Jim Walsh (Fianna Fail)

I thank the Minister of State for sharing time. At a time when we are faced with a very difficult fiscal position, I am not enamoured by the behaviour of some of the social partners. I will return to that presently. According to the Government, our revenue will fall back to something like €37 billion this year. Goodbody Stockbrokers estimates it will be €33 billion. Our projected current expenditure, on the other hand, is €20 billion for public sector pay, €20 billion for social welfare and €15 billion for non-pay areas. This leaves a deficit, according to Government figures, of €18 billion. If one accepts the prediction from Goodbody Stockbrokers, the deficit will be €22 billion.

As a compromise, I will assume a shortfall of €20 billion. Therefore, we must reduce the public sector pay bill by €6 billion to €14 billion, and this must be done as a matter of urgency. As such, it is my proposition that this Bill takes us in the right direction but that we must accelerate savings in the public sector pay bill in order to reduce it to €14 billion. Some €2 billion must be saved from the social welfare budget, which I acknowledge will be difficult to achieve in a situation of growing unemployment. If we are to make an additional reduction of €2 billion in the non-pay area, we will achieve a saving of some €10 billion, reducing our expenditure to €45 billion.

I understand the public sector pay bill was €8.8 billion in 2000. If one increases that at a compound rate of 4% for the last decade, one arrives at a figure of €13 billion. That is the target for which we should aim. I referred to the social partners, who walked out of the talks, because they are part of the problem and part of the creation of the problem. I refer specifically to the benchmarking payments that were made across the public sector. I accept that I make this point with the benefit of hindsight. We were all pleased to avail of those salary increases at the time. However, we must recognise that we went too far and paid ourselves too much, in both the public and private sectors. This must be corrected as a matter of urgency. There is a responsibility on the social partners to play their part in correcting what can now be seen definitively as a mistake that is adding to our problems.

The proposed pension levy is progressive. I utterly reject the claims it will impact on the lower paid to an unfair extent. Those on €15,000 will lose €450 per annum; a person earning €25,000 will make a contribution of €1,250; workers earning €45,000 will pay €3,250; and a person on €105,000 will pay €9,250. This represents a progressive system. On retirement, a person on a salary of €60,000 will receive a pension of 50% of salary, or €30,000 per annum. If that worker is making a 15% pension contribution, as we in these Houses are, he or she will pay €9,000 per year. Over 40 years, this equates to €360,000. Such a pension would cost a private sector worker €1.1 million.

If we are to move in the direction of salvaging this country, we must go further than we have done in this legislation. Everybody must accept this requirement and play their part. We must deal with public expenditure as a matter of priority. At the same time, we must be careful about taking more tax out of the productive sector of the economy. That is where the jobs will be saved and where more jobs will be created for the future.