Joe O'Toole (Independent)

I welcome the Minister of State back to the House. The legislation contains extraordinary elements. In terms of the first amendment, a "whereas" takes centre stage in that it effectively makes it clear that the provisions are time bound by circumstances, namely, serious economic disturbances and deteriorations. Unless the pessimistic view that the circumstances will last forever is taken, the provisions are time bound. Section 13, which provides for an annual review, is not worth the paper on which it is written. The review does not even need to be voted on by either House. Even a requirement for such a vote would mean something.

I ask for the Minister of State's opinion on an extraordinary part of the Bill that I have read time and time again without being sure of what it means. It states: "AND WHEREAS the burden of job losses and salary reductions in the private sector has been very substantial and it is equitable that the public sector should share that burden". In which sphere of philosophy is this idea rooted and has it a complementary meaning, that is, the benefit of job creation and income growth in the private sector should be spread equitably across the public sector?

Benchmarking tried to address this issue. Last night, I agreed with the Minister of State when he referred to something about which people conveniently forget when discussing public sector pensions. The benchmarking report discounted pensionability and ensured that comparisons were made with the third quartile of private sector relationships. The issues being raised have often been taken into account.

I do not understand the reference to the private sector. We know about the problems therein, but we should consider the situation in a realistic way. The greatest instance of job losses was experienced at Dell, but it had nothing to do with the problems in the economy. The second highest instance of job losses, which occurred at Waterford Crystal, had nothing to do with those problems either. The list of job losses is significant. For example, everyone knew that the airport workers would be in difficulty when they lost a major contract prior to last summer. These issues are being thrown around, but two Dell workers to whom I spoke a number of weeks ago told me that they were sick and tired of being used as a shield by Ministers to reflect all that is wrong in the economy and as the reasons for making others share the pain. The workers believe that they are suffering because of Michael Dell's greed in moving the operation to another country, not the downturn in the economy.

How many people are in the private sector? If the workforce comprises just over 2 million people and 300,000 are out of work, the total number working is 1.8 million, 1.45 million if the 350,000 in the public sector are not counted. My figures are approximately right and the Minister of State can take as much advice as he likes. How many of the nearly 1.5 million people are in endangered employment? Let us be givish and say that half of that number worry about their jobs everyday. In this light, 750,000 people in the private sector are in safe, secure and well-paid jobs. I am saying this because it needs to be understood. Why are we not making an impact on those people? While we agree that "the burden of job losses and salary reductions in the private sector has been very substantial", the Bill subsequently states that "it is equitable that the public sector should share that burden". It might be equitable, but will that equity stretch to people in the private sector who will not lose their jobs, have not taken salary reductions and are on good salaries?

For the Minister of State's information, this is the reason the Government's approval rating has fallen to 10%. Previously in this House, I have used the example of the nurse who rang my office two weeks ago. She is married to a public servant and they did everything by the book, by responsibly saving up to put together a house deposit. They bought the best house they could, which unfortunately was 25 miles from their respective places of work and consequently, both need a car. While they were looking forward to raising a family, they now feel they cannot do so on foot of the burden that is being placed on them. She told me that she worked in a theatre with a consultant who is extraordinarily good at his job and for whom she has the highest respect. She has been told that he earns between €350,000 and €450,000 per year and perhaps more. She asked me the reason he is not being asked to share the burden. His job is not at risk, he has not taken a salary reduction and he is as comfortable as he ever was. I cannot answer this question. It is also the question that 100,000 people were asking last week in Merrion Square and is the question being asked when people telephone Members.

Where is the equity in this? In any kind of fair-minded and logical approach, the proposition, "WHEREAS ... the public sector should share the burden", would be fair enough. No sensible democrat could argue with this, as long as everyone is included. What about those in the private sector who are not suffering job losses or salary reductions and who are not in threatened employment? Why are they not being asked to share the burden?

As for the question of taxation, I have spent 25 years in my career discussing issues such as taxation with the Government. Every discussion on the subject came down to a single killer point regarding the Constitution. Eventually, the relevant Minister would tell me, the group I was with, that I led or whatever, that the budget is a matter that constitutionally is under the remit and at the discretion of the Government and that outside parties or bodies may not make such decisions. However, the Government is hiding behind the Commission on Taxation as an excuse for not taxing the wealthy. I have known the Minister of State for years and know his views on various issues. I cannot believe that his views differ greatly from those I am articulating at present. Incidentally, neither the Government Members in this House nor its backbenchers in the Dáil understand why this is the case. Why are they being put behind the eight ball? While there is no problem in waiting for the Commission on Taxation — incidentally, there have been such commissions previously and it would be worthwhile to ascertain how many of their recommendations were fully implemented — it still is a matter for the Government to take the decisions when such recommendations come through. If the Government wished to hear the views of the Commission on Taxation on income taxation, it could ask the commission to provide an interim report of its thinking in this regard. A million things could be done, if the political will existed, but it does not.

I spent five years on the Commission on Public Service Pensions. A perusal of its report will reveal it contains a minority report as I had difficulty with many of the issues included in it. That was my problem as I had a job to do and I did it. However, the work of the pensions commission is important. I do not have a difficulty with the idea of public servants being asked to pay more for their pensions. While fair is fair, I refer to the manner in which this has been done, its isolated nature and the fact it is not really a pension levy at all. It merely is taxation that the Government cannot allow itself to call taxation and so it is calling it a pension levy instead. Were it a levy to pay for our pensions, the State would do what it never has done previously, that is, it would establish a pension fund. Our pensions are paid using a pay-as-one-goes method, which would be illegal for any private sector employer. It is interesting that the Minister of State made comparisons with the private sector. Were a private sector company or organisation to pay its pensioners on a pay-as-one-goes basis, it would be acting illegally. In fact, the Government recently has been contemplating the mirroring of the legislation in the United Kingdom that requires an actuarial report on a pension fund to be prepared each year to ensure it is in balance and can meet its liabilities each year. We now are doing precisely the opposite. We now are imposing a pension levy and the Minister of State should explain its purpose. It is not to pay pensions because were that its purpose, it would go into a pension fund. However, that is not being done as its purpose is to run the Government, which is what taxation is for.

I refer to some of the people who are affected, such as those who were outside the gates of Leinster House yesterday, some of whom are being asked to pay 10%. At present, they probably are paying approximately 6.5% in superannuation. While I am unsure of the precise figure, they also probably are paying PRSI at a rate of approximately 4.5% or 5% at present. If one puts these two figures together, it comes to 11%. They now are being asked to pay between 6% and 9%, depending on their point on the pay scale. As those involved in yesterday's dispute are on the lower end, they will be liable for a payment of perhaps 6%, or of up to 10% if one assumes they earn €25,000 a year. They now are paying approximately 20%, one way or another, into a fund that does nothing except give them their pension. Were one to add the notional private sector employer's rate of 10%, effectively these pensions now are being covered by 30% contributions.

What is the actuarial cost or value of such pensions? The last time I had sight of an independently-conducted detailed study was when I served on the pensions commission, at which time it came up with a figure of approximately 16% or 17%. The most recent study I have seen referred to figures of approximately 24% to 26%. However, pensions must be considered over a career-length period, which is 40 years in the public sector. The amount of money that is being put into pensions at this point is unnecessary for the pension requirements. I do not deny the Government's need for taxation, but this brings me to how I would measure it. The pension levy is far too high. Were the Minister of State to convince me that a pension levy was required but that more money still was required, my point would be that the pension levy should be reduced to its appropriate amount, which can be done actuarially and properly, and the balance should be collected via taxation across the public and private sectors, above a certain income limit, in the course of a year.

Were it the case that such measures were put in place, all the questions I was asked outside the gates of Leinster House by the protesting gardaí a few days ago or by the more than 100,000 people who were in Merrion Square last week, would have to be different. In such a scenario, we would reach a point at which leaders in society, be they in trade unions, politics or whatever, could, with a sense of conviction, tell people the country is in a mess and something must be done. They could say that money must be collected and this €2 billion is needed and could outline how it is to be collected. People could be told they will be obliged to pay more for their pensions and could be given the reason. One then could argue reasonably for all these measures.

I cannot understand the reason the Government will not discuss such matters with the public sector unions or with ICTU. I do not know what was going on when, an hour before the conclusion of negotiations, this extraordinary proposal was put on the table in the expectation that some sort of agreement would be reached, as so doing effectively scuppered the negotiations at that point. I believe people must sit down together. Members have been obliged to listen to Government Members asking for co-operation from all sides of the House. Fine Gael has put forward a nine point plan and ICTU has put forward a ten point plan. Has there been engagement with Fine Gael on its nine point plan?