Dáil debates

Tuesday, 24 February 2009

Financial Emergency Measures in the Public Interest Bill 2009: Second Stage (Resumed)

 

The following motion was moved by the Minister for Finance, Deputy Brian Lenihan, on Thursday, 19 February 2009:

That the Bill be now read a Second Time.

Debate resumed on amendment No. 1:

To delete all words after "That" and substitute the following:

"Dáil Éireann declines to give the Financial Emergency Measures in the Public Interest Bill 2009 a second reading because:

(a) the Government has not set out a fair and balanced five year economic approach covering the correction of the public finances;

(b) the Government has not set out clear proposals to change the policies and personnel executing regulation of the financial services sector to usher in a new culture in banking; and

(c) the Government has not imposed an income cap on bank executives and has not insisted on new boards, new executives or new auditors in those banks that have or are to receive recapitalisation from the State.".

—(Deputy Richard Bruton).

5:00 pm

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
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Deputy Crawford was in possession. I understand that he is sharing time with Deputies Creed and Durkan by agreement. There are 17 minutes remaining in this slot.

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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I have already spoken at length on the delays in the farming grant. The Minister's and Government's decision in that respect is completely unjust and unfair. When the Minister for Finance spoke on this Bill he gave only two lines in a 12-page speech to the issue of farming which gives some idea of his thinking regarding the serious farming crisis. I will leave further comment on that issue to my colleague, Deputy Creed, except to say that banks are putting heavy pressure on farmers. It is clear that if the Minister for Agriculture, Fisheries and Food has met senior bankers he has not succeeded in spreading the message to the staff in local branches because they are sending out letters seeking urgent decisions on the repayment of the money used for farm buildings.

I want to comment briefly on the early child care support that has been removed by the Government. The support in question makes a significant difference to families, particularly if both parents have lost their jobs and no longer have incomes. It is a useful benefit for those in work who need to pay for child care. The thing that annoys parents the most is the Government's failure to try to close a loophole in the system whereby money leaves this country to support children in other countries. It is completely unfair that people who are living here can claim the early child care support on behalf of children who live in other countries. It is time that aspect of the system was stopped.

The pension levy is unfair. Last August or September, at a time when the Taoiseach was on his holidays and completely ignoring the situation, my party stated that there was a need to curtail some aspects of Government output. The imposition of the pension levy on people who earn less than €15,000 is a complete joke. There is no point in Government Deputies talking about fairness or equity, because they are not evident in this proposal. The levy is to be imposed across the board, regardless of the circumstances of the family of any civil servant. That needs to be changed before we vote on this Bill for the last time tomorrow night. It is hard to tell people who are earning €15,000, or even €30,000, that it is in the country's interest for them to pay this levy. When one considers that the former Tánaiste and Minister for Enterprise, Trade and Employment and her husband, who is a former chairman of FÁS, went on a junket to the United States at a cost of €150,000, one has to ask where this country is going. One can ask people to do things that are good and correct if one is acting in such a matter, but it is not acceptable to ask somebody to take the brunt of a cutback of this nature while one continues to live the high life. We all know what kind of job the Financial Regulator did, but he was given a golden handshake of €630,000 nonetheless. In such circumstances, one has to ask many questions.

Photo of Michael CreedMichael Creed (Cork North West, Fine Gael)
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I thank Deputy Crawford for sharing time with me. This is an extraordinary Bill, by any stretch of the imagination. It is an amalgam of various revenue-raising proposals. It provides for child benefit cuts, a public service levy and charges on health professionals. As Fine Gael's agriculture spokesman, I am most concerned about the section of the Bill that will defer payments under the farm waste management scheme.

We have to acknowledge that these economic times are unprecedented in the history of the State. We have almost run out of appropriate terminology to describe it. I do not think we have reached the bottom of the pit yet. People outside this House have not yet recognised the gravity of the situation we are in. I believe the Government will be obliged to introduce a new budget in the not too distant future. The public finances are unravelling at such a pace that a new budget, with tax-raising measures at its centre, is inevitable. The most regrettable thing about all of this is that no cohesive plan is emerging from the Government benches. The Government is not willing to adopt a bipartisan approach to solving this problem. The Government's "we know best" approach is not serving the nation at this critical time in its economic history.

It is not sustainable to borrow €55 million a day as we are doing at the moment. I wish to make it clear, before I move on to the parts of this legislation that relate to the agriculture industry, that Fine Gael will oppose this Bill on Second Stage because we do not believe it represents the comprehensive panacea that is required. While there is a price worth paying for the security that comes with public service employment, it is indefensible that the proposed public service levy is disproportionately skewed against lower-paid workers in the public service. As I have said in previous debates, the political classes in this House have to lead by example. If the Taoiseach had made a commitment, in the first instance, to start leading by example in this House, he would have gone some way towards addressing the problem. The current position is untenable. We need to address it.

I assure anybody who is not familiar with the problems in the farm waste management scheme that the point I would like to make in respect of the scheme does not represent special pleading. Farmers had to invest in waste management systems to enable them to stay in business. The systems do not generate any additional income for them. In fact, farmers are exposed to a liability as they will have to pay for the balance of the works over a number of years. Deputies who are involved in the business or farming communities outside this House will be familiar with the well-established principle to the effect that if one pays one's taxes late, one will have to pay penalties and interest. The same principle should apply to the State in respect of the contract into which it freely entered with farmers throughout the country who had obligations under the farm waste management scheme. Some 17,400 farmers were run up a chute when they were told they had to complete works under the scheme by 31 December last.

I do not know where to start when highlighting the debacle that was the handling of this issue by the Minister, Deputy Smith, and the Department of Agriculture, Fisheries and Food. If the Minister had accepted the thrust of the Private Member's motion on this issue that was proposed by Fine Gael last November, he would have extended the deadline and allowed farmers to complete these works throughout 2009. He could have made it clear to farmers that payments would be staggered if works were completed in 2009. It is entirely unacceptable to pull the rug from under farmers after they have organised finance with their banks and completed their works. That is what the Government is doing, in effect, by providing for staggered payments over three years without proposing to cover interest payments. It is entirely unacceptable, as I have said.

This House introduced the prompt payments legislation, with much fanfare, some years ago. It provides an example of how the State should do its business. Under the legislation, the State is obliged to pay its customers within 30 days. If I recall correctly, the charter of farmers' rights requires payments to be made within eight weeks. It is entirely unacceptable that such contracts are being unilaterally torn up by one partner to them. The Government would not get away with it if it were not for this legislation, which is a signal of the weakness of a Government that is trying to weasel out of contracts into which it freely entered.

I will propose two amendments to this Bill on Committee Stage. The first amendment will require the State to cover the interest liability that will accrue to farmers while they await full payment. I hope the Minister of State, Deputy Sargent, and his Government backbenchers will support that amendment. In the current climate, the cashflow problems of farmers are exacerbated by other problems in the Department of Agriculture, Fisheries and Food. I refer to problems with the refund of VAT that is due on certain works, for example. There are delays in getting documentation back.

A range of problems is associated with farm waste management. The Department can share the blame for the collapse in the dairy sector, which has been caused by the failure to invoke adequate market support measures. The House does not need to be reminded of the pork dioxin crisis. The agriculture sector is an engine that can contribute to the revitalisation of this country's economy. It needs to be recognised as an indigenous industry in which people work hard to create employment in their own farms, while sustaining thousands of off-farm jobs. In addition to our first amendment, which will deal with interest payments, we will propose a second amendment to provide for the payment in two instalments, of 40% and 60%, of the liability associated with the farm waste management scheme.

As the Minister for Finance is not here, I would like to ask the Minister of State a specific question. Some 17,400 farmers are involved in this scheme. If one works on the basis of an average payment of €33,000, the liability can be estimated to be approximately €575 million. Some €125 million has been provided in the budget of the Department. It is proposed to pay 40% of the liability in 2009. I estimate that 40% of the total liability is €230 million. I want clear answers. I do not want to tell farmers in a week or two weeks' time that it is proposed to pay 20%, rather than 40%. Where will the Government make up the shortfall for the €125 million provided for in its estimate, and the €230 million that is required to make a 40% payment in 2009?

The Government's mathematics simply do not add up. Its mathematical failings led us into this debacle the first day. Anybody with any understanding of that scheme would not attempt to hide behind a claim that they miscalculated because they did not expect as many farmers to be involved. It was widely known that the Government's liability was going to be in the region of €500 million, yet it failed to provide adequately for even 40%. I would like clarity on that issue. I also invite the Minister of State's colleagues on the backbenches to support the issue of interest payments on this matter.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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The sad part of this Bill is that we have to have it at all. It is also sad that it has taken so long for the message to sink in and for the Government to recognise that there was a problem. We now have fire brigade legislation that is attempting to deal with issues that were not dealt with over the past six or seven years. The public are now being hammered and must take a punishment beating for the inadequacies of the Government, for the inadequacies of the legislation that was in place, for the non-existence of regulation and for the non-observance of rules and regulations put in place during the DIRT inquiry. I cannot understand how the country is being held to ransom in this fashion.

We hear appeals for patriotism from the other side of the House and for people to put up their hands and accept some of the blame for what has gone wrong. What in God's name is this place coming to? Surely the power and the responsibility rest with the Government. Accountability for the actions of the Financial Regulator, the Department of Finance and the Governor of the Central Bank also rests with the Government. All these bodies report to the Government, so what was going on? We heard lectures over the weekend that the Opposition should tone things down, as they are causing a disturbance and upsetting the equilibrium of the Government. This is a load of rubbish. Where have the Government Deputies been? What have they been doing? Do they not understand what they have done to the country?

The first hit has been on the public service, which is to blame for all this. The public service is taking the punishment beating in the first instance. Did the public servants not do what they were told by the Government? Were they not working in accordance with the instructions of the Government? Have they not observed the rules to the letter? Were they not given benchmarking by the Government? Did the Government not recognise their existence? Did it not recognise the importance of having more public servants? For example, the health service contains an extra 33,000 public servants. Are these people not working in accordance with Government policy?

How is this proposal intended to affect the competitiveness of this economy? How does this affect the price of our goods and services as we sell them abroad? Have we not listened to lectures from the Government over the past few years stating that we would no longer be able to compete in the manufacturing sector and the services sector, and that we now had to look for high technology jobs? Is the Government now recognising that we must go back to the old reliables? Where now is the much vaunted high-wage economy? Where is the richest country in the world? Now that there have been two elections fought on the basis that we were the richest country in the world, what has happened since?

Have the Ministers of State on that side of the House looked into their hearts and asked whether they know everything they should know about these issues?

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

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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It is a pity I do not have several minutes more. Do they know all they need to know before they put these measures in place? They did not know that when they came into the House on 29 September and they have not known it at any time since. More information unfolds from the system as each day goes by. Is the Government capable of extrapolating the information necessary at this vital time for the stability of the economy and finances of this nation? I do not think it is. In such circumstances, the Ministers of State across the floor have a duty to themselves and to the country to stand up and be counted. That applies to all Ministers and Ministers of State, including the invisible Ministers who only come in here when it suits them.

Before it is too late, will the Government please come clean with the full extent of the problem that now faces this country? We should not be drip fed with information, as has occurred in the past three months.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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I wish to share my time with Deputy Kathleen Lynch.

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

6:00 pm

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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I welcome the opportunity to speak on the economic crisis to which this Bill is addressed. The people are anxious that we would be positive. We should know the character of that which has failed and brought us to this position, and be able to look at real options for constructing an alternative that would impact on their lives. Those most concerned are those who have already lost their jobs in the private sector, those whose jobs are threatened in both the private and public sector, and those who are now facing a reduction in meagre incomes as a result of this Bill, which will significantly reduce their capacity to participate in society, affect the opportunities available to their children, and affect their lives in the most basic areas.

Language is incredibly important, as it can mislead people or be of help to them. When we speak of solidarity, it is important to ask — solidarity with whom? The solidarity we need is that which would be at the root of a kind of citizenship that would see the economy accountable to political principles that are ethical in themselves. That version of solidarity is entirely different from the kind of solidarity that is present within the Irish business class. What do I mean by this? When one looks at the former directors of Anglo Irish Bank and the directors of other banks, as well as the members of boards right across the corporate sector in Ireland, one would see what we would call in the social sciences "a very dense network". It is where the chief executive of one body becomes the chairman of another body, and as the chairman vacates the chair, he becomes the member of the board of yet another company. The members of that circle have demonstrated significant solidarity with themselves.

It is shameful that the Government refuses to do what is necessary if we are to have public respect and a restoration of trust. If we are to reduce the size of the debt which we are paying in international interest payments, we need objectively to deal with breaches of the law and breaches of governance. Of equal importance is the need to send a symbolic message to state that the old circle is being put out of business and that a new kind of solidarity based on responsible citizenship — a genuine republicanism — is being put in its place. However, we do not see any suggestion that there will be such a sweep across the boards of institutions that have done such damage to Ireland and its future. We see little evidence that this will take place.

Being positive, I want to suggest it is a time for new ideas. Why is the Government unable to admit that the suggestion of regulation with a light touch was a disastrous tragedy which brought us into disrepute? Why is it unable to say that the worst Minister for Finance, former Deputy Charlie McCreevy, who is now a Commissioner and is regarded in Europe as a disastrous product of the neoliberal school of economics, has given it a poisoned chalice with his notion of regulation with a light touch? He has damaged the Office of the Financial Regulator, the Central Bank and the reputation of this country. The bill is being passed on to some of those who have the least capacity to pay. Will the consequences of Commissioner McCreevy's actions be carried by those who benefited under the so-called Celtic tiger? Will landlords with endless properties who are getting rental interest relief pay? No. Will the people at the top of the banking tree who have an unlimited capacity to purchase additional pension rights pay? No. Will those who have gained benefits from private hospitals on public hospital ground pay? No. Will middle-level public servants pay? Yes. Why is this so? This is very interesting.

I want to mention one of the most shameful things regarding solidarity because it is very important. When I speak about the banks I refer to those at the top of the tree. I find it somewhat cynical that those who chaired the boards of banks can write in The Irish Times today about the lean, flexible economy we need to create. It is very sad that ordinary people who work at lower levels in the banks sometimes encounter the opprobrium of members of the public. That is wrong because these people were recruited during that neoliberal period that drove down wages. Tellers at the counters of banks are not responsible for those who gave them low wages and little security, and who greased their own tills.

In the public service many people are taking the brunt of what has been directed at them, and this is very important. People tell them that because they have a meagre pension they are to be put into tension and conflict with the unemployed in the private sector. This is another scandalous suggestion, cynical and disgraceful in its manipulation. During the 2008 benchmarking most of the public servants who will pay the levy, those in the middle ranks, had their pensions judged to be worth 12.5%. They paid 6.5% on that and then the 1% levy. Now they will pay another levy. The suggestion was put around that because they had a pension of any kind they were the enemies of the private sector and, worse, that they were not contributing to their pensions. It was a disgraceful lie perpetrated and, sometimes, whipped up by the media.

I am a long time in politics and know moral cowardice when I see it. Let those who are asking people to wear sackcloth and ashes have the courage to say who should wear the sackcloth and who should have the ashes. Are they talking about all those who work in banks? Why have they not the courage to name the people they know well, whom they invited to their seminars and to whom they would look for philanthropy? On the other side when they speak of the politicians they are afraid to name those who subscribed to the neoliberal model, were in favour of regulation with a light touch and went on to bring this message from Ireland to Europe. This is the lazy and cowardly way to save the politicians and bankers and instead to drag down all politicians and the person with the most menial position in a bank. Shame on them for their lack of courage.

We can examine what is happening in all the European countries as they respond to something undeniable. Here I agree with members of the Government. There is an international credit crisis, however within that there is a home-grown Irish crisis, namely the property bubble that was created in Ireland. From 2006 it was perfectly clear that we were receiving an inordinate amount of property-related revenue. We were looking on. People can suggest why that is. The Governor of the Central Bank suggests his job relates to the solvency of the banking system so he accepts what they say to him. The Financial Regulator accepts the auditors of the banks and the Department of Finance accepts the legal opinion offered to the delinquent banks. This is lovely and very decorous, but totally insufficient.

This comes from something that has been developed through the second half of the 1980s to the present. People opposed the role of the State, but what are these people doing now? They are turning to the State and using it to take out of ordinary people's pockets money that will prop up a failed and unaccountable banking system. What happened when we wanted the State to invest in schools and infrastructure and be involved in industry? They said we must keep the State out and favour regulation with a light touch.

The old gang is still there. If we are to move forward we must objectively make changes and send a symbolic message that we have cleared out the stables and that they are disqualified from boards in which the Irish Government will have a significant shareholding. We would support such moves by the Government and moves on job creation. We would fully support the Government if it suggested it would have not just a bord snip but a board that would examine every obstacle to retraining, returning to education or getting a caring occupation regarded as a full job and every delay in redundancy payments. However, to get to the point of creating jobs in the green and social economies and to return to the traded economy that is producing and exporting we need to get the banking chaos out of the way. We cannot do that on a drip, drip basis.

That is why the Labour Party has suggested eight principles to deal with banking, including the establishment of a banking commission. Those eight principles exist objectively and the international community can see them. This year we are paying €4.5 billion interest on the national debt and we spend €55 million per day to run the country. We will spend 25% of all our tax on interest and we are borrowing at 2.5% over the prime German rate precisely because of the poisonous circle that brought Anglo Irish Bank and us to where we are.

This is the kind of immunity they desire. They sit on other boards and are the admired class. They are the people who change one from the other. People even appoint them to State and semi-State boards. It is a time for a new politics and a different connection between economy and politics. It is time for ethics and transparency. It is time to end that old, poisonous circle, and to tell the world we are ending it and that we are part of a new kind of thinking that has the best of intellectual work in economics, talking about the social economy, a connection between ethics, society, politics and economy. That means it is the end of the old neo-liberal myth. It is time for Charlie McCreevy to go away and repent, not come back here. He has left a deadly legacy and those who try to prop it up are no friends of Ireland as we try to come out of this crisis.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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There is not a person reaching maturity in Ireland who is not terribly worried about the situation in which we find ourselves, and that is as it should be. We really do not know how or when we will come out of this, but we know what brought us here and it is important that we analyse that aspect.

Recently I visited another country in severe weather. That country did not stop and I envied its transport and health systems. This is a country at which, I suppose, the Minister of State, Deputy Mansergh, and I would look at and say thank God it has joined the European Union because that will bring it on and it will benefit in the same way as Ireland. That country had better transport, health and education systems than Ireland, and it had a better social and moral fibre, yet it is a country which we looked on as being not as developed as Ireland.

The question we need to ask ourselves, which everyone is asking and which the Labour Party has been trying to get the Government to answer for a number of years, is what we did with the money generated during the boom. What we did with that money is what brings us to this point. We gave away that boom money and had a party, which brings us to Charlie McCreevy. We encouraged people, by way of tax reductions and incentives, to drive on an economy that was based on one single aspect. We did not put in place a good transport system and no matter what money we threw at our health service, we did not improve it. God help us with our education system, which is worse than it has been in the past 20 years.

When the economy took a downturn, what did we do? First, we attacked the elderly, the very people who had ensured we had the wherewithal to have a boom in the first place, but we rowed back on that. Next we attacked people with a disability. We decided that they would no longer be entitled to the disability allowance at 16 and would have to wait until they were aged 18, but we rowed back on that. The next target was children with special needs in school, but we have not rowed back on that. Those children, the ones who need the type of expertise we can provide to ensure they have some quality of life in the future, must now survive in classes bigger than we originally intended — 27 on average — with no special needs class.

Our next target is the public service and the Civil Service. No one in this country does not realise that we must do something because we are in serious trouble. However, what these people say, and what we agree with, is that it is deeply unfair. It is the unfairness of scapegoating one sector in society that creates the anger. The attacks on the Civil Service and the public service did not begin in the newspapers. They began with politicians demanding that they be brought to heel as if in some way they had run riot in the country when we all know that is not true.

We need to take hold of what is happening in this country. The Government, still deeply affected by the influence of the Progressive Democrats, who, I remember well, insisted on light-touch regulation and lower rates of tax and also insisted that we privatise our health service, must take hold of the situation and deal with it in an equitable fashion.

I think it was Abraham Lincoln who stated that there are only two certainties in life, death and taxes. There is only one equal system that should apply, which is taxation. With taxation comes all of the protections. One cannot tax people on low incomes, because they are outside the net, while people who are in the system have protection regarding health expenses, if they can claim them back, and mortgage relief. It is the unfairness of what the Government is doing that creates the anger. This country — it has done it before on several occasions — is prepared to accept pain and that every one of us must put our backs to the wheel, but there is only one mechanism to do so, which is fair taxation.

Another matter has brought us to this point. I heard the exact same arguments ten years ago about the employment of women as I hear now about appointments to boards, that there simply were not enough qualified candidates. That is utter rubbish. It was a little golden circle. When government becomes that involved and embedded in industry, and when it becomes part and parcel of the golden circle, then there can be no result other than what we see today.

We need the Government to start clearing out those boards and people to start having trust in them. One would not trust a bank that did what these people have done with the few bob one saved all one's life on which one must rely as a pension, and one is quite right not to trust them. Share prices dropped again today. This is because, basically, the markets do not believe what the Government is saying. The boards should be cleared out. There are enough talented people out there in the world who could take those positions. It is not rocket science. Given the salaries they were paying themselves, applicants will be queuing up at the door.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
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The Ceann Comhairle has advised me that two Opposition slots were taken together in error. As I understand it, I will now call the Minister of State, Deputy Mansergh, and then another Fianna Fáil slot will also be due.

Photo of Jimmy DeenihanJimmy Deenihan (Kerry North, Fine Gael)
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Why?

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
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The Ceann Comhairle advised me that when he called——

Photo of Jimmy DeenihanJimmy Deenihan (Kerry North, Fine Gael)
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There was no one across the floor. That is their fault. They miss out.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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Sorry, there was.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
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There was. The Ceann Comhairle asked me to apologise for not calling the Minister of State, Deputy Mansergh, and he has advised me that such is the approach I should take. If Deputy Deenihan has any difficulties, he must go to the Ceann Comhairle's office.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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If that is the approach, so be it.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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Deputy Lynch's quotation was Benjamin Franklin rather than Abraham Lincoln. It is always a pleasure, at one remove, to follow the passionate rhetoric of Deputy Michael D. Higgins. He started quietly but I knew he would not be able to keep that up.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
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The Minister of State without interruption. I ask the Deputy to resist it.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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Take your own advice.

Photo of Jimmy DeenihanJimmy Deenihan (Kerry North, Fine Gael)
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They did not say anything.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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The justification for this Bill is strict necessity. Due to a catastrophic fall in revenues, we have moved from a comfortable surplus position or near balance in the Government's accounts over a long period to a situation where this year we will be borrowing €18 billion or 9.5% of GDP, which is over three times the limit allowed for a member of the eurozone. We first of all must contain what has been a spiralling deficit and then take further steps to reduce it, without killing off the economy in the process. If we take a lesson from recent history, 20 years ago we started the process of national recovery by putting the national finances straight, alongside accompanying development measures. We will not achieve recovery unless we address that hole.

We are often inclined to exaggerate the outside world's interest in our domestic dramas, scandals, and follies. This time, however, there can be no doubt about the keen attention abroad being paid to potentially vulnerable eurozone economies, including ours, all the more so perhaps because of the star rating accorded to us up to the recent past. The question being asked is whether the Government in particular, and the political system in general, are capable of handling the situation.

If we were to withdraw this Bill or vote it down, as many are demanding, we would risk such an erosion of confidence that our economic destiny, for the first time since independence in 1922, very likely would be taken out of our hands. We would face as a condition of the emergency support we would then require, whether from inside the eurozone or outside, demands for far more drastic medicine, which would quite possibly make present complaints about fairness and equity seem like a storm in a teacup. Those of us who work in more protected areas of the economy and who find it difficult to accept that we now find ourselves in a completely changed situation need to wake up fast.

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

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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Ireland in current circumstances can no longer afford the present pay bill for the non-commercial public sector, a sector which has grown by more than 100,000 people since 1997. There are only two choices: substantial redundancies or across the board net reductions in pay. In many other countries without a social partnership culture, when there are economic difficulties, public servants are simply let go. Twenty years ago, we adopted a fairly expensive voluntary redundancy scheme. Social partnership began as a response to times that were also very difficult. It served the country well for 22 years, both when restraint and co-operation in crisis management were needed, and through the better times. An unprecedented situation like the present, when not merely a wage increase deferral but net reductions in pay, however arrived at, are called for, was never envisaged. I fully understand the difficulty trade union members have in accepting that and I respect their protests. They have to do what they have to do, but so must the Government.

There is a widespread conception about the relationship between public representatives and their more organised constituents, which suggests that Deputies, Senators and councillors are political invertebrates, and that all that is needed to pull them into line is to suggest sufficiently strongly and preferably in numbers that a certain course of action or persistence in it will lead to votes being won or lost. Personally, I always find that one of the least persuasive arguments, not taking kindly to being either bribed or threatened. While most of us will seek re-election, what we do and intend to do while we are here is more important. Perhaps it is time to re-read Edmund Burke's letter to his constituents.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Very conservative.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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He was not that conservative in the 1770s. Later he was, but not then.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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He was a liberal in comparison to Fianna Fáil.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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The seeds of that conservatism had been sown.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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It was 200 years ago, a much more conservative society, but he was still very eloquent on that subject and he was progressive on the American revolution, the period we are discussing.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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He was even passionate.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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The Chair must stop us in our dialectical debates.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
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They are very entertaining.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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There is much talk of a need for leadership, as if leadership would be something popular. This Bill, following the failure of the social partnership negotiations, is an act of leadership by the Taoiseach and the Government.

Obviously, the Opposition parties do not want Government leadership. They want to lead themselves, doing their best to disguise what they would have to do in government beforehand, as we will all have to go far beyond what has so far been decided up to today. Would they rescind this Bill once enacted, or do more than tweak it, as the Taoiseach is willing to do? I doubt it.

The Labour Party is reverting to its roots, as the parliamentary mouthpiece of the trade union movement. I remember, although I do not have the exact quotation, Deputy Ruairí Quinn admitting in a moment of candour about the Fine-Gael-Labour Coalition Government of 1982-87, of which he was a prominent member, that what it had done had helped to prop up public services and employment. We had at that time a low expectations economy with no more than two thirds of the average EC income per head, half the employment we have today and enterprise suffered.

Today, we must be more ambitious. There can be no question of just imposing higher taxes on the wider community to prop up a level of State-supported jobs, incomes and pension entitlements that is no longer affordable.

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

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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It is not Thatcherite in the least.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Of course it is.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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I detest Thatcherism and have almost as much distaste for neo-liberalism as Deputy Michael D. Higgins.

Leadership is about spelling out those facts clearly, and about maintaining an iron resolve to face up to the problems facing our country and finding the necessary solutions, of which this can be only one instalment.

The major change in our circumstances, to which we have to adjust, is our membership of the eurozone. Its advantages are that we are no longer exposed as a small country to currency speculation or exorbitant interest rates, and of course it has immense convenience. The downside is that uncompetitiveness and excessive income levels cannot be levelled out by devaluation disguised by domestic inflation. What is required is that we accept income reductions. The market will face this to a considerable extent in the unprotected sector, but the public sector has to take corresponding action.

When benchmarking was introduced, it was designed to achieve two things, namely, to match the perceived rapid increase in rewards in the private sector and to eliminate industrial disputes based on rigid relativities. The era of social partnership has brought about a highly beneficial improvement in industrial peace, with the number of disputes and days lost reduced to negligible levels compared to earlier decades. Benchmarking was confined to the public sector and created, as we are well aware, considerable resentment in the private sector. The second exercise was largely neutral and made very few changes.

What is taking place at the moment, and what is contained in this Bill, is in effect benchmarking in reverse, a rebalancing exercise. It recognises that on a cost-benefit basis public sector pensions are on average worth a great deal more at the present time than the average private pension. The pension levy, though unpopular, is an attempt to establish greater fairness across different sectors of the economy, but is above all designed as the least unacceptable way to relieve what has become an unsustainable level of Government expenditure.

Historically, many measures, including income tax, have been introduced on the falsely optimistic understanding that they were temporary. The Minister for Finance has correctly given no such assurance in relation to the pension levy.

Any unexpected fall in living standards is likely to put most people under considerable or even great financial pressure. Few of us have uncommitted income and are debt free. Reducing outgoings is difficult and painful, and the cri de coeur coming from people at this time is overwhelmingly genuine. Unfortunately, as a country and as a society, we have little choice in the matter, although I note with satisfaction the comment from Age Action that the elderly are least affected by these measures.

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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No.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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The search for people to blame is in full swing, but we should guard against too simplistic an analysis. While imprudent actions, or worse, at home have certainly greatly exacerbated the situation, the budgetary difficulties and loss of competitiveness we are facing are not caused solely by a few bankers and developers. Making them pay for their mistakes may help assuage public feelings, but will not fill the holes in the dyke.

We need a perspective on what has happened so suddenly and why, apart from the obvious global diversion. We are never going to abolish the economic cycle. While political leaders worldwide promise from time to time to abolish the stop-go, boom-bust and to bring about sustainable growth, implying that it is possible to continue onward and upward, I disagree. I do not believe we will ever again in this country view a tearaway growth that we never experienced before as an unalloyed blessing, where in fact it carries with it the seeds of threat. In biblical Egypt, there were seven fat years and seven lean ones. Every farmer knows to save fodder for the winter. We are fortunate here that the much maligned former Minister for Finance, Charlie McCreevy, and his successor, the current Taoiseach, Deputy Brian Cowen, put aside surpluses into the national pension reserve fund, which thankfully has given us some of the money we so badly need to cope with the banking crisis.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Half of it went to the banks.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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The Celtic tiger years, to some degree at least, benefited virtually everyone and enabled a great deal to be done for the country that would have been previously unimaginable because it was far beyond our resources. The national motorway network, begun in the late 1990s, which will be finished next year, is one instance of this.

The plentiful flow of capital taxes, stamp duty and corporation tax enabled us simultaneously to cut personal tax, vastly increase social service spending, and reduce the real value of the national debt to very low levels.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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With the second lowest social protection in Europe.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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Much of that has dried up, necessitating that we cut some of the spending that was dependent on it and substitute base-broadening sources of revenue that are less fair-weather dependent.

When nearly everyone to a greater or lesser degree was doing better than previously — in many cases, a lot better — there was less general concern that a few were making astronomical gains. A harsh spotlight has now fallen on inflated salaries and pensions in a number of sectors, as well as on many of the wealthiest in our society, who simply opt out of tax residence here altogether and choose for themselves what they support as good causes. Worldwide, amongst OECD countries, there is less and less tolerance for the bank secrecy that allows evasion and for tax havens which do not comply with international codes of practice. Ireland is a good citizen in this respect and a sharp distinction must be drawn between tax competition and tax havens. Such issues require collective international action that will not harm the interests of individual countries that have much less clout than, say, the United States.

Moral discourse here has far too often been narrowly focused, even stunted. The public good and the need to live up to ethical standards have too often been ignored or circumvented.

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

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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Earlier societies had crude methods for making those who had grown obscenely wealthy at public expense accountable through star chambers and chambres de justice.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Put them in the stocks.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
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Much of the initial anger of the French revolution was directed at financiers and speculators. Today, strictly within the rule of law, those who have brought disaster on what would once have been regarded as the ultimate in sound institutions, the bankers, must face the consequences. Whether legally or morally, they have a liability for the debts they have incurred, which must not be heaped on the taxpayer to clear up, while they go off and enjoy extravagant lifestyles in the Caribbean or some other warm foreign climate.

From now on, people will be judged by the extent to which they are prepared to pull their full weight, to give example and, where necessary, to forego personal advantages. The effort of everyone is needed. Public service is and should be a high calling, adequately remunerated but without exploiting the capacity of the taxpayer, which may fall as well as rise, as if it were virtually infinite.

The sooner we take the necessary steps for recovery, the better chance we have of emerging from current difficulties relatively early. This Bill is one of the decisive first steps. We will not see anything like the Celtic tiger again in our lifetime but we can do a great deal in future, when and as we recover, to pull prosperity and equity closer together.

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

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
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I thank the Minister of State. The next speakers are Deputy Chris Andrews and Deputy Cyprian Brady who wish to share 20 minutes. Is that agreed? Agreed. I call Deputy Andrews first. He has ten minutes.

Photo of Chris AndrewsChris Andrews (Dublin South East, Fianna Fail)
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I welcome the opportunity to speak on this Bill. The purpose of the legislation is to provide for the payment of a contribution by persons in the public service, including Members of the Houses of the Oireachtas and certain other office holders, who are members of an occupational pension scheme or a pension arrangement.

As regards today's investigation on Anglo Irish Bank, like everybody else in the House, I am angry with the behaviour of senior bankers. There clearly was a small, cosy group of business people who felt that regulation was for little people. They felt they were untouchable and if the global financial meltdown had not occurred, they could well still be untouchable. Today's action by the Garda Síochána and the ODCE is welcome but it is and must remain a matter for them. I hope this will be the first step in restoring the trust that ordinary people have lost in the banks and also, it must be said, in the political system. We must allow this investigation to take its course. It would be easy to hit out and name everybody we believe is guilty of these banking crimes. We would feel much better if we were able to name and shame everybody, but it would not necessarily mean that justice would be brought to those who deserve it. These bankers lost their moral compass, but we must not say anything that will let them get away with their crimes. While these issues are linked, the most important issues are jobs and financial stability. This Bill is one step in bringing that stability back to the economy.

The levy will be difficult for everybody to swallow, but it is the least unacceptable form of levy. There has been resistance to the Bill since it was first proposed but implementing tough decisions is rarely popular or easy to do. It is the Government's job to make those difficult choices in the best interests of the country and the economy, regardless of polls. As politicians, we are always cognisant of public opinion but it is important that these decisions are taken without keeping one eye on opinion polls. It has got to that stage. We would neglect our jobs as public representatives if we were to pay too much attention to polls at the expense of making tough decisions, albeit the right ones.

Ireland is facing hitherto unseen economic challenges on an unprecedented scale. We have had difficult times in the past but things have never gone from boom to bust at this speed. It is normal for politicians to try to score political points but it has gone beyond that now. Some people are calling for an election but that would only paralyse the country at a time when every day is important and our reputation within global financial markets must be restored as a matter of urgency. An election would only paralyse the political system and do untold damage to domestic financial markets. The easy option is to call for an election but it would do more harm than good.

As with every other TD, my office has been inundated with calls and e-mails about this levy from concerned civil and public servants. I fully appreciate the challenges the levy places on individuals and families, but it is in everyone's interest that we should deal with this issue responsibly given the problems we face. We must not skirt around the difficulties and there can be no escaping the facts, regardless of how unpalatable they may be. We are in the midst of a global recession whose effects are being felt in every developed country. Ireland operates an open market which, in general, has been positive for us over the past 20 years. It has, however, left us exposed in the current international downturn.

This, coupled with the decline in the construction industry, has meant the economy has deteriorated at a faster rate than anyone could have predicted. The State will have to borrow €18 billion this year at steeper interest rates to finance current and capital spending. As the Minister for Finance pointed out, this equates to borrowing €4,500 for every man, woman and child in the State. The current rate of spending simply cannot continue and savings must be made.

The steps the Government is taking is about protecting jobs and assisting small and medium-sized enterprises that generate employment. They are the risk-takers, create jobs and give stability to society. Bringing down costs is a matter of urgency. Costs across the board must come down by at least 30% to 40%, if we are to be able to compete in a globalised economy. Yes, the pension levy will be difficult for people. However, it is only the first step and there will be significantly greater pain to come for all sections of society.

Some union officials seem to recognise this but others are using out-dated political rhetoric. They need to grasp an understanding of the difficulties the country is facing. Some of them are still reading Karl Marx and using his doctrine. Until now, the private sector has borne the brunt of the economic downturn. In January, 1,000 people a day lost their jobs in the private sector. To claim the public sector is being targeted unfairly is not the case. Workers in the private sector are paying with their jobs. The decision to implement a pensions-related deduction is not easy but it is deemed the most fair and equitable solution. Public servants enjoy significantly better pensions than the majority of workers in the private sector. The benefits are higher and, more importantly, they are secure.

It has been claimed the wealthiest in society are not being asked to contribute their share. In fact, the lowest paid are protected and those on higher incomes contribute most. Currently, 38% of the entire workforce pays no tax at all. It should be noted that 6% of the wealthiest in the workforce pay 50% of all our taxes. Everyone in a position to help must do so. This levy applies to the salaries of all Deputies and Ministers, who have also taken a 10% pay cut already. Other measures will have to be introduced. Those who have more money will have to pay more. The higher tax band will be increased and I would not be surprised if the increase was to be 8%.

If another solution that could deliver the same savings were proposed, it would be considered. Some union leaders, however, are not interested in solutions but rhetoric. The Bill's proposals must be implemented for the good of the country.

Photo of Cyprian BradyCyprian Brady (Dublin Central, Fianna Fail)
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I welcome the opportunity to speak on this very important issue facing the country. The introduction of the Financial Emergency Measures in the Public Interest Bill is the first step on a long road that lies ahead of us. The daily and weekly economic developments in, and outside of, the country have opened people's eyes to the fact that Ireland is a small and vulnerable economy in the European context, never mind the global one. We have competed for many years in a globalised market. We now find that everyone is directly affected by what is happening outside and inside our borders. I cannot blame people for being concerned about their economic position. When we had crises in the 1960s, 1970s and 1980s, there was not as much information available as there is today. People are exposed to 24-hour news broadcasts and the Internet and amass much information about what is happening elsewhere.

We should not be sorry for what we have achieved in the past 20 years. Much progress has been made which no one can deny. There is much rhetoric about how we squandered this and that. However, when one drives from one end of the country to the other, the improvements in our infrastructure are there for everyone to see. A much larger percentage of our young people complete second level and third level education, which will stand to us in the years to come. The difference between now and the 1980s is that we have a much better educated and progressive population, open to new ideas. As we have proved over the past 20 years, we can take new technologies and adapt them to compete with the rest of the world. In Dublin's inner city, young people are better educated than they were in the 1980s. This is a strength upon which we can build.

Every effort must be made to sustain and protect the economy which is the thrust of this Bill. As one who started at the lowest rung in the Civil Service, I appreciate where people are coming from on the pension levy, particularly those on the lower wage scales. When starting off in a public service job, one could be a long time in one position without getting promotion. When I started in the Civil Service 25 years ago, there was an embargo on recruitment and promotion while a health levy was introduced.

Every Member on this side of the House recognises the role played by the public service. It is one of the main pillars of the country. We are not out to do it damage. We are asking the public service to come with the rest of us to contribute in remedying the current economic position. We are not picking on civil servants. It is extremely dangerous to go down the road of pitching public against private. No one, either inside the House or outside, should go down that road as it is in nobody's interest. It might sell newspapers or get some coverage on television. Society, however, should not be divided. The only way to tackle these current economic problems is by sticking together. In the past 20 years, we have benefitted from social solidarity and partnership between all stakeholders. This has proven hugely beneficial to Ireland Inc.

Prior to Christmas we reached a stage where, despite everyone's efforts, agreement could not be reached in respect of one matter. It is to that matter the Bill before the House relates. We should not throw out the baby with the bathwater. We should continue to negotiate with the social partners. Rather than engaging in rhetoric and denigration for the sake of doing so, it is crucial that we should call on all sectors to come together in order that we might work our way through the current difficulties. That is the only way we will survive.

The Government has been obliged to take difficult decisions in respect of which no one is in favour. However, the alternatives are a matter of concern to us. The further we go down this road — we have a long way to travel and the Bill represents only a first step — it will become clear that the decisions being taken now are in the interests of the country, of protecting ourselves and of sustaining what we have achieved to date.

Previous speakers referred to the banks. Like other Members, I am particularly disappointed with regard to the way some of the financial institutions carried out their business in recent times. However, the reality is that we need a banking system — an economic framework within which people can save money or take out loans and mortgages to invest in their future. Unfortunately, the existing system is under severe pressure as a result of both domestic and international events. The actions taken in respect of Anglo Irish Bank, in particular, and the financial institutions, in general, in recent months were measured and necessary steps. These had to be taken to regularise and stabilise our financial system.

The bottom line is that we need a banking system. We also need to protect people's savings and mortgages. If we throw our hands up and walk away, these individuals — not to mention the thousands who each day deal with members of the public on behalf of the financial institutions — will be adversely affected. Those at the top in the financial institutions have made mistakes and they will be called to account. Guarantees in respect of the latter have been already forthcoming from those on this side of the House. When the measures that have been put in place begin to take effect, people will appreciate that some of the difficult decisions we are making are designed to protect the country's future. The alternatives do not bear thinking about.

I respect people's right to vent their frustrations. Like other Members, I have spoken to many public servants during the past couple of weeks. I also spoke to people in the private sector who are working three or four-day weeks or whose jobs are in danger. These are the people we must protect. As already stated, some of the measures required in this regard are unpalatable and difficult, particularly for us, as politicians, but also for those in the wider community. In time, people will perceive these measures as having helped our cause. I am of the opinion that they will ensure Ireland continues to thrive.

Photo of Jimmy DeenihanJimmy Deenihan (Kerry North, Fine Gael)
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I wish to share time with Deputies Perry and Neville.

I welcome the opportunity to contribute to the debate on the Bill. I listened to a number of Government speakers who offered a stream of negativity and cast their eyes towards this side of the House in order to apportion blame to Fine Gael in respect of what has occurred. My party has not been in power for 12 years but the economy was in good shape when we left office. What has been said is unfair and it will not wash. However, the previous two speakers, Deputies Chris Andrews and Cyprian Brady, made extremely positive and balanced contributions. If there was more of that kind of debate, it would assist the process and increase the standing of this House among members of the public. Deputies Chris Andrews and Cyprian Brady and I might differ in terms of approach, but good and wholesome debate of a magnanimous nature — which the Acting Chairman, Deputy O'Connor, promotes on most occasions — is always welcome.

Fine Gael set out its stall early in respect of the pension levy. I was a Member of the Houses of the Oireachtas in the 1980s during an extremely challenging period. This was the era prior to American investment, the technology revolution, the advent of huge amounts of EU Structural Funds, the tax amnesties and the inquiries. It was also the era prior to the banks beginning to lend money. During the period in question, the banks penalised people and put them out of business. Due to the fact that the banks could set them, at one point interest rates stood at more than 22%. At that time, the banks were reckless with people's livelihoods in a different way and did a great deal of damage to the country.

I was a Member of the Seanad during the period to which I refer and I am in a position to state that there was not one positive contribution made by those who were in opposition. They did not indicate the areas in which they would spend money or outline where they would make cuts. Instead, they engaged in total opposition. Fine Gael is at least bringing forward proposals in this regard at present. We made such a proposal in respect of where the €2 billion in savings might be made. That is unprecedented in this House. Deputies Bruton and Kenny have put forward several proposals, but they appear to be falling on deaf ears. People do not want to give the Deputies credit. What Deputy Bruton has stated in respect of bad banks, good banks, etc., might be the only option.

I wish to speak on behalf of public servants, particularly those in my constituency who are friends of mine. I received approximately 400 e-mails from teachers, gardaí, HSE employees, lecturers, etc., who are angry and are of the view that they have been identified for special treatment. When these people consider that there are 20,000 individuals in the private sector who each earn more than €200,000 per annum and whose incomes are not being touched, they become extremely angry.

Two Saturdays ago, I was visited at my clinic by a woman who is married to a civil servant who works in the town in which I live and who earns €45,000 per year. They have two children and lead a normal life. She informed me that when they pay their expenses — mortgage, etc. — they have only €100 left over to purchase clothes and other things for themselves and their children. The family to which I refer is living on the breadline. However, the average wage in the public service is between €30,000 and €33,000. Those earning that amount are really being penalised. The case has been made that people on higher incomes who can reclaim tax, will pay less than those to whom I refer. That is why they are angry and annoyed.

Deputy Cyprian Brady referred to a wedge. That wedge has been driven deep and the solidarity that was created through social partnership — of which I am very much in favour and which I would hate to see being abandoned — has disappeared.

People are becoming extremely riled in respect of the issues relating to Anglo Irish Bank. The Government nationalised Anglo Irish Bank but allowed those who took the decision on what has been described as the Quinn shares deal and who were involved in the loan from Irish Life & Permanent to remain in charge. The old guard has regrouped and retained control of the bank.

While I was pleased to learn members of the Garda Síochána were sent into Anglo Irish Bank today at the request of the Office of Corporate Enforcement, why was the Garda not involved earlier? Senior executives of the bank should step aside until the current investigations by the Office of Corporate Enforcement and Financial Regulator have been completed. The Taoiseach has indicated these executives must receive due process. Let them step aside and allow others run the bank while the investigations are taking place.

Many farmers around the country are up to their necks in debt as a result of decisions taken on the farm waste management scheme. They were forced to borrow money and proceed with works because of the manner in which the scheme was administered, the deadline which applied and so forth. They are now in trouble as they face the prospect of a 15 cent reduction in the price of a litre of milk, non-payment of the rural environment protection scheme payment arising from bureaucracy and the non-payment of moneys under the farm waste management scheme. The Minister of State, Deputy Finneran, will know many farmers in County Roscommon who will be adversely affected by the provision to pay outstanding moneys under the farm waste management scheme in instalments of 40%, 40% and 20%. This will create a further crisis shortly.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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Last week, one of the national newspapers featured a piece by a commentator which concluded with the words, "As we approach the inferno we see Dante's injunction: "Abandon hope all ye who enter here."" Has the nation come to this point?

Irish people have a tendency to swing between the outer limits of optimism and pessimism and spend little time in the middle ground. In retrospect, it is clear we have passed through a period of foolish optimism. However, we must avoid entering a phase of hyper-critical self-flagellation, depression and fatalism in which everything appears to be outside our control.

Throughout our history, we have experienced bad and poor times but a sufficient number of people had faith and conviction in the future of the country to allow us to muddle through. This is also the case at present. Ireland has much going for it. It is a relatively rich country with a good standard of living and well educated population. Irish people can also muster a real sense of community when needed. The reality of life, especially in a crisis, is that we can only do the best we can. Somehow we will muddle through but in trying to find ways to address the present crisis we must face reality. The Government, too, must face reality because citizens' confidence in it has been shattered. The future of the country is at stake and confidence in the country and Government can be rebuilt only through facing reality and dealing honestly with the reasons we found ourselves in the current mess.

In my experience in business I have found dealing with a crisis to be simple. It is akin to tackling a house on fire in the sense that one can either react by trying to put out the fire with whatever tools one has at one's disposal or one can listen to other voices who tell us we should sit down and review the position in a series of meetings and then, armed with all available information, make a plan to put out the fire and rebuild the new house. Crises demand real and immediate action.

As a country we face one major problem, namely, the growing national economic crisis and the loss of thousands of jobs every month. We also have a massive hole in the Government finances and a banking crisis. The latter is a sideshow when viewed in the context of the well-being of the national economy. The preservation of jobs must, therefore, be our top priority.

The Government appears to be almost relieved that the focus is on banks, bail-outs and public sector levies as these distract from the crisis it caused in the national economy. The first and immediate step to restoring the national economy must be to rebuild consumer confidence in order that domestic demand can lead to recovery. A fundamental problem is that in Ireland, as in most other countries in the world, people are frightened and domestic demand has declined, leading to further falls in Government tax income. In our case, this is evident in declining revenue from VAT.

To regenerate consumer confidence an essential first step is for the Government to demonstrate, for as long as it remains in power, that its members are people of genuine character and substance. I do not say this to score political points. The Government must clearly accept responsibility for its part in creating the mess in which we find ourselves. To show it is capable of genuine leadership in this crisis, it must first show it is able to deal honestly and openly with reality. If trust is to be rebuilt, it must acknowledge its responsibility for its part in the making of the current crisis. Why should we expect anyone else to squarely face reality when the Government still refuses to acknowledge reality? It must tell the truth about what happened and place the facts in the public domain to enable us to start to address fundamental issues and restore confidence in the economy. If it is not able to do this, it must step aside and allow the Opposition to try to solve our current problems.

On consumer spending, I do not belong to those who believe governments should spend ever increasing amounts of borrowed money to prime the economy. All past evidence shows that an excessive proportion of such additional consumer expenditure is spent on imports, thus making a minimal contribution to the national economy. Anecdotal evidence also suggests that consumers are using any spare cash they have to add to savings or to pay off debt. An additional financial stimulus using more borrowed money would have little direct impact on the national economy.

The critical element of any solution must be to address the issue of jobs. We must take all possible steps to protect existing jobs. Ireland is an open, exporting economy and only the manufacturing sector can provide the volume of quality jobs to give full employment. Companies are closing down and jobs are moving abroad, in some cases to other European Union countries as opposed to low wage economies elsewhere. This demonstrates that our costs are seriously out of line with competitor countries. We must reduce costs in the public and private sectors and State agencies must work intensively with local businesses to help protect jobs. There is no other solution in the short to medium term. Stimulating job creation must focus on local enterprises, including the critically important retail sector.

Photo of Dan NevilleDan Neville (Limerick West, Fine Gael)
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I propose to address a specific issue about which I am extremely concerned in the context of the recession and increasing unemployment. International research dating back to 1987 shows that in times of recession the incidence of suicide increases considerably. Research done in every decade since the 1980s has confirmed this is the case.

In times of recession, stress levels increase significantly among those who are rendered unemployed. Mental illness also increases among this group owing to external factors affecting its members. Depressive illness, which contributes to suicide, increases, as do financial difficulties. As we are aware, financial problems can give rise to a belief that one cannot deal with one's circumstances other than by taking the desperate act of ending one's life.

Health problems also increase among those who are made unemployed. General health problems frequently result in emotional problems and, in some cases, psychiatric illness. Opportunities to engage in education are no longer as widely available in a recession. People who are made unemployed fear for their futures, their families and their homes. They experience anger about the position in which they find themselves, are disappointed and insecure and feel a sense of hopelessness and low self-esteem. This combination is a recipe for serious problems and people will become suicidal. Unfortunately, there will be an increase in the number of people who see no way out of their hopelessness other than to consider taking their lives.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
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I am sorry, Deputy, but it is 7 o'clock.

Photo of Dan NevilleDan Neville (Limerick West, Fine Gael)
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I will develop this point later.

Debate adjourned.