Liam Twomey (Fine Gael)

As the Minister of State is well aware, there has been widespread opposition to the levy, which is considered to be inherently unfair, given the way in which it strikes at people on the lower income levels in the public and civil service. The public views it as another piecemeal reaction by the Government to a serious financial crisis in the economy. In acquiring some of the funding being sought by the Minister, the Civil Service and public service were easy targets.

This is an income levy, not a pension levy, and is unrelated to pensions. It is purely a means of taking additional income from civil and public servants. How can calling it a pension levy be justified? A public or civil servant may earn a significant income from over-time payments or allowances, which have no bearing on his or her pension upon retirement, but he or she must pay the levy on that income regardless. It should be called what it is, namely, an income levy and not a pension levy. This should be cleared up, as the truth is not being told.

It was expected the Government's reaction would comprise a broader base and that more people would be asked to contribute. We expected other taxes and reductions in services to be considered, but that has not been the case. We have been told that an bord snip is considering the issues. However, given the rate at which the finances are deteriorating, if the Government has plans to introduce further cuts, tax increases or borrowings, there is an urgent need for more open debate with those who represent the public, namely, the Members of both Houses of the Oireachtas, regarding what is happening.

A sentence omitted from the Minister of State's speech to this House this evening, but which was included in the Minister for Finance's contribution to the other House, stated that he envisages that growth will regress for the next three years. It is expected that growth will regress in our economy this year by 6% but hopefully this will not recur in 2010 or 2011. Has the Department of Finance considered the impact on the economy were such a regression to take place over the next three years? I refer to regression of 6% this year and to making projections for 2010 and 2011. Only one year ago to the day, the former Minister for Finance and present Taoiseach, Deputy Cowen, envisaged growth rates of 2.5% for 2009 and higher growth rates for 2010 and 2011. Consequently, for Members and the public to understand what will happen over the next couple of years, the Department of Finance should perform due diligence on the economy. It should consider different rates of growth regression over the next couple of years so that we can understand the problem.

This year the Government will be obliged to borrow €30 billion. The gap between Government expenditure and income will be at least €20 billion and tax revenue will be €10 billion lower than anticipated. As for the Government's response that has appeared in the public domain thus far, namely, its two-four-four formation of €2 billion this year, €4 billion next year and €4 billion in 2011, I noted in last night's debate that it is exactly the same as someone whose spending has gone out of control and who only makes the basic repayment on his or her credit card. Even the Minister of State himself has noted that the interest on what we are borrowing at present is approaching €4.5 billion. Government debt is ratcheting up at an unbelievable rate and will reach more than 45% of GDP by the end of this year. Shades of the 1970s are returning in this regard and that is what led us into such trouble in the 1980s. We are selling off the family silver in that we are selling off the good name of Ireland Incorporated. Essentially, we are running up debt rather than examining what has gone wrong with our expenditure.

This worries me, because the Government is not in a position to have its debt reach 100% of GNP by the end of 2011, which was the point it reached in the 1980s. This is because personal debt also is running at that level. By personal debt, I mean that which has been incurred by ordinary men and women, who have borrowed for houses, mortgages and cars. Their personal debt also is running at approximately 100% of GNP. If one combines the ratcheting up our borrowing and the fact that our GNP is falling every year, which means we will reach that 100% figure faster, and if taxes are not increased or if Government spending is not controlled, the Government deficit also will accelerate and we could be borrowing €23 billion this year, €25 billion next year and an unknown quantity thereafter. The problem with this financial crisis is that we do not know. While I do not believe that anyone claims to be an expert and it is difficult to know what the final outcomes will be, the more information that can be made available to the public and exchanged between Members, the more realistic we can become regarding our position at the end of this year and the year after and the better we can face up to what has happened to our economy.

At the outset of the Celtic tiger and possibly during the first five years of the Fianna Fáil-Progressive Democrats Government, growth was focused on exports. At some point during the lifetime of that Government, it switched to being driven by consumption within the internal market, which led to accelerated borrowing on everyone's part. Although the Government received enormous tax takes, what did it do with them? Government spending on public services accelerated at twice the rate of the growth level within the rest of the economy. Public spending had gone out of control, while at the same time people were borrowing all around them.

We are faced essentially with an economic crash in Ireland and I do not believe the figures as to what must be done to restore competitiveness in our economy have sunk home. Ministers appear on "Morning Ireland" or "Prime Time" and talk about restoring competitiveness in our economy, as well as preserving or creating jobs. By the same token, however, this applies across the economies on this island. Members should forget about Eastern Europe, as I have repeatedly pointed out the difference in pay between hospital consultants north and south of the Border. This also applies to nursing staff and senior administration staff within the HSE, as an unbelievable difference exists between the pay of staff who provide health services on either side of the Border. We are an indigenous group of people north and south of the Border, more or less. However, the cost of providing such services is huge.

If, for instance, one considers the minimum wage and the cost of labour within the hospitality industry, there are matters one must discuss. While I do not know what we will do, we must talk about such issues. I spoke to a hotelier who told me that costs for labour in the hospitality industry in the Republic are approximately 30% higher than in Northern Ireland. The impact is that people from the United Kingdom and Ireland will begin to take their holiday and weekend breaks in Northern Ireland. People will no longer go north of the Border simply for their shopping. We are not facing up to such enormous contradictions between the two economies that share this island and I have not discerned suggestions from the Government as to how we may resolve this problem. Although the economy went mad for a couple of years, it is not a bad economy and actually is quite solid. However, if we are to correct the underlying problems, they must be dealt with quickly and we must be reasonable in respect of how we do so. We must stay away from the piecemeal measures we have seen thus far.

This financial crisis also constitutes an enormous political crisis, although this issue has not quite entered the heads of the Government. The Minister of State has stated that everyone is suffering in this regard and that the more income one makes, the more one pays. Nevertheless, there are a few minor measures that would make little or no difference to the actual outcome, but which would make the entire picture look different. Can Members imagine how the public or international investors would have felt if two or three senior executives at Anglo Irish Bank had been led out of their headquarters in handcuffs on the morning of the Garda raid? When this happened at Enron in the United States, where people were marched out by federal officers in handcuffs facing charges of white-collar crime, it had a dramatic effect. Although it made no difference to the outcome, it made a great difference to people's perceptions that something was being done in their name.

The Bill proposes taking what to the Minister of State are small amounts of money from people on low incomes. However, no consideration has been given to the case of retired civil servants who, having retired from the Civil Service, are appointed to new jobs within the public and Civil Service and are paid a wage for their new job, while collecting their pension for their previous jobs. Ministers also do this and ministerial pensions are generous, to say the least. Even our ex-Taoiseach is engaged in this practice. He has a substantial pension and still draws a Deputy's salary as a public servant. While I accept this is only a minor matter, such measures also should have been included in this legislation. The Government should consider these matters because this simply constitutes another form of double payment that people are making to themselves and it should be taken into account. While the Minister of State might say that the amounts involved would be very small and would not be worth the Government's while, it would make a difference to perceptions regarding our common suffering in this respect.

The actions taken by the Government are striking people's pay packets without effectively addressing the problems they are apparently designed to tackle. For example, I have called on several occasions for the Minister for Health and Children, Deputy Harney, to come to the House and tell us whether she agrees that there are too many administrators in the Health Service Executive. Since her announcement that she intends to reduce staffing in the health service by 1,000, we have had the director of finance at the Health Service Executive and various Ministers speaking about this initiative on the radio. All that is happening, however, is that beds are being closed in hospitals throughout the State, home help services are being scaled back and people are being told they will no longer be able to access physiotherapists and other health care professionals because the funding is not available. The cutbacks taking place in the health service are quite savage. For example, Wexford General Hospital has lost 10% of its beds. In the meantime, however, not one administrator, let alone 1,000, has been removed. This is the type of injustice that will turn the public completely against the Government. There is little evidence that its actions are carefully considered. The changes being made are relatively easy to implement but they will have little positive impact in the long term. The same applies in the case of many of the cutbacks in education. Again, the relatively easy options are being taken but these actions target the wrong people.

I am disappointed that my time is almost up as I hoped to obtain answers from the Minister of State to the questions which were put to him in the other House. How does the Government propose to stabilise the public finances? Will we have a broad debate in both Houses on how this will be achieved? What does the Government intend to do about the failure of the repeatedly promised reform agenda throughout the public service? What does it propose to do in the area of jobs protection? There is much talk but few concrete proposals as to how employment will be protected in the mainstream economy as distinct from the Civil Service and public service. The debate on job losses tends to degenerate into a question of private sector versus public sector. I am not in favour of that type of dichotomy. However, there are large numbers of jobs in the mainstream economy which also require protection. The Government has offered promises in this regard but no policy details.