Dáil debates

Thursday, 9 October 2014

Ceisteanna - Questions - Priority Questions

Public Sector Pensions Levy

9:55 am

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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5. To ask the Minister for Public Expenditure and Reform his views on a reversal of the pension levy for public sector workers; and if he will make a statement on the matter. [38321/14]

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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When will the Minister reverse the pension levy for middle and low-income public sector workers, as we now enter the sixth year of austerity?

Photo of Brendan HowlinBrendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
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The public service pension related deduction, PRD, referred to as the pension levy in the Deputy's question, was introduced in March 2009 under the Financial Emergency Measures in the Public Interest Act 2009. the PRD is a progressively structured multi-band reduction imposed on the pay of pensionable public servants. Based on the current PRD rates structure across all sectors of the public service, it is estimated the deduction raises €950 million per year. Unfortunately, it continues to be necessary because it is a critical part of our national fiscal consolidation.

Notwithstanding encouraging evidence of progress in respect of the public finances, immediate reversal of the PRD would require revenue to be raised from other expenditure reductions in other areas and there is no obvious area where I could find an extra €1 billion in cuts. Nevertheless, a start has been made in respect of the amelioration of the impact of PRD on public servants. As legislated for in the Financial Emergency Measures in the Public Interest, FEMPI, Act 2013 and as provided for in the Haddington Road Agreement, the rate of PRD on the €15,000 to €20,000 band of pay received in a year fell from 5% to 2.5% on 1 January 2014. This rate cut is worth €125 annually in gross terms to most public servants. The first part of income up to €15,000 is exempt from the PRD.

The powers granted by the Oireachtas under the FEMPI legislation are temporary, as I have already indicated. The PRD is reviewable as part of the overall review I mentioned and I present that review annually to the Oireachtas. My next annual report on PRD and the other emergency measures will be laid before the Houses of the Oireachtas by the end of June 2015.

As I have already stated, the Government also has to have a plan to address the legislative position as the extreme fiscal situation comes to an end. As part of the general discussions next year, the pension levy will be on the agenda.

10:05 am

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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The Minister would get many billions if he introduced a progressive tax on super wealth and a financial transaction tax and if he made major corporations pay something approaching a fair rate of tax rather than allow them to bask in the type of tax shelter they have here. The will to do that is not there. We have had much talk of recovery and much propaganda from Government sources. In reality, from the answers the Minister has given me this morning, it does not mean anything as far as low and middle-income workers are concerned.

I was fascinated to see the Minister on television recently when he speculated about possible tax breaks for workers. When he was asked about water charges and their effect next year, he said it had nothing to do with the Government, ignoring the fact that a family of four including an 18-year-old and a 19-year-old will have just under €500 demanded of it next year according to Irish Water. Irish Water seriously underestimates the amount that will be used and one will be talking about €600 or €700. Does the Minister not appreciate the contradiction between what he is saying and what the reality is for working people?

Photo of Brendan HowlinBrendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
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The Deputy raises a number of questions. I am acutely aware of the pressure on hard-working families and this will be a very significant focus of the budget next week. The point I made about water is that it is not part of the Government take. It is a commercial semi-State company. If we took it all on balance sheet, as the Deputy advocates, and just had a company that was funded by the State, I would have to find an additional €800 million of cuts next year because the entire cost of it would be on balance sheet.

The Deputy makes a good point about the financial transaction tax. It is a matter of debate. Obviously, Ireland could not act alone on that. We had a discussion on that very point with the British Shadow Chancellor at the Labour parliamentary party meeting this week. It is a pity that Deputy Higgins is still not there as he could have participated in that.

In respect of the increase in corporation tax advocated by the Deputy, the prime focus of this Government is to create jobs and I think we have done that with great success. The unemployment rate is now 11.1% and the projection is that it will be below 10% next year. That is a sea change from the calamitous situation we inherited when we were heading to a half a million people unemployed and there was 15% plus unemployment. Since this Government came to office, we have created 76,600 net new jobs.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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One of the Minister's colleagues, Patricia King, was on the radio this morning outlining in a very articulate manner the nature of many of those jobs - low-paid, insecure and exploitative. The fact is that the Government has continued the policies of its predecessor, which was the decision that working people and the poor would pay for the price to ensure that the major bondholders and bankers of Europe did not lose out. Discussing the financial transaction tax with his British counterpart is somewhat amusing considering that the City of London has heavy battalions to ensure that not a single extra cent of tax comes out of that hugely lucrative area.

The question is when low-paid workers in the public sector can hope for some relief with regard to the pension levy?

Photo of Brendan HowlinBrendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
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I answered that question already but, obviously, the Deputy was not listening. We will open negotiations next year on all these matters. The Deputy is wrong again on low pay. We restored the minimum wage cut by Fianna Fáil. We would like to do more which is why the Tánaiste has insisted on the establishment of a low pay commission because having a liveable wage is an absolute priority not only for my party but for the Government as well. The Deputy is also wrong about the impact of the recession. I am sure he has read the data published by the ESRI that states that the biggest impact was on the wealthiest people in this State.