices will continue to consider new initiatives to assist redundant apprentices in gaining the necessary on-the-job experience to progress and complete their apprenticeships.

All existing full-time further and higher education places in September 2009 will continue to be open to applications from unemployed persons. In addition, applications will be encouraged for courses in institutes of technology that have vacant places. The Minister for Education and Science, his Department and the education sector are working to develop schemes to assist those who are unemployed and who wish to return to education.

Further assistance for those who have become distanced from the labour market for some time and who are seeking to re-enter it is provided via community employment, CE, schemes. CE is an active labour market programme designed to provide eligible long-term unemployed people and other disadvantaged persons with an opportunity to engage in useful work within their communities on a fixed-term basis. The programme helps unemployed people to progress to the open labour market by breaking their experience of unemployment through a return to work routine and assists them in developing both their technical and personal skills. Funding for CE this year will enable the scheme to be operated on a flexible basis to maximise progression to the labour market through on-the-job training as well as maintain the support of community services. Funding for services provided by FÁS to people with disabilities will allow the continuation of specific employment and training programmes targeted at such individuals.

While a significant amount of work has been done in a short period, the Government and I are intent on achieving greater capacity within existing resources. In that context, I will be bringing forward further measures to make training and education services available to a greater number of unemployed persons during the coming weeks and months.

In addition to the activation measures that I have outlined, the Government's focus will also be on supporting the growth of Irish companies with the ambition, leadership and innovation to succeed in creating and sustaining employment. The environment is challenging but like its workforce, Ireland's enterprises are resilient and adaptable. I am confident that they can rise to the challenge.

These are difficult times but by working together I am certain that we can return to an Ireland of economic growth and prosperity. The measures set out by the Government provide the right mix of policies to stabilise the economy, to protect those in our society who are the most vulnerable and need our help the most, to foster the right conditions to generate new and sustainable jobs and, ultimately, to advance the standard of living of our citizens and maintain the social and economic advantages that have been acquired for this country during the past decade.

Photo of Kieran O'DonnellKieran O'Donnell (Limerick East, Fine Gael)
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Deputy Bruton, on behalf of our party, tabled an amendment to this motion which states:

To delete all words after "Dáil Éireann" and substitute the following:

"—accepts the need to reduce borrowing in 2009 by €2 billion, as outlined in the Revised Stability Programme;

calls for a detailed review and amendment of the measures announced by Government on 3 February 2009 to secure a fairer balance;

calls for major reform and restructuring of programmes and agencies to get maximum value for the taxpayer;

calls for the presentation of a credible five year economic plan; and

calls for a fresh package of initiatives to address the issues of job loss, competitiveness, credit and new economic opportunities."

I wish to expand on a number of the matters to which this amendment refers.

The difficulty with the package announced by the Government yesterday is that it amounts to another in the series of fits and starts that have been made in respect of dealing with the problems the economy faces. The Government does not appear to understand that the economy relies on the integration of a number of areas, namely, the public sector, business, the banks, education, health, etc. Yesterday's announcement related to the public sector but did not address the issue of getting small business moving again, nor did it deal with a range of other matters.

The pension levy announced by the Taoiseach yesterday is nothing more than another form of cut and there are major anomalies attaching to it. The Department of Finance's website contains information relating to the net cost, after tax, of the levy for public servants. The cost varies and the net percentage moves all over the place. Why is that the case? It is due to the fact that some will obtain tax relief while others will not. The lower paid will not get a fair deal under what is proposed.

The figures provided by the Department indicate that a single person who qualifies for a full contributory old age pension of €230.30 per week — based on an average contribution of 48 stamps annually over a 40-year period — will qualify for a State pension of just short of €12,000. If he or she is employed in the public sector and is in receipt of a salary of €24,000, he or she will be entitled to half of that amount — approximately €12,000 — by way of a pension. He or she will, therefore, obtain no benefits from the contributions he or she makes to the State. He or she will pay an additional 4% for a public service pension but he or she will never benefit as a result.

Let us consider the position of a married person in his or her early 30s who has been working in the public sector for ten years, who is the sole earner in the family and who has young children. If he or she is on the average public sector wage of €45,000, when he or she reaches retirement age he or she will qualify for a pension in the same amount as the State pension. As a result, he or she will not benefit from the contribution he or she is making to the State pension. That is a major problem. Furthermore, over a period of 40 years he or she will have paid almost €73,000 into the public sector pension scheme but will only receive €68,000 back. He or she will, therefore, be obliged to endure a net loss.

Single people who earn below €25,000 and married people who earn €45,000 should not be forced to pay the pension levy. The Government must re-examine the levy because it is extremely unfair to the lower paid who, effectively, will be subsidising public sector pensions for those whose incomes are much higher.

The pension levy is merely another example of the Government rushing its fences and not examining the impact. An income levy was already introduced in the budget and people over the age of 65 are supposed to be exempt from this if they earn less than €40,000. Persons whose annual income exceeds €20,000 pay the levy and must apply for a refund at the end of the year. The Government's statements to the effect that the levy does not hit the lower paid are incorrect. It is pursuing a policy of disguising tax increases and cuts as levies. This was also true in the case of medical cards. The Government's proposal to remove medical cards from people aged over 70 years was rushed and ill thought out.

In the case of negotiations with the social partners, the Government produced a pension levy at the 11th hour. Its proposal has clearly not been worked out in detail as the levy will apply to people who do not pay income tax. For example, it does not make sense that a single person earning less than €18,300 who does not pay income tax will pay the levy. A married couple with one income earner working in the public sector who earns less than €31,950 will not pay income tax but must pay the pension and income levies. Similarly, a married couple with two incomes earning less than €36,600 is also exempt from income tax but must pay the pension and income levies.

The Government has also reduced the early childhood supplement from €1,100 to €1,000 and reduced the age threshold from five and a half years to five years. Employees in their early 30s who have been working in the public sector for around ten years and have large mortgages and children attending crèches will be hit hardest by the measures announced yesterday. In addition to the child care measures, those in this group will pay a pension levy from which they will not benefit. I ask the Government to review the pension levy and consider making it fairer for single persons earning less than €25,000 per annum and married couples with an income of less than €45,000.

The Government plans to invest €8 billion from the National Pensions Reserve Fund in the banks. The NPRF was established to pay public sector and social welfare pensions. The fund has lost value and is currently worth approximately €16 billion. The Government plans to invest €8 billion of pensioners' money in the banks, while asking public sector employees to make pension contributions. This is not fair. The Government has not explained how it proposes to ensure funds start to flow to the small business sector and houses are not repossessed by the banks, nor has it explained how it proposes to curb remuneration to bank executives.

A short time ago, the combined value of the banks was approximately €57 billion. This figure has fallen to less than €1 billion. It appears, however, that top executives in the banks continue to receive the same salaries as previously. This does not make sense. Once again, the ordinary citizen is paying for the mistakes of the banks and Government.

The Government does not know how to run the economy. It has still not produced a credible economic strategy to get Ireland out of recession. This morning, the Taoiseach acknowledged recent job losses, which is easy to do. His job is to ensure jobs are not lost. The number of people on the live register has increased by almost 150,000 in the past 12 months. If the increase of 36,500 in the live register recorded in January is replicated in February and March, the number of people on the live register will reach 400,000. Despite this, the Government has not shown a sense of urgency and does not appear to know how to address the problems. This is clear from the manner in which the pension levy was introduced. It appears some people in the public sector pension scheme will not benefit from the contributions they are making. It is incumbent on the Government to provide a detailed breakdown of how its pension levy plans will work and how people will gain at the various levels.

Unlike the private sector, where negotiation takes place on occupational schemes, the Government has decided to impose draconian charges of 3.8% on people on low incomes. I ask the Government to produce a credible plan. We know savings must be made but this must be done in a structured manner which avoids deflation and further job losses.

Photo of Peter PowerPeter Power (Minister of State with special responsibility for Overseas Development, Department of Foreign Affairs; Limerick East, Fianna Fail)
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The difficult decisions taken by the Government yesterday will have implications for all Votes across all Departments. These decisions were vital and have but one purpose, namely, the elimination of unsustainable levels of borrowing for day-to-day public expenditure to provide the platform needed for economic growth in future.

Let us not be under any illusions. The reasons we must eliminate unsustainable levels of public borrowing, borrowing for the sake of borrowing and borrowing to repay borrowing is that, as we found in the 1980s, the costs of borrowing will eventually become unsustainable and every single penny raised in income tax will be used to pay the interest on the borrowings. We have learned one lesson from the mistakes we made in the 1980s, namely, that we need to borrow to invest in the future. While we need to borrow, we must do so at affordable rather than unsustainable levels. The decisions taken yesterday must be considered in that context.

In the limited time available, I will focus on the decision to reduce the total budget provided for overseas aid and development from €891 million to €796 million. Notwithstanding the decisions made yesterday, our best estimate is that our overseas development assistance expenditure next year will be in the order of 0.53% compared to 0.55% two years ago. We should not overlook that Ireland's aid programme is at historically high levels in the international context and, notwithstanding the decision taken yesterday, we will remain the sixth most generous donor in per capita terms in the world.

The announcement has been criticised in some quarters. I will emphasise a number of points which informed thinking on the decision. If we chose not to reduce public expenditure, including overseas development assistance, as we did in the 1980s, and the economy were to go into freefall, we would simply offer our development partners, principally in Africa, a proportionately larger slice of a rapidly shrinking cake. It is also widely recognised in the development community that long-term borrowing for development programmes at exorbitant interest rates is untenable and unsustainable. It is a lose-lose scenario in which the developing countries would lose and our development programme would lose credibility.

The size of all international aid programmes is expressed as a percentage of gross national product. Increasing the percentage of assistance given in the context of a seriously declining GNP would not be in the interests of the poorest people in the developing world or the credibility of Ireland's aid programme internationally. The bare truth is that if the economy were to continue to decline at the current rate, we would provide an ever decreasing amount in overseas development assistance. The absolute imperative therefore is to provide for national economic recovery, thus enabling us to resume the expansion of the programme. It is the Government's intention to expand the overseas aid programme again, as we did when times were good, the economy was expanding and gross national product was increasing.

All aid budgets internationally are under pressure as the global economic crisis begins to affect the developed and developing world. The reduction in overseas development aid must be considered in that context. Having said that, Ireland has a proud record in development and Irish people can be justly proud of the Government's aid programme implemented by Irish Aid. Ireland is the sixth most generous donor in the world in per capita terms and I am confident it will remain so in 2009. The overarching objective of our programme is the reduction of global poverty and hunger. Ireland is making a real difference to the lives of the poorest people in the developing world.

We are significantly closer to achieving the 0.7% target we set ourselves, and which all developed countries have set, than most of our EU partners even after the painful decisions we took yesterday. Only Sweden, Luxembourg, Denmark and the Netherlands have higher percentages than Ireland.

My immediate priority as Minister of State at the Department of Foreign Affairs with special responsibility for overseas development is to ensure the budget provided for the development programme is implemented effectively and in line with our priorities. What will our priorities be? Two weeks ago I signalled that the fight against world hunger would become a cornerstone of our international aid and development programme.

That is our response to the hunger task force report which set out a real sense of anger and frustration on behalf of the Irish people that, notwithstanding the enormous difficulties we are facing in our country, there are still, as we go to bed tonight, 1 billion people who will not have enough food to eat. That is one person in every seven on the planet. To put it in context, the number who do not have enough food to eat is 250 times our population.

It puts some of our own problems into some perspective. Our response this year, even in the context of the new realities we must all face, is to take a leadership role internationally in this area and encourage our development partners, all of whose budgets are under pressure at the moment, to refocus on the issues that matter, putting food in the mouths of the people who are hungry on the planet today.

I have signalled to my ministerial colleagues this week at the development ministerial council meeting in Prague that we intend to take a leadership role in this area in 2009. In the context of the decision made yesterday we will examine every aspect of the programme to ensure its effectiveness in the fight against poverty and hunger. We will adjust the programme in line with yesterday's decision and with a clear view to minimising the impact of those most in need.

Regarding the macro-economic situation, the defining characteristic of the recession which has hit us over the last 12 months is the rapidity with which it hit not just Ireland and the developed world. Why is it so different from other recessions which did not hit us so quickly? It is clear evidence, if it is needed, that we are in a truly globalised financial economy and economic trading environment and only those countries which are able to compete effectively and ably in the technologically and internet based financial and economic global world economy will survive.

Unless we get our public finances under control and do so quickly we will not be allowed to borrow. We need to be in a position to borrow that money so we can invest in the globalised trading economy. What does that mean? It means producing the best and most creative students in the world whose ideas go into the computers we used to make in Limerick, but can no longer make because we are not competitive in the assembly and production market.

We need to produce people in this country who can make software and develop creative ideas, such as those of Microsoft, that go into computers. That is the new reality and globalised economy we face. To compete in it, we need to invest in it. To invest in it, we need to borrow. There is only one key determining fact in our ability to borrow and that is our ability to repay our borrowings. If we do not control public finances, with all the real pain and hardship that causes throughout the country, we will not be able to borrow a single penny.

We will repeat the mistakes we made in the 1980s which were not to invest in our infrastructure, young people, roads, hospitals, schools or universities because that is the surest way for this recession to go on and on. That is why, even though they are painful, we needed to make the very difficult decisions yesterday.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I wish to share time with Deputy Michael Ring.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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Is that agreed? Agreed.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I ask the Ceann Comhairle to tell me when I have reached five minutes.

This is the greatest financial crisis this country has faced since the foundation of the State. The startling unemployment figure of 328,000 people, the greatest number ever, is just another reminder of the stark reality facing so many of our citizens.

The sad thing about this is that it was seen coming. Commentators have been warning about it for at least two years and yet we were told by the current Taoiseach that all was well and the fundamentals of the economy were sound. However, the fundamentals have not been sound for some time. During ten years of an unprecedented boom we went from the fourth most competitive economy in the world to being way down the list.

This Government managed the startling feat of turning a surplus of €2 billion into a €22 billion deficit. Fianna Fáil squandered the boom and shunned the opportunity to reform our public service through benchmarking. Consequently we are very poorly placed to deal with the world recession. I agree that we need to save €2 billion and need incisive action but what is happening here is yet again a blunt instrument has been used and it is aimed purely at public pay cuts. What will happen next year when we will have to save €4 billion? Will there be more public pay cuts? I do not think so.

The HSE is an example of a burgeoning, bungling bureaucracy that is not delivering efficiency. We pour more and more money into it and yet we get fewer and fewer services. A total of 500 beds went out of the system last year, 600 will go this year and there is a 30% increase in delayed discharges, which has the same effect as having the Mater Hospital closed for a year. There has been a 10% increase in cancelled operations, there are 50 people lying in the accident and emergency department on trolleys in Beaumont Hospital and the list goes on. The health service is in a mess due to inefficiencies and lack of management, yet we are discussing whether or not its CEO should receive a bonus.

Where is the reform of the banks? We have seen this Government wait for the banks to come to it with a solution. We are the ones who are bailing them out, therefore we are the ones who should be dictating. This Government should be leading from the front telling the Banks the way it will be.

There should be a complete cull of the entire board of directors of any bank that has been bailed out because if these are the people that led us into this mess, they are not the people to get us out of it. New directors should be appointed who will dictate more reasonable salaries for the bosses and get rid of the nonsensical bonus system which only really appeals to short-term thinking and greed and is one of the reasons we are in this sorry mess.

The era of cronyism and golden handshakes has got to end. I do not have much faith in this Government's ability to do it as it has been at the centre of it for the last 20 years. How is it that a banker who has, in my view, been guilty of serious breaches of company law can walk away with a half a million pension having inflicted such enormous damage on his own bank and on the entire banking system?

The ordinary person in the street is asking why, when they are earning €15,000 a year, are they paying a 3% levy on their pension whilst this man walks away with half a million euro. These are the sort of inequities in Irish life that lead to civil unrest. This whole area brings into question the role of regulators, their ability to regulate and the whole ethos of turning a blind eye.

We are not addressing the need for reform in either the public or private sector, nor are we addressing the need to stimulate the economy. What has this Government done? It has increased 17 different taxes, the most ridiculous of which was increasing VAT. Has it not heard of the law of diminishing returns? There has been a drop of €365 million in VAT collected in January 2009 compared to January 2008.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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Deputy Reilly has one minute.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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The economy is frozen and there is no activity in the market because everybody is afraid. They are afraid for their jobs and savings. There is no certainty anywhere. We need to put some real initiatives in place. We have already asked for a reduction in VAT and have suggested a moratorium on PRSI for new employees to encourage employers to take them on.

I suggest a six month moratorium on stamp duty, reducing it to 1% for that period so people can see they have an opportunity to enter the market and get value. I would also like to see a moratorium — this is a personal view — for a further six months on properties abroad so that capital gains tax will be reduced from 22% to 5% to encourage people to repatriate their money and invest in Irish business. None of these proposals is designed to interfere with the market, but rather to stimulate some activity, the consequence of which will be an immediate gain to the Exchequer of 13.5% VAT on all new houses sold, as well as VAT on the fees charged by solicitors, auctioneers and surveyors. I would remind the House that 1% of something is better than 6% of nothing. Last month, stamp duty dropped by 72% compared to January 2008.

We have asked the Government to freeze local authority rates and charges to give businesses a chance. This is not a time to put a strain on businesses. We need to restore a semblance of normality, even if it is only at half the value and half the volume.

The Taoiseach's plan is a poor start. It is a blunt instrument that is hurting many people unfairly and, further, it ignores totally the areas of reform, improved efficiency and initiatives to stimulate the economy.

5:00 pm

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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Ministers and Fianna Fáil backbenchers should be wary because the country is angry. Many families have been hurt by yesterday's announcement. I was talking to a county council official today whose only income is his own salary. His wife does not work and they have three children attending third level education. He has a job but since that is the only income coming into the house he is worried whether he will be able to pay his mortgage and keep his children in college. He also wonders what is going to happen in the future. The Government is pretending that this is a pension adjustment but it is not; it is a pay cut. If Fianna Fáilers become aggravated they go back to the time of Earnest Blythe and talk about taking the shilling off pensioners. After yesterday's announcement, however, Civil Service employees and others working for the State will never forgive Fianna Fáil or the Greens. They will never forgive this Government for what it has done to their livelihoods. It is the second pay cut this year because the 1% levy was another pay cut. That is the second pay cut in two months.

The Government is lurching from one crisis to another. There is no leadership and nothing is happening. It closed down the Dáil from December and did not reopen it until the end of January. The whole country was going down the tubes when the Dáil should have been back here discussing what could be done to help the economy.

I want to make two points concerning rip-off Ireland and housing. The Minster of State, Deputy Finneran, has responsibility for housing. There are approximately 70,000 unused houses in this State. If they were sold, the 13.5% VAT would amount to €2.8 billion for the Exchequer. I am calling on the Government to reduce VAT by a quarter and give the ensuing €30,000 to young first-time buyers. It would mean that the Government would not get the full VAT amount but at least it would get a fair percentage off it and it would bring €1.7 billion to the Exchequer. By God, do we need the money.

If shops or supermarkets have an oversupply they have a sale, but there is no thought or initiative on the Government side of the House. In yesterday's announcement and in the budget there was nothing about creating employment to give people opportunity. What has the Government done in the last ten years for small businesses? It has imposed VAT and other taxes, as well as every kind of inspector to ensure that the few people who were in business were put out of it.

Photo of Michael FinneranMichael Finneran (Minister of State with special responsibility for Housing, Urban Renewal and Developing Areas, Department of Environment, Heritage and Local Government; Roscommon-South Leitrim, Fianna Fail)
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The Deputy supported the long-term lease of houses.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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The long-term lease we want is to put the Government not even into opposition but out the door. It is the worst long-term lease we have had in this country. It has been in office for too long.

Photo of Michael FinneranMichael Finneran (Minister of State with special responsibility for Housing, Urban Renewal and Developing Areas, Department of Environment, Heritage and Local Government; Roscommon-South Leitrim, Fianna Fail)
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The Deputy was here before me.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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It has gone stale and has no ideas. The soft option is to crucify the taxpayer, but the taxpayer is going to react.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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The Deputy has only 30 seconds left.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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I need more time to deal with them. The Minister, Deputy Gormley, might have got a buzz in the poll last week but there is only one poll that counts and that is the one in June. When he gets the results of that poll, he will be pole-vaulting over here to get away from that Government because they will bring the Greens down as they did with the Progressive Democrats.

Why is the Government attacking people who are working and paying tax? Yesterday's levy was unfair. It is the second pay cut this year. People can only take so much and they have now taken all they can bear, particularly those who are working.

Photo of John GormleyJohn Gormley (Minister, Department of Environment, Heritage and Local Government; Dublin South East, Green Party)
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The unemployment figures released today show the unprecedented economic situation in which we find ourselves. By now, everybody knows someone — be they a relative, friend or neighbour — who has recently lost their job as unemployment of 9% reaches record numbers in absolute terms. As a small open economy that is part of a European currency, traditional monetary instruments are not open to us. Ireland's eventual economic recovery will also be reliant on a global economic recovery.

We in Ireland have to implement policies and measures that will place us in a position to capitalise on that global economic recovery. We need to move away from an over reliance on construction and back to export-led industry and services. We need to ensure those new industries are sustainable, and that is why the Green Party in government is advancing the green economy and the green-tech sector as an essential element in our recovery.

First and foremost, however, we must restore our public finances to more sustainable levels if we are to repair our economy, restore confidence and restore employment growth. We are now borrowing €4,500 for every man, woman and child in the State. That €18 billion in borrowing is the equivalent of a third of current spending. The interest we will pay on that, €4.5 billion, is the equivalent of a third of the entire income tax take. That level of borrowing is not sustainable and consequently current levels of Government spending are not sustainable.

The package of measures announced by the Government yesterday is a significant step along the difficult and arduous road towards restoring our public finances. More difficult decisions on expenditure will be required next year and in 2011 and 2012. I know the measures announced yesterday are very difficult. They are painful and unpalatable in many cases, but they have to be introduced if the economy is to survive and prosper.

As shown last week in the framework document, there is unanimous agreement that public spending must be reduced by at least €2 billion in a year. It would have been impossible to make that reduction without a significant change in our public service pension system.

Public service employees deliver excellent services across this country, from our hospitals to our schools, Garda stations and council offices. They are hard working and as a group they earn their salaries and wages, but if we are to make the necessary adjustments, there is no option but to take significant steps to reduce the overall net expenditure on our €20 billion public pay roll.

The changes to public service pensions will deliver savings over a calendar year of €1.4 billion. I appreciate the sacrifice that will be made by each and every one of the 300,000 public service employees in this country. Nevertheless, if the changes are not made those very public service jobs could be placed in jeopardy in the long term.

The decision to reduce the early childhood payment was also a difficult one to make; it was necessary but its effect is minimised. The payment will end six months earlier at the age of five. The total annual payment has also been reduced. The decision to maintain the payment reflects my party's concern that parents of young children should continue to get additional support in order to give them a choice on how they care for their children. Parents with children under five will continue to receive €3,000 a year in child care payments.

The reduction in overseas aid was also a difficult decision to make. I acknowledge the concerns of the Irish NGOs, but the reduction has been minimised to €95 million. Ireland will still be the sixth largest per capita donor in the world. Our budget for overseas development aid will be just €4 million euro short of €800 million this year, which is €300 million more than in 2004. While our per capita contribution is less than some of the Scandinavian countries, it is still larger than many of our European neighbours such as Britain and Germany.

In terms of spending reductions, the package is balanced. The measures will, I hope, minimise the impact on lower income households and insulate the most vulnerable. The alternatives to the spending reductions announced yesterday would have had significant impacts on low income households. That is not the Green Party way of thinking.

However, what has been absent from the analysis is comment on some of the positive elements in the package in terms of a reorientation of investment by the Government. This package will divert capital investment towards labour intensive programmes, which will create green jobs, maintain the construction sector and pursue climate change goals. This capital investment will secure and create thousands of badly needed jobs in the construction sector this year. For example, the water services investment programme will see €560 million spent on water infrastructure, 19% more than in 2008. More than 4,500 jobs will be sustained and by the end of this year there will be 150 projects under construction. The green capital programme will deliver and create thousands more jobs through a greatly expanded insulation scheme for houses and buildings around the country.

I know we are asking a lot of the general public. However, I, as Green Party leader, would not ask the public to accept this package if I did not believe it to be absolutely necessary. I also believe that we here in Leinster House must show political leadership. The Government is determined to play its part, along with the Oireachtas, in reducing the costs of our democratic and political systems. We aim to achieve substantial savings in 2009 through a range of changes in Government and Oireachtas funding.

The Oireachtas Commission will be asked to contribute to this process, and we invite the co-operation of all political parties and Independent Deputies, to show clear leadership across the political system. In this context, the approach to foreign visits of Oireachtas committees, the funding of the Houses of the Oireachtas Commission and the systems of remuneration, pensions, expenses and allowances for Members of the Oireachtas will be considered. The costs of discharging ministerial functions in support of effective Government will also be reviewed.

Speaking personally, I do not believe last month's expenses reform proposals from the all-party Oireachtas Commission are nearly sufficient to show that leadership. A vouched expenses system merely tinkers at the edges of the significant spending reforms needed in the Oireachtas. We in Government need, more than anything else, to send a signal to the general public that corporate greed and responsibility will not be tolerated. This is the reason the Green Party wants to see new measures to deal with the remuneration of the senior management of our banks and to ensure that those who have brought our banking system into disrepute and caused untold damage to our international reputation are held fully to account.

These are the most challenging economic times we have faced in this country in living memory. The global phenomenon makes that challenge even greater. I agree with Deputy Enda Kenny that things have gone beyond political point scoring. I said that a fortnight ago, at the 90th anniversary of the Dáil celebration. We as politicians must be honest, open and truthful about the extent of the problems we face, the fact that there are no easy solutions and that we are all going to experience some form of financial pain. That is as true for the Opposition benches as it is for the Government.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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I wish to share my time with Deputy Arthur Morgan.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Is that agreed? Agreed.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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The Government's proposals to cut €1.4 billion from the public pay bill will do nothing to help the finances of the country. Neither will they have the support of the public, because they are fundamentally unfair. The Government proposes to cut the pay of all those in the public service, simply because they are public servants and are, therefore, the soft option. The majority of public servants bear no responsibility whatsoever for the country's economic problems, yet they are the ones being asked to pay the price.

It is the developers and builders who made massive profits from the housing bubble who should be the first to pay the price for our current woes. Those in the banking world, who have contributed largely to the current banking crisis, should also pay the price. It is these and the others who facilitated their activities who should bear the responsibility, be punished and pay.

The Government's proposals are unjust because they make no attempt to share the burden across the community. Solidarity is about people pulling together, but it is also about everyone paying his or her share, based on ability to pay. There is no attempt in the proposals to ensure that those with high incomes, whether from salaries, rents, professional fees in the public or private sector, shares, fees as company directors or benefits from the many tax shelters and allowances, pay. Why is it that these people get away with it yet again?

The public service should make sacrifices, but with all other sectors. It is time to consider capping all public sector pay at a realistic level, for example, at the €150,000 mark. We should also stop all bonus payments and increments for those earning over €100,000. I agree too that Deputies' expenses should be reduced and vouched.

The most unfair aspect of the Government's proposals is the fact they hit all public servants, no matter how low their income. Why should anyone with an income under €50,000 have to take a pay cut? Let me give the Minister an example of how these cuts will impact on people. Ministers are fond of using imaginary families as an example at budget time, so I want the Minister to imagine a family of a husband, wife and three children where the husband works in the public sector and the wife works in the home.

The husband earns €40,000 gross and takes home approximately €35,000 per annum or €673 per week. The State deems that this family does not have sufficient income in order to live with dignity and for that reason the family receives a family income supplement of €1,040. Now, under these proposals, the State will take €2,750 from that family. On the one hand the State gives a supplement to the family because it does not have enough to live on, but on the other hand it removes a far greater sum by way of this levy. This demonstrates how unjust and unfair are these proposals. They will hit people who are struggling to keep their heads above water. This is the equivalent of trying to squeeze blood from a stone.

The proposals are unjust also in that they make no attempt to share the burden across the community. This is not a plan to get the economy going again. It does nothing for jobs. It does the opposite, by proposing to take €1.4 billion out of the economy. This means increasing numbers of public servants will cross the Border to do their shopping. Less money will be spent on services here and fewer goods will be bought. In the long term, these cuts will lead to greater levels of unemployment, because much of the employment in the private sector results from employment in the public sector and the moneys spent by that sector.

There is no fairness in these proposals. They do not have the support of the public and will not achieve what the Government intends to achieve. They should be rejected.

Photo of Arthur MorganArthur Morgan (Louth, Sinn Fein)
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I thank the Labour Party and Deputy Shortall for sharing time with me. Yesterday's statement by the Taoiseach has caused irreparable damage to the public's confidence in the Government and has cemented the perception that, unfortunately, the Taoiseach is incapable of recognising the real issues and is simply fixated on targeting our public workers and our front line services. The Taoiseach's only strategy is to attack nurses, gardaí and people breaking their backs to serve the public.

The public and all on this side of the House were waiting for the Taoiseach to finally deliver a plan to deal with the real problems of our deteriorating economy. It is through rescuing the economy that we can shore up our finance deficit. The unemployment rate is now at 9.2%, and if we keep on losing jobs at a rate of 9,000 a week, the €2 billion savings will evaporate, through the increased burden on our social welfare system.

This morning, the Taoiseach stated this was an "old fashioned approach" to focus on job creation. If this is the case, why is it that almost every other country in the western world is engaged in kickstarting the economy and not kicking public sector workers? We will continue to call for a coherent plan which focuses on job creation, job retention and finding the money to address the increasing national debt through getting the wealthy to pay their fair share.

What is most annoying about the Government's cutback plan is despite all the talk of sharing the burden once again our low and medium paid workers will get it in the neck. It is nurses who will lose €2,250 from their salaries and it is gardaí who will have thousands of euro taken from their incomes. Effectively the actions of the Government mean that hard-working people will have to take a pay cut of up to €3,000 before paying the income levy and health charges. What makes this even more difficult to accept is that the Brendan Drumms of this world, who earn almost €500,000 of taxpayers' money between their salaries and bonuses, continue to get off scot free and are being allowed to continue wreck the public service with the Government's privatisation plans.

Today in the Dáil, the Taoiseach stated he will seek a 25% pay cut for banking executives. This is not nearly enough given that we are about to hand them €8 billion of taxpayers' money to bail them out for their reckless lending. We still do not know when the beloved directors of Anglo Irish Bank will finally pay back the €179 million worth of loans they now owe to the taxpayer. President Obama's idea of placing a ceiling of approximately $500,000 on bank executives comes close to the mark. A 25% cut will still leave our so-called world class banking directors with salaries worth millions of euro each and nothing has been done about the earnings of a vast number of public body CEOs, including the CEO of the ESB who continues to earn in excess of €500,000.

It is clear the Government's pension levy plan discriminates against the lower paid as the higher one goes up the scale the smaller the increases become. This does not include the fact that the high earners in the public sector will be able to claim most of this money back in tax relief on their pensions. In our pre-budget submission we made the point that the Government should have a standard rate relief which would have yielded almost €1 billion for the Exchequer. It has continued to ignore this and instead focused solely on cutbacks.

There are a number of sources of savings, particularly ending subsidies to private companies operating in the public services and numerous other areas. It is job creation that increases revenue and it is only when the Government finally sees the importance of a strategy that we will create the conditions necessary for recovery. The Government's approach must change. We need to see the front-loading of critical infrastructure labour intensive projects. We need greater assistance for business start-ups. We need to grow the indigenous export market, develop and support a truly innovative culture and rebuild the Irish economy. The Taoiseach will have to re-enagage with this House and finally start listening to this side of the House.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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We have spoken about the economy in recent times outside of this House and a great deal of public commentary has been made on it because it is the most central issue and the greatest challenge to face the country in recent times.

I support the motion which states:

That Dáil Éireann:

supports the expenditure measures announced by the Government to restore greater balance between revenue and spending;

affirms its confidence in the economic strategy of the Government to restore the economy to growth as soon as possible;

and

calls on all sections of our country to follow the lead of the Government and show the social solidarity needed to tackle this unprecedented economic downturn.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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The Government is only getting one section.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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It is important to mention this because we have listened to the debate in the House today. We also had a debate yesterday and on previous occasions. We all accept that major challenges exist. We are trying to find solutions to the major problems we confront.

Reference has been made by the Opposition to the banking crisis. I want to reiterate the reality of this situation. While this country had its own internal difficulties in the context of the governance of some banks, this issue started in Wall Street some time ago. It started in the sub-prime market in the United States and spread throughout the world. There was an economic crisis across the entire world. Being quite truthful, to point the finger simplistically and solely at our internal system does not do a service to this debate.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Do they bear any responsibility?

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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There are more fundamental problems causing distress to the banking system in Ireland than our own internal issues.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Should they contribute to the recovery?

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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To simplify the debate to this level does a disservice to the seriousness which confronts us as a society, a Government and a Parliament.

The figures on the live register this month show a worrying trend in unemployment. Everybody in this House is fully aware of the impact unemployment has on individuals, communities and broader society. Reference was made to how we deal with these problems in the context of unemployment. I remind the House that this year we will spend €8 billion in capital project expenditure which is 5% of GNP. People take for granted that the national development plan can be just rolled out without finding the resources to fund it. We will have to go onto the markets and borrow this €8 billion.

The Labour Party pointed out that we need a stimulus package to promote further economic growth and generate more employment. In theory, this might sound impressive but the reality is that we are a small open economy. Already we are borrowing well beyond our means and fundamentally this would mean going back to the international markets and borrowing at very high rates to fund further capital projects when we have anticipated funding of €8 billion this year in schools and roads and throughout the area of capital infrastructural investment.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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That is nothing new.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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We must realise that we are doing a lot already as a State in the context of capital investment——

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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A lot of damage certainly.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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——and we will continue to do so.

We also seem to forget what we have achieved to date. It is important that when we are trying to do the groundwork and build a platform for recovery of the economy that we acknowledge that this country has achieved much in recent years. We have 2 million people at work, a low income tax base, fairly high social welfare payments to protect the vulnerable and we have the second highest minimum wage in the OECD at €8.65 per hour.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The model is broken.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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These are fundamental achievements and many people benefited from the policies pursued in the past 15 years in this country and this cannot be denied by anybody. However, we are living beyond our means and yesterday the Government announced a package of savings of €2 billion in the calendar year, a pension levy on public service pension payments——

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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A pay cut for public servants.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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As the Taoiseach stated, this is unpalatable but necessary.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Call it what it is.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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We must be honest with ourselves. We can come in here and speak rhetoric but if the public finances are not addressed quickly they will run into difficulty.

It is also appropriate that we examine some of the Opposition proposals. Reference was made by the leaders of the parties opposite that they are willing to engage and put forward positive proposals. However, on the one hand we have a view from Fine Gael on how we address the issue, on the other hand we have views from the Labour Party and they are not compatible with what we are trying to achieve.

The Labour Party attacked the Government for not giving the social partners enough time to discuss the challenges confronting us. In the House the Labour Party accused us of not engaging with the social partners. In the same debate, the leader of the Fine Gael Party accused us of dragging our heels and discussing for too long a time with the social partners. We built a social partnership model which has served this country well since 1987. It does not behove anybody to try to pull this model down when it has shown that it has the capacity to deal with challenging issues.

It is regrettable that the unions and the ICTU could not come on board in the final hours of the discussions with the Government to address the problems with regard to funding the public pay bill. In fairness, they did engage and acknowledged that major problems exist and €2 billion had to be found. They agreed a framework but they could not come to the table on where the pain would be felt. Some of the commentary here is not doing the debate justice.

With regard to what we are trying to achieve on unemployment, we have increased the capacity of labour activation programmes. Fifty-one extra training places will be provided to allow those who become unemployed to receive some training. Thus, they will at least be engaged and making progress while unemployed. We will be trying to achieve this in the coming months. During the downturn in the 1980s, when people were just given social welfare and unemployment benefits, there was no engagement with training programmes or education courses, thus creating a considerable social problem. We must ensure there is continual engagement with those who are unfortunate enough to find themselves unemployed. As the Minister and Taoiseach said, the economic difficulties will continue to confront us throughout 2009. We fill face considerable challenges associated with job shedding in the broader economy. We are very conscious of this and will try to provide as many training places as possible. However, training alone will not address all the problems confronting those on social welfare.

Reference was made to the cost of living. There seems to be a view in circulation that nobody has benefited from the decrease in the cost of living due to deflationary pressures. Interest rates have decreased substantially, while the cost of fuel is decreasing. Our energy policy must be considered in this regard. Energy costs will comprise a fundamental issue in the coming weeks. All surveys show that energy provision is of fundamental importance to the country, an issue on which Deputy Coveney has been very forceful. Foreign direct investors express concern about the cost of energy when considering Ireland as a location in which to invest. If the Government, the Dáil and the people do not take collective responsibility to deal with these challenges, they will send a very dangerous signal.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Hypocrisy.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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There is certainly no hypocrisy on this side of the House. At least we are willing to make the tough decisions.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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It is hypocrisy. The Government should take responsibility.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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The Labour Party, through Deputy Shortall, is proposing in the House that only those earning over €150,000 should contribute to addressing the problems.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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I did not say that.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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The Deputy should note that many from where I come believe €100,000, never mind €150,000, is a substantial salary.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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The Minister of State should not misrepresent me.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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Bearing that in mind, it is the Deputy's view that is hypocritical.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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That is not what I said.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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The Government is to borrow €18 billion this year, or €4,500 for every man, woman and child in the State. This is substantial borrowing. If we do not deal with these issues, we will saddle the generations to come with considerable debt. Every responsible political party in the Dáil would certainly not want this to occur. Unfortunately, some parties have not rejected the approach that would allow it to happen.

I want to refer to the banks issue to which many references have been made. Last year the Government gave a guarantee to all depositors in the Irish banking institutions. We received support from some political parties. Members on the other side of the House are now crying that there is not enough liquidity in the market or credit available to small businesses. In this country's hour of need, the Labour Party sat on its hands. During the effort to ensure we could provide some——

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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We were against a blind guarantee.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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The Labour Party sat on its hands——

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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The Government has done nothing to make credit available to small businesses.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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——at a time when we were facing——

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Rightly so.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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——a financial meltdown. The party sat on its hands.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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The Government still does not know that for which it has given half the National Pensions Reserve Fund.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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Again, when rhetoric met reality, the Labour Party was found wanting.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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No. The Government gave half the National Pensions Reserve Fund to banks without knowing their debts.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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The Labour Party wanted to rob the fund a couple of years ago.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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That is right; Fianna Fáil would not let us touch it and gave half of it to the banks without knowing their debts.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I wish to share my time with Deputy Jim O'Keeffe.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Is that agreed? Agreed.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Fine Gael, as a party, accepts the need for a reduction in expenditure but the Government should not expect us to like it. Like so many across the country, we are angry and frustrated that it has come to this. The vast majority of those being asked to accept pain, be it through what one calls a social solidarity pact or everyone putting his or her shoulder to the wheel, face income reductions, while others face job losses. The State will have to borrow significant funds that we will all need to repay long into the future.

Fianna Fáil-led Governments have led the country to virtual collapse. The Minister of State, Deputy Kelleher, spoke about the need to recognise what Ireland had achieved in the past ten to 15 years. The model that achieved growth and job creation is now broken and needs to be rebuilt in a different form. We need to find new ways of raising money and rebuilding competitiveness which is what got the Celtic tiger started in the first place.

The only way Ireland will recover from its current condition is by increasing export trade, attracting new investors and businesses with a view to creating jobs, and building on our domestic skills base to encourage new entrepreneurs to borrow, build and employ. The same approach must be taken as was adopted after the 1980s with a view to creating a competitive, attractive country in which to do business. This is not such a country because of sloppy, lazy, arrogant governance that allowed Ireland to lean on the crutch of the construction boom. When the revenue from the boom disappeared, Ireland's financial viability also collapsed. We must now cope with this.

Last night on "Prime Time" I heard the Minister for Justice, Equality and Law Reform state Ireland had hit a wall, that it was nobody's fault and that it was everybody's fault. What a load of rubbish. It is people's fault. There are many events taking place that the Government cannot and does not control and which make existing domestic problems far more difficult to solve, but people need to know that we have a Government which is in charge and knows where we are going. The people are willing to put up with pain if they believe the Government's approach is part of a broader strategy to bring Ireland through the dark tunnel and out the other side. They do not believe this and the Government has not even managed to communicate the extent of the problem to them. They are finding out the extent of the problem by noting the reductions in their salaries and hearing yesterday's announcements.

We do not even have a Taoiseach with the political courage to stand before the nation and talk honestly about what has happened to Ireland, why it has happened and the way forward. Instead, we heard of meetings behind closed doors and efforts to do cosy political deals to obtain political cover for the hard cutbacks announced yesterday. Fine Gael will not facilitate this. It will, however, support responsible government. It offered yesterday to discuss options with the Government in an effort to achieve consensus in the House, given that it was not possible to do so with the social partners.

Photo of Jim O'KeeffeJim O'Keeffe (Cork South West, Fine Gael)
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The package announced yesterday was a dismal, sad effort without vision or hope. In addition, it was unfair and unbalanced. The real problem is that the Government is still in denial about the background to the problem. It will not accept that its own neglect created it. Last night the Minister for Justice, Equality and Law Reform was asked about responsibility. He stated everybody was responsible and then that nobody was responsible, that we had hit a wall. In the name of goodness, a Government in such a state of denial does not deserve to be in government.

Coupled with this were the tortuous secret negotiations that occurred without transparency. They have caused great concern among those who had no idea what was going on. I received an e-mail from one of the Garda representative bodies this morning and noted that it was not involved in the talks, yet it has been hit by the pensions levy such that individual gardaí must now pay an extra €5,000 or €6,000 without having any idea why.

Before I address public servants, let me refer to the cut in overseas development aid of €95 million. I have been interested in overseas development aid all my political life. Must we literally take bread from the mouths of the starving people of the world to solve our problems? To me it is entirely unacceptable.

A few points arise on the question of public servants. They believe they were individually focused. As far as they were concerned, and without any reference to anybody else, the proposals were savage. The proposals appear to be quite unfair as far as the lowest paid are concerned, who will gain nothing whatever from the contributions. There also appears to be an anomaly, especially in terms of those who came into the public service in recent years who are already making a contribution. Will they now have to pay an additional contribution?

We should remember that all these public servants will be caught for the extra levies that were introduced in that dreadful budget last October. The real problem is that there was no consultation of any kind and there is a lack of communication and a lack of understanding on the part of the public service. I accept the public service will have to make a contribution the same as anybody else but this was not the way to do it. A lead should have been given.

I focused on questions lately about foreign travel, not because I am against foreign travel. The Minister of State, Deputy Roche, is present. He has to go to Brussels and negotiate on the Lisbon treaty and other matters. I did it myself when I was in the Department. However, it has to be proportionate and reasonable and a lead has to be given in that regard. That is what I am asking. I am not making any point other than that. Reference was made to Ministers of State. If that area was tackled it would be some kind of example from the Government.

What I really wish to see from the Government is some message of hope and reform. Are we just into a cut, cut, cut situation? Where is the focus on jobs? Where is the focus on enterprise? Does the Government not see there are significant areas that can be tackled that do not cost money?

One area that annoys me is planning. I know it is not popular to be in favour of development and enterprise but I am in favour of it. I accept many developers abuse their situation but we need development. We have a ridiculous situation now where there are bureaucratic obstacles to people seeking planning permission. In some local authorities a 40% invalidation rate applies, namely, in Limerick, Dublin, Waterford and Galway, yet it is down to 8% in Sligo, Wexford and Louth. Why is that the case? Why do we have huge delays for planning appeals? We need development. I do not suggest we lower the standards but if projects are going to be granted let us encourage development. I note from the most recent report of An Bord Pleanála that only one quarter of all appeals were disposed of within the statutory timeframe of 18 weeks in 2008. How can that be justified?

Why do we not examine the other bureaucratic problems such as those in regard to foreshore licence applications? One would want to be mad to develop a marina at the moment but if one wanted to do so it would take about ten years before one could do it due to all the bureaucratic obstacles. Why do we not examine the possibility of developing community employment schemes to deal with the unemployed? Why do we not abolish the silly rule stipulating double time on Sunday that is closing hotels, restaurants and pubs around the country? Why are all those things not being done?

The message I wish to give to the Government is that it must resolve the public finances — a problem it created itself largely. In so far as they are reasonable proposals we will back them. At the same time, let there be a focus on enterprise and development. Let us look at the plight of the unemployed and the need for enterprise. Let us do what we can to encourage enterprise and get people back to work again.

Photo of Michael MulcahyMichael Mulcahy (Dublin South Central, Fianna Fail)
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I wish to share time with Deputy Conlon.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Is that agreed? Agreed.

Photo of Michael MulcahyMichael Mulcahy (Dublin South Central, Fianna Fail)
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We will have five minutes each. It is important that there should be a mature appreciation not just in this House but among the population as to the seriousness of the current economic situation. It is perfectly right and reasonable to examine what we have done in recent years, to be positive where it is appropriate to be positive and to be critical where it is appropriate to be critical. No Government ever gets it entirely right. Governments make mistakes. People make mistakes. That is not unreasonable. When one looks at what is happening in the United Kingdom, France, Spain, Germany, Greece and the United States of America, there is no doubt that this downturn in our economy is mirrored precisely, if it is not worse, in several economies.

The question thus arises as to what should be the response of the Government to a downturn of that magnitude. In the main, I fully support the programme as set out yesterday by the Taoiseach and Minister for Finance. It is a sensible first step. However, I have to be honest about it; perhaps they should even have gone a little bit further because at this stage we do not know if this is a recession, a very deep recession or a depression. If it is a depression the economic downturn could last for not just up to three years but possibly up to six years. In that case our tax revenue would decrease even more, which would put our general budgetary situation under strain.

I am sure the Acting Chairman was in the Chamber when she heard the figures given to her party leader about the cost to the State of the unemployed, not just giving an unemployed person, correctly, social supports and unemployment benefit but also the cost to the State of lost tax revenue. The real challenge for economic recovery is to deal with unemployment. Not enough credit has been given to the previous Government and the one before that for having reduced unemployment and having secured the employment for the first time in the State of more than 2 million people — a not insignificant achievement.

The question now arises as to how we respond to the crisis. The first step is to restore stability to the national financial and budgetary situation. I am pleased the Taoiseach said that this morning. The second step must be to get our competitiveness into line with other economies. There are a few basic costs to any business. One is the cost of capital, which has come down because interest rates are now cheap. However, capital must also be available and that is why we are addressing the banking situation.

The second major ingredient in the cost of any business is the cost of labour. Whether we like it, the cost of labour in this country is unacceptably high. That goes from the top to the bottom. The minimum wage in Ireland is just south of €9 per hour. The minimum wage in Poland is approximately €2 per hour. I do not advocate that we go down to that level but we need to examine every aspect of the price of labour in this State. I hope to debate the matter with colleagues in the next few months. I echo the comments made by Deputy Jim O'Keeffe, that double time on Sunday at the current rate is no longer sustainable. It is no surprise that hotels are closing. I call on the trade unions to show some leadership in that respect. Ultimately, what is the point in having high wages if jobs are going to disappear?

I very much support the Government's programme, as announced yesterday.

Photo of Margaret ConlonMargaret Conlon (Cavan-Monaghan, Fianna Fail)
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Chuir an Taoiseach an plean atá ag an Rialtas os comhair na Dála inné. Ceapaim go gcuideoidh a bhfuil ráite ag an Taoiseach inné le smachtú caitheachais. Rinne an Rialtas an-iarracht aghaidh a thabhairt ar na deachrachtaí. Táimid i gruachás. Teastaíonn cabhair uainn. Caithfimid go léir tarraingt le chéile.

The decisions taken yesterday were necessary to help stabilise the public finances. Yesterday, there were no job losses in the public sector. A lot of pain is being asked of the public sector's employees and no one likes to feel pain. I have spoken to many public servants in recent months and they all accept and agree that there is a need for public sector reform and cuts but they are quick to point out what everyone else should forgo as long as they are okay. The "I'm all right Jack" mentality is alive and well. Public servants have not been forced to go on the live register, unlike 120,000 private sector workers in recent times.

Deputy Jim O'Keeffe referred to the cut in overseas development aid, ODA. The allocation for 2009 was set at €891 million in the budget last October and this will be reduced to €796 million. Even after this realignment, Ireland's ODA percentage rate exceeds that of the United Kingdom, the United States and most EU member states, while it is inferior only to that of Holland, the Nordic states and Luxembourg. The Government still has the target of 0.7% of GNP by 2012 dedicated to ODA.

In budget 2009 it was decided that the additional costs of the pay increase due on 1 September 2009 would be met through administrative efficiencies. The pay increase has been deferred and €50 million of the efficiency savings is being retained for the Exchequer. These savings will arise from greater efficiencies in Departments and offices in both pay and non-pay areas. People have looked for efficiencies in these areas for a long time.

The Government has decided there will be no payments under Towards 2016, leading to a further saving in 2010 of more than €1 billion. I accept this decision is also unpopular but we have to cut our cloth to fit our measure. As a housewife and mother, if I cannot afford something in the home, I do not get it. Boom and bust policies got us into dire straits in the 1980s and we cannot go back to that——

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
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We have.

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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This is worse.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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This is the worse position in the history of the country.

Photo of Margaret ConlonMargaret Conlon (Cavan-Monaghan, Fianna Fail)
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——otherwise, we can bury our heads in the sand and in four or five years face up to stark reality and face horrendous cuts, greater than those included in yesterday's announcement.

As a former teacher, I welcome that within the capital budget €150 million has been specifically earmarked for school building and insulation-energy efficiency measures. The re-tendering process pursued by the Minister for Education and Science is delivering better prices of between 15% and 20%. Therefore, the same funding is going much further in this new economic climate, enabling more school projects to go to construction and us to get better value for money.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Is the collapse of the construction industry a good thing?

Photo of Margaret ConlonMargaret Conlon (Cavan-Monaghan, Fianna Fail)
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Domestic pressures in the economy, in particular the sudden halt in the construction sector, are being made worse by the parallel weakening of sterling. Since presentation of budget 2009 last October, the economic climate has worsened. We are borrowing €18 billion or almost €4,500 for every man, woman and child in the State, which is huge.

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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That is a scandal.

Photo of Margaret ConlonMargaret Conlon (Cavan-Monaghan, Fianna Fail)
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We are paying for approximately 32% of current spending, including pay, through borrowing, which is totally unsustainable, and it is inconceivable that we would continue to borrow to fund current expenditure.

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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Deputy Bruton said that a long time ago.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Fianna Fáil brought us to this.

Photo of Margaret ConlonMargaret Conlon (Cavan-Monaghan, Fianna Fail)
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We are in uncharted waters economically and the only way forward is to act together to take collective pain. Further disastrous Exchequer figures for January were released yesterday and they show tax receipts were €900 million down on January 2008.

The Opposition parties also have serious national responsibilities in this unprecedented time of crisis. The problems we face as a State are so acute that elected representatives of all parties have an onerous responsibility to contribute to getting us all on a level footing. We need to examine costs, look to the future with confidence and hope, have more positive thinking than negative spin and let the world know Ireland is open for business and investment.

Photo of Deirdre CluneDeirdre Clune (Cork South Central, Fine Gael)
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I wish to share time with Deputies Timmins and Crawford.

Deputy Conlon outlined how the Opposition should behave in a responsible fashion but in the past five or six years we pointed out that Government spending was unsustainable. We had responsible opposition but the Government took no responsibility. The boom and bust policies of the past seven years, not the 1980s, are a major contributory factor to the position in which we find ourselves.

I object to the content of the motion which is unfair and unbalanced, particularly as it affects low paid public servants who will only be in receipt of the State contributory pension when they retire. It is totally unfair to ask those on such a low income to contribute to address something that is completely not of their making. I accept spending cuts of €2 billion are needed but an across the board levy should not have been introduced. The cuts should have been approached in a manner that would have placed a greater burden on higher earners. Many who entered the public service in recent years are contributing at a higher rate to their pensions but they are being asked to carry an additional burden. Fine Gael's amendment objects to what we perceive to be an unfair levy and we are seeking to have it renegotiated to redistribute the burden.

Many are losing jobs in the private sector. As I stated in the House prior to the Christmas recess, anyone who feels his or her job is secure is lucky. Those who have been let go face significant mortgage repayments and have no idea how they will meet them. We need to focus on those who are unemployed or whose jobs are threatened. The haemorrhage of jobs in the private sector is a serious issue and I wish we had heard something from the Taoiseach yesterday about how the Government will address it. We heard nothing and the Government's only approach is to cut and slash pay without a mention of increasing productivity and reducing wastage and bureaucracy in the public sector. I am member of the Committee of Public Accounts which is preparing a report following hearings into non-adherence to procurement policies in FÁS.

I have spoken to many constituents today and the fact that the heaving bureaucracy attached to this House, its committees and Ministers of State was not addressed is driving people insane. It should have been addressed first or in tandem with the cutbacks. We heard nothing about it which is a sad reflection on the Government whose attitude is to cut and carry on regardless. I support the Fine Gael amendment which is much more constructive than the Government motion and which addresses the issues we are facing.

6:00 pm

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
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I do not recall a boom in the 1980s. However, we only have to go back to the past few months to find a boom and bust cycle. We are here not because of the global downturn but because of the failure of the Government on three fronts: first, the failure to manage the public finances; second, the failure to regulate the banks and, third, the failure to ensure we have a competitive economy, particularly in export markets. Public servants had the stomach for cuts. The private sector pays for the public sector and has taken a hit in recent times. There was a willingness but, once again, the Government has got it spectacularly wrong. History will show it doubled the national debt within a few weeks.

The lady or gentleman who earns €15,000 a year and went into Government Buildings or the Departments of Finance and Education and Science this morning to put on plastic gloves to clean the offices will give up €40 a month. Those are the people being hit by this package of measures, which is why we in Fine Gael are totally and utterly opposed to it. Once again it hits those who are most vulnerable.

Regarding Irish Aid, I accept GNP has contracted here as it has across the globe. The 1 billion people who go to bed hungry every night have suffered as a result of the downturn in the global economy. These people are not participants in the global economy. Once again it concerns the poor and the weaker. We need to re-evaluate how we distribute Irish aid to get the best value for money.

I listened to the Minister, Deputy Gormley, talk about the reform of Dáil practices. For a number of years I have been calling for the reform of Oireachtas committees. If the Minister and the Taoiseach want efficiencies, they should look at the diaries of Ministers. They are in Kiltimagh at 11 a.m. opening a school, in Birr opening a shop in the afternoon and somewhere else in the evening. The same happens on Thursdays and Fridays. Is that any way to use those human resources? How can a Minister do his or her job? The recent Governments led in the main by the former Taoiseach and with the current Taoiseach as Minister for Finance went on a PR junket for the past 11 years and we are paying the price today.

If the Minister, Deputy Gormley, has the courage of his convictions he should introduce a ban on Ministers traipsing around the country at the taxpayers' expense and putting on a display of PR instead of being in their Departments running them. They should not have handlers or civil servants doing the job. The job has been done quite badly. The Minister is responsible. Let him take the responsibility and do it. That is the reform that he has the power and authority to do. He is a member of Government and is no longer sitting over here on the sidelines pontificating as he did for a number of years. We need to stop Ministers going around the place on junkets and keep them in their Departments to do their jobs.

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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I welcome the opportunity to speak on this extremely important issue. Unfortunately, it took the Government so long to make up its mind that much of our credibility and money has been lost in recent months. The proposals themselves raise major questions about the thought process of those involved. Those on quite low incomes have been asked to pay a pension levy that will never be of benefit to them. This will clearly put further pressure on the low and middle-income earners who are already classified by CORI, whose representatives appeared before the Joint Committee on Social and Family Affairs today, and other organisations as the new poor because of their high mortgage costs, etc.

This package, introduced in the first days of February when we have now learnt that 36,500 more people joined dole queues in January, gives no support or impetus towards job creation. According to the Taoiseach's figures the additional 36,500 will cost the Exchequer more than €700 million in social welfare payments and revenue lost through PAYE and PRSI in a single year. In turn, this represents more than half of the payments the Taoiseach is taking from the public service in pension charges. This is why it is essential for the Government to make proposals to give constructive support for industry and employment in general such as those made by my party leader, Deputy Kenny, during Leaders' Questions this morning.

This week I visited a shop in Monaghan. While it looked the same as the last time I had been there, when I talked to the staff I discovered that one was on a two-day week and the other on a three-day week. They are all sharing time to try to keep their jobs. This is an indication of the problems in the retail and manufacturing sector throughout the country. The Government can no longer ignore the haemorrhage of business to Northern Ireland caused in the main by the VAT difference but also because of our lack of competitiveness through higher costs. In recent years I along with others have been highlighting the serious problem of our ESB and general energy charges. Unbelievably the Government supported the energy regulator every time fuel prices increased owing to so-called "external factors". However, when oil prices collapsed there was no rush to bring down prices.

On Friday I travelled from Cavan town to Limerick. On that journey I passed a number of petrol stations. The prices ranged from 89 cent per litre to 99.9 cent, which is a differential of 45 cent per gallon. There is no effort to control these costs. We are uncompetitive and this proposal makes no attempt to address that.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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It was very important that decisions were taken without further delay to start to remedy the gaping hole in the public finances. Ireland's credit worthiness is essential to sustain public services and jobs. The decisions announced yesterday did not just save €1.8 billion this year or €2 billion in a full year, but also provided the first €1 billion savings of the €4 billion that will be needed next year.

Across the world there is a confluence of banking crisis, widening budgetary deficits, and sharp decline of growth and employment. Every country has been hit unexpectedly. Every country has needed to react on more than one occasion and sometimes revisit decisions made at an earlier point. No country has turned the corner. Unlike in previous recessions, where some countries were relatively unaffected and therefore able to provide a stimulus to the rest, unfortunately, that is not the case in this instance. Ireland has been particularly badly affected perhaps because the boom was so strong and prolonged. As a society, including Government and all sides of the Dáil, very few anticipated the exceptionally hard landing we have had. I accept there were one or two isolated voices.

Despite prudently putting aside considerable revenues into the National Treasury Management Agency and also encouraging private savings, we built up services and incomes to a level that we are now unable to sustain. During the last general election campaign promises were made on all sides of tax cuts and concessions, which in the light of today seem surreal. However, they were made on the assumption of continued growth of approximately 4% or 5%.

Great demands are being made on the Government from every sector of society and the economy when, as recently as a couple of years ago, neo-liberal commentators were half wondering whether government was really necessary at all. We need to focus as far as possible on maintenance of essential services and jobs, including investments that will help sustain jobs now and in the future. We cannot sustain incomes at the levels that existed until very recently. The Government has a choice of maintaining incomes or jobs. Once jobs are lost they are very hard to recover. The clear choice made has been to put the priority on jobs rather than income maintenance.

To legislators across the world it is repugnant in many ways to be bailing out a banking sector from the excesses and greed of some of its higher echelons.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Hear, hear.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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However, the economy cannot function without banks. We needed to nationalise one and support others. I refer to an article in Der Spiegel which states: "Sometimes, unfortunately, it is the case that one must temporarily satisfy private interests to avert far greater damage to the common good". One would like to know what the alternative is or was. How would allowing our banking system to collapse help in any way the interests of people? It would cause chaos.

Social partnership has been a major achievement of the past 21 years. It has been vital to the success of the economy. It is not perfect but it has helped in particular to address many crises that have arisen in that 21-year period. I welcome the fact that a common analysis of what needs to be done in broad terms was accepted, even if not the detail of the conclusions. Last night at his press conference, the Taoiseach was very insistent that his door would continue to be open to the social partners but ultimately the Government has the responsibility to decide.

Unlike many commentators, in particular the Fine Gael Party opposite, I do not see consultations with the social partners as detracting from parliamentary democracy. It is terribly reductionist just to reduce democracy to elected chambers national and local. My definition of a democracy would be the widest possible participation——

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
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We are paying for deals done behind closed doors for the past ten years by the Government.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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Social partnership is a relatively——

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
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We do not know how benchmarking was ever arrived at.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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One of the differences between Fine Gael and Fianna Fáil is that Fine Gael has no real commitment to social partnership. Most of the growth and the doubling of employment was due to social partnership.

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
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That is what we are paying for.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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One of the reasons for the failure of the Fine Gael-Labour Government was because it rejected the social partnership model.

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
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What about the bankers? We are signing blank cheques and we are sick of it.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Deputy Timmins should allow the Minister of State to continue uninterrupted.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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I am proud in that respect to belong to what I conceive as the social democratic tradition. I accept there are other traditions.

It is perfectly understandable that the Opposition wishes to steer clear of supporting unpopular decisions and to keep its powder dry and I do not criticise it for this. The Government, however, has the responsibility, if necessary on its own, to do what is necessary. We have to strive for equity but it is impossible to get complete consensus on what equity is in given situations. One of the measures I welcome is the reduction in professional fees because those had risen to quite exorbitant levels. One of the alternatives put forward regularly by the party opposite, Fine Gael, is that increments should have been frozen. It should be pointed out that although senior levels of the public service do not enjoy increments they are particularly important to low paid public servants. When we hear arguments about equity we should bear that in mind.

With regard to the demand for a plan for the next five years, the scale of the problem has been outlined. In the coming year, both the Commission on Taxation and what is popularly known as an bord snip, will be preparing for the budget next year which will have to reduce the deficit by another €4 billion, and €1 billion is already provided for in the decisions taken.

In the very fast-moving situation, to demand, as has been demanded, that there be a complete plan in detail on the next five years is utterly unrealistic. It is necessary to proceed empirically, vis-À-vis a fast-moving situation.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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The Government does not have a plan for the next five days.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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A previous speaker spoke about reducing the costs of government in general and the Oireachtas, in particular. We plan to reduce the cost of procurement in my area of responsibility. We are also looking at the expenses of this House and, in particular, there will be no capital expenditure on this House, other than essential maintenance.

There has been a demand from the other party opposite, the Labour Party, for an election. That would simply be a diversion and a form of escapism. We have to bite the bullet and get on with it now.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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The Government knows the result.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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I wish to share time with Deputy Michael D. Higgins.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Agreed.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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I will begin with the closing point of the Minister of State. We need an election because the current Government has no mandate for what it is doing. The notion that any democrat would regard seeking the view of the people and the endorsement of the people for such a policy platform as some sort of diversion is somebody who does not understand the meaning of a democratic mandate. We are in a catastrophic economic situation. Everybody in this House knows that and the people know it. The Government wants to couch our economic catastrophe in some sort of world vision that it is not our own doing or the doings of this Government, but that somehow it is somebody else's fault. However, largely our problems have been caused by a Government that changed an export-driven, job-focused economy in 2001 into a speculation economy, driven by speculation in land and property prices, coaxed on by the friends of Fianna Fáil and allowing windfall profits of unimaginable sums to be given to some small cohort of individuals in the State. The economic commentariat, who were among the cheerleaders for that economic policy of property speculation, have managed in the last short while to switch the focus away from those who caused our economic woes onto those who certainly did not and that is the public sector who are in no way responsible for our economic situation. There is palpable anger among all public servants who are enraged not only at the scale of the financial imposition upon them but also by the way their service has been devalued and dismissed. They are being characterised by some as, "drones dragging down our economy" and it is a disgrace that this would be the case. The divisions being stoked between public and private workers is a hornet's nest that will do great damage to the country.

In the minute or two of my time I want to talk, not about the economic plan presented to us, because we have no economic plan, but about the levy which is not, as has been characterised, a pensions levy but rather a pay levy on one sector of the economy, the public sector. I have spoken to dozens of people today. Some are really dismayed. A part-time cleaner in the public service earning €17,000 a year will be required to pay €510, one and a half week's wages, out of her miserable wage. That is not fair, not equitable and not acceptable. The levy is not pension-related. Gross income is to be tabulated into the levy. Overtime, premium payments, payments that are not calculated for pension purposes, should not therefore be encompassed by the levy.

The Minister for Defence was unable to answer a simple question at Question Time as to whether, for example, overseas military service allowance was to be included. Will the allowance paid to our soldiers in Chad be included? The Minister for Defence does not know. That is how well thought out this income levy dressed up as a pensions levy is. It is a crude and unfair system. It is clear, however, that the public pay bill must be addressed. It can be addressed in a fair way but the Government has not gone about doing it in this measure.

In the time remaining I want to deal with one other issue, that is, the assault on overseas development aid. I say this as someone who worked for some time in a voluntary capacity in Africa. It is dishonourable that solemn commitments twice given to increase our overseas development aid budget incrementally over time are to be among the first casualties. The poorest of the poor, those who literally cannot feed themselves, are to be casualties of the cuts. That is reprehensible and disgraceful.

I ask the Government to forge a consensus of social solidarity to address in an effective way the serious problems that face us. The Labour Party will assist in this, but the division of society between public and private workers and the characterisation of some as drones will be a disastrous way to set about it. That is what has happened on the part of the Government to date.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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I welcome the opportunity of contributing to the debate, even if I am confined to five minutes. I find this process entirely unsatisfactory for analysing the position in which we find ourselves in the economy and any strategy we might adopt.

I support the remarks just made by Deputy Howlin on overseas development aid. We have moved from a commitment to provide 0.55% of GNP two years ago to 0.53% now. If one wanted to make the cuts announced proportionate across the board, the cut in ODA is €38 million more than anything else. It has carried more than its share, even of the most unjustifiable cuts, and affects the poorest of the poor.

I want to take up an issue raised in the contributions I have just heard from speakers on the Government side. The word "empirical" was used by the Minister of State but what is empirical? Just over a year ago the National Pensions Reserve Fund was worth €21 billion. I recall the debates on the fund in previous Dáilanna. The Labour Party was once attacked for suggesting we should lean on it to fund school, road and crucial infrastructural projects. Across society it was said we must not touch the fund. Last year it lost €5 billion. The people who presided over that loss received a fee payment of €20 million. Of the €16 billion remaining, half is required for the recapitalisation of the banks in circumstances in which we do not know the extent of the asset exposure of the banks. That is empirical. At the same time, a person working in the public service whose income and family circumstances means he or she qualifies for family income supplement will lose twice as much under the income levy as he or she is receiving in family income supplement. These are facts.

Not a single group has been moved from the top echelons of the celebrity culture of speculation put in place in the boardrooms of the banks. It is a great scandal that in interviews our independent media will ask the people concerned if they are distressed or upset and if they will continue on, to which they will reply they intend to go on as they are. The Government has done nothing to call to account this group which damaged the reputation of Ireland for this and future generations. Those looking on are asking about the quality of the arguments that allow the people concerned to stay in place. The Government should not insult our intelligence by suggesting any of us who has spent a lifetime in politics does not know the importance of a banking system but what we want is a credible system. We do not want a system that rewards itself disproportionately, even in the worst of times, that refuses to call its income "income" but "compensation", and that, even as the Government is attacking the public service, continues to issue bonuses and privileges to those in the boardroom. County and city managers are constructing schedules of workers who are to be let go. We should begin with those who are on the road but they still keep the racket of paying bonuses going. Consultancy fees were not the first to go.

Why is this happening? It is happening because the media, when it was building up to this, did not point out that public servants were already contributing to their pensions. Even as late as yesterday evening, on the 6 p.m. news, RTE could not get it right. It did not point out that the new levy on income — that is what it is because there are people who are not drawing pensions and will not draw one who will be paying the levy — was additional to what they were paying. Thus, for weeks the notion was built that there was something wrong with the worker who chose to work in the public realm——

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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That is right.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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——be it as a nurse or a garda. It is with great sadness I say Fianna Fáil, the party which used its old clientele system to put so many of them in place, is the one leading the attack on the concept of the public service worker.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Hear, hear.

Photo of Martin ManserghMartin Mansergh (Minister of State with special responsibility for the Arts, Department of Arts, Sport and Tourism; Minister of State with special responsibility for the Office of Public Works, Department of Finance; Tipperary South, Fianna Fail)
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That is not true.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Regarding proposals for an extension of the tax base, the old prayer we heard from the Government was that it would let the Commission on Taxation come up with proposals and that then it would be moved to act on the super-rich. Where are the proposals from the Government which knows the people concerned very well? It knows the people who approached the former Minister, Charlie McCreevy, when he was preparing his five budgets that were driven by property related tax incentives. It knows the people whom he met before he went to Brussels and left with his final valedictory statement to his friends, "party on." It knows where to go for the money. Why does it not go to that source for it instead of attacking the middle and the lower paid?

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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The Deputy must conclude.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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That is a pity.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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The characteristic of the Labour Party amendment we have circulated emphasises the importance of employment, job protection and creation.

This is the choice facing people on the right and the left in politics. Does the Government state to somebody who is providing care that he or she is drawing a social welfare payment to which he or she is not entitled or does it state he or she is a worker in the caring economy? We must protect and create jobs in the green economy and regard all those engaged in caring activities as working in the social caring economy. That is the way to come out of the recession, not by attacking the most vulnerable and the weakest, while at the same time the celebrity culture of speculation rattles on.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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Hear, hear.

I wish to share time with Deputy Byrne.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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Is that agreed? Agreed.

I welcome the opportunity to speak in this debate on the serious condition of the economy and the expenditure measures proposed for the stabilisation of the public finances. Some of the last contributions from the Opposition benches were farcical.

Deputies:

Hear, hear.

They were bags of wind. While we heard about stimulus packages and so on being provided, we did not get one proposal from the Opposition. This morning Deputy Gilmore spoke about a stimulus package. He does not recognise the national development plan as such a package.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Correct.

What does he think it is?

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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It has been in place for the past six years.

Does he not see the benefits it is providing? Where does he intend to find the extra——

(Interruptions).

I listened to your contribution and you can listen to mine. You should have some manners.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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The Deputy must speak through the Chair. That is the way we operate in the House.

I did not interrupt the Deputy. I let him have his say; he should show me the same respect. Where does the Opposition expect to get the money to fund the extra stimulus packages? What schools building projects, health services or parts of the national development programme does the Opposition want to cut to do this? These must be spelled out, yet the Opposition does not have the guts to do so.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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We want to cut out the waste.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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We want to get people back to work.

The Opposition does not have the guts to tell us how it would provide extra moneys. It would not have the guts to come forward like the Taoiseach yesterday with his proposals. If the Opposition were on this side of the House, the economy would be in a mess.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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It took the Taoiseach a long time to go out and meet the people yesterday.

The Opposition does not have the guts for it.

It has been a tough week for all of us as a nation. Tough decisions have had to be made. We would prefer not to have to take them but, unfortunately, in these exceptional circumstances they had to be made. The message must be sent that they have not been taken lightly. They were taken in the realisation of the hardship that would be caused as a result. Most of all, they have been taken as a necessity.

Yesterday, after the Taoiseach had made his statement, Deputy Kenny claimed the banks were bust. It was one of the most reckless statements made in the House.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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Hear, hear.

It was responsible for banking stocks further collapsing this morning on the markets . All developers are not bust, another wrong statement made by Deputy Kenny.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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That is it. Blame everyone else except themselves.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Deputy Blaney did give a standing ovation to the Budget Statement.

Both the Taoiseach and the Minister for Finance referred to the wrongdoing on the part of the heads of the financial institutions being dealt with in due course. There is an anxiety among the public that some will get off scot free. They will not. Getting the economy back to square one is the priority for now. Those individuals in the banking institutions will be dealt with in due course.

The measures introduced in the House yesterday by the Taoiseach were taken because no other options were available to reduce current spending. We are all affected by them and know others who are also affected. This is not an attempt to punish the public sector or drive a wedge between it and the private sector. It is an attempt to stabilise the economy in order that we can again enjoy a prosperous one in the future. I did not see any proposal from the Opposition to do the same.

There has been much criticism from Opposition parties. We know how easy it is to criticise. The Opposition has proved its worth with its lack of credibility in any of the alternative suggestions it has offered in the past few months. This is a time for support across the board, not criticism. Does the Opposition realise the seriousness of our situation? If it does, it is time it got on board and offered something constructive. Each week abuse is shouted at Ministers. That is not what the people want. They want to see informed and constructive debate and it is time they had it. They realise the seriousness of our situation because they are feeling it. They deserve more than a shouting match in Parliament. The blame game must stop if we are to bring the economy back to what we once enjoyed. We will have to work together. We are in a global recession and not alone with the problems we face. However, we must work with the strategies devised by the Government to address the problems we face.

The new pension levy will be treated for tax purposes which means it will be effectively relieved of tax at the marginal rate. There has been much disquiet among workers in the public sector, which we understand. Everybody in the economy, however, is suffering. Those in the private sector have been suffering pain for several months, with many of them losing their jobs. I hope common sense will prevail in the Chamber before not too long and that we will work with the Taoiseach and the Government in tackling these problems.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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The Opposition should reserve its anger at the Government for a general election. That is the time to get even with the it and lay its cards on the table.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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The sooner, the better.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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It might be sooner than the Deputy thinks.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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This energy being expended against the Government would be better expended in coming up with ideas as to how to get the public finances back on track. The Opposition has been short of ideas so far.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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We have bags of them.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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It has no idea how to get the finances back on track. Both Opposition parties have agreed the public pay bill should be reduced but they have not said how it could be done.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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I did it my way.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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The reality is that any worker who was let go from, say Dell, would take up a part-time job on €17,500.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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My God.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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The Opposition talks about attacking the most vulnerable. Nurses and teachers are not vulnerable. They are public servants. Vulnerable persons are those who have lost their jobs.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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The Deputy is going well now.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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Let him at it.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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The term should be reserved for those who are genuinely vulnerable. Someone who has lost his or her job would gladly take a part-time wage of €17,500. I accept it may not be the best job and that it is a low wage but the Deputy referred to it as a part-time job.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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The Deputy is losing his grasp of reality.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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Deputy Howlin is detached from reality if he believes an unemployed person would not grab such a job in current economic circumstances. The shocking reality is that people are losing their jobs and the most vulnerable are not middle income public servants. The vulnerable are the unemployed who are struggling. Deputies Higgins and Howlin never referred to the fact that the people who are losing their jobs are the ones on which we must focus. If we do not get the public finances back in order and maintain our triple A credit rating, investors will not come to Ireland. In turn, the research and development export driven economy which the Labour Party advocates will not be developed.

There is much anger about the cuts in the overseas development aid budget, about which I have just come off the telephone with a constituent. The anger ignores the fact that all the money for the budget is borrowed. I accept it is badly needed in poor countries and that it is a matter of life and death. However, Ireland still spends more of its national wealth, up to 0.54% of gross domestic product with a 0.7% target, on overseas development than any other country, yet it is all borrowed money. For how long can we go on increasing the budget when we have serious problems at home?

Fianna Fáil has supported public servants during the years. While most of them are not happy about the substantial levy imposed, they have family members in the private sector who have either lost their jobs or taken larger pay cuts.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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Of course, they are unhappy.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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Unless those private sector workers are working, there will be no taxes coming in to pay public servants. The majority of public servants understand this. We must get the public finances and the economy back in shape or nothing else will happen.

I welcome the level of capital spending in which the Government has engaged. No other country in the developed world is spending such a percentage of national wealth on capital projects. Roads are being built in Meath East, with new rail lines being planned for it.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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Planned is right.

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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I want more schools to be built in the constituency with small building firms getting the tenders for the projects. It has been brought to my attention that companies from abroad or larger companies — the big boys who did very well as we are constantly reminded by the Opposition — are now tendering for small building projects. I want to see a fairer chance for small local building firms to get the contracts for local projects.

The Opposition, particularly the Labour Party, will criticise developers' alleged links with Fianna Fáil. Does it want development to stop and no employment in the construction industry? Many in Meath East want to see more development and employment in the industry. They want to see more schools and offices built that will be occupied by companies coming to Ireland. Someone must develop these projects.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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I wish to share time with Deputies Sheahan and Connaughton.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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Is that agreed? Agreed.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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The State's finances are in a critical position. The public relations spin from the Government in the past six months is that this is a global recession. Current economic circumstances in Ireland, however, have been caused by the Fianna Fáil-Progressive Democrats-Green Party Governments of the past ten years. They squandered taxpayers' money, leaving a shortfall of €2 billion in balancing the books. It will be worse in the next three years with annual savings of €4 billion being required. Bad as it is now, it will be twice as bad in the next three years, whichever party is in government. The sad part is that this was predicted two years ago by many economists, yet the Government kept its eyes shut, pretending everything was okay because it wanted to win the general election and cling to power. Perhaps it is a little sorry now because if it had taken the necessary steps two years ago, we would not be in these sorry circumstances and the remedial measures would not be so severe. The saddest spectacle was this morning in the Dáil after the Leader of the Opposition, Deputy Kenny, and the leader of the Labour Party, Deputy Gilmore, had offered in a constructive manner to sit down with the Government to work out a solution. The party leaders acted in the national interest and it was sad and regrettable to see the Taoiseach rejecting their offer. The Deputies opposite asked what proposals we had but we have not had an opportunity to put forward any to find an all-party solution to the problem; the advance made this morning was clearly rejected.

There is a belief in the media that people are ready to take hard decisions. People may be ready to play their part but only if the burden is shared equally. By no means does the Government do this. The hardest hit by these proposals are wage earners in the €30,000 to €50,000 bracket; they were hit first by the 1% levy and have now been affected by the new proposals. At the same time, the Government has bailed out the banks which are partly responsible for our dilemma to the tune of €8 billion. However, it has not capped the truly extravagant and outlandish salaries, bonuses and expenses of the top earners. Will the Minister indicate if any bonuses have been paid to bank staff or other managers in local government or the HSE since the guarantee scheme was put in place? President Obama has set a cap of €370,000 in America. The chief executive of Bank of Ireland, Mr. Brian Goggin, earns €4 million a year or €59,600 a week; Mr. David Drum of Anglo Irish Bank earned €3.2 million per year or €46,173 per week; Mr. Eugene Sheehy of AIB earns €2.1 million or €30,288 per week; Mr. Michael Fingleton of Irish Nationwide earns €2.3 million per year or €42,307 per week; Mr. Denis Casey of Permanent TSB earns €1.3 million or €25,000 per week. Even with a reduction of 25% in salary which was suggested today, they would still be earning millions a year, or more in one week than most earn in a year.

The unfairness of it all is the reason people refuse to accept the proposals. They are waiting for their chance in the next election no matter what Deputies on the opposite side of the House say, whether that election is held in June or beforehand. The Government has much to answer for.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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Yesterday the Taoiseach came into the House and, effectively, took between €3,500 and €4,000 per annum from the pockets of public service workers. I was contacted today by members of the public service and it is costing some up to €114 or €116 per week. The public service did not cause the current problems but there was an agenda driven by the media, in coalition with the Government, to nail public servants. The circulation of daily newspapers is down by in excess of 30% because all people are reading is bad news as the print media run with the Government agenda.

Why are we here and why is the country in the state it is? It is the bubble created by the Government, developers and bankers. In the Bacon report of June 2000 the Government was warned that it was creating a bubble, as opportunists were buying properties with the tax-free allowance given for properties built and the tax incentives given by the Government to developers to build massive housing schemes and hotels.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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They are all closed.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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The Government did not realise until September or October 2008 that there was a problem with the economy but the 2006 census indicated that there were 215,000 unoccupied houses in the country.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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And empty hotels.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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The Government was driving on to build 90,000 units a year, even though there were 215,000 unoccupied houses in the country, yet we are told it did not see it coming.

What must be done now? Throughout the country people working for companies are being laid off or put on a three-day week. The Government should create an initiative in employment maintenance whereby people working three days a week would stay in employment for five days a week with the Government paying for two days rather than unemployment benefit. This would improve the productivity of the companies concerned. I am being positive and trying to help.

We must consider people who are out of employment for longer than six months. As an incentive to employers, the Government should pay €100 a week of their wages if they find employment. That would save the Government the cost of paying them unemployment benefit of €220 or €230 per week. It would be both positive and a pro-business action.

I have heard people show resentment — almost turning to racism — to non-nationals claiming benefits. In Poland benefits are halved after six months and stopped completely after 12 months. We must consider such a measure.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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I have been in the House a long time and yesterday was as rough a day as I have ever seen for public service workers. Like the rest of us, they know that the country is in dire financial straits. They know, as I do, that they did not cause the problem.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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Correct.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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That is the problem the Minister of State present will encounter when he travels around the country to defend what the Government has done. People comment on the unfairness of these measures, which started last October — rather than yesterday — when the budget was delivered. At the time the Government saw no difference between a person earning €17,000 and €99,000 as far as the 1% levy was concerned.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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Hear, hear.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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It could not see any difference yesterday either, which is a problem.

We know the country is in a terrible state. I never thought I would see a time when 36,000 would lose their jobs in one month. There is talk of 400,000 being out of a job at the end of the year. If events unfold at the same rate, we will be in the unspeakable and unthinkable realm of having 500,000 out of work next year. I sincerely hope that day will never come, as it would create havoc.

Whatever the Government does, it must be fair to the people. Everybody knows we have a significant job on our hands. The one thing Irish people will never stand for is being treated unfairly.

Photo of Tom SheahanTom Sheahan (Kerry South, Fine Gael)
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Hear, hear.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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When they see the people who created the problem——

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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Banks and the Government.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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——bankers and big builders — getting off scot free, while those who keep the country going are screwed into the ground, the Government will have a problem on its hands.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I wish to share time with Deputy Beverly Flynn.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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Is that agreed? Agreed.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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Something which was agreed by the social partners in the past few weeks was that we required a €2 billion saving this year. This is accepted in the Fine Gael motion and the Government amendment. When one considers that the breakdown of Government spending is €20 billion for social welfare, €20 billion for pay and €15 billion for the capital programme, one realises that the options in identifying €2 billion in savings are limited. We cannot, as every previous speaker stated, reduce the social welfare budget, particularly in the light of the huge demands being placed on it. Our capital programme is essential in order to address the problems in and reignite the economy. It is unfortunate, therefore, that we have been obliged to consider reductions in the €20 billion public service bill.

No one is stating the public service caused the financial crisis. Some 99% of those who work in the public service contributed to the growth of the country through their hard work and endeavour. However, it is unfortunate that in addressing issues relating to Government expenditure and the need to reduce it we have been obliged to consider the position vis-À-vis the public service. It is important to emphasise that the pension contribution is tax deductible. The nature of the contribution means that it will reduce the level of income at which PRSI and levies are paid. As a result, the bulk of headline reductions are not as major as may seem.

It is also unfortunate that we have been obliged to reduce the level of overseas development aid, ODA. However, it is important to remember that Ireland's position in the world as a per capita donor remains hugely significant. A former Member of the House who once had responsibility in this area would have been satisfied to have had the amount by which our contribution is being reduced as the overall ODA budget.

The decision to increase funding for the capital investment programme which was announced yesterday is particularly welcome. In effect, this is the stimulus package so many are seeking. I am especially happy with a number of the increases announced by the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Finneran, in my home town of Ballina last weekend. A development for which the town has been waiting 25 years has finally been given the go-ahead. I refer to the construction of 75 social houses for the most vulnerable in the town.

Yesterday's decision to allocate further funds for the schools building programme is particularly welcome. I commend the Minister for Education and Science, Deputy Batt O'Keeffe, in this regard. I hope the additional funding can be utilised to speed up projects which have been delayed for many years. We can increase the value of this investment and that of the entire public capital programme by considering different ways of building schools. We should use the downturn in the construction sector which is associated with developers in possession of large land banks. We must encourage them to open them up. We must also open up the schools building and other programmes to developers to become involved in community-based projects on a build and lease back basis. This approach would require an entirely lower level of up-front capital than is needed under the current model. In addition, it would provide employment for construction workers and opportunities for apprenticeships and ease the pressure not only in respect of schools but also with regard to building social welfare offices and other capital projects.

We should use the downturn to obtain more money for less. The savings identified yesterday in respect of the capital programme are evidence of the success of that approach. As one of the largest purchasers in the economy, the State should go in much harder in respect of this matter.

Deputy Byrne referred to a matter to which I have referred previously, namely, the very restrictive tendering process that applies in respect of these projects which was introduced in different times. It must be reviewed as a matter of urgency. Small builders are no longer gaining access to Government projects. As these are now the only projects proceeding, such builders depend upon them. It is the small builders who are keeping apprentices and tradesmen in jobs locally.

Members have expressed their frustration about the fact that those who, in the eyes of many, caused the financial crisis are getting away with it. I share that frustration. Since before Christmas there has been a great deal of evidence of a complete collapse in standards in some business operations. It is unfortunate the majority of business people who adhered to their responsibilities, etc., are being dragged down as a result of what has happened. Certain examples of corporate behaviour that have been exposed have given rise to a complete collapse in trust. Further action should be taken in respect of this matter.

Deputy McCormack referred to our bailing out the banks. Let us nail that myth. We have not bailed out any bank. The bank guarantee scheme is being offered at a fee. The bank recapitalisation due to take place is happening because businesses cannot get money and mortgages cannot be approved because of the fact that the banks cannot obtain capital. We are bailing out businesses and mortgage holders, namely, those who need loans and access to finance. The banks will also pay a fee in respect of recapitalisation. We are not bailing out the big boys, but those who provide local employment.

Photo of Beverley FlynnBeverley Flynn (Mayo, Fianna Fail)
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I welcome the opportunity to contribute to the debate. The Minister for Finance has set out in stark terms the position in which we find ourselves. It costs €55 billion to run Ireland in a given year. Our tax receipts are down to €37 billion. We are borrowing, not just for capital projects, but also to meet day-to-day expenses and pay nurses, gardaí and teachers. We cannot continue to do this for the next number of years because to do so is simply not sustainable.

The Minister has outlined exactly how the €55 million to which I refer is spent. Some €20 billion is used to pay for social welfare. It emerged earlier today that 36,500 people lost their jobs in January. As a result, it will be difficult, nay impossible, to make any savings in the area of social welfare. If anything, expenditure is going to increase.

Some €15 billion is being invested in the capital programme. This programme is badly needed, particularly at a time when the construction industry is on its knees and so many are out of work. It is critically important that our investment, whether it be in the construction of roads, infrastructure or schools, continues.

As Deputy Calleary stated, the final €20 billion goes on public sector pay. It is important to state a painful decision was taken yesterday.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
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The Deputy also had to make a painful decision.

7:00 pm

Photo of Beverley FlynnBeverley Flynn (Mayo, Fianna Fail)
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I thank the Deputy for pointing out the obvious. The decision to which I refer will have a major impact on public servants whose contribution is valued. I have the height of admiration for nurses and stood with them when they sought additional pay. However, the sad reality is that public servants can only be paid if sufficient money is garnered from tax receipts. The advantages they have over those in the private sector are job security and pensions. In the light of the fact that 36,500 people lost their jobs in January, the job security to which I refer cannot be underestimated.

It has been stated public servants did not contribute to the difficulties we now face. During the past 12 years when the economy improved, the public service expanded greatly and wages paid to those employed within it increased substantially. These wages must be paid from the wealth generated in the economy. That wealth is simply not being generated. While I accept that the decision taken by the Government was both painful and tough and will have a significant impact on these individuals — many of whom contacted me today — I am of the view that it will secure employment. Those working in the public service will come to realise that they will have jobs. The correction we are making is to try to assist the 36,500 who lost their jobs last month and others in returning to the jobs market and obtaining gainful employment.

I do not like to see anyone attacking the public sector. Neither do I agree with pitting the private sector against the public sector. The latter was happening on every radio programme to which I listened today. Everybody must play his or her part.

What was announced yesterday represents only half the equation. It has been acknowledged that a cut of €2 billion is required this year, that a saving of €4 billion will be required in both 2010 and 2011, that a saving of €3.5 billion will be needed in 2012 and that a saving of €3 billion will be necessary in 2013. That is a massive task and we can only deal with it if we work together in the belief we will be successful. The belief to which I refer is lacking throughout the country and in the House. If Members do not believe we can be successful, it is difficult to expect ordinary citizens to believe we can solve this crisis and that by 2013 we will reach a position where tax receipts will equal expenditure and that there will no longer be a budget deficit. That is what we are trying to achieve.

I am concerned about the other half of the equation — the stimulus required to generate wealth in the economy. It is not just all about cuts. We need to stimulate growth and get those in the construction sector back to work. In the House the terms "construction" and "industry" have almost become dirty words. The sad reality is that we are dependent on those involved in the industry to generate wealth. Many in the sector — carpenters, electricians, plasterers and bricklayers — are on poor wages. The vast majority are now out of work. A large number of my constituents depend on the sector for their living. "Construction" is not a dirty word in County Mayo and I would like the sector to be revived.

Debate adjourned.