Dáil debates

Wednesday, 18 February 2009

The following motion was moved by Deputy Eamon Gilmore on 17 February 2009:

That Dáil Éireann:

believes that:

the measures required to deal with the current economic crisis must be based on the principles of fairness and equity;

those who contributed most to the crisis should be required to contribute most to a solution and that people should be asked to contribute according to their ability to pay;

irresponsible lending practices by the banks and reckless speculation made a major contribution to the economic problems we are now facing and that the Government has failed to take required measures to remove senior bank executives and board members responsible for this and to adequately cap pay and remuneration packages; and

measures should be taken to end the practice whereby people living and conducting business in this country can avoid paying taxes by a phoney tax exile status and to end the various tax shelters and relief schemes that facilitate tax avoidance by wealthy individuals;

deplores the attempts to scapegoat public service workers and to create divisions between those who work in the public and private sectors;

regrets the manner in which the negotiations with the social partners were handled by the Government and particularly the failure of the Government to table specific proposals on public service pensions until the eleventh hour, leaving no time to reach agreement;

believes that the pension levy unilaterally announced by the Government is unfair in that it places an unacceptable burden on public servants on modest incomes, including those who are so poorly paid as to qualify for family income supplement;

notes that no account is taken of the differing arrangements for pension and social welfare contributions in the public sector and that anomalies in the way in which the levy is structured will mean that some public servants on low pay will lose a greater proportion of income than somebody on higher pay;

regards the decision to impose the levy on all income, including income which is not reckonable for pension purposes, to be fundamentally unjust;

recognises that public servants are willing to play their part in economic recovery and in the stabilisation of the public finances on a basis that is fair and equitable; and

therefore calls on the Government to suspend the introduction of legislation to impose the levy and to re-enter negotiations with the social partners with a view to reaching agreement on a fair and equitable set of proposals that would meet the adjustment of €2 billion already agreed between the Government and the social partners in the draft Framework for a Pact for Stabilisation, Social Solidarity and Economic Renewal.

Debate resumed on amendment No. 1:

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

"—affirms that all measures required to deal with the current economic crisis must be based on the principles of fairness and equity;

supports the proposed pension-related deduction as a reasoned and measured step which is necessary to help restore balance in the public finances;

recognises the need to apply this measure without delay to assure all concerned of Ireland's resolve to tackle the financial position facing the country in an expeditious and determined manner;

acknowledges the extensive efforts of the Government to secure solidarity among the social partners and support for specific actions and the fact that the Government is acting within the framework agreed with the social partners; and

expresses its confidence in the Government's measures to stabilise the banking system, reform the tax system on the basis of the report due from the Commission on Taxation, and to place the economy on a sound footing for the future through the implementation of the framework for the restoration of sustainability in the public finances over the medium term as set out in the Addendum to the Stability Programme Update and the economic strategy of 'Building Ireland's Smart Economy' published in December 2008."

—(Minister for Finance, Deputy Brian Lenihan).

7:00 pm

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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I wish to speak on the very serious issue of the pensions levy.

The measures required to deal with the current economic crisis must be based on the principles of fairness and equity. Those who contributed most to the crisis should be required to contribute most to its solution. People should be asked to contribute according to their ability to pay. I deplore the attempt to scapegoat public service workers and to create divisions between those who work in the public and private sectors.

I attended meetings last week with Members from Counties Leitrim and Roscommon. There was anger among workers who have given great service to the country and who feel let down and neglected by this Government. I wish to read into the record one of more than 1,000 e-mails and letters which my office has received in the past three weeks conveying the anger of normally law-abiding people. It states:

I am a clerical officer in [a] motor tax office . . . I am contacting you in relation to the recent imposition of a pensions levy on my salary. This levy will introduce a grossly unreasonable burden on my finances.

At present my take home pay is approximately €440 a week far below the kind of wages the government refers to when discussing public service [salaries]. The financial position of the majority of public servants has been misrepresented to the general public who [believe] we all earn upwards of €30000 [a year].

I have a mortgage, personal loans and substantial childcare costs. My [partner's] employment is not secure given the economic conditions and even with both incomes increases in insurance, motor tax, salary levy to name but a few represent a major challenge to us.

I [previously worked] for the private sector and had superior pay, health cover and pension plan.

I chose to join the public sector for job security and financial security despite a net loss in salary of €4500 at the time. I have been betrayed by the government and any party that endorses [inequitable] cuts in my take home pay. . .

It is your duty to ensure that you do [your] upmost to protect the economy but not by [excessively] reducing the take home pay of public sector workers without [regard] for the contribution that everyone who remains employed through these difficult times could make.

This levy must be reconsidered and [adjusted] to distribute the cost most fairly.

I have met hundreds of public sector workers who believe there is a campaign by this Government to outline a position that they are protected and cosseted. This message is wrong and, under bench marking two, they were deprived increases of up to 12.5% on the basis that the State was providing a pension for them and, as a consequence, they found themselves with less money, and they now face this inequitable measure. Each one is put to the pin of his or her collar to manage family budgets.

Our policy should not be one of a class war between the public and private sectors. More than 160,000 people have been made unemployed in the past year and our thoughts are with them. We need to come up with solutions, but tackling the public sector, which has been very loyal to this country, is not the way to do so. We need a plan and a roadmap from this Government, which cannot be ham-fisted, to get us out of this problem.

Fine Gael has long argued that the only way to restore confidence in the country is a root and branch reform of the way Government does its business. We need to break up the cosy relationship between Fianna Fáil, the big banks, the developers, the regulators and senior public servants which has concealed waste and the failures of this Government and destroyed the fundamentals of our economy.

I am very concerned that unless the Government acts fairly and reasonably, there could be blood on the streets. This is a law-abiding nation, but I have never witnessed such anger. The Government must climb down from its ivory tower and treat the people who work in this country with respect and dignity and ensure this situation is redressed.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
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The Government's public sector pension levy is unfair, imbalanced and ill-conceived. It is designed to hit low and middle income earners, a repetitive feature of the economic policies of the current Government. Ireland is once again the sick man of Europe. Our economy will shrink by at least 5% this year. With an unprecedented 36,500 people signing on the dole in January, double the previous record, the Taoiseach has admitted that the live register will rise to at least 400,000 by Christmas, twice the level of when he took office.

Low and middle level public servants, small businesses and PAYE workers are now bearing the brunt of the problems created by huge failures on the part of Government politicians, some bankers, some business leaders and regulators.

The root of Ireland's unique difficulties is the cronyism of Fianna Fáil over the years. The economic principles that delivered the prosperity of the Celtic tiger under Fine Gael in the 1990s — keeping costs down through competition, high productivity, export-led growth, tight budgeting and strong regulation of the financial sector and housing market — were all abandoned by corrupt Fianna Fáil-led Governments since 1997. Instead, the wealth generating power of the private sector and the public service mission of the State were bent by Fianna Fáil to serve the interests of a new golden circle of banks, property developers, big businesses, senior public servants and regulators.

Instead of continuously harassing the Opposition for lack of co-operation with a scheme designed to penalise those least able to pay, the Taoiseach and his Government would have been better advised to seek the co-operation of Opposition parties for a revised levy designed to save €1 billion and aimed at those earning in excess of, say, €100,000 and then look to the main Opposition parties for ideas on how to save the other €1 billion without driving low paid workers on to the dole and out of their homes. Irrespective of whether the Taoiseach wants to admit it, proposals by Fine Gael to make the necessary savings through such measures as a pay, increment and bonus freezes in the public sector and pay cuts for those earning €100,000 plus, the overhaul of FÁS operations, efficiency reviews and bureaucratic streamlining would be an effective means of achieving what the Government has lumped into inequitable penalties on those least able to cope or bear the brunt.

In the past few months, the Taoiseach has perfected the art of talking the talk without saying anything. His Government has wasted valuable time and money talking around the issue of recession without delivering solutions. For the Taoiseach to expect low and middle earners to once again bear the brunt of cutbacks is unfair and untenable. What does it take to make him realise that the loss of €450 to an already hard pressed worker on €15,000 is far more crippling than the €28,750 annual levy for those on a salary of €300,000 and more. It is extremely puzzling to low paid workers that judges are exempt from the levy. I hope the Taoiseach can give a reasonable explanation as to why that is the case.

Fine Gael has consistently called for the reform of the public service, which is imperative and vital to the national interest. Public service reform is not a criticism of the Civil Service. Our public service has a fine tradition of dedication and makes a major contribution to the economic and social life of Ireland. We must improve structures to make it more citizen-centred in the delivery of services and in the provision of essential infrastructure. The public must be given an input into policy-making to ensure services are designed and delivered to meet the highest standards, greater knowledge of services and to ensure access to them with greater ease. This would attract the confidence of our citizens in the system.

It is also important to improve technologies to help in the delivery of services, to provide better value for money and greater efficiencies. There is nothing wrong with radical reform and transformation of the Civil Service to bring a system, which we essentially inherited and utilised since the foundation of the State, up to 21st century standards.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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I wish to share my time with Deputies Nolan, Dooley, Michael Ahern, Blaney and O'Brien.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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Is that agreed? Agreed.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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The current crisis requires realism and urgency. A sense of fairness is important too, but the acknowledged difficulties in achieving a consensus on how that is to be reflected cannot be an alibi for inaction or delay or for arguing that the responsibility falls on other people, not ourselves.

As the chief economist at the Commerzbank in Germany stated in the Financial Times of 14 February, "The lesson of the past six months is that every country has been affected — whether it had a bubble in the property market or not." The main story in today's Le Figaro, headlined, The Collapse of the Japanese Economy, reports on an annualised drop in growth of 12.7% and a fall in industrial production of 21% between December 2008 and December 2009. We are not uniquely to blame for our situation, but we bear responsibility, past and present.

We have a great belief in our exceptionalism, but it is a pity all of us did not learn more from the Asian tiger economies when they became defunct. Even though providentially overflowing revenue was put aside into the National Pensions Reserve Fund, some of which will be used to recapitalise the banks, and private savings were incentivised, former Minister for Finance, Charlie McCreevy, is often criticised for his remark, "When we have it, we spend it." During those years, the Government was often urged by those opposite to spend still more of it. If there were prophetic voices crying in the wilderness, they did not include any party that put before the electorate in 2007 ambitious plans to spend more and tax less.

Nearly everyone was glad of the Celtic tiger. Some gained only moderately, others a good deal, and a few gained spectacular runaway wealth. Child benefit and pensions increased far beyond inflation. We have the second highest minimum wage. In no other country has 38% of the workforce been exempt from tax. Unfortunately, we allowed a culture to develop where, higher up, people's value has too often been defined by their salaries and their bonuses.

Public servants participated in the good times as well. Salaries since 1997 have increased from 20% to 60% in real terms. Numbers went up from 219,000 to 317,000. The conviction that private sector wages were increasing even faster was responsible for the first benchmarking exercise. Only Professor Ed Walsh is calling for benchmarking today, because all-round wage cuts would be the outcome.

Earlier today, I was speaking to executives of an indigenous company, employing 80 people. To preserve employment, and against union advice, the workforce agreed recently to a 5% cut in wages for anyone earning more than €25,000 a year, a 7.5% cut for those earning more than €60,000 a year, a 10% cut for those earning more than €80,000 a year and a 17% cut for the two top earners. Last weekend, I spoke to the vice-president of a US multinational outside my constituency. Leaving aside low-wage competition, he told me the average wage for their Irish workers was €58,000 a year, €45,000 a year for their US workers and about €34,000 a year for their English workers, with implications for their ability to maintain their workforce unless something is done to change costs.

In the past, real wages could be adjusted downwards by inflation and devaluation and competitiveness could be restored. Today, deflation may help preserve spending power, but that is all. As members of the eurozone, our currency has appreciated and we are committed to tight budgeting disciplines to which we must return if we want to retain control over our destiny. Currently, established public sector employees are guaranteed a high degree of job security. If we do not face the fact that all our wage costs must be lowered, at least in weighted proportion according to ability to pay, we will exacerbate our situation.

I accept that it is very difficult to ask trade unions, whose job it is to defend their members and to negotiate better conditions, to accept this. It also asks much of the majority of us who spend what we have and run up debt. However, the reality is that unless we are ruthless with ourselves and adapt quickly to the new situation without excessive arguing and fighting, we will endure a worse experience and stay on the floor longer.

What of the really wealthy? In 1932 at the time of the Great Depression, de Valera famously declared that no man was worth more than €1,000 a year.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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That was a long time ago.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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He robbed the Irish Press at the same time. That is why it went to the wall.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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We have only a limited time. Please allow the Minister of State to conclude.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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If that were to be generously updated, no one paid for or supported by the State would be worth more than €500,000 a year.

With regard to bankers in controversy, let the enforcement agencies do their work expeditiously. I would not force out of the country anyone who provides investment and jobs and contributes to Ireland's international success and reputation. However, at this critical juncture we would all like exiles to reconsider where their home is so that they can enjoy their full rewards in public esteem.

Photo of M J NolanM J Nolan (Carlow-Kilkenny, Fianna Fail)
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This country is facing its biggest economic challenge since the foundation of the State. As the days and weeks pass, we see the challenge increase. I am glad to have the opportunity to speak on this motion as it is important to put on the record the extent of the problems facing us. Every Deputy and public representative back in his or her constituency at the weekend got first-hand contact with constituents who made them aware of the problems they face. In 20 years I have not seen such genuine upset and urgency——

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
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Anger is a more appropriate word.

Photo of M J NolanM J Nolan (Carlow-Kilkenny, Fianna Fail)
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——on the part of constituents. I am surprised the urgency of the problem is not getting through to some people. The bottom line is that revenues are falling at an inordinate rate and the economy is shrinking. Two years ago we were talking about potential growth of 4%, but now we are talking about a potential contraction of the economy of between 4% and 6%.

Whatever Government is in power will have to deal with this problem. If we do not generate finance, the only options are to borrow it or cut spending, or try a combination of both. This is what the Government is trying to do. The challenge facing the Minister for Finance, the Taoiseach and their colleagues is significant. They must save €2 billion or cut spending by that amount this year and save or cut a further €4 billion next year. If we think our problems as public representatives are difficult this year, I fear for the situation next year. Hopefully, we will see an improvement in the world economy and will, to an extent, benefit from that upturn.

The sheer speed of the economic downturn has caught everybody, not just here but internationally, by surprise. Ireland, as such an open economy, is doubly exposed to the downturn. The shortfall in the public finances will put significant pressure on all Ministers with regard to their spending budgets.

I agree with some previous speakers that this debate should not go down the road of public versus private sector workers. This attitude is being generated in certain media quarters, but cultivation of it would be unfortunate because it divides workers and families. The majority of individual workers are concerned and serious about trying to find a resolution to the problem.

What we see in the financial and banking sector is a cause of concern for people. The case is made that over the past 15 years banks have operated a cosy cartel for senior managers. Much of what is coming out of late tends to suggest there were some very close relationships between individuals at a high level in banking and business in particular.

One area I ask the Minister and the Government to examine seriously is that of families and individuals who have run into serious debt and are having problems with their mortgage repayments. They paid at the top of the market to buy themselves a house and now they find themselves having problems with repayments. I encourage the Minister and the Government to ensure that the banks look leniently on all those who find themselves in this unfortunate position.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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I welcome the opportunity to address this motion and in particular to support the amendment. It is difficult for all of us to comprehend the scale of the problem in our public finances at present. The gap of €18 billion is difficult to comprehend when one considers that we had surpluses recently. We must recognise and accept that the cost of running the State for the coming year will be €55 billion while we will try to operate on the basis of revenues of €37 billion. It will be an enormous task for the Government to try to bring about a resolution over a period of time. It is coping with this as best it can in very difficult circumstances.

It is clear that Ireland is not alone in this regard although there has been an exercise by some to suggest that a couple of builders, politicians and bankers caused this problem. This is an international crisis. As Vice Chairman of the Oireachtas Joint Committee on European Affairs I was in Brussels last week to attend a joint parliamentary meeting. If we think we have problems, it is clear from speaking with parliamentarians from throughout Europe that they have similar situations and, in some cases, more severe difficulties than we have. If it was our problem alone we could trade out of it but this is not the situation. Our trading partners are severely restricted because of the state of their finances and this makes the problems for us far more difficult.

We are where we are I suppose and as Bill Clinton stated, one must play the hand of cards one is dealt rather than the hand one would like. The Government has to take action and is doing so to address this crisis. It has put in place a plan to chart a route back to a balanced budget. The reason it has to do this is a requirement to balance the books. We are part of the Growth and Stability Pact in Europe and it is a requirement to get back into line with the recommendations of this. We have sought and received an accommodation that will allow us to do this over a period of time. We cannot borrow to the extent that some on the Opposition benches want. We cannot do so because it would affect our capacity to borrow and pay back in the future. The greater the borrowing we do now, the greater the burden we put on future generations. Those who saw how we traded out of it in the past would not want to see it again.

The decision to place the levy will burden all public sector workers. Among the people I have met there is as much annoyance among those on €60,000 as there is among those on €25,000. Anybody who has an income in any of these brackets has developed a lifestyle which requires this money to be spent. The money is not there to meet their demands. It is unfortunate but this is the situation. Nobody in either the public or private sector can afford a reduction in income but unfortunately it must happen in this case.

We must implement cost savings and I suppose over time we will see an increase in taxation to try to bring about equilibrium between what it costs to run the State and what we raise. The levy is just the beginning in many cases and the Government has indicated that over the next four to five years significant steps will have to be taken to bring back the notion of a balanced budget.

The public servants I have met are prepared to play their part but they want equality. They believe it is vital that equality is the bedrock of the system. They want to see those who have damaged the reputation of our banking system brought to book and I am confident that this will happen. I am delighted that the Taoiseach today outlined his vision and his views on this.

While the Opposition is attempting to fool or mislead the public——

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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We will never be as good at fooling them as Fianna Fáil is.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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——by insinuating that the Government has been soft on wrongdoing, if the Government were to follow the calls of the Opposition and fail to follow due process or attempt to ignore the separation of powers——

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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The Taoiseach stated he would do it his way.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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——the very people we all want to see brought to book could walk free. Right-minded people on all sides of the House do not want to see this happen. We have to see fair play. The bank officials also need fair play. When they cross the line they should be subject to the full rigours of the law. The punishment must be proportionate to the crime and in my view the crime is treason.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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Does Deputy Dooley think they crossed the line?

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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Yes, I do.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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Then apply the law.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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Any people who sought to undermine the banking and financial systems of this country have sought to undermine confidence not just in this country but in its people and its future generations. They will have to be brought to book.

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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Is €610,000 a fair punishment?

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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The sleight of hand and notion of "technically legal" cannot be used as a defence for this monumental abuse of office, trust and the systems of regulation which exist.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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The Deputy's time has concluded.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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It is absolutely imperative that the people who have perpetrated this wrong are brought to book. I have no doubt that the officials——

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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Deputy Dooley is taking his colleague's time.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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In the few minutes available to me I want to emphasise the exceptionally serious situation which the country faces and the difficulties facing the decision makers and the Government to ensure we do not get totally consumed by the world financial blow up. In 1987 we faced a similar situation and got support from Members on the opposite side of the House. It is a pity that they do not recognise——

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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The Government has an overall majority.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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They abuse the situation today to further their political aims.

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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The Government did not have an overall majority in 1987. It needed us in 1987. Deputy Ahern should get his facts right.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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We are a trading nation and 85% to 90% of our GDP is from exports. The rest of the world faces the same problems we do but we are taking a bigger hit than many other countries because of our trading situation, especially with regard to trading with our neighbours across the Irish Sea. Up to 20% of our exports go to the sterling area and the 33% devaluation of sterling has had a serious effect on this country's income.

At home, we have had a downward spiral in purchases in the retail trade and in all other businesses. On top of this, with regard to house building, people could buy houses at equivalent prices to 1994 or 1995 due to interest rates and the drop in prices but it is not happening.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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If they could get a loan.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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Loans are available through many institutions but they are not being taken up because people are still waiting for further reductions in interest rates and in the price of houses.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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Tell us about the levy.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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All of this means the revenue available to the Government is shrinking. VAT, income tax, corporation tax and stamp duty intakes are shrinking. In the long term this means that the funds available to the Government to pay wages and to pay for all services are reducing.

Those who watched the news at 6 p.m. saw that the debt ratio is due to climb to 65% in the next year or two. This is not acceptable in that it will mean we will pay up to one third of our income tax to pay the interest on our debt. We will be heading back to the situation we had in the 1980s when all our PAYE intake went to pay the interest on our debt. We do not want to face back into this situation. The Government must take serious decisions to ensure our economy is brought back into a stable position and we do not throw away the gains we made over the past 20 years.

As the Minister stated, the Government will borrow €4,500 for every man, woman and child in the State. More than one quarter of our current bills, including pay, will be paid with borrowed money and the money we need to borrow will use up one third of income tax receipts. This is why the Government made the decisions it did over the past year. In the coming years, more unpalatable decisions must be made if we want to bring our economy back into equilibrium. Nobody likes to make those types of decisions but they must be made. I am confident the decisions that will be made will ensure each and every citizen will be treated equitably and that the burden will not fall disproportionately on those on lower incomes, who should not be made pay more than their fair share.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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The Deputy should not vote for it tomorrow night.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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I am voting tonight.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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I am referring to voting on the Bill tomorrow night, and on the following Tuesday and Wednesday. He should vote against it if he is on the side of the low paid.

Photo of Niall BlaneyNiall Blaney (Donegal North East, Fianna Fail)
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I thank my colleagues for sharing time. I very much welcome the opportunity to speak on the Private Members' motion and to support the Fianna Fáil amendment.

With regard to the pension levy, this is certainly no easy time for any family. My colleague has depicted the global scene, including the European scene, and it is evident from this that our difficulties are no different from those of any other country. Deputy Michael Ahern referred to exports to the United Kingdom and the depreciation of sterling, which has made trade very awkward in this country.

We have been very lucky that the number of public sector employees increased significantly in recent years. We all welcomed this but with it comes the burden of additional pay. While there is to be expenditure of €54 billion this year, more than one third, approximately €20 billion, will be on public sector pay. Anybody with a commonsense approach will know this is not sustainable. It is for this reason, and also because nobody has any alternative, that the levy was introduced.

The pension levy does two things: it protects existing public service jobs and it protects pensions. Despite what we heard tonight and last night, nobody on the opposite side of the House has come up with any worthwhile proposal that will meet the shortfall of €2 billion. We can cry and scream all we like and criticise this and that, but one should not be allowed to have one's say unless one can step up to the plate. The parties opposite have not done so and this must be emphasised.

I congratulate the Minister for Finance on the code of conduct introduced for the banking sector. For the first time, very strong protection measures are being introduced in respect of the making of mortgage repayments and banks trying to repossess houses. This offers comfort to many mortgage holders. Given time, confidence will grow among first-time buyers, many of whom are waiting for prices to fall further. I am sure they will fall.

Despite all the negativity, we must recognise how much the cost of running a car, for example, has decreased in recent years. Insurance costs have decreased considerably, as have the costs of petrol and tax. Home heating oil prices have decreased considerably also. There are major savings to be made. If one listened to all the doom and gloom, one would conclude there are no savings to be made, but there are. When times are difficult, there are positive developments. I find it hard to read a motion that criticises every measure but fails in every way to state how the required €2 billion could be saved.

There has been much talk about the ten individuals in Anglo Irish Bank. Considerable pressure was placed on the Taoiseach all day to name them. I hope the Taoiseach and this House do not to find out who the individuals are. If the recklessness in this House over recent weeks is repeated when the names are discovered, the individuals will not be prosecuted.

I listened last week to the leader of Fine Gael talking about banks going bust and to the Labour Party finance spokesperson talking about a particular bank going bust. They do not seem to know how reckless their statements are. They are causing markets to fall further.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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It is as if it were a secret.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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The reckless people are the ones who ran the bank.

Photo of Niall BlaneyNiall Blaney (Donegal North East, Fianna Fail)
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If the names are released and reckless statements are made in the House, the ten individuals who should be subject to the law will not be prosecuted as they should be. I hope, for the sake of the country, that the names are not released because the other side of the House will not help matters.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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The Deputy wants to cover up corruption.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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I am pleased to be given this opportunity to contribute to this debate in support of the Government's counter-motion to restore balance in the public finances.

The Government and I have consistently supported the public service over the past ten years. Our public service performs a crucially important role in this State and it will play a very important part in ensuring that Ireland comes through this global economic crisis.

Over the past few weeks, I have received many representations from the public sector in my constituency of Dublin North. The vast majority of these people have said very clearly to me that they are willing to make a contribution towards resolving the current economic difficulty. They also want to make sure that their contribution is fair and that other sectors within the country pay their fair share also. This was of no surprise to me because, in my day-to-day dealings with public sector staff, I have found them to be professional and courteous. At all times, they act in the interest of the State.

The decision to introduce the pensions levy was not taken easily but in the clear knowledge that it would not be popular initially or be supported by the public sector. The Minister himself said today that we know the levy will impose a burden on public servants and their families. Many of my constituents in Dublin North are public servants but I must act responsibly as a Deputy in this Dáil to support what will best protect the future of all citizens of the State.

The Government endeavoured to reach an agreement with the social partners, including the unions.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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No, it did not.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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It did. It spent over a month doing so. I did not have an opportunity to interrupt the Deputy yet.

As part of the framework agreed in the discussions, the social partners and the Government were at one in agreeing that €2 billion in additional savings were required this year. That is a fact.

What is required to deal with the €18 billion hole in our public finances is urgent and decisive action. We could wait no longer to bring about these changes for the good of the country and to ensure that these measures form a part of stabilising our public finances. Even the Labour Party, which has produced no coherent plan on how it would deal with the economic crisis——

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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That is not true.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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Am I allowed to speak?

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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That is not true.

Photo of Brian O'SheaBrian O'Shea (Waterford, Labour)
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Deputy O'Brien, without interruption.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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The Labour Party, which produced no coherent plan on how it would deal with the economic crisis, has said savings are needed in the public sector.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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We have published a paper and the Deputy would know that is not true if he bothered to read it.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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On 29 January, the Labour Party's own finance spokesperson, Deputy Joan Burton, stated the public sector reform issue will form part of the solution.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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That is right. It is not a levy; it is punishment.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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Deputy O'Brien, without interruption.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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She stated "Members must stand back and be fair when evaluating the strengths and failures of the public sector in Ireland." Is the Labour Party being fair in its evaluation of the pensions levy? It has even stated it would introduce one but it has not produced any figures on what its proposal would save. Urgent action is needed and the Labour Party appeared to agree with this approach just a month ago.

The Government is committed to remaining engaged with the social partners over the coming years to bring about the required savings of €18 billion. The scaled pensions levy is the fairest way to try to deal with the public sector pay bill, which cannot be sustained at present. The levy is scaled based on earnings, from 3% for those on €15,000, to 9.6% for those on €300,000 and over. The levy attracts full tax relief at the marginal rate and will also have the effect of securing the defined benefit pensions held by the public service. A pay cut would have done neither. It is not a question of singling out the public service.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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It is. Only the public sector is affected.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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The Deputy should read his own legislation.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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We are all aware of the sacrifices being made within the private sector where employees are taking pay cuts in order to retain their jobs and where thousands of people have lost their jobs in recent months, including in my constituency of Dublin North with the announcement of SR Technics earlier this week.

I am sorry I was so rudely interrupted throughout my five minutes. I had more to contribute to the debate but I will defer to my Labour Party colleagues and see if they can show us what they would do, and show some bottle for once.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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The Deputy should stay on and listen.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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I wish to share time with Deputies Howlin, Upton, Tuffy, Costello and McManus.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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Is that agreed? Agreed.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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I value the public service, those who work in it and the service they provide.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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As do I.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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They range from council workers to fire fighters and from county managers and senior civil servants to nurses and gardaí. I respect all of them and I value the vital work they do for our country.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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That sounds like my speech.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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I deplore the denigration of the workers and the work they do by the Government and the media in recent months.

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

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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That was an orchestrated campaign of half truths and downright lies culminating in the unfair and severe wage cuts dressed up as a pension levy. The most oft repeated lie was that public service workers did not pay for their pensions. It is just that, a deliberate lie.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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Who said that?

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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The levy is unfair and inequitable in that it is applied to one group of workers. It is also unfair and inequitable as it is applied within that group of workers.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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What would the Labour Party levy do?

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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For example, the cleaning staff in one section of Leinster House will have to pay the levy on their miserable income while similar staff in another part of this House are not covered by the levy. One group is in the private sector and the other group is in the public sector, both are badly paid, but the levy only applies to one group. The proposal seeks to divide workers and set them against one another.

The other example of unfairness is the different rates payable within the targeted group. For example, a public service worker on €39,000 a year will pay €2,120 while his or her colleague on €44,000 will pay only €1,858. How can that be justified? It cannot. It is unfair and unacceptable. The strongest case against the levy is the application to those who cannot afford to pay. The levy applies to part-time workers, sole earners in families that are in receipt of family income supplement — a payment made to people who are on the breadline — and it is payable by workers who are on such low wages that they are not liable for income tax. It is payable on overtime and other income that cannot be reckoned in calculating pensions. How can any of that be justified? How is any of that fair or equitable? How is that sharing the burden equally?

Since the Government gate-crashed this wage cut through the talks with the social partners, I, like others, have been contacted by large numbers of public service workers. Every man and woman to whom I have spoken or from whom I have received e-mails are all prepared and willing to pay their fair share to rescue the economy. They stress they are not the cause of the problem. They are insistent that whatever is done must be worked out on a fair and equitable basis across all of society and not on a sectional basis, as is the case with the levy. I support them in that. They are angry that they and the public service they provide have been vilified as lazy and overpaid by their Government and the media.

Photo of Jack WallJack Wall (Kildare South, Labour)
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Hear, hear.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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That is right.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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They are angry that the bankers and the speculators who caused the malaise are getting off scot free and walking off with golden handshakes and pensions of which the public service could not dream. They are angry at the attempt by the Government to drive a wedge between public and private sector workers with misinformation and lies.

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

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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The Labour Party supports the public service and its workers. We reject this crude, unfair measure and call for its withdrawal and for a reconvening of the talks with the social partners with a view to finding the savings needed where all will share the burden equally.

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

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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Where is the Labour Party proposal?

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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I will send it to the Deputy in the post.

Photo of Darragh O'BrienDarragh O'Brien (Dublin North, Fianna Fail)
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Do that.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Last night, with echoes of Churchill, the Minister for Finance called the nation to arms to, as he said, fight for our economic future. His rhetoric may well have been Churchillian but his actions to date are more like Colonel Blimp. The totality of the Minister's plan for national recovery is unfair, unthought-out and will divide the nation at a time when common effort is required to solve the genuinely enormous problems we face.

To begin with, we must recognise why we are in this mess. That is the question citizens throughout the country want to hear answered first. Since 2001 a speculator's economy was deliberately created to encourage greed, cheered on by Fianna Fáil and Progressive Democrats Governments, who wanted light-handed regulation and control and who regarded timely warnings from these benches as pinko socialism to be scorned and laughed at and who exhorted the nation to party on. Some did party on — and some continue to party — not, however, the vast bulk of our public servants who got mortgages for houses at inflated prices and to build homes, who paid their taxes and lived ordinary lives, not extravagant ones.

The country is in a grave and serious place. We, on this side of the House know that full well. The people want those who are responsible for bringing us here to at least acknowledge their role in the disaster. World economic events have made matters worse but our basic vulnerability was home grown. First, there must be an accounting, politically and within the banking and speculative classes. Only then, can one ask the nation with any legitimacy to put our collective shoulder to the wheel. Second, there must be a plan, one that maps a route to a stable economy that involves all in society and that is fair in terms of its scope and ability to pay.

Last night the Minister for Finance said that the Government plan was to baldly introduce cutbacks amounting to €2 billion. That is no plan. Even today the Minister admitted on Question Time that he would be lucky to get €800 million but the nice, balancing economics means that it can be accounted for as €2 billion. There is no confidence in the so-called plan. Basic taxation decisions that need to be made now are being long-fingered to the Commission on Taxation, the report from which will be implemented some time next year. Things have changed utterly in this economy and in this nation. Everything has to be thought through again, including our governance, our delivery systems for public services, our support systems and oversight of business, how our professions operate for the public good and much more.

This imbalanced levy, targeted at one section of society, will do nothing to solve our problems. The country deserves better than that. We need to reconstruct the proposal in the context of a truly comprehensive plan and bring the whole country together in the common vital objective of restoring our national finances.

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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We were told over and over again that when the economic downturn came there would be a soft landing. Now we are being told that we are all in it together. Neither statement is true. It was a crash landing with debris scattered all over the place and nobody who has the responsibility for managing it is ready to step up to the plate and take on that responsibility. There is nobody to tidy up the mess. We are not all in it together, because if we were, the pain would be shared evenly among those who could best carry it and it would not be off-loaded selectively on to the lowest earners. Low paid public servants have been selected for special treatment. There is no sign of bankers handing back their golden handshakes and taking a significant drop in their millions in salaries or bonuses or of developers being called to heel to pay their share. Instead, modestly paid jobs in the private sectors are being shed and the lowest paid public servants are carrying a disproportionate share of the burden in the form of pension levy or, as it should be more properly called, a pay cut.

Over the past while, the Government and sections of the media have orchestrated an insidious campaign to demonise the public sector. Government backbenchers and Ministers together with business leaders and media commentators tripped over themselves to talk about plump public sector hens with Rolls Royce pensions, which is nonsense. They are living in a parallel universe if they think the levy on the table is fair to the lowest paid. Will they explain to my constituent who has worked out a budget arising from the so-called pension levy where she will find the missing €300 per month for her food, mortgage or heating bills? Will they tell the ambulance workers who wear stab proof vests as they go to work that they are overpaid? Community welfare officers are working overtime for free as they attempt to clear the backlog of cases. Will they be told they are lazy and do no work? What about telling the community garda who has no prospect of promotion for years or the teacher with a class of 30 or more students that they will have a Rolls Royce pension? The only people who will have Rolls Royce pensions are the bankers, builders and business people who creamed it during the boom.

Like every other Member, I have received hundreds of e-mails, telephone calls and representations at my constituency clinics from worried, desperate and angry people. Three issues have arisen during all these contacts, the first of which is equality. Despite the Government's bleating, the levy is unequal. A graph highlights that those on low and middle incomes are taxed disproportionately. A person earning €120,000 annually, for example, only pays 3% more than someone earning €30,000 a year. How is this equitable? As the levy stands, people who will not receive a pension will still be levied while judges, for example, will be exempt.

The second issue is justice. Most of the e-mails I received echo the following sentiment: "I am willing to pay my fair share but when I've seen the fat cats get away with driving the Irish economy into a black hole, then why should I pay?" Despite having done serious and possible irreparable damage to the banking system, no one has been held to account. The Government guaranteed the Irish banking system in September and those in charged have only resigned in dribs and drabs instead of what one would expect, which is mass resignations. A Government with a true understanding of the depth of public anger would surely have insisted on this. Where is the justice in a regulator who benignly oversaw what one commentator called "fraud" receiving a pay-off of almost €600,000? These high earners are detached from the society in which the rest of us live. One banker was happy to tell the Government to tax child benefit while he was concealing loans while another attempted to elicit sympathy for the fact that his earnings would be under €2 million this year.

The third issue is poverty. The levy reduces wages at the lowest level to such an extent that it may act as a disincentive to work and lead people into a welfare trap. As one constituent put it, "Financially I would be better off on the live register where I would qualify for health and income supplements". Since it has been established that every extra person on the live register costs the State approximately €20,000 per annum, why would the Government further disincentivise work?" We need as many people as possible contributing to the economy and the way the levy is structured will force workers on to the live register.

Photo of Joanna TuffyJoanna Tuffy (Dublin Mid West, Labour)
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I refer to how this decision was arrived at by the Taoiseach and the Government and what this indicates about their attitude to democracy, the people we represent and our political system. A week prior to the announcement of the levy, the Taoiseach told the Opposition in this House that it was his way or the highway. The levy details were presented to the unions at the 11th hour and they were told to "take it or leave it". Until then, we had months of divide and rule during which public sector workers were demonised and dehumanised. The Government's allies such as IBEC and right wing economists and media commentators bashed public servants because they have a vested interest. IBEC made the most ridiculous suggestion by saying the solution to our economic problems was to put more people on the dole.

It is telling that the Taoiseach's first significant speech was to Dublin businessmen and not to the people. We have had an absentee Taoiseach for the past few months and we have had government by press conference and tips offs to journalists. The Oireachtas has not had a genuine opportunity to contribute to the debate on the decision and there is no belief in or solidarity with the Government. No pain was experienced by the Government or the Taoiseach, in particular, when thrashing out this proposal to make sure it was fair by dealing with anomalies, solving problems, involving all stakeholders, achieving consensus, persuading people and bringing them on board. That was not part of the Government's plan. The entire process is an indictment of Fianna Fáil and the Government's attitude to democracy, the political system and the people we represent.

I received a copy of the Public Sector Times earlier. The Taoiseach stated in an article, with the decision having been made, that it was only fair. We voted on the fair deal legislation earlier. The Government has taken the attitude that if it says something is fair, it is fair when obviously it is the opposite. It is not news that the Government parties do not believe in fairness. Tax cuts favoured the most well off in our society and they promoted land speculation. The cutbacks in recent budgets hit those who could least afford them such as people with disabilities, those living in disadvantaged areas and pensioners.

The Minister for Finance was quoted in today's newspapers regarding the anomalies associated with the levy and he admitted that low paid public servants would be hit hardest but his attitude was that is just the way it is. Nothing will be done with the money taken from these workers. There is no plan in that regard with vague promises having been made.

I was a clerical officer in the VEC and the Dublin Institute of Technology. It was reported earlier that two thirds of public sector workers earn less than €50,000 annually. Many of them are not well paid and they work hard dealing with the public. I received an e-mail from a clerical officer in a social welfare office. He referred to the sea of worried faces he must deal with every day. Unfortunately, he cannot help many of them but he is now doing the job of two people because of the significant increase in queues at his office.

The Government had months to negotiate the levy and to plan, persuade and achieve a consensus because tax reform and a recovery plan were needed. The ICTU came up with a recovery plan but the Government could not do so. Work schemes could have been put in place and we could have done what the US, Germany and other states are doing by investing in badly needed infrastructure while regenerating the economy. People were prepared to play their part. For example, those interviewed for a Newstalk vox pop on the day the levy was announced said they knew they would have to suffer some pain and they were prepared to take it as long as the levy was fair. That goodwill was squandered by the Government parties because they have lost touch with the people and they are no longer democratic. They have damaged the political system, social partnership and, at the end of the day, they have damaged themselves. They will rue the day they did this.

8:00 pm

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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The decision by the Fianna Fáil, Green Party and Progressive Democrats Government to impose a pension levy on all public sector workers and only on public sector workers is wrong and fundamentally unjust. It should be rescinded and the Government should go back to the drawing board. The public sector constitutes less than a quarter of the workforce. In the first instance, the equitable approach would be to spread the pain equally and not target one sector. Second, the levy is unfair because it is payable on all earnings, including overtime and allowances, and not just on basic salary. Third, low paid public sector workers who receive tax relief at 20% will pay a disproportionate contribution compared to higher paid workers who will receive tax relief at 41%.

Fourth, there is a false belief abroad, fuelled in particular by sections of the media, that the public sector makes no contribution to its pension fund. All public sector workers are already paying a compulsory contribution and most are paying 6.5% of their salary, which, in the case of health care workers, meets the full cost of their pensions without any State contribution. This new levy will double that contribution for the vast majority of public sector workers and they will get nothing in return. Fifth, and what is probably most infuriating for public sector workers, is that they were in no way responsible for the economic mess and recession we are in at present, yet they are the only ones singled out to pay the price.

The legislation was published today and it is even worse than expected. Public sector workers will be required to pay 3% on the entire first €15,000 earned. Those are the people on the minimum wage and those who qualify for family income supplement. They will be required to pay 6% on the next €5,000 and 10% on all earnings over €20,000, regardless of whether they earn €20,000, €25,000, €100,000 or €1 million. That is an outrageously unfair tax. The lowest paid are the hardest hit.

Government mismanagement of the economy and bankers' greed and fraud are the real culprits. Anglo Irish Bank appears to have been rotten to the core and contaminated Irish Life & Permanent and Irish Nationwide Building Society, yet there is no sign of the fraud squad or the Criminal Assets Bureau being called in to investigate. The Government voted down the Labour Party's proposal that the Director of Corporate Enforcement would ask the High Court to appoint an officer with extensive powers to investigate the banks.

Where is the Green Party? While Green Party Members are making angry noises in the media, they have not yet taken a stand against any of the Government's unfair and unjust policies or on this issue. In fact, a Green Deputy or Minister in this Chamber is now a rare sighting. People will soon be sending letters to The Irish Times about it. We will not say what bird we are talking about.

A Deputy:

A cuckoo.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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The Government has only targeted the most vulnerable and less well off in this measure. It is galling to hear the Bank of Ireland chief executive state nonchalantly on the airwaves that he expects to earn less than €2 million this year while his bank's shares and the pensions of so many people who invested their money, including redundancy money, are going through the floor and are virtually worthless. It is also galling to see the Financial Regulator, who was asleep on his watch, ride off into the sunset with €600,000 of a golden handshake and a six-figure annual pension.

The pain must be spread evenly, but it must be spread from the top down and not from the bottom up as is happening here. Too often when it is spread from the bottom up it stops along the way and never reaches the higher echelons. It is time to start with those who pay no tax and, first, is our well heeled tax exiles, who are always able to make it back home for the Galway Races and a table in the tent. It is time to make them pay their taxes in Ireland. Next come our resident landlords, the tens of thousands who have never registered with the Private Residential Tenancies Board and evade and avoid paying taxes on their property and tenants.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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Repetition.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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Allow Deputy Costello to speak without interruption.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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Next come our developers and speculators who have made fortunes on tax breaks which were supposed to stimulate growth but were used instead to line the pockets of the already rich. They should cough up a few euro as well.

These untapped sources should be targeted first before the Government moves to target either public or private sector workers. This is also good economics because the more disposable income available to working men and women and their families, the more will be spent in the economy and therefore the more support for the retail sector and small and medium-sized businesses. That is why the Labour Party is calling in this Private Members' motion on the Government to go back to the drawing board and find an equitable solution. An equitable solution is the only solution and it is right for the public sector workforce to demand it.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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We are debating a defining motion. It defines the fundamental principles that are necessary to underpin a national plan of recovery. None of us in this House underestimate the gravity of the economic crisis we face. The banking scandal, the international economic downturn and the level of Government incompetence shown so far all combine to collapse public confidence. Unemployment is hammering families and communities across Ireland. By year end there will be more people unemployed than are employed in the entire public service. In our constituencies we are seeing the individual heartbreak of job losses and the fear of crippling debt. For the first time I have had to bring in a box of Kleenex tissues and leave it on the desk in my constituency office because so many tears are now shed when constituents come into me.

These are extraordinary times and they require extraordinary responses. So far the Government has failed to present the roadmap that is needed to get us through. The so-called pensions levy has been cack-handed in its construction. By its narrow focus it has fuelled a false divide between public and private sector workers. Yet, as our leader said last night, the real divide is between those who caused the crisis and those who are now paying the price.

Labour has set out in this motion our belief that social partnership offers the best way forward. The Government seems to want social partnership when times are good but thinks it can do without it when things are bad, which is folly. When there is an onus to pull together as a society and confront the challenge, we must rely on the great strength of partnership and solidarity. In this economic crisis people know that sacrifices are required of them but they also know that what is being imposed by the Government is unjust and the sense of anger and betrayal is palpable. Ability to pay should be the yardstick when sacrifice is required. Clearly, that is not the case now. Those on highest incomes are escaping scot-free while those at the lowest incomes are made subject to Government extortion.

There is a better way to get out of the mess. Recently, the Irish Congress of Trade Unions set out ten key initiatives which could frame a national recovery plan. They include taxation measures and innovative measures like a national recovery bond. These could be central to good governance and prudent public financing. I welcome too the document's emphasis on an immediate reduction in energy prices. Today, I raised this issue with the Taoiseach and I was disappointed that I received the same vacuous response that the Minister for Communications, Energy and Natural Resources gave last week.

There is an urgency about meeting the challenge, an urgency that the Government has misunderstood. Trampling on public sector workers is one approach but one more likely to succeed is an agreed national recovery plan based on the principles of solidarity and fairness. That is an important point to remember because we are all very touched by the cases of the individuals who have contacted all Members of this House. However, ultimately, it is the Government's responsibility to ensure that there is a roadmap pointing out the way forward and that people can support it in conscience. That is completely at variance with what the Government is doing now, which is to railroad through measures which are a blunt instrument at least and totally unjust and unfair at worst. If the Government intends to continue on that road we will see deeper division, more conflict and more unnecessary pain and heartbreak, which could and must be avoided. The strength we have with social partnership is being ignored by a Government that does not seem to know its way forward and refuses to look to anybody else for assistance in addressing the major challenge facing us all today.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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I am pleased to address the motion this evening. Taking up from where Deputy McManus left off, we are all aware of the major challenges we face. We have all had constituents in our clinics. We are all aware of the anecdotes shared by speakers on all sides. The situation set out by the Minister for Finance last night is really alarming. He enumerated some of the figures that illustrate how deep the crisis is and I was particularly shocked to learn that one third of our income tax will be spent on interest payments on our borrowings. We all know that there is pain and that it is regretted. I want to set out why I believe our proposals on the pensions levy and other fiscal adjustment measures are the right way to go. There are many reasons for this current situation and sometimes a blind eye is turned to those factors. I refer in particular to the collapse of the international banking system, the collapse of global growth, the collapse of our own property sector, the construction boom coming to an end, unemployment and the currency situation between us and our nearest neighbour. Ireland is more vulnerable under all those headings than any of our eurozone colleagues and this point has not been stressed enough in this Private Members' debate. Ireland's international financial services sector is more prone, and as a strong exporting nation we are more open to the collapse in global growth. The UK is one of our strongest trading partners and we were therefore more open to currency fluctuations.

Many of the crystal ball gazers and the hindsight experts suggest that we should have seen all of this coming. We all know that every policy has downside risks which we try to minimise and identify. However, no one could have predicted that all of these risks would materialise at exactly the same time and that they would be mutually reinforcing. However, many people in this Chamber claim that they saw it coming and that they were derided and were the subject of many snide remarks. This was not the case.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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They were.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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The Minister of State without interruption.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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Nobody was able to identify it. Naturally the Government was criticised and naturally the Government defended itself but nobody foresaw those risks would happen at the same time. It would be wrong of anybody to make that claim as it would be dishonest.

The Government took action by announcing the smart economy initiative and the innovation fund before Christmas and there has been a €2 billion fiscal adjustment which is the subject of this debate. There has been a capital investment plan which is predicated on job creation. Unlike what has been said on the Labour benches, we have a plan that is greater than most of our European colleagues in terms of capital investment, constituting 5% of GDP. We are reforming banking. Nobody could have seen the damage that was done to the banks by the behaviour of some of our executives but many have now resigned or retired and that process will continue. We need a complete clean-out of some of the top people in the banking sector. The Government has shown courage and resolve in this crisis in tackling these issues.

We have a progressive tax system but this fact is denied by people in the Labour Party who say there is not fairness in the tax system. However, the top 9% of income earners pay almost half of all income tax. This is not acknowledged by the Labour Party which turns a blind eye to the international situation. At the very first hint of criticism, the Labour Party panicked and produced a document last Saturday which, as the Minister for Finance said yesterday, is back of the envelope stuff. This shows that whatever difficulties they have ——

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Minister of State would know all about that.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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——in producing their own document——

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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What about a brown envelope?

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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The Minister of State without interruption.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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——whatever difficulties they have in accepting the €2 billion fiscal adjustment which we agreed in a framework document with the social partners, they are too windy to accept it here in this House, to take on their responsibilities and to be part of a solution for this country. I wonder if there is anyone on that side of the House——

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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The Minister of State should not be dishonest. We have definite proposals and the Government should read them. Is the Minister of State unable to read?

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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The Minister of State without interruption.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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I am prepared to discuss this on its merits but if the Deputy would show some courtesy. Nobody interrupted him. I want to make my points in a democratic Chamber——

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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One of his colleagues interrupted me.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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——and I will not be interrupted by the Deputy. Nobody on that side of the House is demonstrating independent thinking. We are in a crisis.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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The Minister of State is being dishonest again.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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Nobody on that side of the House is prepared to step up to the plate and this is very disappointing.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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The Government caused the mess.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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If the Labour Party ever gets into government, it will have to resile, as we all know, as a matter of inevitability, from all its rhetoric——

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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You and yours caused the mess.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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——and from the blandishments it provided for the public service.

There has been much talk about a wedge being driven between the public and private sectors.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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Which the Government created.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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The people who are creating the narrative for that so-called wedge are in the Labour Party. It suits them to do that. There is talk of media influence and the mood music is being created by the Labour Party and it knows it.

(Interruptions).

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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The division that was seen in the opinion poll last weekend did not indicate that the 41% against——

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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The Minister of State should read his own reports.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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——were public sector. There are people who are honest enough to accept we do not have many choices.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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They rejected the Government on the matter.

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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I commend the Government amendment.

Photo of Jack WallJack Wall (Kildare South, Labour)
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I wish to share my time with Deputies Higgins and Burton.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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Agreed.

Photo of Jack WallJack Wall (Kildare South, Labour)
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If we all listened to the Minister of State, Deputy Barry Andrews——

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)
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Not all the Deputies opposite listened to me.

Photo of Jack WallJack Wall (Kildare South, Labour)
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——we would not be in this House at all.

I refer to a recent article in a Sunday newspaper in which the Minister of State's former leader said that when he left in May 2008 he left the economy in very good condition. If we were to believe Deputy Bertie Ahern it is true to say that in a very short time consisting of six months the current Taoiseach and his Ministers, including the Minister of State, have destroyed the economy. However, I am sure no one believes the statement Deputy Ahern made at that time either.

The Labour Party motion describes this proposed pension levy as unfair as it places an unacceptable burden on public servants with modest incomes. It has been argued that public servants are in permanent employment with a good pension. I wonder what the 120 people employed by Kildare County Council, who were let go in the past few weeks, think of that suggesting? What was the permanency attached to those jobs? What was permanency attached to the 1,000 let go by local authorities right around the country in the past few weeks? Where were the pensions and the permanency for those unfortunate people?

This proposed pension levy is now regarded by everyone as a wage cut and it will put families under tremendous pressure as it will create further problems for them. People have contacted me to outline their individual cases and their grave concerns for their income and future. They talk about their children and the effect on them. In many instances this wage cut will ensure that their child will not go to college because the Minister for Education and Science has outlined time and again that free third-level education will be a thing of the past come April or May this year when he gets his opportunity to talk to An Bord Snip.

Last night the Minister in a flippant manner gave one of the worst speeches ever in this House. He stated:

I can assure Deputies that the Government did not take the decision to introduce this measure lightly. We know it calls for a measure of sacrifice but it is called for so as to avoid a worse fate.

He further stated that the pension-related deduction was not seeking to scapegoat the public service. Was there ever a worse statement made in this House? It will scapegoat the public service. Since I became involved in politics in 1992, I have seen the work carried out by public servants on behalf of this State. Now the Minister says we are not going to scapegoat them when in fact he is undermining each and every one of them. He is not only undermining public servants but also their families and their children in the future. This is the reason we have so many angry people outside the gates today. This is the reason so many angry people were knocking on the Minister of State's door too because they see no future in this Government for their children and for the education of their children which is their right.

We have one opportunity to get this right. This Government has fobbed off that opportunity. It has not thought it out. It has tried to undermine ICTU and its members. Out of the side of its mouth the Government suggested that ICTU told it that if it introduced the levy, congress would walk away and it would be all right on the day. It was a scandalous and scurrilous remark intended to undermine ICTU. Our one hope is that the Government will return to the table to ensure that a proper and right agreement can be reached with the social partners to benefit the State in the first instance and, in the second instance, to be fair across communities.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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I welcome the opportunity, and wish I had longer, to speak on this motion. I will address a single dimension, namely, citizenship. Not today or yesterday, a continuous, sinister and despicable campaign started that devalued public service. During the so-called boom times, public servants were regularly contrasted with the buccaneer individualists who were supposedly making a fortune bringing the economy unto the glory days, but who actually wrecked it.

In the minute or two available to me, let us deal with some facts. It costs €55 million per day to run the country. While the Minister of State, Deputy Barry Andrews, was right that one third of income tax will go to pay the interest, let him continue the story. We are paying interest of 5.5% on our borrowings, 3.5% more than we were a couple of weeks ago because a few people in the banking sector wrecked the country's international reputation.

Deputies:

Hear, hear.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Last week and on Monday, when members from different unions from around the country visited their Deputies, they did something that was difficult. They spoke about their jobs and their children and what it cost them to live, not just to participate. The bankers who knifed the country's reputation went into hiding. Their names are still being protected. They comprise the golden missing circle that wrecked the country.

Does the Government prepare a five-year response to our economic position? Does it tell the House that the €16.5 billion will be removed within a structured way? No. Instead, it starts with the people it has caught while releasing a shower of deceit. Some 300,000 public servants did not receive increases in the second benchmarking exercise in 2008 because they had an imputed benefit of 12.5% in terms of pensions. On top of that there is the 6.5% pension contribution, the 1% income levy and now this levy. These are the facts and let us not run away from them.

What did people ask us at the meetings? If this levy is imposed when the Government looks for €2 billion, what will occur when it seeks €4 billion? People have been unfairly and unequally hammered. Their children will not be able to attend third level education. When all of the windy statements from the pseudo-sham republicans are made, how will they possibly justify a family with three children and an entitlement to €1,100 in family income supplement paying €2,700 in a levy? It is nonsense. It would be fine were if it were only absurd, but it is unfair, unequal and destructive of citizenship.

I support solidarity and Mr. David Begg. The Labour Party motion supports ICTU and refers to solidarity in a real sense. We could be positive and build a new economy, but all of the people across the floor are around the corpse of the old speculative economy. They are asking whether we can revert to how we were. The people who attended meetings in County Galway and across the country were not on waiting lists for helicopters and were not those who delivered us into a situation in which we have more Mercedes cars per capita than Germany. They were interested in paying their mortgages, getting an education for their children and retaining basic good health. They were public servants, people who chose to work for the public rather than themselves. They have been denigrated, insulted and treated unfairly, chosen as the first victims by a Government that will not show the House its five-year strategy to address the €16.5 billion deficit.

There are many examples, but I will finish with the landlords who own multiple houses. They must pay €200 per house, but their benefits in tax breaks will amount to €550 million. Would that not have been a good place to start? Would it not have been practical? What of the people in hiding from the banks who can fork as much as they like into their pension funds with tax benefits? If the Government could have found them, it could have started there. What citizenship is it to take one's passport with the Irish stamp on it and refuse to pay one's tax?

Deputies:

Hear, hear.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Labour Party has two words for the Government and in response to every contributor to this debate. I thank every Deputy who has spoken, including those on the Government side like the Minister of State. They entered the House with their tails between their legs, but at least they were prepared to say something, unlike the missing hundred or so who have returned to the legions of the rearguard and are hiding in the bar somewhere until the vote is called. The Minister of State is welcome.

Our two words on the legislation are simple, namely, "withdraw" and "redraw". We want the Bill and the proposal withdrawn. The latter was put on the table at the 11th hour of the negotiations, on which the Taoiseach deemed sufficiently important to spend weeks while the country waited with baited breath for a resolution to the various crises besetting us. We want the proposal withdrawn in a way that reflects the fact that many of us cling to the notion that we are one society on one island.

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

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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We do not just want economic representation of this notion. Rather, we want our politicians and our Government in particular to represent it as well. Despite the traditions of Fianna Fáil and the people of no property, it sometimes seemed that, during the Celtic tiger years, those who now represent Fianna Fáil were seduced by the allure of gold like King Midas and by the amazing performance of those who could make money out of nothing. Like children blowing bubbles, they blew bubbles bigger and bigger until the bubble finally burst. Ordinary people must pick up the pieces.

Let us be clear. We want a social solidarity pact——

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

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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——for the hard times facing almost everyone, particularly those on low incomes or who have lost their employment, irrespective of whether they are public or private sector workers. We resent Fianna Fáil's attempt to drive a wedge between people who work in the public service and those in the private sector. I do not have to tell the House that many teachers, nurses, gardaí and other public servants are married to carpenters, bricklayers and shop and factory workers. It is not like South Africa under apartheid, two separate corrals of people who never meet one another. We reject Fianna Fáil's vision of a divided Ireland where public and private sector workers will fight it out.

Tomorrow, I will discuss the levy's unfairness in detail. Most of the public sector workers who I know are realists and know that sacrifices must be made. What contribution will the Government demand of the bankers who have brought the country to the point of economic ruin? What of the tax exiles who leave this country in their helicopters at five minutes to midnight to secure another tax-free day in this jurisdiction? What will the Minister of State demand from them? Does the Irish passport carry a commitment to paying tax and contributing to this country?

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

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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We in the Labour Party believe in the contributory principle, namely, that everyone in this society is required to contribute. When they are young and children or when they are old, on a pension or in a nursing home, then society returns to them what they contributed when they were able bodied and worked and studied. This is our vision and is what a social solidarity pact is about. I can only repeat my suggestion to the Minister of State regarding those two little words, "withdraw" and "redraw". The Government should withdraw the legislation and then redraw these proposals. Let us build a social solidarity pact for Ireland in order that people can go forward in the knowledge that the banker who only earns €2 million per year at least contributes proportionately.

Amendment put.

The Dail Divided:

For the motion: 77 (Michael Ahern, Noel Ahern, Barry Andrews, Chris Andrews, Seán Ardagh, Bobby Aylward, Niall Blaney, Áine Brady, Cyprian Brady, Johnny Brady, John Browne, Thomas Byrne, Dara Calleary, Pat Carey, Niall Collins, Margaret Conlon, Seán Connick, Mary Coughlan, John Cregan, Ciarán Cuffe, Martin Cullen, John Curran, Noel Dempsey, Jimmy Devins, Timmy Dooley, Michael Finneran, Michael Fitzpatrick, Seán Fleming, Beverley Flynn, Pat Gallagher, Paul Gogarty, John Gormley, Noel Grealish, Mary Hanafin, Mary Harney, Seán Haughey, Jackie Healy-Rae, Máire Hoctor, Billy Kelleher, Peter Kelly, Brendan Kenneally, Michael Kennedy, Tony Killeen, Séamus Kirk, Michael Kitt, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, Michael Lowry, Tom McEllistrim, Mattie McGrath, Michael McGrath, John McGuinness, Martin Mansergh, John Moloney, Michael Moynihan, Michael Mulcahy, M J Nolan, Éamon Ó Cuív, Seán Ó Fearghaíl, Darragh O'Brien, Charlie O'Connor, Willie O'Dea, Noel O'Flynn, Rory O'Hanlon, Batt O'Keeffe, Ned O'Keeffe, Mary O'Rourke, Christy O'Sullivan, Seán Power, Dick Roche, Eamon Scanlon, Brendan Smith, Noel Treacy, Mary Wallace, Mary White, Michael Woods)

Against the motion: 67 (Bernard Allen, James Bannon, Seán Barrett, Joe Behan, Tommy Broughan, Richard Bruton, Joan Burton, Catherine Byrne, Joe Carey, Deirdre Clune, Paul Connaughton Snr, Joe Costello, Simon Coveney, Seymour Crawford, Michael Creed, Lucinda Creighton, Michael D'Arcy, Jimmy Deenihan, Bernard Durkan, Damien English, Olwyn Enright, Frank Feighan, Martin Ferris, Terence Flanagan, Eamon Gilmore, Brian Hayes, Tom Hayes, Michael D Higgins, Phil Hogan, Brendan Howlin, Enda Kenny, Ciarán Lynch, Kathleen Lynch, Pádraic McCormack, Shane McEntee, Finian McGrath, Joe McHugh, Liz McManus, Olivia Mitchell, Arthur Morgan, Denis Naughten, Dan Neville, Caoimhghín Ó Caoláin, Aengus Ó Snodaigh, Kieran O'Donnell, Fergus O'Dowd, Jim O'Keeffe, John O'Mahony, Brian O'Shea, Jan O'Sullivan, Willie Penrose, John Perry, Ruairi Quinn, Pat Rabbitte, James Reilly, Michael Ring, Alan Shatter, Tom Sheahan, P J Sheehan, Seán Sherlock, Róisín Shortall, Emmet Stagg, David Stanton, Billy Timmins, Joanna Tuffy, Mary Upton, Jack Wall)

Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Emmet Stagg and David Stanton.

Amendment declared carried.

Question put: "That the motion, as amended, be agreed to."

The Dail Divided:

For the motion: 78 (Dermot Ahern, Michael Ahern, Noel Ahern, Barry Andrews, Chris Andrews, Seán Ardagh, Bobby Aylward, Niall Blaney, Áine Brady, Cyprian Brady, Johnny Brady, John Browne, Thomas Byrne, Dara Calleary, Pat Carey, Niall Collins, Margaret Conlon, Seán Connick, Mary Coughlan, John Cregan, Ciarán Cuffe, Martin Cullen, John Curran, Noel Dempsey, Jimmy Devins, Timmy Dooley, Michael Finneran, Michael Fitzpatrick, Seán Fleming, Beverley Flynn, Pat Gallagher, Paul Gogarty, John Gormley, Noel Grealish, Mary Hanafin, Mary Harney, Seán Haughey, Jackie Healy-Rae, Máire Hoctor, Billy Kelleher, Peter Kelly, Brendan Kenneally, Michael Kennedy, Tony Killeen, Séamus Kirk, Michael Kitt, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, Michael Lowry, Martin Mansergh, Tom McEllistrim, Mattie McGrath, Michael McGrath, John McGuinness, John Moloney, Michael Moynihan, Michael Mulcahy, M J Nolan, Éamon Ó Cuív, Seán Ó Fearghaíl, Darragh O'Brien, Charlie O'Connor, Willie O'Dea, Noel O'Flynn, Rory O'Hanlon, Batt O'Keeffe, Ned O'Keeffe, Mary O'Rourke, Christy O'Sullivan, Seán Power, Dick Roche, Eamon Scanlon, Brendan Smith, Noel Treacy, Mary Wallace, Mary White, Michael Woods)

Against the motion: 67 (Bernard Allen, James Bannon, Seán Barrett, Joe Behan, Tommy Broughan, Richard Bruton, Joan Burton, Catherine Byrne, Joe Carey, Deirdre Clune, Paul Connaughton Snr, Joe Costello, Simon Coveney, Seymour Crawford, Michael Creed, Lucinda Creighton, Michael D'Arcy, Jimmy Deenihan, Bernard Durkan, Damien English, Olwyn Enright, Frank Feighan, Martin Ferris, Terence Flanagan, Eamon Gilmore, Brian Hayes, Tom Hayes, Michael D Higgins, Phil Hogan, Brendan Howlin, Enda Kenny, Ciarán Lynch, Kathleen Lynch, Pádraic McCormack, Shane McEntee, Finian McGrath, Joe McHugh, Liz McManus, Olivia Mitchell, Arthur Morgan, Denis Naughten, Dan Neville, Caoimhghín Ó Caoláin, Aengus Ó Snodaigh, Kieran O'Donnell, Fergus O'Dowd, Jim O'Keeffe, John O'Mahony, Brian O'Shea, Jan O'Sullivan, Willie Penrose, John Perry, Ruairi Quinn, Pat Rabbitte, James Reilly, Michael Ring, Alan Shatter, Tom Sheahan, P J Sheehan, Seán Sherlock, Róisín Shortall, Emmet Stagg, David Stanton, Billy Timmins, Joanna Tuffy, Mary Upton, Jack Wall)

Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Emmet Stagg and David Stanton.

Question declared carried.