Seanad debates

Wednesday, 24 November 2010

National Recovery Plan 2011-2014: Statements

 

5:00 pm

Photo of Paschal DonohoePaschal Donohoe (Fine Gael)

I welcome the Minister of State. I welcome the publication of a plan such as this because one of the great failings in the budgetary process is that it is done on a year-to-year basis. This plan will put in place a framework for a number of years, laying out budgetary targets while recognising the fact that a new Government will have the discretion to decide to achieve the targets in a different way.

Given the atmosphere, I want to make some positive comments about the plan, how it can be implemented and how it can be improved. The publication of today's report will bring clarity for people about the effect the plan will have on their standard of living. I saw some of the RTE coverage of the plan and a tax expert made the point that the average family on €50,000 per year, as a result of the tax changes across the next five years, will see a loss of €2,500 per year. I do not want to see that sort of change taking place when people should be spending more, which is what we need. Nevertheless, the fear and uncertainty that exists at present leads many families to anticipate that their income will be affected by many multiples of that. There are people who are assuming the worst for the standard and higher rates of tax. Too many families assume that they will have no disposable income to save or to invest at the end of this process. Hopefully this plan will provide clarity through balanced discussion in the coming days. We will be able to spell out the likely effect on our standard of living in the coming years. That will give people and businesses the confidence to plan and organise their lives and investments.

It is also important because there has been what has been called "the great deceit" perpetrated on people in recent years. That deceit is that there is a simple, cost-free, fair plan to address the difficulties our country faces but it cannot be implemented because the Government and Opposition are too stupid to see it. This plan lays out that there are no cost-free choices for anyone, be they for this Government or a new Government. If any Administration wants to do something under this framework, there will be something else it will not be able to do. That is a welcome improvement in politics, where there has been a belief that it is possible to increase public expenditure while decreasing taxation. There was a belief we could do everything to satisfy all of the needs placed upon us by those we represent. This plan, and the fact that the two main Opposition parties have signed up to the objectives of the plan, will provide a framework for more honesty in the discussions that must take place on the future.

The table on page 92 of the document should be noted by everyone. It lays out that since 2004 until the present, 45% of income earners have been exempt from any income tax. Fixing that will be painful but it must be done. Fairness is about everyone making a contribution depending on the means they have. Fairness is also about everyone making a contribution, except those who have next to nothing and finding a way to do that fairly will make a huge contribution to fixing the deficit.

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