Feargal Quinn (Independent)

I thank Senator Norris for allowing me to share time with him. I met a widow at Christmas whose husband died some years ago. She received practically no pension this Christmas. Those with guaranteed pensions and those who are State employees have something very valuable. I have just used the word "guaranteed" but such pensions and jobs are not guaranteed because if this country goes bankrupt, even pension and dole cheques could bounce. The public does not realise the very serious position we are in.

Senator Hanafin spoke of Mr. Trichet, whose speech I attended today. He spoke with great confidence about Ireland but we do not realise the serious nature of our position. We must tackle our serious budget deficit. The Government has indicated there must be cuts in expenditure, leading to measures like this. We will have a pension levy now and there will be an increase in taxation next year.

I appreciate the Minister of State's indication that this Bill has been brought forward in light of the unprecedented economic challenges now facing the country. He also indicated that painful decisions must be implemented as a matter of urgency. We are taking one bite now, which is hoped to save us approximately €2 billion, and we will wait until later this year or next year for the Commission on Taxation to tell us when the next steps will be taken. If this is a serious matter, I do not understand why we are not taking the necessary steps now. The country was ready for this last October and last month.

In business, if there are tough decisions to be made and a crisis is to be faced, one can go to the employees, open the books and indicate how serious the problems are and how tough medicine must be taken. I have found that generally that medicine will be accepted, as long as it seems fair and even-handed. That is not understood by the Government.

Our economic position is worsening and we need massive budget cuts. The Government is going about these spending cuts in the wrong way. Taking small bites — such as the pension levy on public sector workers — is not the best strategy on its own. The Government has indicated the wealthy will have to take a hit further down the line when the Commission on Taxation reports later in the year but they are not being seen to be hit now. Therein lies the problem. Those in the public sector believe they are being unfairly targeted and consider there is an imbalance in that not everybody is being hit. If everybody was seen to bear an equal part of the burden, people would be much more supportive. The PAYE tax marches of the 1980s were based on the idea that PAYE workers were bearing more than their fair share of correction in the public finances. People were scared about the future in 1987 and they were willing to take cuts if they believed they were fair. That situation has not changed. People still want a fair deal.

Our deficit is more than €20 billion. The Government proposes to save €2 billion this year, €4 billion the year after and so forth. It would have been much fairer to start with a reduced deficit now of, say, €5 billion when people were willing to accept it. It would have been seen to be fair and everybody would be playing a role in addressing it. Amazingly, the Tánaiste said yesterday the public finances are "under control" and ruled out further spending cuts or changes to the tax regime until next year's budget. She said, "spending cuts of €2 billion this year have been found and the Government is working on a plan to reduce spending by €4 billion next year". Where is the urgency in that? Is she the only person in Ireland or the world who believes this? The only possible explanation I can think of for this sort of talk is that it is for international consumption. We need action now, sooner rather than later, rather than this sort of attitude. The Government needs to spell out to all of us how bad our situation is.

I heard Mr. Trichet speak today and I believe he was being too optimistic because we can see what is happening elsewhere. Peter Sutherland pointed out in an article in The Irish Times the day before yesterday that there is an unexpected inequality when it comes to the present tax system and that less than 10% of taxpayers contribute half of all income taxes. In regard to most if not all of those earning above €70,000 a year, we will need to adopt a new realism because the required tax rises and the scale of them will be much greater than heretofore. Cuts such as the pension levy will not be enough.

I read a European Commission document published last week which estimates the pension levy will save only 0.5% of GDP on an annualised basis. That is a long way from the Government's objective and prediction of a saving of 1.4% of GDP. The Government argues our percentage of national debt is not as bad as it was for instance in the 1980s and that is correct. That is such a complacent attitude to take that it is plainly not the issue. Our real debt is the issue. The situation is very serious but that message is not being conveyed to the public. People can only get a view of the real situation by reading more.

A recent article in the Financial Times states that "Last week speculators bet on an Irish default, and these bets made it more expensive for Ireland to refinance its debt, thus threatening to turn into a self-fulfilling prophecy". The comment by the financial historian NiallFerguson was different. He said:

Europe's prospects could get a whole lot worse this year, to the extent that it could be very, very hard indeed to keep the euro zone together. . .

There will be howling anguish, all kinds of pain, conflict between Germans and the others. It's going to get very uncomfortable indeed.

I cite these comments because there is a belief that because we are in the eurozone we are safe and that everything is all right. We cannot rely on the euro being able to hold the countries in the eurozone together, if we are the ones who are defaulting.