Dan Boyle (Green Party)

At a cursory glance by the media, with them giving the contents even the most superficial treatment, it has to be expected that the four year plan will be reacted to in a most negative light. The contents are truly horrible. We are experiencing a vista that none of us in public life ever could have imagined given the circumstances we enjoyed at the height of the Celtic tiger. That said, the adjustments are being made to a period when we enjoyed levels of wealth that even now are in excess of many of our European partners and in a global index rate us very high in the scheme of things.

To have to make decisions as regards reducing the income and wealth levels of any member of society is something any public representative would wish to avoid. None of the content in this particular plan is indicative of decisions anyone wants to make, but they must be made nonetheless given the circumstances. Because of that we must think long and hard as regards the consequences of those decisions.

There is legitimate debate as to how the plan is to be achieved, as between expenditure and taxation, and between the different levels of expenditure. Whichever Government has to make the ultimate decisions in 2012-14 may be engaged in elements of tweaking that could make this a slightly more palatable package, but we need to show consensus as regards where we are internationally given that these headline figures cannot be avoided. We have to adjust our budgets accordingly to ensure that come 2014 we come as close as possible to the figures indicated in this plan. In the event, we shall have achieved a remarkable feat as a country.

We are capable of achieving such a feat, because we have shown in the relatively short period of the Celtic tiger economy that we can grow fast and deep and achieve significant levels of growth. We need to learn, however, that we can never envisage a situation where we throw money around with such largesse and lack of direction, without accountability, which is the real failure of the last seven years in particular.

Policy decisions were made in the period from the start of this decade, which have been expounded upon as regard how we reacted to their effect in the second half of this decade, which have made things far more difficult than they needed to be. While we are dealing with the effects of such wrong decisions, we need to factor in that although a large part of what we are addressing may be put down to political failure, a significant part too has been fomented by international circumstances. If we are to face the reality of the new international economy and assess the country's position as regards competitiveness, we must make difficult decisions.

Senator O'Toole has pointed to two areas he is unhappy about. Even in expressing his unhappiness, he understands the wider context of where we are. At the very least, we need to be positive as regards some aspects of this plan. A particularly positive aspect of it is the decision to protect education and enterprise. If we are to achieve improvement and to get out of this situation as quickly as possible, we will need to prime the engines that will allow us do this. Education and enterprise are the two areas that are so primed to allow us do this.

The downside of where we are is that income will be adjusted among the sectors that have least in our society. There will be impacts in terms of social welfare and the lower paid. This must be counteracted by an equal and greater adjustment by those in our society who have more. I heard Senator MacSharry make this point on the Order of Business today. There is a need to cap and reduce higher level salaries and for the political system in particular to adjust in ways that are not alone equal but greater in terms of what we are asking of particular sectors of society. The message must go out from whoever is in government as we move towards the specifics of budgets 2011-14 that a greater loss is being asked of those in our society who have more than is being asked of those who will be affected by adjustments in social welfare and the minimum wage. We have a responsibility as a political class to show the way in our sector.

I would be particularly disappointed if come budget day we do not see a reduction not alone in the cost of politics but in salaries paid. I will not listen to any argument in regard to the Croke Park agreement and relativities in this sector because I believe they will adjust accordingly. We must as a political class put in place measures that show that we are prepared to take a greater loss in terms of income than are those we identify in this plan. If we do not do so, we will have failed the country.

In terms of the public sector, which is a wider debate regularly aired in this House, there are many caveats in regard to our being well served by our public sector which is often asked to meet needs that would not otherwise be met by the cost to which we expose it on a daily basis. Three heavy spending Departments in the form of Health and Children, Education and Skills and Social Protection account for 80% of our expenditure. A further analysis of expenditure by the State in any given year illustrates that 50% - this figure was quoted earlier as being 70% - of expenditure goes on the public sector, 26% in the form of direct salaries and 24% in the form of provision for future pensions or the payment of existing pensions. If we believe that this is in any sense sustainable into the future while meeting the needs of everyone in society, we are deluding ourselves.

The biggest change needed in the course of the life of this plan that will adjust our public finances and will accordingly, I hope, inspire international confidence, will be a more appropriate balance in terms of the cost of our public sector and how we spend elsewhere in terms of public expenditure. On social protection, there is an obvious difficulty in that there are 450,000 people on the live register, 280,000 of whom are directly unemployed with the remainder being in part-time employment, which accounts for a significant part of €21 billion budget in this area. The biggest challenge we face during this four year period will be significantly reducing those numbers. The more they are reduced the more our costs will decrease. The more people who return to full or part-time employment the more tax we will take in, thus the more the equation in terms of what we take into the Exchequer and what we pay out in terms of social protection becomes more easy to manage. While this sounds simple in theory, the imbalance between where we are as a society and where we need to get to is colossal. All of us in public life must concentrate on the challenges we face and must provide concrete responses to our people in regard to how we can make up this difference.

On taxation, Commissioner Olli Rehn when visiting Dublin recently spoke about Ireland being a low tax economy. This was taken as code in regard to our corporation tax. The reality is that if we are to improve as an economy, we need incentives to encourage further foreign investment and further export led growth. There is consensus on this issue. It is hoped we can have an ongoing agreement with our partners in the European Commission and European Central Bank in this regard. It is true that as a percentage of gross domestic product we pay less in tax in terms of our overall wealth than do other countries. We must ensure that during this four year period higher income earners and everyone in general, by way of a wider and deeper taxation system, pays more tax so that we can avoid this type of situation in the future. It was the pretence that there was a mythical future ahead of us that we could increase public expenditure and pay less tax that got us into this problem in the first instance. The more consensus on these issues and the more honest we are with the Irish people, the quicker we will get out of the morass in which we find ourselves, regardless of the circumstances and the individuals who brought us to where we are.