Seanad debates

Thursday, 5 February 2009

Stabilisation of the Public Finances: Statements

 

11:00 am

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

I welcome the Minister of State at the Department of Finance, Deputy Mansergh.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

I wish to set out the basis for the Government decisions on expenditure and the economy, announced on Tuesday, and to commend them to Senators for their support. As the Taoiseach and the Minister for Finance have made clear, we are now living in exceptionally difficult budgetary times, and the measures announced on Tuesday are likewise exceptional. The Government has had to take resolute action, and, despite constant criticism, the Government has not been found wanting. It is easy to castigate, speculate and to make pronouncements from the sidelines, but ultimately it is the responsibility of the Government and the Oireachtas to act in necessary time in the interests of all our citizens.

The economic background is stark. Growth is forecast to decline by 4.5% this year, and export growth will be negative. Unemployment has increased significantly to date and, unfortunately, is set to continue to rise to 400,000 or beyond. The Government has prioritised the creation and maintenance of jobs above the maintenance of income levels. Improved competitiveness must be at the heart of our economic policy. The Government's resolute actions must be seen in this light. On the positive side, inflation is set to ease considerably over the course of 2009, reflecting reductions in interest rates and lower prices of oil and other commodities. All of this helps to boost any given income in real spending terms and means we can obtain better value for money from a given level of expenditure, including of course in the capital area.

The current condition of our public finances is such as would require us to borrow €18 billion this year. In the present international climate, and against the background of easily alarmed sentiment among global bond markets, such borrowing must be financed at ever-steeper interest rates. This is why the national debt will rise to more than 45% of GNP, although it is still below the Maastricht guidelines, and spending on interest costs alone will come to €4.5 billion, or 12% of the total tax take, in 2009. This is of course an unsustainable position and must be corrected.

To listen to some critics, one might think that Government fiscal policy over the past decade and more was without any thought to the future. The reality is different. Our establishment of and investment in the National Pension Reserve Fund means our net debt has been much lower than in most other EU countries, and this, together with the cash balances built up by the NTMA, allows for a better funding position than would otherwise be the case.

The Government has set out a clear three-pronged strategy to correct our public finances and restore our economy. We must lower our cost base as rapidly as possible and become the highly competitive economy we once were, rebuilding a platform for future export-led growth; we must maintain the real value of our investment in our national productive capacity; and last but not least, we must carry through this policy in as fair and balanced a manner as possible to reinforce social solidarity along the lines that have long been a hallmark of this Government. Reducing public expenditure is never an easy task. At present, social welfare spending accounts for around €20 billion of the €55 billion or so the Government spends on current goods and services. The pay bill accounts for a further €20 billion, and the balance of €15 billion represents all other day-to-day spending on public services, grants, administration and consumables. There is limited scope to reduce social welfare given the Government's priority of protecting the vulnerable. In the past number of years, there has been a strong focus on securing greater efficiencies in the delivery of the €15 billion that is not pay, and further such savings are planned. All that remains is the public pay bill. We cannot avoid looking to this area to secure major savings.

Of course, we could have recourse straight away to tax measures, but let us think that through a little. Increases in indirect taxes would undermine already weak consumer confidence and drive more shoppers north of the Border. Further increases in income tax would affect our ability to produce goods and services. Meddling with company taxation would drive away foreign direct investment, which is a key driver of jobs growth. The scope for capital tax increases is simply not there at the moment. The Commission on Taxation will take a considered look at these and all other options and report to Government later this year. For now, we must start to put our fiscal house in order by looking at the expenditure side. That is the task that is facing the Government. Its actions are essential to underpin our creditworthiness and the confidence of investors both at home and abroad, and ultimately our ability to continue paying for public services.

International investors understand that the problems we are experiencing are not unique to us. In fact, we are now in the midst of an international recession of unsurpassed severity, prompted in turn by the worst crisis in international financial markets since the Bretton Woods agreement was instituted. All major world economies, and most of the minor ones too, are now suffering or will suffer this year. As Ireland is a small, open trading economy, its difficulties are exacerbated by exchange rate movements. It is also true that our excessive reliance in the recent past on the domestic market and the housing sector as drivers of growth has proven to be a serious structural weakness within our economy. That is the diagnosis. The Government is now concerned with finding the solution to our problems and setting us back on the path to recovery and ultimately prosperity. The budgetary measures we have had to take are not pleasant, and we are profoundly conscious of the burden we are asking public service workers, including all in these Houses, to share.

It is now fashionable to charge the Government with recklessness in our desire over the years of plenty to improve public services and improve the lot of those who were poor and marginalised. Generally, the only voice of dissent from the Opposition benches to our initiatives in these areas was that we should have been doing even more, and sooner. The same voices now berate us for having tried to do too much, spend too much, and reduce taxes too far and too fast. In the May 2007 election platforms of the parties opposite, the main commitment was to reduce the standard rate of income tax to 18%, plus a raft of other tax concessions.

We were all mistaken about the relative security of our position. Now is not a time for mutual recrimination but for common purpose — for social solidarity, which is the principle behind the Government's response to our current problems. We engaged fully with the social partners and sought to draw up a solidarity pact to put before this House together with a series of measures to secure savings of €2 billion on a full-year basis, which are needed as a minimum to start restoring fiscal balance. Regrettably, it was not possible to reach full agreement on that. But that does not alter the fact that the savings are essential, or the continuing value of social partnership. Unless we are prepared to shoulder the burden collectively now, much greater sacrifices may be forced on us at a later date. The Government, therefore, must proceed with the proposals it formulated in our discussions.

The larger part of the savings proposed are in the area of pay and pension contributions. In total, these changes will yield savings of €1.4 billion in a full year. The great bulk of the saving will come from a new pension-related payment which will be paid by all public servants, including TDs and Senators. Those who have already made a voluntary surrender of salary, among them some Members of the Oireachtas, may discontinue that surrender should they so choose and substitute their contribution through the new pension payment. For its part, the Government, which includes for this purpose Ministers of State, has decided to continue with its 10% voluntary surrender in addition to the pension contribution of more than 9%. Those in positions of leadership in all parts of this country must lead by example. The remuneration of political advisers will also be adjusted in line with the pension contribution.

The payment will be on a graduated, progressive scale, with the average payment being 7.5% of total earnings. It will apply to all elements of the public service pay bill, with the exception of employers' PRSI, including both pensionable items and non-pensionable items such as overtime. This payment is in recognition of the fact that public service pensions are significantly more favourable than the generality of pensions in the private sector, together with the need to reduce net public service pay costs. This change will require new legislation which will be introduced as a matter of urgency. A much smaller component of the total pay-related savings will be achieved through reductions in travelling and subsistence rates and other savings. In addition, the increases provided for under Towards 2016: Review and Transitional Agreement 2008-2009 with effect from 1 September 2009 and 1 June 2010 will not now be paid on those dates. Further discussions on these increases will be held in 2011 without prior commitment. This will represent an additional saving of up to €1 billion in 2010, making a start on the €4 billion savings that will be required then.

The pay-related savings will also apply to local authority staff. To that end, it will be necessary to amend the existing legislation on the local government fund. Again, it is proposed that the necessary legislative amendments be introduced as a matter of urgency. Public servants paying the new pension contribution will be treated for tax purposes in the same way as those making pension contributions in the private sector. Contributions will be deducted from gross pay by employers before income tax, PRSI and health levies are calculated and, as such, will be effectively relieved of tax at the marginal rate.

Flexibility in responding to changing service demands must be pursued with determination. In this context, the Minister for Finance is establishing an innovative mechanism via the Public Appointments Service and the Commission for Public Service Appointments to facilitate the redeployment of surplus staff in several areas and the matching of vacancies at all levels across the civil and public service. The redeployment of staff across different sectors of the public service organisations, for example, Civil Service, local authorities, HSE and State agencies, gives rise to technical, legal and human resource issues that will require consultation with local management and staff unions. Discussions have been taking place already with relevant Civil Service unions about the redeployment of staff into social welfare offices.

The Government's approach sets the pay-related savings measures across the public service as part of the comprehensive national effort to adjust incomes, with the aim of restoring competitiveness in national incomes generally. This is not about targeting the public service, which we value. I have been a public servant for 34 years, both permanent and temporary, apart from some periods in opposition. We are simply asking public servants to share in the adjustment that is taking place more broadly across the economy, especially in the unprotected sector.

Savings will be also vigorously pursued in all appropriate State payments to individuals, including fees payable to medical and legal professionals. The need to engage in consultation with professional interests, and the delays that may ensue, may limit the scope for securing the full savings we would like in 2009. Here again, the Government would appeal to all sections of our country and our society to engage expeditiously and with good will in the collective national effort to deal with this unprecedented economic downturn.

The following supplementary measures are required to realise the full €2 billion: a modest retrenchment on overseas development aid this year in view of our diminishing resources — this still leaves our ODA spending rate among the highest in the world at about 0.53% of GNP; a small reduction in the early child care supplement to €1,000 per year and a lower maximum age of five years — this will save €75 million in a full year; a further €140 million to be pruned from administrative and other spending on staff, advertising, travel and procurement; and a reduction of €300 million across the board in spending on capital, still leaving our spending rate as a percentage of GNP at more than 5% and among the highest in Europe.

Within this revised capital envelope, a sum of €150 million is being reallocated, half each, to labour intensive spending on schools building projects and energy saving measures, which is being funded from all parts of the capital programme, including education. With falling construction prices, we should be able to maintain a high output of projects even with reduced allocations. Tender prices in a variety of areas such as national roads, schools, higher education and social housing tell a consistent story. We are getting a bigger result from a given level of capital funding or more from less. Even with reduced allocations, careful and proactive management of capital allocations will enable priority, high-return projects to be delivered.

We are already well on track to complete the major inter-urban routes next year. We will continue to invest in public transport. We will continue to expand commuter rail and the Luas network and invest in other suburban rail services such as the Cork-Midleton line, the Kildare line upgrade and phase one of the Navan line. We will continue to support the development of the smart economy and direct capital investment towards science and technology, inward investment and indigenous enterprise.

The total saving comes to €2,090 million in a full year. In addition, there will be saving of up to €1 billion in 2010 from not paying pay increases next year. In announcing these measures, we have focused not just on short-term needs but also on the vital necessity of preparing the ground for eventual economic recovery. We have tried to protect the most vulnerable. We have sought to maintain capital spending in real terms, and redirected much of it to areas that can sustain and protect jobs. We have sought to make a firm start now to take us off the path of high borrowing and job-destroying tax rises in the future that would cripple us before long.

More must be done in a planned way in 2010, 2011 and beyond. The Government's economic framework published before Christmas provides the blueprint that informs all of our progress. We have a competitive advantage in the knowledge and skill base of our people, and we will build on it further. We have an advantage in our flexibility in responding to change and to challenges and we are demonstrating that flexibility and firmness of purpose now. This Government will play to our strengths in rebuilding our economy and seeking new opportunities for job creation, export growth and future prosperity for all our people.

A Chathaoirligh, I am happy to commend the Government's expenditure measures and economic strategy to this House.

12:00 pm

Photo of Liam TwomeyLiam Twomey (Fine Gael)
Link to this: Individually | In context

The Minister has often spoken at length in this House and he always has been good at revision of history. The Opposition never had the same views as the Government over the past five to ten years. We had different views on benchmarking, which some people considered an automated teller machine or ATM for the public service when it was introduced. We made a strong case at that time to the Government to deal with the issues of accountability, transformation and reform of the public service. We were ignored by the Government. From that point of view we were quite different.

We had a different view on decentralisation. We urged the Government to be careful in what it did to the civil and public service in its plans for decentralisation as it could ruin the service rather than improve it. The initial announcement by the former Minister, Mr. Charlie McCreevy, outlined a scattergun approach of 53 decentralisation locations throughout the country. It was soon reined in to less than 40, and progress in that programme has not improved. The majority of staff who moved under decentralisation were already living outside the greater Dublin area and simply moved to a different location outside Dublin.

We also raised concerns about the PPARS project and the waste of taxpayers' money on a system for paying health service staff that has since been switched off. These issues, and there are more if I had sufficient time to discuss them, marked our approach as significantly different from that of the Government. The Minister should acknowledge that.

In discussing the stabilisation of the economy and what we should do for the future, we should start with our democracy. Both Houses of the Oireachtas have been neutered by Fianna Fáil in the past two decades. They have become nothing more than places to rubber stamp decisions made in Dublin Castle by the Government, its advisers and the social partners. The Government has taken power from the people and given it to a select group. It simply came to the Oireachtas to present us with reports or a fait accompli and told us to vote on them.

We have heard speakers from the Government benches speak in support of what Senator Denis O'Donovan is doing about the Harbours Bill in an effort to protect local democracy and issues which he considers very important. However, if Senator O'Donovan was not standing up for those issues, all the Fianna Fáil Senators would have voted for that Bill by now. That is how much both Houses of the Oireachtas have been neutered. Even the Government representatives will rubber stamp whatever is decided. They will not speak their minds and say what they believe is wrong about Government policy. They will not stand up against that policy but, like sheep, will do what they are told by their betters in Fianna Fáil. That has led to many of our current problems.

It sickens me to hear members of Fianna Fáil criticise the Opposition for saying hard things about the Government, as if we are not being sufficiently patriotic in what we do. Our job, since the Government has neutralised Parliament, is to stand up to the Government and be extremely critical of it. It is not our job to come up with solutions for the Government. Most Ministers have between 200 and 500 civil servants and advisers to help them in that role. When we do offer solutions and suggestions, they are ignored in the majority of cases. There is no consensus in this Parliament between the different political parties because it is the Government's decision not to have such consensus.

The next decade will be extremely difficult. The economy will not turn around in 2010 or 2011 and Ministers who claim it will are only continuing the foolishness they have displayed in the past couple of years since the election was won in 2007. It was only last March that the members of the Government felt they could pay themselves 14% increases in their ministerial salaries, which was incredibly out of touch with what we knew was happening in our economy at the time. We knew there were difficulties. I said in this House I thought it was a mistake when I received a letter last September stating we were to get a 2.5% pay increase, given that everybody knew the reason we were having a budget in October was that the national finances had deteriorated so much.

When the Celtic tiger was going well, I never heard any Minister giving credit to Alan Dukes for his role in the Tallaght strategy. All the credit was soaked up by Fianna Fáil and its party members with no credit given.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

I have done so frequently.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
Link to this: Individually | In context

The Minister of State did not. He is doing it now because it suits him to do so.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

No, it is on the record.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
Link to this: Individually | In context

More important now is for the Government representatives to begin speaking their minds in the same way we do, and this includes the Senators opposite. They must give up this idea of being Mighty Mouse in their constituencies and Mickey Mouse in Dublin. This has had a detrimental effect on our politics and democracy and is why we are in this type of scenario. We are playing politics with people's lives and it has been going on for too long.

To give some idea of how disjointed the situation is, I will give a simple example. Private health insurance contributions are tax deductible at only the standard rate of tax. If a person wants dental treatment for his or her children, it is deductible at the standard rate. When the Minister, Deputy Harney, was asked the reason for this, she said she wanted everybody to be treated equally and did not want those on better incomes to somehow have better access to medical and dental care on the basis of tax. Yet, in regard to pensions, if one pays at the higher rate of tax, one can deduct expenses at the higher rate. This seems to be a contradiction.

This issue is not being taken into account with regard to the level of overall savings. Ministers are everywhere saying they will save €2 billion. They will not save €2 billion because at least €300 million will be paid back in tax rebates to those making pension contributions. It is very difficult to support a Government that simply cannot get its figures right.

The Government needs to wake up to the seriousness of the situation. A contribution was made in the House this morning stating that we have not realised how serious the issue is. We have realised it. If America has the iPod, we are part of the i-pigs. We are one of five countries in Europe that is considered by international investors to have an extremely poor credit rating. This is the price we are paying. The public is being drip-fed announcements by Government — we are not going to nationalise, we are going to nationalise; things are bad, things are not so bad; we are not going to tax you, we are going to tax you. They have lost confidence in the Minister and at the same time the clouds of the wider global economic downturn are swirling around us. We understand this. Our situation is much worse than people perhaps acknowledge. The IMF pointed out that the economic downturn of 2% in some of the large economies is extremely serious yet the economic downturn in this country will be at least 5%.

If we are talking about moving forward, when we ask questions of Ministers, I would like them answered. Often when we ask questions in the House, they are not answered and we are not told what is happening. Much information is still not getting to these Houses in time. For example, I read a report on what will happen to taxes in the future. One of the concerns is that the tax take will be down during the course of 2009. The Department of Finance is not in a position to give us the different profiles for each of the tax categories.

I presume the reason for this is that the situation is difficult and unpredictable for the next couple of months. However, when that is the situation, there is an even greater need for Ministers to come to both Houses to give us as much information as they have, to let us know they do not know and to stop acting as if they do know. The Taoiseach, Deputy Brian Cowen, and the Minister, Deputy Brian Lenihan, for the past five or six months have been acting like they are great fountains of knowledge who will protect this country, only for them to be exposed as emperors with no clothes a couple of months later, in some cases a few days later. This is only putting fear into people's minds. There is a need for the Government to be more open.

When the Government says we must make changes and become more competitive, what does it mean by competitiveness? In a contribution to this House two weeks ago, I pointed out in regard to the health service that consultants in Northern Ireland get paid a maximum of €100,000 whereas consultants on this side of the Border are being paid at least €180,000. The same goes for all other categories of workers. Is the health care system in Northern Ireland substantially worse than that in the Republic? In Northern Ireland, 10% of people feel the need to get private health insurance because they do not trust the public health care system whereas, in the South, 70% feel the need to get such insurance. Every individual north of the Border has free GP care but fewer than one third of the people on this side of the Border have this. This is one section of Government expenditure where costs, efficiency and delivery can be examined. We are completely out of kilter with what is happening just north of the Border, even before we begin making other international comparisons.

That is what competitiveness is all about. It is not the mumbo jumbo Ministers go on with and on which they publish documents. We have priced ourselves out of being a small, open, global economy and this is the price we are paying. We are still not prepared to accept that sort of language. This is the fourth or fifth time I have debated the economy in the House. If I studied the last four or five speeches from Ministers who have come to the House, there has not been much change. In fact, today's debate is probably the most substantial example of the Government actually doing something. It will actually impose a pension tax on public and civil servants, reducing services that are being provided for children and others across our economy.

It is the first time something tangible is being done but, even as it is being done, the Government figures are still all wrong. The Government gives a figure of €2 billion but I suspect that because it must introduce legislation and other changes, this will drag on and we will have no idea what will be saved this year.

The Minister of State, Deputy Mansergh, said we have more or less reached the end of the line. He said we cannot change corporate tax, income tax or capital gains tax. He said we cannot do any more and he gave his reasons for this. However, if things do get worse, what is the next step for the Government? What if 400,000 people are unemployed in September and the situation is getting tighter? What is the next step or will that also be pulled out of the hat like a rabbit sometime in July, and will we live in denial until the very last minute? Is the Government planning to make changes to capital spending or income taxes?

If the members of the Government are talking about national government, partnership and consensus, why do they not share their thoughts with us? Are we simply to lead ourselves into another abyss in a few months without the Government telling us what is going on? Will the Government continue to lose the confidence of the people? A lack of knowledge brings fear, which is why people are panicking. They just do not know what is happening and do not get the sense that the Government knows what is happening.

There is time for the Government to come to the House to talk to us about what we will do next and potentially how bad the situation could get. The banks have fallen off the radar, as it were, in recent weeks but a further €15 billion or €20 billion at least may need to be invested. The Government has referred to a €2 billion saving, but that is not the case. The problem in the public finances amounts to €20 billion per year. We cannot get out of this problem by borrowing. Debt in Ireland, including private debt made up of mortgages, car loans and credit card loans, is in excess of gross national product. The people are already seriously in debt. The Government cannot afford to fall into serious debt in the coming years. That would bring us into the category of Iceland as a bankrupt state. We are not there, but delusional thinking such as we need only consider savings of €2 billion per year for everything to be fine will put us there. There is a need for the Government to give a clearer idea of its strategy in the coming years to stabilise the public finances. There is no point discussing something occurring in 2010 or 2012 and suggesting we need only make €2 billion savings this year, €3 billion in the following year and €4 billion the year after that. In each of those years we will borrow a minimum of €20 billion. There will be a shortfall of €50 billion at the end of that three-year period. If the economy contracts and does not improve in the coming years, then by 2011 it will not be in good enough shape to bring us out of recession.

We should consider a detailed national plan for the coming three years, not simply a framework or a policy document, to give some idea of the worst possible scenario and a plan for the next decade. That is how the Tallaght strategy worked and that is what Mr. Charles Haughey and Mr. Alan Dukes discussed. They did not simply discuss the matter over a couple of months and discuss Mickey Mouse figures, which is essentially what we are discussing now. They made some serious cuts at the time. Some people say we never recovered from the cuts made then because we did not transform and change the health services during the good times. We simply used benchmarking as a method of throwing money into the system. However, it was not very efficient.

Perhaps some of these matters might be addressed when the Minister is replying to the House, including the nature of the grand plan. The Opposition should not be expected to come up with it; that is not its role. We will produce some ideas. We have provided opinions and backed the Government with some of its suggestions. However, there is no leadership. We are all very much in tune and we wish to know what is taking place. It is not the job of ordinary men and women to pay attention to what is occurring. We are paid to do so. Perhaps many of those people are only now understanding the serious extent of the crisis.

We wish to hear more from the Government benches than we have heard to date. The Government must broadly indicate how it will proceed. We have heard very little about its proposals for the banks, which is a significant part of the issue. We do not know if reference has been made to stopping remuneration of senior bank officials. Between giving the State guarantee and nationalising Anglo Irish Bank, millions of euro was paid in bonuses to managers at Anglo Irish Bank, in which the Government had no say. There is a need for the Government to take control of such matters. These are not weekend wonders where large meetings take place and everyone stays up until 1 a.m. or 2 a.m. and then everything is forgotten. There is a need to explain what is being done and what will be done with the senior management of the bank and how they will be made accountable.

I listened to the car radio on the way to work and I heard one possibility which the Minister might consider. A person spoke of how he was tied into fixed rate mortgage repayments because he thought interest rates were increasing. In the meantime, interest rates have dropped significantly. When this person asked the bank if he could exit this arrangement, the bank indicated it would charge excessive amounts of money to do so.

Some years ago, I had a similar arrangement and I worked it out. The banks examine the difference between repayments now and if repayments were fixed, and that amount is charged over the course of the fixed term, whether it is two or three years. What role has the Minister in such a scenario? There is no point in suggesting writing to one's friendly bank manager. Such a letter goes straight to the headquarters and a pro forma letter is returned. In this case, the Minister could step in and, as the person bailing out the banks with €8 billion of taxpayers' money, ensure the banks make null and void all these fixed mortgage terms, if so requested by the customer. Some people may not wish to break such a contract, but that is an example of the leadership the Government should display for the people. The significant savings we are now making on mortgage repayments, owing to the drop in interest rates, have been swiped from us by the pension tax and other levies introduced by the Government. The Government could help those who have not benefited from the fall in interest rates because they are tied into fixed rate repayments. Perhaps it should say to the banks tomorrow morning that if customers wish to break such a contract, both sides should sign to that effect and the contract would then be null and void. The Government should show some leadership.

Photo of Joe O'ReillyJoe O'Reilly (Fine Gael)
Link to this: Individually | In context

Hear, hear.

Photo of Marc MacSharryMarc MacSharry (Fianna Fail)
Link to this: Individually | In context

I will share time with Senator O'Malley, 15 minutes and five respectively. However, I doubt if I will use 15 minutes as I wish to be as brief as possible. I welcome the multiple opportunities in recent weeks to address the serious economic crisis we face, nationally and internationally. Many have had the opportunity to put on the record of the House their views on the causes of the crises and the possible solutions to be undertaken by way of remedy.

As it is customary, I will begin with a rebuttal of the remarks of my good friend, Senator Twomey. I welcome the decisive action taken by the Government this week in terms of €2 billion in savings. I will return to the rebuttal. Senator Twomey has referred to some of these actions. I will go through each one and make a comment. I refer to the amount of €1.4 billion to be generated from the pensions levy.

We have all received e-mails and calls from those within the public service. There is much anger and frustration at this measure. As I remarked on the Order of Business yesterday, as a public servant I share the anger and frustration resulting from the introduction of these measures. In reality, circumstances have intervened to make such measures essential. That is highly regrettable and it frustrates me. I am angry, as are many public servants, that this is case. However, I fully accept the necessity to do so. We have no choice but to take it on the chin. When tax receipts were significantly higher in recent years, it was possible to introduce certain measures which are no longer possible. This is a simple fact.

Some 80% of the workforce are in the private sector. Most of these would gladly trade their position with ours because of the associated security. They do not enjoy the same level of security at this time. I am certain such people would gladly swap their positions with ours. There is no question that every household in the country will have sacrifice and pain forced upon it by measures already introduced. Clearly, more such measures are necessary as the situation continues to evolve. That is another fact. The Government has no choice but to provide decisive leadership by introducing the necessary measures to correct the public finances from their current state. It is not sustainable to do otherwise. I welcome the proposals of recent days as the first of several necessary steps as we proceed on a course to economic recovery.

Recently published unemployment figures are extremely shocking and it is frightening that 37,000 people have signed on in January. Other figures have been mentioned in this regard and Senator Harris this morning speculated on a figure of up to 700,000 people. While I hope he is wrong, I fully understand the reason he said that. This is extremely worrying and every possible measure must be taken to ensure as much employment as possible can be saved or created in these difficult times. This is what is most important. I appeal to those in the private sector, if possible, to try to consider the possibilities that may exist, such as short-time work or week on, week off work, instead of laying off people. One manufacturer from County Meath to whom I spoke explained to me how he had put his staff onto a week on, week off basis rather than laying off anyone. I respect such commitment to one's workforce and encourage it within the private sector to the greatest extent possible.

I refer to calls for a national Government, such as those I heard from Senator Harris on the Order of Business, and Senator Twomey also mentioned the possibility. It is interesting that such calls are being made and, again, I can understand the reason for them. However, I do not necessarily call for it. Decisive leadership is what is required at this time and I believe this is what the public is getting. I also believe that Members of the Opposition may not like this. As Deputy Kenny noted in the other House recently, the role of the Opposition is to provide opposition and I am quite happy for it to so do if it wishes. While the Opposition should do so in a constructive manner, I am not especially bothered if it does not because that is its choice. At present, a majority exists on the Government side and any constructive suggestions made by the Opposition will be taken on board as the Government and Members on this side see fit. I welcome any constructive suggestions made in this regard.

I also have heard the Tallaght strategy being mentioned in this context many times. However, the 1987 budget has been substantially credited with turning the tide at that time and, as I noted on the Order of Business yesterday, the Tallaght strategy did not exist until the following September. A minority Government put through that budget and if the Opposition wishes to make constructive criticisms or points, it should do so. However, I do not call for a national Government. The Government must provide and is providing the level of leadership required to take difficult decisions to try to secure the future for our children and our grandchildren.

Senator Twomey made a number of points in respect of the Harbours (Amendment) Bill and noted that some Members on this side of the House, of whom I am one, had spoken in favour of the stance taken by Senator O'Donovan. What is important within any political party is a level of vitality to ensure the correct policies are being followed at all times. In pursuit of this objective, it is important opinions differ when formulating policy as, otherwise, it simply constitutes public administration and, God knows, we have enough of that. Senator Twomey should not worry about how Members on the Government side conduct themselves as they will continue to do so as they best see fit.

While I can understand the frustration engendered by the cut of €95 million in overseas development aid, as others have pointed out it is worth noting that Ireland is among the highest per capita contributors in the entire world. Its per capita contributions are higher than those of the United States or the United Kingdom. Moreover, throughout Europe only the Nordic countries, Luxembourg and the Netherlands make higher per capita contributions than Ireland.

I also welcome the curtailment of the early child care supplement. While it constitutes pain for every household in the country, it had to be done. Although a recent increase of €100 to €1,100 was welcome, it now is necessary to reduce it back to €1,000.

I greatly welcome the general and administrative reductions of €140 million as there is always room for improvement and efficiencies in respect of matters such as printing, stationery, advertising and so on, all of which are areas in which we have continually over-expended. All businesses must keep such areas constantly under review and I welcome the proposed savings in this regard.

As for the savings on the capital side, I welcome that much of the suggested €300 million in savings will come from re-tendering and lower construction costs in respect of the various projects. However, I also welcome the Government's commitment to the capital programme, both as a stimulus to our economy and to ensure priority is given to those capital projects which will most contribute to Ireland's competitiveness. This is what is most important.

While we are in unprecedentedly difficult times, both nationally and internationally, the world has not come to an end, nor will it do so. We will come out of this and it is important to do everything we can to best position ourselves to capitalise on an upturn, when it comes. While it is at times difficult, particularly these days, to identify light at the end of the tunnel, it will come. It is vital to ensure those measures that are within our power to take, such as correcting the public finance issues, are taken quickly and decisively. Regrettably, there is no easy way to take the appropriate action in the forthcoming weeks and beyond. As I noted, I believe further measures must be taken in future budgets. It would be nice if that could be spread as equitably and as fairly as possible among all sectors of society. However, as I noted yesterday, I fear it will not be possible to so do without angering many people in this House and in many households of hard-working people nationwide.

I am confident, however, that the Government, under the stewardship of the Taoiseach, Deputy Cowen, the Minister for Finance, Deputy Brian Lenihan, and their Cabinet colleagues, will take the appropriate action. It is important to maintain a level of agility and an ability to improvise as the situation continues to evolve. If one looks to the United States, I have watched with interest as President Obama's stimulus package has been negotiated through the United States Senate — I was going to refer to it as the Seanad. It is interesting to see that while the Democrats support it, the Republicans seek changes. However, as President Obama noted, no plan is perfect and if it can be strengthened, that is good. The same is true in Ireland. These are the early steps towards building an economic recovery. However, if they can be strengthened along the way, that certainly should be done and constructive criticism is welcome in this regard.

As for the banking situation, I note with interest that the Government intends to proceed with the capitalisation plan. I do not know whether this will take place this week or next week and I ask the Minister of State to provide clarity to Members in this regard as soon as possible. I realise other matters are being considered. Internationally, I note that in the United States, the possible introduction of an aggregator bank appears to be favoured, whereby bad debt would be pooled and centrally managed. While I am unsure whether this is the correct option, perhaps it should be considered. Moreover, insurance schemes in which governments will insure banks against potential bad debts over a certain level also are being considered. If possible, the Minister of State should clarify whether there have been some suggestions on this matter at European Union level or whether proposed regulations are forthcoming. Unquestionably, in a general sense the entire banking system in Ireland must change forever. I am in favour of capped remuneration as one cannot continue with the level of incentivisation for risk taking that obtained in the past. It has proven to be reckless and contributed, internationally as much as nationally, to much of the difficulty in which we find ourselves.

I expect Members will continue regularly to have the opportunity to contribute on the economic crisis that faces us. Above all, I am sure all Members would like to wish the Government well in all its endeavours on our behalf. Some of today's media reports carry headlines on the so-called biggest bluffer in Leinster House and stated that populist platitudes will not solve the problems. Those terms do not apply to any Opposition Members in the House. It is clear that, while everyone is trying to be as constructive as possible, some are better at it than others.

Photo of Fiona O'MalleyFiona O'Malley (Progressive Democrats)
Link to this: Individually | In context

I will continue from where my colleague, Senator MacSharry, concluded because I disagree with him. Other political parties have had ample opportunity to provide their solutions to this problem. I was expecting to hear Fine Gael Senators——

Photo of Joe O'ReillyJoe O'Reilly (Fine Gael)
Link to this: Individually | In context

On a point of order, would it be in order to highlight to Senator O'Malley the fact that Fine Gael has made umpteen proposals?

Photo of Paddy BurkePaddy Burke (Fine Gael)
Link to this: Individually | In context

It is not a point of order. Senator O'Malley without interruption.

Photo of Fiona O'MalleyFiona O'Malley (Progressive Democrats)
Link to this: Individually | In context

A debate is an opportunity to share ideas and I am in attendance to listen to those of the Fine Gael Party, but there is none. Unfortunately, we have been treated to constant whinging, questions about what went wrong and mumbling. There are no ideas on how to get away from the problem.

I was impressed by the way in which Deputy Gilmore spoke in the Dáil last week. Part of his job is to criticise the Government, which he did well, but the second part of his job is to tell us what he would do. He let down himself and his party badly. This is the difference. Politics is about ideas and solutions. If there are no ideas, Fine Gael will be in opposition for a long time.

Photo of Joe O'ReillyJoe O'Reilly (Fine Gael)
Link to this: Individually | In context

We have the ideas.

Photo of Paddy BurkePaddy Burke (Fine Gael)
Link to this: Individually | In context

Senator O'Malley without interruption.

Photo of Fiona O'MalleyFiona O'Malley (Progressive Democrats)
Link to this: Individually | In context

The Government's measures, which clearly comprise the beginning of the stabilisation programme, will amount to €2 billion this year, but it will not be long before we hear about the €4 billion that must be saved next year and so on.

A responsibility of office is to make tough decisions. The Opposition is unfortunate in this regard. While I do not expect it to fall over and say the Government has got everything right, I expect it to be responsible enough to say the Government was right on a tough decision and to back it to restore stability to the public finances. Where the Opposition does not agree with a decision, it should outline where it would make the cuts. Otherwise, it is only fooling people and letting down everyone.

I have great faith in politics as a profession. However, if the Government gets a decision wrong, we let ourselves down if all the Opposition does is kick to the sideline without offering a proper idea or robust argument on where it would make cuts or from whom it would demand additional revenue. Where the Opposition is critical, it must provide proper opposition.

Earlier this week, I mentioned that I grew up at the end of the last recession among school leavers who placed no hope in the country. They only tried to put enough money together to leave the country, a dreadful situation I will never forget. The Government must ensure the hopelessness of the 1980s never returns. For this reason, it is necessary to make such tough decisions.

It is not good or easy to govern at a time when cutbacks must be made, particularly after a time of prosperity when the most difficult decision for Ministers was the size of the increase to be given. Everyone's expectations rose as a result. Now, the international and national economies are unable to generate the same level of income. We must grab the bull by the horns and arrest expenditure growth, which has been proposed in the plan.

As the Taoiseach stated, it is never easy to ask people to pay more. People in the public sector have a job security not possessed by those in the private sector. The former must make the sacrifice that the latter has been making. Many homes and families are being visited by the devastation of unemployment to which those in the public sector are, to a certain extent, immune. For this reason, it is necessary that they make sacrifices. The public sector must be honest in this regard. During the week, people from a radio show went to County Galway to ask for comments. RTE was somewhat disappointed with its vox pop, as most people recognised the fairness of what the Government is asking people to do.

The second half of what must occur comprises measures to promote enterprise. The private sector will get us out of the recession. There must be measures to promote enterprise and the maximum amount of sustainable employment. I look forward to the relevant initiatives that will be announced in due course.

Photo of Shane RossShane Ross (Independent)
Link to this: Individually | In context

With the permission of the House, I will share time with Senators Bacik and O'Toole.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Shane RossShane Ross (Independent)
Link to this: Individually | In context

I was struck by Senator O'Malley's comments. Regardless of some of the debate's party political spats, we must recognise that we are facing a large schism in society. The situation is fundamental. According to Senator O'Malley, she was raised at a time when all her generation did was save money to go abroad, a situation she never wants to recur. While it is now recurring, it is worse in some ways. Recently, I did a little work to determine to where our unemployed are emigrating. They have nowhere to go, the implications of which will, in some ways, be worse for society than the previous recession. This time, members of a well educated workforce will be rightly discontented in the country of their birth without any outlet for the education, enthusiasm and energy they have been brought up to have. The implications are mind boggling, given that the numbers unemployed will reach 400,000 by the end of the year.

As well as economic problems, we will face unprecedented social problems unless we somehow get ourselves out of this awful mess. I have listened to the arguments on all sides. To which side one belongs determines who one blames. The Opposition blames the Government and the Government blames the world. This is politics and it is fair enough. However, the world and its markets have made a judgment on us in terms of the cost of borrowing money overseas, namely, that the Government's situation is exceptionally more fragile than those of other European countries, apart from Greece, which is above or below us from time to time.

The judgment of those who have to put their money where their mouths are is that we are in a worse situation than anywhere else and they will not lend us money at any reasonable rate unless we do something about it. I have not looked at the rate today but as far as I know that has not changed since the Government introduced its package on Tuesday. The markets continue to watch us with a great deal of scepticism about what we have done. They may or may not be right; we will have to wait and see. For some time to come we must face the scepticism of the international markets about our ability to get out of our economic situation. I take the argument made by many on all sides of the House that were we not in the eurozone we would probably be in a much worse position. That might not have been the reason for our entering the eurozone but it is a side benefit of monumental proportions in our present situation.

The Minister of State's speech was somewhat benign and lacking the sort of alarm we ought to feel. I distrust the references to social solidarity because they do not mean anything. He stated: "Unless we are prepared to shoulder the burden collectively now, much greater sacrifices may be forced on us at a later date." I have never heard such a clear warning. When decoded it means that the International Monetary Fund, IMF, or others will impose this on us. I do not expect the Minister of State to say that but if he says such sacrifices "may be forced upon us", there is little doubt that he means the IMF is at the door. The only problem is that by the time the IMF gets around to Ireland, it may not have any money left because it has been involved in situations in Ukraine and Iceland and elsewhere which will not leave it with unlimited sums of money to rescue Ireland. It would be useful if we faced the problems head on.

I am interested in the mindset that we cut now and introduce taxes later in the year. People are sceptical of some of the cuts. It is inevitable that taxes will rise at the end of the year. We are beginning to get hints that even the sacred cow of corporation tax will be tackled. I wonder whether it has occurred to the Government to cut corporation tax rather than raise it. The movement of multinationals such as Dell and others from Galway and elsewhere out of the country has not gathered a great deal of momentum yet, although it is alarming to see big and small ticket names moving.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

If the Senator is dividing his time three ways his time is up now.

Photo of Shane RossShane Ross (Independent)
Link to this: Individually | In context

Perhaps I could have ten minutes and give Senator O'Toole eight and Senator Bacik two, or seven and three.

Photo of Ivana BacikIvana Bacik (Independent)
Link to this: Individually | In context

That is what we agreed. I am happy with two minutes.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

The Senator may continue and I will notify him when ten minutes have expired.

Photo of Shane RossShane Ross (Independent)
Link to this: Individually | In context

I thank the Cathaoirleach. We are not in an alarming situation with multinationals but we will desperately need them. The main reason for their coming to the country, apart from the young educated labour force, is the 12.5% corporation tax. People who have ideological difficulties with that should not because the multinationals have produced employment on a scale that we could not have dreamt and the spin-off prosperity has been enormous. They are leaving because of the high cost of labour and because the eastern bloc countries they visit have cut corporation tax to a level below ours. There is no reason for us not to experiment by reducing corporation tax to 10% or 9%. There would be a loss to the Exchequer in terms of forensic accounting but there might well be a long-term gain from attracting more multinational industry into the country.

The good times began when Charlie McCreevy, the former Minister for Finance, slashed capital gains tax by 50% from 40% to 20%. That produced a great deal more revenue and activity. It was a double gain. We can learn from that. If we cannot do it by ourselves, attracting more industry from overseas will help employment and possibly the Exchequer.

Senator Regan raised the alarming prospect that the figures are wrong. He may be right. I studied them this morning too. There is some window-dressing in these figures for cuts and the Government has not cut €2 billion. The figure may be lower and it may have to come back for more when the Department of Finance examines its figures again. There is good reason to worry about that. The Government should accelerate the cuts process. I do not know why we have to wait for "an bord snip". If it has any recommendations, let us deal with them and make the cuts now.

There are serious questions to be asked about the semi-State bodies and State agencies. FÁS is only one with €1 billion. There are interesting questions to be asked about the budget of Enterprise Ireland. It is all very well for semi-State agencies to tell us they have done a wonderful job taking a few guys out to Japan and the Middle East, announcing they have got €140 million worth of orders in Japan and therefore Enterprise Ireland is a good thing. That does not follow. Let us examine what it costs because if we compare the operational costs for Enterprise Ireland and the Industrial Development Authority, Enterprise Ireland is inexplicably in the stratosphere. There are quangos galore that could be cut. An industry grew up around the sacred cow of social partnership in which there are people on boards that need not exist. The State is looking after them. We could begin to attack that mindset. I wish I had more time to speak.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

The Senator has used up 11.5 minutes of his time.

Photo of Paddy BurkePaddy Burke (Fine Gael)
Link to this: Individually | In context

Senator Ross was going to be a Minister——

Photo of Joe O'TooleJoe O'Toole (Independent)
Link to this: Individually | In context

I welcome the Minister of State at the Department of Social and Family Affairs, Deputy Máire Hoctor, to the House. I will not get involved in a debate about who is to blame for all this. We are where we are and we need to find a solution to the problem.

The Government's action, standing alone and unchanged, is unacceptable. I received a telephone call yesterday from a nurse who is married to a teacher. She told me their salaries, which are not important because we can work those out. They are both being hit for the 1% levy and the pension levy which is fair enough. Her husband, however, is one of two siblings. His mother, who receives a small pension, is in a nursing home for which he and his sister must each pay €700 a month. The Government has now decided that from next January, that will only attract a 20% tax rebate whereas it was 40% previously. That is appalling. It means that the young couple are more than €1,000 worse off per month in net terms. That couple are struggling now.

I received a letter this morning from another person. She stated:

It is my belief that we must all make sacrifices to pull the country out of this difficult time, but we need to target it as well ... I also feel that the way in which the levy has been calculated is most unfair, and that somebody on a salary seven times more than myself will pay only 1.9% extra...We are just a young couple trying to get by, like so many of our colleagues. We have never enjoyed a luxurious lifestyle. For example, when we finally made it onto the property ladder, we could only afford a place 35 miles away from work. This is far from ideal, when we both have to drive because of our jobs. My husband and I were already wondering how we would ever be able to afford to start a family, but now the whole thing seems impossible. This really does not seem right in a country whose Constitution promises to protect the family.

As politicians, we are used to getting people on the other end of the phone, spraying abuse in all directions. However, the people getting on to me recently have been on the verge of tears. A nurse told me that she was working with a consultant who is earning somewhere between €400,000 and €500,000 per year. She and her husband are being asked to pay about 10% of their salaries, but he is only being asked to pay 2% more on the levy. There is something wrong with that. There surely must be a point above a figure of €70,000 or €80,000 where people in the public and private sectors pay more.

A person rang me who has a menial job in the public sector. He is earning €25,000 per year. He has been hit for all these pension contributions. He told me that if he was paying his ordinary stamp in the private sector, he would get a pension of €250 per week, which equates to €12,000 per year and which is exactly what he would get in the public sector under the so-called defined benefit pension. Where is the equity in that? Surely these are anomalies.

When everything was supposed to be bad last year, Irish developers put €1.8 billion into the Cape Verde islands — the same amount the Government is looking for at the moment — yet these developers are not being asked to contribute. Let us get fairness and equity into this. It is fine to hit people like me and everyone in this House. However, the people below us should not be included. There is so much we need to do to get this right.

Prices have dropped in the past six months in places where there seemed to be no change in wages or whatever. Prices dropped by 20%, 30% and even 50%. How did those businesses manage to do that and still stay profitable? The answer is that they were greedy and making profits for the last few years. Ministers had been saying that, but no one is saying that we should go back to those people and make them contribute. They caused much of the inflation and many of the problems. They should surely be included. If this is going to be a national initiative, then we must ensure the public sector makes its contribution, but workers from the public sector should not be picking up the tab on their own for what has gone wrong in the economy.

Benchmarking cost the State €900 million, and we are still talking about it. We now intend to take twice that amount out of the public sector, following the announcement yesterday, and we will take twice that again next year and the year after. We need to bring a bit of scale to what we are doing here. We have much work to do to get balance into things. What we have seen in Greece, Iceland, and France is beginning here with the Waterford Glass workers and the students. People are going to feel completely disengaged and disconnected. We need to make sure this is shared by everyone. Let us forget about whose fault this is. Let us claw our way out of it. We must move forward together as a country with everyone involved and paying their share while recognising that some people cannot do so.

The Waterford Glass workers surely should have their pension protected. I do not mind paying into a fund that would do that.

Photo of Paddy BurkePaddy Burke (Fine Gael)
Link to this: Individually | In context

Hear, hear.

Photo of Joe O'TooleJoe O'Toole (Independent)
Link to this: Individually | In context

Some people dipped into their pension, and they should be jailed. In the meantime, I want to tell those workers that this is what the State is for. If I have to pay extra to do that, I will be happy to do so. If people in the public or private sector are in danger of losing their houses because they cannot meet their mortgage repayments and if we are prepared to insure banks, then we should also be able to insure ordinary people, and in a sensible way that does not pick up the slack for people who have never paid their mortgages.

Photo of Ivana BacikIvana Bacik (Independent)
Link to this: Individually | In context

I thank Senator O'Toole for sharing time with me. I echo his words about the need for equity, about the problem with the burden of blame being heaped on the public sector and the unfair scapegoating of public service workers. In the public service, we all accept the need to pay our share. I support the principle of the pension levy, but I disagree with the inequitable way in which it is being imposed on the lowest paid. As the Government accepted with the 1% levy, there should be a level below which there is no pension levy. Those of us at the higher end should pay a higher percentage, but I do not think that people on €15,000 or €20,000 should be paying 3% or more as a pension levy. That is an unfair and inequitable way of targeting lower paid public service workers.

I express solidarity with those in the private sector who have borne the brunt of the recession, especially the Waterford Glass workers. As the granddaughter of the founder of Waterford Glass in the 1940s, Karel Bacik, I would like to say how deeply regretful I am to see what is happening at the company. I echo Senator O'Toole's words that we need to ensure at the very least the Waterford Glass pensioners are guaranteed their pensions. That is vital.

At a time when we are bailing out bankers with multiple billions of euro, it seems unfair that those in receipt of the largest sums of money — developers, bankers and people who are not earning incomes, but dividends on property — are not being asked to pay their share in the same way that we in the public service are asked to do so. I ask the Minister to look at the equity of the Government's scheme.

1:00 pm

Photo of Dan BoyleDan Boyle (Green Party)
Link to this: Individually | In context

We have heard of the unpalatable choices that have had to be made in the past week. There seems to be an expectation, fostered by many on the Opposition side, that everything that can be done should be done now. I am not sure whether that is an acceptable economic strategy to be following. We are dealing with an immediate situation where cuts of €2 billion are required owing to the shortfall in tax receipts in November and December. That has caused us to make decisions on public expenditure that were agreed only last October. The biggest element of public expenditure agreed in last October's budget relates to public sector pay. It comes to around 35% of all public expenditure in any given year.

The options are either to reduce the number of people working in the public sector, to pay them less, or to look at how additional costs are achieved, particularly regarding pension entitlements. These entitlements in the public sector are better than those that exist in the private sector. With the imposition of this new levy, they are still nowhere near the economic cost of providing such pensions. When we face that reality, we have a further job to do about the sustainability of pensions across our society. We provide far more in relief for private pensions than we pay into the State pension every year. Now we have a third element on how we treat public sector pensions.

The reality is that there are distinct differences between public sector pensions and pensions that are available to people in the private sector. Many of the pay-related pension increases that apply in the public sector do not apply in the private sector. We have to accept that it is not sustainable that some former senior civil servants, including former Secretaries General, are now earning more in their pensions than they were paid to work as civil servants in this State. We cannot afford that on an ongoing basis. As a society, we need to think about what we can afford and how we can afford it.

The reality of what needs to be done about other issues is that at the end of this year, we will have to decide how to save a further €4 billion. At the end of 2010, we will have to decide how to save another €4 billion. At the end of 2011, we will have to decide how to save a further €3.5 billion. The measures we take to that end will not even balance our books. According to our projections, all they will do is bring us back in line with the 3% expenditure rule set out in the Maastricht criteria. This country will still be spending more than it can afford. These drastic circumstances require difficult decisions to be taken. Action is needed in response to what is happening.

I accept that the public outcry that has resulted from the unpopular decisions that were announced earlier this week is partly based on the desire to see certain actions taken concurrently. People's anger in respect of the financial services sector is justifiable. They want action to be taken in relation to remuneration. They want criminal action to be taken against those who have brought our economy to its current position. Regardless of the amount of money it will save the State, there is a responsibility on the political sector to play a particular role in saving money. A symbolic gesture would be appreciated by the wider public. I do not get a sense from Senators in this Chamber, or from people in wider politics in general who have contributed to this debate before now, that they are prepared to take such a jump.

The political representatives of the people need to consider how costs in the political system can be reduced to an extent that is equal to or greater than that being experienced by those outside that system. I refer to people who will now have to make added contributions and to the 40,000 people who have joined the dole queue over the last month. If public representatives do not take action in his respect, we will be doing a disservice to our roles. We should send out a clear signal that we accept the need to address issues like the payment of additional expenses and the receipt of pensions by people who are still in public office. If political parties and politicians are collectively not prepared to accept that need, regardless of who is in government, they will not receive the respect or acceptance of the public. In such circumstances, the public will not buy in to what it is being asked to accept in this package and in future packages. It will be possible to prevent that if the measures that are needed are announced and implemented as quickly as possible.

We have already provided for the recoupment of €1 billion in 2010 — money that would otherwise have been spent — by imposing a pay freeze rather than the national wage agreement. We intend to consider the proposals included in the report of the Commission on Taxation. I expect that any new taxes will be aimed at those in our society who have most, but are contributing least. That is the essence of one of the issues of public concern. If those of us who are part of the political system want to retain any sense of respect, we need to be prepared to take the type of decisive action that is needed. It is a simple equation. If we are not prepared to countenance a tiny reduction in overall public expenditure — I suggest that €20 million can be saved from the Houses of the Oireachtas Commission's annual budget of €100 million — we have no right to talk about the additional measures that are affecting the wider public.

We have to do things in a better, more efficient and more honest way. I have not yet seen a willingness on the part of politicians, across all political parties, to change the way we behave within our political system. We need to send out the right signals by showing a degree of empathy and by making changes — in the Oireachtas, in the first instance, and subsequently in the rest of society — that will give us a better society and a more sustainable economy. Until that happens, debates of this nature carry very little worth, to be frank. I hope this House can send a message to the effect that the Government's consideration of these issues will result in adequate decisions being made at an early date.

Photo of Joe O'ReillyJoe O'Reilly (Fine Gael)
Link to this: Individually | In context

I would like to share time with Senator Healy Eames.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Joe O'ReillyJoe O'Reilly (Fine Gael)
Link to this: Individually | In context

Ba mhaith liom fáilte a chur roimh an Aire Stáit. The proposals that are the subject of this debate are welcome only in so far as they mark the end of the period of prevarication, indecision and rudderless leadership. We have had no Government, in effect, for the last eight months. We have lost some of the international credibility we had built up. These measures are welcome only in so far as they represent the end of that horrific period. However, I do not welcome the unfair effect these proposals will have on the lower-paid sector of the public service. There is no escaping that reality. It is unreasonable to expect young people who are burdened with mortgages, child care bills and travel expenses to make this contribution to pensions, in addition to the 1% income levy. Public servants at the lower end of the wage scale already have little disposable income. While it is acceptable at a certain level, it is unreasonable in many cases at the lower-paid end.

Unfortunately, this problem is exacerbated by the fact that bonuses are being paid willy-nilly throughout the State. Bankers and media stars in RTE are being paid enormous salaries. Public servants are justifiably angry about this series of injustices, irregularities and unacceptable practices. We are putting the cart before the horse in this instance. What about tax exiles? What about the plethora of waste at Government level? Over the last 11 years, the Government threw money around like confetti on projects like PPARS, electronic voting and the Red Cow roundabout. Nothing has been done, in effect, to halt such practices. I have already referred to tax exiles.

In his opening speech, the Minister of State spoke about the need to cut expenses and other bills. What about consultancy contracts? What about public relations expenses? What about the plethora of advisers in the offices of Ministers and Ministers of State, which is costing the State a fortune? It is the greatest national scandal confronting us at the moment, particularly as this country has a native Civil Service of a high calibre with high entry requirements. It is an abomination and a nonsense of the worst kind that a Minister of State's office is staffed by a plethora of non-civil servants when we have a brilliant native Civil Service. I am concerned about that kind of wastage. What about the quangos? I am concerned about the young civil servants who are following this debate. It does not matter whether they are in single or double-income households. Nothing is being done about all the other anomalies and forms of wastage.

Senator Boyle made reference to the Government's aspirations, but we have put the cart before the horse. We need to get the public to engage with, accept and understand what we are doing. In the context of this debate, we should be talking about introducing a real programme of job creation. I welcome the announcement of a scheme of insulation grants, but they need to come on stream immediately. A radical school building programme is needed to reduce the cost of prefabricated buildings in schools throughout this country. We need to consider the money that would come back into the economy if the cost of paying social welfare to construction workers could be reduced. It is bizarre that we are not building schools across this country. There is a huge deficit in the quality of our school buildings. No radical effort is being made to train people. Some months ago, I proposed in this House on many occasions that the introduction of a FÁS scheme was seriously needed to retrain people who had half-completed their apprenticeships when they lost their jobs when building firms folded.

What about energy costs? There is no case for increased prices. The increase given to Bord Gáis Éireann and the ESB last year was predicated on the then price of oil, which was €1.46 a gallon. Oil is a fraction of that price now. Why has the Government not reduced energy costs? It has been aspirational in talking about it. Everything that has been talked about has been aspirational with this Government, but why was that not done? Why was the regulator not called in? Why has action not been taken? Action should have been taken on this months ago. When oil prices fell, ESB and gas prices should also have fallen. All the wastages in the economy could have been eliminated months ago. This is why the people are cynical and bitter. This is why a Waterford Crystal worker who will lose his or her pension is angry.

Why has the Government not engaged properly with the banks to date on the credit business and on putting money into the economy? Why is the European money that can be drawn down for reconstruction not being used? There are so many whys that people are angry, and justifiably so, and it is time for coherent action.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
Link to this: Individually | In context

I thank Senator O'Reilly for his kindness in sharing his time with me.

I wish to be helpful here today. All around us companies are falling and unemployment is increasing, I heard Senator Harris say this morning that he was fearful that the number unemployed could rise to 700,000 by the end of the year. I heard on the news last night that Celestica in Galway, a contract manufacturing company that makes inkjet cartridges, is seeking 80 voluntary redundancies. I wrote to that company this morning and it has responded to me to the effect that it can be helped. It is important to share this information with the House. I asked the company if there was any action or initiative the Government could take now that would enable it to retain the 80 jobs at risk? I asked if it would reconsider its position if a change was made, for example, in the rate of employer's PRSI, and if a subvention grant per person per year for less than the amount of his or her social welfare payment, for example, €5,000 per person, would enable the company to keep these people employed? The answer I got was "Yes". The costs that are killing the company are utility costs, including ESB costs. Since September 2008, the company's ESB bill has increased by €500,000, a 34% increase. Furthermore, it is tied into that contract for 12 months. It needs the Government to get it out of that contract immediately if it is to save those 80 jobs. This is good news. If we know that ESB costs is the cause of the potential loss of these jobs, we can do something today. We must reduce this cost base, as Senator O'Reilly said. The person in the company went on to say that we should ask all companies by how much their ESB bills increased since last autumn. We should ask Intel and Dell that question. This is something we can control because the regulator has not acted.

The second cost, about which we all know, is the cost of labour. The person in the company gave me some interesting information. He said he is out there bidding for work. Even though we are in a world recession, there is still work for which to bid. Anything that will help him with the bidding will make a difference. He said, if the company can say with clarity that the Government will keep costs down over the next five years, the company will be more competitive.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

The Senator's time is exhausted.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
Link to this: Individually | In context

I have to make this point, as this is the good news. In eastern Europe, inflationary rates are increasing all the time but, if we could bridge that gap and if we can stand still in terms of costs, we will be more competitive. We need to stop the inflationary bandwagon we have been on for the past ten years.

I have made these points to be helpful to the Government. I have given the Minister of State two important items of information. I will tender the letter I issued to Celestica this morning, to which it has given a positive response. It said it needs help and it will take our help, but the Government must control the costs.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
Link to this: Individually | In context

The Senator's time is up.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
Link to this: Individually | In context

I have offered the Minister of State some information today, to which I want a response to ensure action will be taken to save jobs in Galway.

Photo of Eoghan HarrisEoghan Harris (Independent)
Link to this: Individually | In context

There are three questions we must ask ourselves. How bad is this recession, whose fault — if anyone's — is it and what should be done? Judging by what I saw on television yesterday — I was in hospital and had a chance to watch television — and as viewed through the eyes of the general people, I have no evidence thus far that colleagues in the Upper or Lower House grasp the seriousness of this recession. It is global, deep and there is no end in sight. It will get worse before it gets better. I heard the top Bloomberg analyst say the other day say it has a double peak. Behind the bad news of the first peak or when we have climbed the first peak, we will see another bad news peak behind it.

I understand why the Taoiseach, who has a good and clear grasp of the situation, would not want to play up public fears, but I do not agree with that approach. We are faced with a global recession and a national emergency, given that, I believe, unemployment will hit 700,000 or perhaps higher and personal debt is astronomical. The Government is close to a situation where Irish bonds will not be trusted and it will not be able to borrow. I do not know to where the Government can turn, except to those parts of society which are able to bear the burden. In a situation such as this, there is a growth of fear, anger and denial. That is what is currently prevailing. There is so much fear that people are not thinking straight.

First, there is all this loose talk of fat cats. Every wealthy person in Ireland, Tony O'Reilly, the Smurfits, whoever you want to name, has seen their wealth cut by between 50% and 60%. Therefore, they certainly are bearing the brunt of the recession. Second, the professional classes could do with bearing some of the brunt of the burden and a start was made by the Government, but they will have to bear more of it. For example in the case of doctors, the State has cut their fees, but they and other professional classes should be forced to cut their fees, professional classes in their private capacity.

Then there are the bankers. Again, I am struck by the way the climate of fear prevents people from thinking clearly. In terms of the media, RTE in particular is at fault in this because it, being a public sector institution, is anxious to spin away from scrutiny of its own wage rates for presenters and higher paid staff. RTE is anxious to work up hysteria about banks and so on. The fact of life is that the Bank of Ireland and Allied Irish Banks are solvent institutions. The problem is they need to write off some of their property portfolios to close the market gap. The market does not believe they are valued at €8 billion, it believes they are valued at €3 billion less than that. It believes the true value of each of the banks is probably closer to €5 billion. It would be welcome if the Government talked to the banks and got them to write down their real assets in terms of what the market believes them to be, which is approximately €5 billion. We could then have an honest start.

On the banking issue, some people in Anglo Irish Bank behaved badly. I am all for handcuffs and the Criminal Assets Bureau being brought in to deal with bankers who commit criminal offences, but just because one smallish bank behaved badly is no reason to create an air of panic and hysteria that all the banks are facing meltdown. The assets of both of the larger banks are quite solid and they should seriously consider amalgamation to become a kind of Ryanair bank in Europe. They are both too small to be European players. They should amalgamate.

Beyond that, the only brunt that can be borne is by those of us in permanent and pensionable employment. That is the class that must be targeted. I was struck with disbelief when I listened to speeches on the public sector from Senator O'Toole and others. I cannot understand, when workers in Dell and Waterford Crystal are losing their jobs, people in permanent and pensionable employment have so little grasp of reality. I will spell it out for them.

For every €100 earned by a private sector worker, a public sector worker gets a premium of 20%. On top of that, they are being paid between 15% and 30% — the economists disagree — on a premium of their pension. In other words, in addition to the 20% they get a further 30% in value from their pension. In other words, for every €100 earned by private sector workers, public sector workers earn €150. They produce 30% less in terms of productivity. They are off sick more often and they are the greatest crowd of self-appointed victims I have ever come across. They are not victims in this society. They are the fat cats of society but they do not like to accept that.

Any of us who are asked to look at our incomes will come up with reasons we cannot pay. Ryan Tubridy, the RTE broadcaster, said he could not pay up because of personal reasons. None of us wants to pay up but we will have to do so.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

I ask the Senator not to name any persons outside the House.

Photo of Eoghan HarrisEoghan Harris (Independent)
Link to this: Individually | In context

I did not mean to pick out Mr. Tubridy or any other RTE presenter. We all come up with excuses.

The truth is the Taoiseach was correct to cut into the public sector. His one mistake was that he did not cut more deeply. He will have to do so in the future. I predict that the shortfall in Exchequer revenues will be in the order of €25 billion rather than €18 billion. I commend the Minister of State, Deputy Mansergh, on providing us with a lucid and well-written document which sets out clearly the state of the public finances. I disagree with some of its content but I commend him on its clarity.

The recession is a grim reaper that is throwing a searchlight into every corner and crevice of society. It has revealed the weaknesses in the banks. It has revealed the cushioned nature of the public sector. It has revealed the profiteering of the professional classes. One calls to mind the Mahon tribunal in this regard. Above all, the recession has revealed a society in denial. Almost every taxi driver, small builder and tradesman seems to have purchased a second house either at home or abroad. It is a lie to pretend the entire middle and working classes did not benefit from the Celtic tiger. The evidence remains physically around us. It is ridiculous for us to seek a few scapegoats in the form of politicians and others. We in the public sector must make a start in bearing the brunt of the pain. I agree totally with Senator Boyle in this regard. We should offer the public something between 25% and 30% of our salary and expenses before the public takes it from us.

Photo of David NorrisDavid Norris (Independent)
Link to this: Individually | In context

I welcome the Minister of State, Deputy Barry Andrews. I listened to part of what the Minister of State, Deputy Mansergh, had to say and I read the document he provided. Like Senator Harris, I agree with much of its content. The Government now wishes to take resolute action. Unfortunately, it has not been resolute all the way through. There has been a certain amount of fumbling. In a situation where what is needed internationally is confidence, that is very dangerous. It is worse than causing fear and worse than facing the situation we are in. I am glad the Minister of State, Deputy Mansergh, in a manner uncharacteristic of Ministers in general, has described the economic situation as "stark". That is unusually uncompromising language.

It is appropriate that we recognise the reality of the current crisis and that there is an international aspect to it. The State is obliged to repay borrowings from the European Central Bank at a rate 2.5 percentage points higher than that paid by Germany. This is nothing other than a confidence issue. For that reason, there must be firm, clear and concerted action supported by all members of society.

However, there are aspects that are divisive. We are not unique in this. The President of the United States, Mr. Obama, recently had to reprimand Wall Street companies in the strongest terms because in the middle of this crisis, with financial institutions on the slide, chief executive officers had taken a total of €18.8 billion in bonuses. These people have no shame.

Greed, vulgarity and selfishness are not unique to the economic ruling classes of this country. It is a general situation and so too are the financial difficulties. They represent a systemic failure of 21st century capitalism, a reality which must eventually be tackled. We must deal with the immediate crisis but, as I have said before, we must also examine the basic issue of money and the way in which our entire financial system has lost touch with the reality that money is supposed to represent. The notion of the worker worthy of his or her hire has gone entirely astray. However, I will not go into that theoretical issue today.

The situation gets worse even as we sit in this Chamber. Before coming into the House, I listened to the news headlines announcing that Drummonds, the large grain company, is in trouble. Sony Ericsson management has just called in its workers for discussions. We know what that means. The Bank of England has reduced its interest rate to an historic low of 1%. In the 300 years in which the bank has been in operation, the rate has never been so low. The British Government expects as many as 3 million to be unemployed by the end of the year. We will be lucky to get away with a figure of 400,000.

A difficulty for this State relates to the balance between the public and private sectors. The money to pay the public sector comes from the private sector. If there is a substantial collapse in private sector employment, how will the Government find the money to pay the public sector? This is an issue we must tackle. I agree with Senator Harris that we all must take a lead. I hoped yesterday to raise the issue of the pay rise for ESB workers but there was not time to do so. However, several of my colleagues raised it this morning on the Order of Business. I congratulate the Leader on the commitment he has given to use his influence to seek a reduction in ESB rates. Those rates are one of the factors that make this State completely uncompetitive. It is indecent for ESB workers, who have an advantageous pension system comparable even to that of Oireachtas Members — and God knows we are well fortified — to take a 3.5% pay rise.

Photo of Eoghan HarrisEoghan Harris (Independent)
Link to this: Individually | In context

Hear, hear.

Photo of David NorrisDavid Norris (Independent)
Link to this: Individually | In context

I appeal to ESB workers to show the solidarity that is needed. When people are being thrown out of work, it is unfair for those workers to accept an increase.

The pension levy must be imposed in a fair way. Senator O'Toole made an interesting case in this regard. I heard an interview on the radio yesterday with a civil servant who is separated from her spouse and is under pressure to provide for her children on one income. She consulted the money advice and budgeting service for assistance which mapped out a budget plan for her. Not a single cent of that budget is allocated for luxuries or entertainment. The entire budget goes towards servicing debts and purchasing food. How can she be expected to pay a 7% levy? There must be some degree of flexibility.

My colleague, Senator Bacik, whose grandfather was one of the founders of Waterford Crystal, spoke about the situation at that company earlier. One is struck by the difference in the position of workers at Waterford Crystal and those at Waterford Wedgewood. The former are likely to be put out of work and their pensions are not protected. In Waterford Wedgewood, because of legislative action by the British Government, workers' pensions are protected by a pension protection fund. That option must be considered in the case of the Waterford Crystal workers. What are the workers to do if they lose their jobs and their pension funds either have been raided or have collapsed because they were invested in bank shares that are now worthless? How will they make a living? They will represent a cost to the Exchequer one way or the other, so we should examine the possibility of some type of pension fund.

Members received an e-mail in recent days from a married couple, both of whom are civil servants. They write that those on a salary of €55,000, as each of them are, will pay a levy of 7.7%, but those earning almost five and a half times more will pay only an additional 1.9%. In other words, the wealthy will get away again. They go on to say that it is always middle income earners who suffer most and this is the case once again. They find the levy difficult to accept because the value of the public sector pension has already been taken into account in the benchmarking process. Therefore, they have already been awarded a lower salary than comparable employees in the private sector. For that reason, they welcome the scrapping of the increases provided for under the review and transitional agreement. That is quite right. I support that completely and will support the Government in any coherent measure it takes which directly affects the better off, such as me, to support people who are in considerable difficulties.

We have taken certain measures. Much has been done already. With regard to the schools programme, very large numbers of schools await redevelopment, new premises, etc. In some circumstances schools are renting portacabins. The rent on these is less than they would pay on a mortgage to build new classrooms. Let us do that. That would save money, provide work and decent classrooms for our children.

With great respect to Senator Harris, there has not been a co-ordinated response. I protested on the Order of Business when the Government increased VAT by 2.5%. On the same day, the British dropped the rate by 2.5% in Northern Ireland. Again that very day, the Government put extra rates on Dublin city centre businesses. That is not a co-ordinated response. We are contributing €580 million to the Northern Ireland economy, as a political gesture. The rate of unemployment there is only 2%. Ours is 7.5%. Why are we helping that economy? Perhaps we should look again at that situation.

We could reduce VAT on food to zero, certainly for fresh produce. We could have an across the board rate of VAT at 16%. We could halve this rate for Irish goods and load tax on imports of such materials. The Government could get rid of five Ministers. There are 15 Departments and 22 junior Ministers. Why does one Department need two Ministers? There could be a saving there.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

The Senator's eight minutes have expired.

Photo of David NorrisDavid Norris (Independent)
Link to this: Individually | In context

Electricity costs must be reduced. Residential development sites are idle and half-finished. The Government should establish an agency and buy these sites at rock bottom prices from the developers, put public money into the project and get the building sector back to work.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

I call on Senator Butler, who has eight minutes. However, as ordained on the Order of Business, I ask the Senator to move the suspension of the House until 1.50 p.m.

Sitting suspended at 1.30 p.m. and resumed at 1.50 p.m.

2:00 pm

Photo of Larry ButlerLarry Butler (Fianna Fail)
Link to this: Individually | In context

I welcome the Minister. I hope I will not have a negative tone. I will do my best to make a contribution on the basis that there must and should be solutions to all the problems we face, and I am sure there are. The Minister has taken very prompt, swift and effective action in the banking situation. Last October we brought in legislation to deal with the banks. By and large, the banking system has been stabilised and our banking situation has improved. We took prompt action on nationalising Anglo Irish Bank. It was vitally important that this be done swiftly.

Some speakers here this morning said there was inaction in these situations; there was not. The actions were precise and well-measured. With the banking problem we have had throughout the world, countries have put huge amounts of money into banks and it did not stabilise the situation. Britain was tired of pouring money in on a weekly basis and found it had to nationalise the banks in the end. We have been dealing with the banking situation since October. The pork crisis was dealt with very swiftly and we showed the rest of the world our food product is top of the range.

I have heard people talking about "propping up" the banks. We cannot have a stable economy without having a solid banking system. I have heard people say we are keeping the "fat cats" in there. We need a proper inquiry into all banking situations and new regulations should be put in place. That should be part of any condition of recapitalising the banks. We have not yet spent any taxpayers' money on support for the banks. The guarantee scheme supports depositors in the banking system. It is important that when we recapitalise the banks, which we will, we have a guaranteed share in the banks and that the banks pay a dividend to the pensions scheme. That is vitally important. I do not want people to say we have put money into the banking system. We are lending money to the banking system. They are paying us for it. The guarantee scheme also carries a charge in that regard.

It is important we turn to how we will regenerate jobs in the economy. It is vital to ensure we have proper training schemes for those who are losing their jobs. Our support for the smart economy scheme, which we brought out before Christmas, will ensure we have a focused look at how we will rejuvenate the economy. I welcome the recent cuts and savings in the public sector. We had to do that. It was very important to send the message to the global markets that we are taking action to put our public finances in order. That was a first step. We all know we have a lot further to go and there will be pain involved. There is no use in saying there will not be pain for you, me and everybody in this House or in the public service.

The public sector gives a great service. The people who work there are fine people and they do a good job. We are asking them now to help us out in a time of crisis. It is important that the people in the private sector who are suffering see that we are doing that and that everyone is playing his or her part. In the private sector, 25% of wages go on pensions which are not guaranteed. We have seen people who were working in Waterford Crystal for 40 years and now find themselves with no pension. That is the reality in the private sector. They are not guaranteed jobs or a pension. Therefore, we have to take a certain responsibility in ensuring the country survives this terrible recession.

The lower sector of the construction industry, which is involved in retrofitting, insulation and alternative energy, is important for the creation of new jobs in the future. More than 20,000 jobs are involved. I have done some calculations in this area, as the Minister of State knows, which we have put through the parliamentary party. A cost of €15,000 to €20,000 would bring a house up to a "B" energy rating. This would save the householder 50% on energy costs, which is a major saving. It is important we get this scheme up and running soon because it will create many jobs. To give an example, for every €25 million the Government puts into the scheme, €100 million will be spent in the economy and there will be a benefit of €52 million to the Exchequer. This is in small industries. We could create 20,000 jobs in that sector. In 2008, the turnover in the renovation, retrofit and extension sector was €7.7 billion. That could be increased. We must also bear in mind that a million houses in this country will have to be brought up to standard. We will be penalised in Europe if we do not do so, and this will cost us hundreds of millions. We might as well start there and create jobs. This is terribly important. We are somewhere on the way to doing it, but I would like to see urgency in this scheme.

The Minister has announced the school renovation, insulation and solar energy plan, for which there is a major need. We can have running hot water within our schools for nothing using solar energy systems which can be established at a small cost. This is a wise way to go. I suggest we expedite this. Many people are going on the live register. We must consider PRSI and we must consider all options open to us by which we can create jobs.

Senator Twomey mentioned that he did not have any plan and he hoped we would not be expecting him to come up with a plan. That is a poor response when we have a full-day debate in the Chamber. I want the Opposition and everyone in this House to come together with solutions that are workable and credible. I commend the Minister of State on his speech in which he clearly outlined how things have to be for the future. That is the way forward. We should tell the people up front what we are doing, and then we can get the results.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

I welcome the Minister of State, Deputy Mansergh, to the House. I did not hear his speech earlier, although I read parts of it. As previous speakers have said, I agree with much of what is contained therein, although there are a couple of points I will make about the Government's announcement earlier this week. I do not want to be discordant at the start but I must comment on the remarks with which Senator Butler concluded. I did not hear what Senator Twomey said this morning but I know that Fine Gael has put out many ideas and plans for reforming public expenditure, including changes we deemed suitable and appropriate in terms of the public finances. There has certainly been no lack of opinions or plans from the Opposition. From the Government side, until very recently, we had met a stonewall response. There was very much an attitude that it was going to do things its own way, as expressed in the words of the Taoiseach in the other House about ten days ago. That attitude has changed slightly, and I welcome the fact that there seems to be more willingness to listen to what those on other sides of the House have to say on these issues.

The announcements earlier in the week by the Taoiseach were a step in the right direction. I would have announced things differently had I been in his position——

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

One never knows. The Senator might be at some time in the future.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

One never knows.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

Keep saying the prayers.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

Some of the provisions for the pension levy are worthy of comment. People on lower incomes in the public sector are being treated a little unfairly. I was talking to a nurse yesterday who is to lose almost €2,000 from her income because of the Government's measures. I would not consider somebody on €32,000 or €33,000 to be a very high-earning public servant. If I were in the Taoiseach's position, I would have tilted the levy a bit more towards those who are earning more in the public sector. However, I do believe something had to be done and I support the taking of action. The only criticism is that it should have been done sooner.

I agree with Senators Harris, Norris and others who have spoken about the need to reform the way we operate in this and the other House, especially with regard to the costs of Government. There is a need to lead by example. I acknowledge that the Government members have taken a voluntary cut in their incomes. I support that and it is to be commended. However, we need to consider the number of Ministers of State, and the biggest disgrace is the staff attached to the offices of the Ministers of State. I am not casting any aspersions on the Minister of State, Deputy Mansergh, and I do not know how many people he has working in his office.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

No permanent civil servants.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

There are some Ministers of State who have nine or ten people working in their offices. That is not acceptable. It has spiralled out of control in recent years and we need to get back to some semblance of reality. People expect this to happen and the Government should lead by example in this regard. The number of Ministers of State should be reduced significantly, as should the number of Oireachtas committees. There are around 20 Oireachtas committees and there is ample scope to cut back.

Senator Norris made an interesting point about the possibility of public works and a schools initiative, with which I largely concur. He also raised the difficulty that has emerged of unfinished housing estates in towns and villages throughout the country. Building work has not been completed on many of the houses and many of the estates have been left unfinished for a long period of time. I am puzzled that the Government appears to be cutting back significantly on spending on social and affordable housing for local authorities at a time when there will be more people on housing lists. There are already approximately 56,000 people on the lists. There is obviously a glut in the housing market and, while I do not know the ins and outs of the market, I am sure something useful along the lines of what Senator Norris suggested should be examined.

The problems we face in the public finances are a symptom of what has happened in the Irish economy in the past couple of years. They are due primarily to our lack of competitiveness. Our competitive position has deteriorated significantly. Senators Norris and Harris were correct to point out that, in effect, the private sector pays for the public sector. If we are haemorrhaging jobs at a huge rate in the private sector, as is occurring now, there obviously will be a shortfall in income for the Government to support the public sector. We need to get back to basics, to quote the phrase used across the water, in terms of competitiveness in the Irish economy. The Government has a key role in that regard.

There have been a number of speeches recently by Government speakers in this House and elsewhere about the energy crisis. A significant job must be done to reduce the costs of energy. There is also the issue of Government charges, while VAT was mentioned earlier in the debate by previous speakers. There are also problems with wages. I do not have a difficulty with the minimum wage but the arrangement whereby a particularly high rate is paid for weekend work is causing huge difficulties for small businesses, particularly in the service sector. This matter should be examined as well.

Senator Butler referred to Waterford Crystal. I am familiar with the industry as I live only ten miles from Waterford city. I know many people who have worked there over the years. It is disgraceful that one of the workers, who spoke to Senator Cummins this week and has worked for Waterford Crystal for 44 years, has discovered he does not have a pension. There is something very wrong with that. Interestingly, Senator Norris referred to the British pension insurance scheme. There should be something similar in this country. It will not provide any comfort for the workers in Waterford Crystal but it should be put in place for the future. I fear that the black hole in the pension provisions in Waterford Crystal will be replicated in other businesses across the country. We should not allow people who have spent their lives working in those businesses to be thrown on the scrap heap when they leave.

I welcome the opportunity to participate in this discussion. There is a greater sense that the Government side is listening to what the Opposition has to say and is taking on board some of the more constructive arguments being made by all sides. I welcome that. Like Senator Harris, however, I believe the full realisation might not have dawned on the general public of the country's grave situation, given the numbers on the live register announced yesterday and the figures announced earlier this week for the reduction in tax income in the month of January. The country is in a stark grave position. The announcement this week is a small step in the right direction but I believe we will have to go further.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

I welcome the Minister, Deputy Mansergh. He is much busier now than he was when he was a Member of this House. It is good to see him.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

He was always busy here as well.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

He was, indeed. However, he is much busier now. I listened with interest to the debate and was delighted with the contributions from all sides of the House. Some very constructive points were made in some of the presentations.

I commend the Taoiseach, Deputy Brian Cowen, the Minister for Finance, Deputy Brian Lenihan, and the Cabinet on what they have done. It was a courageous step but there was no other choice. Nothing else was on offer. It had to be done, and done immediately. I was delighted to hear, on "Morning Ireland" yesterday, two of the country's leading economists say it was courageous of the Taoiseach and the Minister, that it was the right move and that it is the first step in a long journey. We must regain our competitiveness. This is the first step towards improving the country's economic situation; it is a first step towards recovery.

The €900 million reduction in tax yield in January is unprecedented. We have never seen such figures. Undoubtedly, the situation is gloomy but we cannot become despondent. If we do, we will be unable to do anything. We will be unable to borrow and what will we be faced with then? I hate to think of it and will not even say it. Words have a way of sneaking out of places such as this, they are jigged around and are put across another way. It is unsustainable to think we can borrow €18 billion to run the country. We cannot do that. Pay increases will not be paid in 2010, and rightly so. I believe everybody wishes to play their part in getting the country back moving again.

My main reason for contributing to this debate is to address something quite upsetting, how it has become fashionable in recent days to question the concept of social partnership. The leader of Fine Gael accused the Government of covering itself in a cloak of social partnership. He said, "The public coffers have been emptied, the developers and the banks are bust, and trade unions have little to offer." He said it — I was in the Chamber and heard him — in a very dismissive tone, which has been echoed in this House and in the public pronouncements from various Fine Gael Deputies and Senators. I also have been disappointed by the contributions of some of the Labour Party speakers, who seem not to recognise the true value of social partnership or the contribution made by the partnership process to the development of the Irish economy.

I am a trade union member. The Leas-Chathaoirleach can smile all he wants. I would prefer if he did not look to his own side of the House and sneer while I am making a presentation. It is very off-putting.

As a trade unionist and somebody nominated to the labour panel to contest my seat in the Seanad——

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

That is unprecedented.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

——I consider the reference to the social partners and to the process both simplistic and insulting.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

As insulting as the Senator is to the Leas-Chathaoirleach.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

Trade unions, business leaders and representatives of civic society——

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

The Senator should apologise.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

——have a role to play and the importance of that role must be recognised.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

The Senator should withdraw the remarks she made about the Chair.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

Those who criticise the——

Photo of Paddy BurkePaddy Burke (Fine Gael)
Link to this: Individually | In context

The Senator without interruption.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

I did not interrupt anybody.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

No, but you should withdraw those remarks.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

Those who criticise the process of consultation would do well to spell out in clear terms——

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

The Senator is a disgrace.

Photo of Paddy BurkePaddy Burke (Fine Gael)
Link to this: Individually | In context

Senator Feeney without interruption.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

——what their alternative to social dialogue would be.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

That is the most pathetic contribution I have heard in seven years in the House.

Photo of Paddy BurkePaddy Burke (Fine Gael)
Link to this: Individually | In context

Senator Feeney without interruption.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

The concept that all power, responsibility and wisdom resides in one person or in a government is alien to this republic and has no place in democracy. All Senators participating in the debate brought forward ideas of how things might work. On Monday or Tuesday of this week, The Irish Times and the Irish Independent covered very extensively the current crisis in the motor industry. Is there any way the Government could consider reducing VRT on cars by perhaps 10% or 20%? We should also examine stamp duty. If we cannot reduce it, we could consider not collecting it all at once but spreading it over a number of years in order to help young people buy new homes or help others move up. It would also help the real estate industry.

Other speakers referred to VAT. Could we have a serious attempt to reduce VAT? Although I am sorry to mention names, on a recent programme I heard Ben Dunne discussing the importance of getting cash back into the economy. People are afraid to spend money. There is still money out there; it did not disappear overnight. We need to get people spending again. There is an old saying in this country that once the builders and farmers are doing well, the country will always be on the up.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
Link to this: Individually | In context

The old saying did not mention the builders, just the farmers.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
Link to this: Individually | In context

We must get small construction businesses back up and running. I come from a medium-sized town and I know the small builders who would build a house or an extension — I will not call them construction people. They are on their knees. I call on the Minister of State, Deputy Mansergh, to ensure that whatever we do when we recapitalise the banks, there is a clause that small and medium-sized businesses will be looked after. If we do not do this, we are at nothing.

We must also ensure the excessive salaries of the directors of the two banks we are now ready to recapitalise are brought into question, and that everybody shares the pain that we in the public and private sectors are sharing.

Photo of Feargal QuinnFeargal Quinn (Independent)
Link to this: Individually | In context

I welcome the Minister of State to the House and I welcome the words he used in his speech. I want to concentrate on three points he made. He said, "We must lower our cost base as rapidly as possible and become the highly competitive economy we once were, rebuilding a platform for future export-led growth." I entirely agree. One of the things that disappoints me about today's debate is that we have moved away from this to a large extent. It really is essential.

I started in business at the age of 23, way back in the 1960s, and I have seen many enterprises go out of business. On one occasion, we had a joint venture with another company and we had to close that company although we had taken on 100 people. It was one of the saddest days of my life when I had to tell those people that while we had encouraged them to join the company, we would have to close it down because it had not succeeded. They had every right to say, "It is not fair" and "That it is not our fault." However, the business did not succeed and so it closed.

When one takes, as we have this week, the first steps in reducing our costs and certainly the costs of running Government — they are only the first steps and we must go much further — people will say, "It is not fair. I did not cause this. It was those nasty people in the banks or somewhere else." Business is not about fairness, it is about competitiveness. If somebody takes business away, one loses that business. It is not a question of being fair.

We must find a way of reducing costs. On occasions in my business career, I had to go to our people and tell them that if we were to stay alive and be healthy again, it was time to take tough medicine and to cut costs. I found that when I managed to show leadership and explain the position, as I think we are attempting to do now — although we did not do it early enough back in October — it is possible to get acceptance and recognition.

It is not a question of fairness but there is a question of equality for everyone involved. From what I hear of the sounds being made this week with regard to the proposal to cut costs, particularly in regard to the pension commitment, there does not appear to be an understanding that this will be equally applied. There is a belief that those who are well off are not paying their fair share. We need to examine that issue.

We must take steps to address the costs of running the Government, which are too high. There is little doubt that the benefits of a fixed, secure job with a pension must be paid by somebody and it seems only fair that those who will benefit will be those who pay. This will be accepted if the cuts are seen to apply to everybody in the public service. The challenge for the Government is not just to cut wages and the cost of pay, although that is a very serious issue and we have no choice but to take that medicine in order to get healthy again. I support the Government in what it is doing and I believe it needs that support. However, it has not gone far enough and it will have to go further in the future.

When a business looks at its problems and realises it has a crisis and its costs are too high, it then looks not just at wage costs but at the cost of purchasing. We have not taken nearly enough steps in this regard. I saw some figures from a committee which considered the position of just one Department perhaps 15 years ago. It reckoned that with more sensible and better purchasing, £100 million was capable of being saved at that time, and savings would certainly be possible these days with e-tendering. To the best of my knowledge, that report has never been acted on despite the benefits that could be brought about.

For a business, the first thing is to reduce wages and one would go to the employees and tell them what had to be done in order to remain healthy. The second thing is to reduce the cost of purchasing goods. The third is to reduce the cost of rent. Therefore, I would support the idea of a property tax of some sort. I am not sure how this would be introduced and I know there was a huge reaction to rates in the past. However, the suggestion of a property tax on second homes seems quite acceptable and this is the sort of step that will have to be taken. This needs imaginative ideas on the part of the Government and it needs leadership. Acceptance of those measures will only happen if it is understood where they are coming from.

The next stage for a business, when it has sought to reduce wages, purchasing costs and rent, is to find whether it can bring in more money in higher sales or some other way. I do not believe we have done nearly enough in this area. We talked about tax during this debate but the idea that appealed to me is the concept that, as happened in the past, one would reduce the percentage rate of certain charges to take in more money. We know this applied very well with regard to corporation tax, which was reduced from 30% to 12.5% over a number of years. This was well thought out, well planned and well publicised. Every time we brought the tax rate down, we took in more money. I am not suggesting with full vigour that we should have taken up Senator John McCain's proposal. When he was in debate with the now President Obama, Senator McCain made the mistake of referring to an 11% tax rate in Ireland and how well we were doing because of that. At that stage, it would have been great publicity to say, "What a good idea, Senator McCain. We will bring our tax rate down to 11%." However, if it were done imaginatively, it would be possible to reduce tax rates and take in more money. We have seen this on a number of occasions, although it is not a simple issue.

Our thinking was wrong at budget time. At the very time when we were competing with Britain as it reduced its VAT rate by 3% or 3.5%, we raised our VAT rate, forgetting that we must encourage spending. I am unsure to what extent that is easy to achieve, but it is possible to be imaginative in those areas.

There is another area in which it is possible to be imaginative. I believe we should become the recognised country in Europe and the world for start-up companies, especially those which are knowledge-based. Someone involved in a start-up should say this is the country to go to before any other. I remember speaking with a man who was on the board of a company in the United States of America some years ago. It was during the bad times in Ireland. He could not believe that a person came before the board with a concept for opening a new business. That person intended to take on 38 people and the board agreed with his proposal. The man asked what would happen if it did not succeed. The board said that if it does not succeed, then it does not succeed. In other words, it was willing to be entrepreneurial and to take chances and accept that there might be failures. If we decide to seed fund start-up businesses which are imaginative, thinking and creative, we could become the global centre of excellence. If everyone planning to start up a business gave serious thought to locating in Ireland because of a fund, in some form or other, to encourage such businesses, then I believe there is a greater chance of making progress and of improving the present position. However, to do so, we would have to accept and recognise failures might occur. We must be willing to accept this if we are to create a seed capital fund.

Let us consider what occurred when Mr. Dermot Desmond approached the then Taoiseach, Mr. Charles Haughey, in the mid-1980s with an idea which was developed. Let us consider the sizable success in that case. It requires such imaginative thinking. Let us recall when Mr. Tony Ryan set up Ryanair. Anyone could have said that he should be careful, because no one at the time could have believed that within several years, and from those beginnings, one of Europe's largest airlines would be based in Ireland. We must recognise how the country has developed in the past 15 years.

I refer to an article in the Financial Times yesterday, the title of which is "In praise of Iceland". I was going to read it, but there is no time. However, it is worth reading.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

I read it.

Photo of Feargal QuinnFeargal Quinn (Independent)
Link to this: Individually | In context

It is fascinating. Of all newspapers, it is remarkable of the Financial Times to praise Iceland and to suggest that it deserves to be given a chance and an opportunity. Iceland did not join the European Union, yet the article suggests we should fast-track it into the European Union to show what can be done. I believe we will not get such support from Europe unless we vote "Yes" in the referendum. I believe we have done harm to seek support for a goal which was unattainable. I hope we will still get support from Europe. However, it would have been a good deal more active if we had voted "Yes". We have another chance to do so and I hope we do not lose that second chance.

Photo of Jim WalshJim Walsh (Fianna Fail)
Link to this: Individually | In context

I wish to share time with Senator Mark Daly. It is always very good to follow Senator Quinn, because he is always constructive. The business expertise and knowledge which he brings to the debate and the manner in which he puts forward very thoughtful points is beneficial for the debate. I compliment him in this regard. I listened to Senator John Paul Phelan also. I have been critical of the partisanship in both Houses, as is the public. It does nothing for the image of politics, or to address the challenges we face. However, in fairness to Senator John Paul Phelan, his comments were very good and constructive.

Photo of Ann OrmondeAnn Ormonde (Fianna Fail)
Link to this: Individually | In context

Hear, hear.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

Hear, hear.

Photo of Jim WalshJim Walsh (Fianna Fail)
Link to this: Individually | In context

We should acknowledge that and encourage such contributions. I do not believe this side of the House should always take the same view. If we have a different opinion from the Government we should say so. Perhaps we should encourage the Government to take on board some of our opinions in that regard.

We are in a very difficult situation. We are part of the global difficulties. I attended a meeting of a Fianna Fáil cumman in Campile, County Wexford two weeks ago. A major debate was held on this matter. The was much complaining, as is usual at these meetings. However, one man said that in every town and village in the world there is a recession and we must accept it. It may be preferable to be controversial and to personalise issues from the point of view of selling newspapers. Perhaps it is more attractive from a media point of view if such an approach succeeds in getting the attention of the audience. However, that constant drip can undermine collective and individual confidence.

Obviously, the correct decisions must be made. We must meet the challenges in the financial sector and elsewhere. However, we must also restore confidence. People must be able to hope and we must try to inject this into the system. The Government has shown courage this week. The decisions made took some courage, especially when the talks with the social partners broke down. I welcome the disposition and comments of Ministers, and especially the Taoiseach, who strongly and genuinely believes in a significant role for social partnership to get through our current difficulties. I recognise and support that call.

There must also be fairness. I recognise why the unions had some difficulties. I watched a very interesting debate on "Prime Time". There was representation from IBEC and Mr. Jack O'Connor from SIPTU was also present. He came across as very balanced, and he had certain difficulties with what was done. No one in the public service or in any business would welcome a cut in pay, which is understandable. However, failure to take such action now would lead to a horrendous situation later on. That is the reality. If we do not correct the public finances, the Government will be paralysed and unable to take effective measures to instil some growth into the economy, and to deal with the banking situation and so on. We may find ourselves unable to borrow money. I do not wish to be too alarmist, because we need to restore confidence, but we also need to be somewhat realistic.

In fairness, the Government must tackle those in privileged positions who are, perhaps, on salaries which are unsustainable in the current climate. As someone who raised the issue at the Joint Committee on Communications, Energy and Natural Resources, I welcome the statements from several people on contract in RTE. I am unsure if they have all made similar commitments. No one in a privileged position should be immune, especially lawyers who have been creaming off for a long time in the Four Courts and elsewhere at tribunals and so on. It is an absolute scandal. We should call on them to complete the tribunals with no additional pay whatsoever. I do not mean they should take a pay cut, rather that they should work gratis, because of the millions they have extracted from the taxpayer in the past decade. I hope the Government will take strong action and I will be very critical if it fails to do so.

A very bad deal has been done with the hospital consultants, which must be corrected, and not only by 8%. It should be retracted more significantly. There is no justification whatsoever for people in this country being paid 50% more for doing the same job as people in a neighbouring island. I hope the Government will focus on these issues and pursue them energetically and strenuously. Once people see that the Government has a very even-handed approach and that everyone is asked to contribute, progress can be made. If people fail to contribute or to assist in the national recovery plan, steps will be taken to ensure they do.

I echo the comments of Senator Quinn on encouraging risk-takers and entrepreneurs. The last thing we need is to turn on each other. This additional payment from the public sector should remove the debate and criticism between the public and private sectors. We are all in this together and we will all either come through it together and come out at the other end unscathed, or we will all come out seriously retarded, both financially and in other ways. This is a boat that must be rowed in unison.

Photo of Mark DalyMark Daly (Fianna Fail)
Link to this: Individually | In context

I thank Senator Walsh for sharing time. I agree with his remarks regarding those in privileged positions. We should start with ourselves. The Houses of the Oireachtas Commission, of which Senator Walsh is a member, is considering the matter of expenses and remuneration. However, one cannot take action such as that announced yesterday and then state that Members' expenses are immune, as one then would have no credibility. I do not wish to see the implementation of the report and findings of the Houses of the Oireachtas Commission in a few months' time, in the wake of a sustained media campaign that has lasted for weeks and with a perception that it was done under public pressure, rather than doing it quickly and immediately.

As Members are aware, advertisements on Internet sites for hotels in Dublin suggest that a room can cost as little as €10 or €20 per night, or €40 if one wishes to go up-market. Members' subsistence allowances are greater than that. Their purpose is to pay for overnight expenses and the cost of a hotel room. There is not meant to be an element of profit. Given the public is contemplating hotel rooms that cost €10 a night, how can Members state that although subsistence was taken from the public sector yesterday, they are a different case? Members are not a special case and if they declare everyone is in this together, they should mean it.

I congratulate the Taoiseach, the Minister for Finance and the Cabinet on taking a decisive decision yesterday. It is unfortunate this could not have been done under the auspices of social partnership. I realise the pressure the unions were under as they were stuck between a rock and a hard place. It is difficult for union representatives, whose job is to get the best pay, terms and conditions for those who pay their wages, to tell their members they have just negotiated a pay cut for them. It was an easier job when times were good and benchmarking awards and so on were being handed out. It is very difficult for them to accept reductions and the pressure of time was a major factor. Obviously, the rating agencies are still considering Ireland from the perspective of its volatility and ability to pay. There are those, I am unsure whether one can call them merchants of doom, who have suggested that 500,000 people will be unemployed. Such unemployment levels obviously would have a massive impact on social welfare payments and social order. Consequently, nobody is immune and if Members are to give leadership, they must begin with themselves.

Amid all the talk of levies yesterday, some good news was announced, as an additional sum of approximately €750 million will be spent on the capital programme for schools. A further €56 million will be saved in the schools budget in respect of lower than expected costs, which will provide employment. While such employment will not be nearly sufficient, it is something. In addition, I have been informed there will be job announcements by the Government over the coming weeks. They probably will go unreported in the newspapers, which only sell when there is bad news.

Ireland must make itself competitive again and must do what Senator Quinn advocated, namely, encourage entrepreneurship. As for the Opposition parties, my learned colleagues in Fine Gael have put forward proposals, some of which the Government has already adopted to a degree. However, I note with interest that in today's edition of the Irish Independent, the Labour Party, while critical of the Government, has put nothing forward except platitudes and plenty of criticism. In the hour of greatest peril, when deposit holders nationwide looked to the Government for leadership in respect of the banks, the Labour Party balked. Senator Fitzgerald should consider that had a Labour Party Minister for Finance been sitting in the hot seat that night, Ireland would be in an entirely different world, which would not necessarily be a better place.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
Link to this: Individually | In context

I welcome the opportunity to speak today and welcome to the House the Minister of State, Deputy Mansergh. The tone of the debate has been highly interesting and I found myself in agreement with many points made from different sides of the House. The best thinking from everyone in Ireland must be sought and as many people as possible must be brought with us, because we face an unprecedented crisis both in Ireland and internationally.

Earlier today, I read a note that John Bruton circulates on a weekly basis, from which a phrase struck me. He spoke of being at a meeting in San Francisco in which EU-American relations were being discussed and at which he stated that the challenge of the 21st century will be to build a system of political governance for the world that can manage the economic, environmental and human relations globalisation that has already taken place. The international crisis is evident and no one can deny the mess the international financial situation has become. The international management system has been shown to have feet of clay. Financial management is being re-invented both in Ireland and internationally and I do not believe the answers have been found yet. This is clear in respect of the debate on the banks. While other countries have recapitalised banks, they have not necessarily got the hoped-for results, which raises serious questions about Ireland's capitalisation plans. One sees President Obama talking about the need for tighter regulation in banking and the Minister of State should comment on that issue. I welcomed the Taoiseach's comments yesterday regarding tighter regulation in the banking sector, and caps placed on bonuses and pay, which I consider to be absolutely essential.

I will refer to an e-mail which I and many other Members received and which was rather well put. The writer stated his belief that everyone must make sacrifices to pull the country out of this difficult time. However, he continued by suggesting that were economic cuts to be targeted at any particular sector, surely it should be at the financial institutions and the construction industry, which largely caused the problems. A genuine sense of shock is widespread and those who were targeted yesterday by the pension levy are questioning the reason they will be the ones to feel the pain, given they did not cause the problem in the first place. I agree with Senator Walsh's point that one cannot set up the private sector against the public sector. We must move forward and create a sense of everyone being in this together. The only way this can be achieved is if people believe the actions that are being taken are fair and equitable in so far as possible.

This is the reason for dealing with the banks in an up-front way and imposing conditions for the vast amount of money that they are to receive. Conditions and tighter regulations should be imposed and greater feedback should be received on a more permanent basis. In addition, one must ensure the audits are more accurate or cover all they must cover, compared to what has happened previously. This is the only way in which those who have been asked to take money from their back pockets and who consider that they did not contribute to this crisis will believe that what is happening is fair.

Senator Healy-Eames did something interesting and the Minister of State may wish to take note of her contribution today. She spoke to a company in Galway in which 80 redundancies have been sought and asked whether there was anything the Government could do that would enable it to retain these employees. It responded in the affirmative. I do not suggest simply pouring money into firms with no return but, as everyone is aware, the cost to the Exchequer of unemployment is extremely high. Therefore, everything that can be done in a proactive way to maintain jobs is critical.

One issue the company cited was its energy costs and I believe strongly that the question of ESB and Bord Gáis charges should be considered. Although the global price of oil has fallen, we appear to be experiencing a huge delay in the passing on of the reduced costs. I also take great note of the comments made by Senator Quinn, who spoke of the absolutely critical necessity of returning to a competitive environment. As the Minister of State is aware, Ireland has been losing competitiveness for approximately five years. My worry is that there appears to be a lack of urgency on the part of the Government in respect of, for example, tackling the issue of electricity and gas prices. The aforementioned company stated that this issue was of critical importance to it, as were the PRSI costs in respect of employment, about which I also seek the Minister of State's response. Urgency certainly is needed in our responses.

Energy costs are key to maintaining jobs. We must consider what proactive steps can be taken to make a difference and to keep people in employment given the appalling scale of debt, the significant levels of unemployment and the consequent personal stress, especially among those who cannot see alternatives. It is not nice to suggest that people could have gone away beforehand. At least there was somewhere to go at the time.

Dole queues should be dealt with urgently. I have spoken to people who recently became unemployed. They do not feel that anyone is reaching out to them, telling them that, in light of their particular skill sets, they will be offered training courses in X, Y or Z or going over their options with them. We must invest more resources in reaching out to those who have become unemployed so that they have some hope of moving forward. We must ask them whether they are interested in further education, developing certain skill sets or moving into other fields. Given unemployed people's desperation, a more proactive engagement with them is necessary.

Will the Minister of State respond to a number of Fine Gael initiatives, namely, the necessary acceleration of the schools building programme by fast tracking planning applications for new schools under the critical infrastructure Act, reversing the hike in VAT to give retailers some relief, providing PRSI relief for employers in distressed companies exposed to competitiveness problems and who retain a minimum number of employees this year, and providing a loan guarantee scheme for small businesses? As the Minister of State is probably aware, these points were also made in the Dáil.

Regarding social partnership, one can be in favour of social partnership and still show political leadership, which was Fine Gael's point when Deputy Kenny referred to the cloak of social partnership. Only when the Taoiseach's back was to the wall did he make his announcement in the Dáil. In fact, it was the last place in which he did so, but it should have been the first. There should have been detailed discussions on the options available to help people, but none was held. Social partnership has bypassed the Dáil and the Seanad. I urge the Government to consider the matter and, while possibly continuing with the social partnership process, to find ways to have meaningful engagement in the Houses during this economically and societally serious time.

Photo of Ann OrmondeAnn Ormonde (Fianna Fail)
Link to this: Individually | In context

I welcome the Minister of State, whose patience, I imagine, is running out.

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

Never.

Photo of Ann OrmondeAnn Ormonde (Fianna Fail)
Link to this: Individually | In context

Every point has been raised repeatedly. Unfortunately, I will go down the same track and make the same points that were contributed in a constructive manner by Members from all sides of the House in the past few hours. Listening to this debate and the fine statements on how best to move forward has been great. There is no doubt that sacrifices must be made. If we are to pull ourselves out of the crisis, the days of bickering, points scoring and one-upmanship must end. I want to work in any way possible to bring the economy back.

Two years ago, everyone was cushily sitting without worries, money was flush and people were spending long weekends in Marbella to play golf. People are now shocked and are asking themselves whether they will keep their jobs. How many families are watching their television sets and wondering how they will get out of this situation? This morning, I spoke to a young couple with two small children. The husband works in consultancy and his wife told me that, while she is lucky to be able to do so, she has no choice but to return to her teaching profession because her husband may shortly be without his job.

The division between the public and private sectors has been mentioned. The private sector has strongly argued that salaries in the public sector have pulled ahead of its own. This was not always the case, but the public sector played catch-up for a while. When I started teaching, I compared my salary with those working in the business world. Like with like, there was no comparison. In fairness to the unions, they pushed the matter and our salaries jumped quickly. They moved ahead of those in private industry. There must be a levelling off in both sectors.

The majority of those in the public sector understand they must accept cutbacks. This morning, I asked someone whether he or she wanted to be like the workers at Waterford Crystal who, after working in the industry for 40 years, have no hope of jobs, no pensions, are fighting to hold on to whatever is left and are trying to rebuild Waterford Crystal, or a worker in the public sector, be it a teacher, nurse, garda or those in the Civil Service. I would prefer to take a cutback and hold on to my job for five days per week than to find myself, like those at Waterford Crystal and many other firms, worrying about whether I will have a job in one month's time.

We must protect everyone. We are Ireland and we want to ensure a return to a good standard of living. We have started on that road and I congratulate the Taoiseach and the Cabinet on taking the lead. I also congratulate the social partners who did their best and brought the negotiations to the wire. Unfortunately, they could not step over it. However, they are on side and are anxious to hold the country together. Everyone has a responsibility to do the same.

As a public representative, listening to the discussion and the many points raised and the constructive ideas has been rewarding. I will repeat a number of points that struck me. When I am out and about, the matter raised with me is a reduction in the VAT rate. When I go to the ladies' clothes shops where I am known, I am asked to reduce VAT. I am not convinced, given the type of shop in question. In recent years, the mark-up on clothes has been colossal, making a profit of 200% to 300% on any item of clothing. Many would agree with me in this regard. These figures can be reduced. Even those shops where sales see items' prices reduced by 70% are making profits.

Senator Quinn told the House that costs must be reduced. Wages are automatically falling, but production costs must be considered. We must play a role in this regard, given that retailers did well during the Celtic tiger years. They made their profits and must now make a contribution. I am not knowledgeable enough to know whether we should go about doing that via VAT or otherwise, but we must determine how to tell the public and shopping malls that they must help. The day of the fast buck is over.

I refer to small building projects that can be brought on stream quickly, such as school or house extensions. I ask the Minister of State to work with local authorities to speed up the planning process because some are making a mess of it. That would help to get projects off the ground. There is not enough co-ordination.

We must help the unemployed, who are vulnerable. We need counsellors who will guide them to the best opportunities. There are not enough people to help them whether they do a course and upskill, an educational programme or whether they collect their dole money and look for opportunities wherever they can get them. The FÁS placement officers have been misplaced for a long time. There is a golden opportunity to re-specify their jobs and how they do them.

The economy is on the rocks. We can make it work. Let us all work together. Our Taoiseach and the social partners started this process a few days ago. I was pleased to be part of such a constructive debate this afternoon.

Photo of Paul BradfordPaul Bradford (Fine Gael)
Link to this: Individually | In context

I am glad to speak in this important debate and glad that the Seanad is discussing the enormous and grave financial crisis facing the country. At a time when politics and the Seanad receive negative publicity, this House should engage in robust debate on matters pertaining to the economy, analysing why and how we are in our present difficulties and suggesting how we can advance. I hope this is only the first of many regular debates on economic issues.

Approximately 15,000 students turned up to protest outside the House yesterday about various matters, particularly the possible introduction of new fees for education. I noted with a wry smile one group calling itself Free Education for Everybody, FEE. That terminology represents the philosophy that has this country in its present state. Cloud cuckoo land is the only place where free anything for anybody would exist. Everything has a price that the taxpayer must pay. The sad and brutal reality of our economic plight is that we have lived significantly beyond our means for many years. "Race to the bottom" is the phrase tripping off many lips. For the past five to ten years, however, there has been a grotesque rush to the top in which everybody wanted to maximise profits, wages, expenditure, borrowings and purchases, buying a second house, a second apartment, a foreign home and so on. If one did not enter that league of decency, one was deemed to be a second-class citizen. All has suddenly changed and a cold new dawn of reality surrounds us. We must live within the rules of our new financial dispensation. While the crisis has major international elements, it also has major national elements because many decisions taken by Governments of the past ten or 12 years proved ill-founded. We have debated the onus placed on the property sector to bring in taxes and fuel the economy. All the international agencies warned us that we were too dependent on property but the Government did not heed this advice. We must try to work our way out of the resulting difficulty.

The battle against inflation did not get the attention it deserved in the past five or six years when most people had a large disposable income and rarely sought value for money. In the new economic circumstances we must try to tackle the cost of living because most people will be significantly worse off. Hundreds of thousands will be unemployed. We must attend to energy pricing, home heating oil prices, telephone charges, value added tax, VAT rates, transport and fuel. The income of most families will move down a peg and we must try to ease their burden a little by tackling the costs. That is worthy of another debate.

I have been annoyed recently also by the phrase "we did not cause the problem and therefore we should not be part of the solution" coming from all sides of the House and society. Virtually everybody has been part of the problem because most of us earned too much, spent too much and saved too little. I appreciate that some people are more responsible than others but trying to wash our hands of the problem is the economics and politics of cloud cuckoo land. We are all part of the solution. While some practices within the banking industry have been despicable, grossly irresponsible and damaging, and must be addressed, we need a solid banking system. It is imperative that we get our banking house in order and recognise that while the national debt is a serious problem, personal debt is at a record high too. We have all contributed to some degree to the problem and must contribute to a solution.

The Government's solution is only the beginning. We can debate it at length but decisions were urgently required. The Minister of State is aware of the Fine Gael proposals. The taxpayers' money must be spent wisely and carefully to get maximum value. Public sector pay must be controlled as much as possible because the taxpayer pays the bill. It is not some invisible cheque written by Government. The numbers speak for themselves. Ironically, while public services in the area of health and education have reduced and their quality has disimproved, the number of providers of those services appears to have increased. We must examine the numbers working in the public service and consider how to streamline the services and reduce the number of staff, apart from those in the frontline. The man and woman who pay tax cannot continue to fund the present level of public expenditure. The reduction will be painful, difficult and must be approached in a fair and balanced way.

The Government offered one analysis and Fine Gael offered a different one but the Government proposals are being enacted. In the past 48 hours many public servants have expressed grave disquiet about the income levy. It can be argued that it is an unfair and disproportionate levy across the board but it is Government policy and we must consider how to make the unfair measures more fair. We are now facing the gravest economic and social crisis in the history of the State. The Minister of State was a Government adviser in the 1980s when we thought that the era was the worst time for us since the Emergency. This is truly the greatest challenge we have faced.

At a time when projections show that 400,000 people will be out of work, those of us who have a guaranteed job must recognise that the first priority must be for those who have no such guarantee. All policy decisions must be taken in such a fashion to protect taxpayers, provide value for money and make cuts and sacrifices in a fair and equitable fashion. Otherwise, the country literally will go down the tubes. If we believe we are unique in the world and that a situation that occurred in Iceland or South America could not happen here, then we are not dealing with reality. I hope all of us in this House will play a part in having real economic debate so that realistic political choices can be put forward over the course of the next few crucial weeks and months.

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
Link to this: Individually | In context

I wish to share time with Senator Brady. I agree with the majority of what Senator Bradford had to say about the common responsibility we all share in the current economic situation. I welcome the Minister of State to the House for this important debate on the economy. It is the key issue on the doorsteps, and this is the right place to debate those issues.

Jobs are being lost all over country and it is forecast there will be a couple of hundred thousand job losses this year, and possibly up to 400,000 job losses. There was a recent announcement in Donegal that 120 jobs will be lost to the county, albeit that they are being moved to Galway, following a decision by Boston Scientific yesterday. Other difficulties are being faced by employers at the moment as they lose jobs, especially within the small and medium enterprises. By these I mean hotels and small businesses that may not be part of IBEC but that employ locally. Those businesses are experiencing cash flow difficulties at the moment. I have discovered this from talking to employers and employees who are raising their concerns with me. The lending agencies that allow the businesses have cash flow, be it through overdraft facilities or loans, are simply not doing that anymore. They have withdrawn the overdraft facilities to small businesses, which is creating havoc. The one key thing is to provide liquidity to the SME sector, be it those who want to establish small businesses or existing small businesses. I am not sure how we can do that, whether it is through some Government fund or through the banks, but it is something we must do to bring liquidity back to those creating jobs.

There is a company in my constituency that wants to create 60 jobs. The State agency has provided funding to that particular company but it is having grave difficulty in liaising with the financial institutions because it cannot get its hands on a bridging loan. It is disgraceful if the banks cannot support jobs. If that is the case, then it will add to our unemployment figures. We have a responsibility to work through this and provide a solution.

There are advantages in the current climate. Oil costs have fallen, as have interest rates, and that is advantageous to those with mortgages. However, I hope that all the banks are passing on the European Central Bank interest rate reductions. A number of Senators spoke about electricity prices and I hope we see a reduction in those prices. The Minister for Communications, Marine and Natural Resources is working on that. It is imperative to bring down those prices because it would bring down the cost of living at home and the cost of doing business here. Capital investment by the Government is about €8 billion this year, or 5.3% of gross national product. That investment is important at this time because it will allow the Government to invest in infrastructure at a reduced cost while employing people as well.

There are 50,000 people employed in the financial services sector in Ireland. The majority of those do their utmost, but there is a small percentage who should bear some of the responsibility for the mess in which we find ourselves. Those people gave the wrong advice to customers while they were totally negligent in the way they implemented their own professional responsibility. Those individuals, and there may only be a handful, need to be taken to task. The public is looking for them to be taken to task and it is time that was done. The necessary information will have to be obtained but if individuals are shown to have done wrong, then those individuals in the banking sector should be brought before the courts and the judges can make decisions on how to deal with them.

Photo of Martin BradyMartin Brady (Fianna Fail)
Link to this: Individually | In context

I thank the Minister of State for his useful statement, which puts everything in context. I listened to Senator Harris who put it all in context in the most straightforward way I ever heard. We all tend to talk about the public sector and the private sector but we are all in this together. As other speakers have said, we must work together and we must work through this. If we do not, we will never get out of it. The fire is raging and we must put it out.

As Senator Harris said this morning, somebody else is to blame. We are all in this. We all benefitted in some way or other from the Celtic tiger. Nobody escaped that, although people will say that we got nothing from the Celtic tiger. That is not true. This is a lie, a misnomer, and not a fact. Some might have benefitted more than others. We hear continually that the construction industry did well. The construction industry and anyone else in business is there to make a profit. In making a profit, it enables them to provide jobs. The construction industry provided many jobs and people bought houses from them. If the people did not buy the houses, they would not be in business. There seems to be a big emphasis on the construction industry. If we did not have the construction industry at the time, we would not have had the Celtic tiger. We might have had some part of it, but it would not be as good as it was. We must be fair with people.

The bankers are only one component of this. They did not cause all of the problem. However, they will have to be brought to account. There is no doubt that if I was in a job and I behaved in the fashion they did, I am sure I would not be standing here speaking to you, a Chathaoirligh.

It is important to acknowledge the role of the trade union movement, especially David Begg, who is a former colleague of mine. He performed the duties required of him in a very professional and dignified manner. The involvement of the social partners was not an optional extra. They contributed to industrial peace and they enabled the framing of the Celtic tiger. Without them it would not have happened either. We are all in this together and we all have to get out of it together. We cannot start saying that some people are losing more than others, why should one person do this and another do that, that the builders were to blame for this and the banks were to blame for that, and that the public service is to blame for something else. We cannot solve a problem in that manner.

Having said that, I acknowledge that the Opposition Senators to whom I have listened have been very positive. They have not taken political advantage of the situation, which is very good of them. It is also wise because the public does not thank politicians who refuse to engage in constructive debate. People can see through it from a mile away. They prefer politicians to be honest with each other. The day of tomfoolery is long over.

Photo of Alex WhiteAlex White (Labour)
Link to this: Individually | In context

I have listened with interest to most of the debate. I begin by making a technical point. The Seanad is, of course, not being asked to vote on the measures introduced by the Government this week. I understand the Seanad's constitutional position in respect of financial matters. It gives a slightly different focus to our debate. We are responding to the statement made by the Minister of State at the beginning of the debate. The advantage of that is that it gives us an opportunity to make more general remarks and give a more general account of where we are coming from on these issues. It is important to remind ourselves that we are not being asked to vote for or against the Government's measures, which were passed by the other House a couple of hours ago.

I do not disagree with Senator Brady's remarks, which are fresh in my mind, about the importance of not wallowing in a sense of blame. I agree that we will not make much progress on the grave issues before the House by wallowing in the past or immersing ourselves in petty finger-pointing. Having said that, it would be absurd to suggest that there is no room in this debate for an analysis or assessment of how we got here. I often hear Senators on the Government side using the phrase, "We are where we are." I even heard Senator O'Toole use it today. That, and nothing more than that, is supposed to be the basis for discussion. It is suggested that we should confine ourselves to proposing how we should get ourselves out of where we are. I would amend the phrase slightly — "We are where the Government brought us." That is where we are, and it should be the starting point. If we do not honestly analyse what has occurred, I do not think we can hope to achieve the public or social solidarity that will be needed to address these issues in the future. When one asks people to make sacrifices, one needs to have their support and confidence. If one is entirely silent on what has happened, that is not possible. People are not stupid. They are discussing among themselves how we got to where we are. The Government has to be clear on that.

I noticed a marginal reference in the Minister of State's speech to mistakes having been made. It is like the first cuckoo in that it is the first acknowledgment of mistakes I have spotted in a Government speech over recent weeks. I may be wrong in that respect. The Minister of State touched on the construction issue in that section of his speech. The relevant section lasts just four or five words, but at least it is there. It is necessary. Perhaps the Minister for Health and Children, Deputy Harney, made some similar remarks in the other House last week. I am not entirely sure. The Government cannot expect people to come together in any serious way to support its decisions, or at least give it some space when making them, if it is not straight and honest about what has occurred.

I was slightly amused by Senator Brady's defence of the construction industry. He suggested that we would not have had a Celtic tiger if it had not been for the construction industry. The problem, at least for the second half of the Celtic tiger's life, was that we had a construction industry and very little else. We hear many jokes about the tent at the Galway Races — it is the subject of much teasing and slagging in these Houses — but it turns out that the tent may have been our economy for the last few years. We had little else. I do not suggest that other productive activities were not taking place. In terms of real expansion, however, there was little to show for the years after 2001 or 2002 other than what was attributed to the construction sector. That has to be analysed and assessed if we are honestly to consider our approach to this problem.

Before I explain the nature of the difficulty I have with the measures that were announced this week, I wish to make it clear I absolutely accept that if there are gaping holes, and the boat is going down, those holes have to be plugged. Unlike Senator Feeney, I do not think I would attribute courage to the Government for doing something it had no option but to do. I would not say that somebody was courageous for doing something if they had no choice other than to do it. If someone has to do something, how can he or she be said to be courageous when he or she does it? If one sees a tsunami coming in one's direction, one will have to do something to block it. I am mixing all kinds of metaphors, nautical and otherwise, but I am sure the Minister of State will understand what I mean. Of course the Government has to do something, but what it has done this week is no more than one part of the picture.

The difficulty I have with the measures announced this week is that they are being undertaken in isolation. Before this week, the Government had done virtually nothing over the many weeks and months that had passed since last summer, when the storm clouds started to gather. Other parties made many proposals to the Government during that time. I am speaking only for my own party, obviously. Senator Regan can deal with his party but I can say, without fear of genuine contradiction, that no party has proposed more positive ideas for dealing with the economic crisis than the Labour Party. I have said this previously in the presence of the Minister. I do not claim that every one of my party's policies or proposals stands up. The Government might not agree with them all, or find them all acceptable. However, I can assure Senators that they have been seriously thought through and tabled in the public domain by the Labour Party. I invite the Government to consider them.

While debates of this nature are very useful, they do not really give us an opportunity to scrutinise the detail of individual policies and proposals. I wonder if a means of providing for such scrutiny can be agreed at some point. If my colleagues on the other side of the House want to scrutinise or cross-examine the Labour Party's proposals, I will have no difficulty with that. However, I ask them not to claim, as some speakers did earlier, that the Labour Party has not introduced any proposals. That is manifestly untrue. It is simply not the case. We have done so over and over again. The Government has indicated that it agrees with many of our policy proposals, even if it has not adopted them. We have proposed some constructive ideas. For the past 18 months, we have been talking about the need to ensure that small high-tech Irish companies can access capital. Deputy Gilmore made a speech on the issue in November 2007.

In May 2008, the Labour Party called for the establishment of a programme of investment in schools. As I recall it, a Senator on the other side of the House pooh-poohed the idea of providing for a schools expansion programme. It is now one of the things the Government plans to do. Last September, we made the case for a scheme to promote home insulation. Once more, it was scoffed at in certain quarters. The Government now appears to be moving in that direction, although as far as I am aware it has not yet made any specific proposals. In September 2008, we were arguing in favour of a medium-term fiscal strategy. I note that the Government adopted such an approach in January of this year. Last September, before the Government's bank guarantee was introduced or the Anglo Irish Bank scandal emerged, we demanded a full review of the operations of the Central Bank and the Financial Regulator.

In November of last year, we called for a home guarantee to be introduced. At the same time, we proposed the introduction of an "earn and learn" scheme for people who have lost their jobs or have access to a limited amount of employment. Retraining should be made available to people who have part-time or short-term working arrangements. We are all big boys and girls in here and I have no difficulty in withstanding criticisms of the policy proposals put forward by the Labour Party. We can deal with them in a robust fashion and sometimes our minds can be changed about matters we advocate, but I do not accept the suggestion thrown about that the Labour Party has come forward with no proposals when the opposite is the case. This has been widely acknowledged, including in an editorial in the Irish Independent of 1 December last in which the leader of my party was described as a person who has shown imagination and originality in his approach to the economy and proposals on it.

I would like to respond to a point made by Senator Boyle earlier in the debate. As always, he is thoughtful and he made some interesting observations with which I agree. He spoke about the involvement of politicians and the necessity for politicians to address a reduction of costs in our sector. I am not sure if he mentioned Ministers of State but he indirectly mentioned the question of expenses and so on. I agree with him on that. A number of speakers raised this point. I acknowledge that, of all his colleagues, the Minister of State present is the least culpable in this regard but he is here not on his own behalf but on behalf of the Government.

It is clear there are too many Ministers of State and the number ought to be reduced. It is not clear what some of them are expected to do in terms of the delineation of functions. However, I am much more concerned about the veritable infrastructure surrounding Ministers and Ministers of State that deals with everyday constituency queries. I have a problem with this not only from the point of view of the financial commitment the State has to make to it but from the perspective that it risks undermining our democracy. We have what I would describe as an infrastructure of people around Ministers and Ministers of State whose function is to deal with constituency queries. The Minister of State, Deputy McGuinness, used the extraordinary phrase, "A&E of the system" to describe the role of Ministers. Ministers' armies of assistants in their offices deal with everyday queries and service individual constituency needs.

What people ultimately expect from politicians is for those of us in the Opposition at the time of an election to put forward proposals and policies for consideration by the electorate, who either vote for us or they do not. An outgoing Government similarly publishes a manifesto on how it will deal with this or that question of public concern, particularly the question of the economy, and people vote or do not vote for it on that basis.

It is simply not acceptable for the kind of structure of patronage and clientelism that has grown up around Ministers and Ministers of State to be funded out of the public purse. People are being asked to vote for people on the basis of the level of service they have given them in a constituency but the service they provide is funded out of taxpayers' money. I know many politicians and many of them are admirable. We all deal with queries from our constituents and it is an important part of our work. I do not denigrate that. It is part of the way the system works, but it ought not to be funded in the way it is, particularly in the case of Ministers and Minister of State by large numbers of persons working in Ministers' offices whose sole function is to deal with constituency inquiries.

If I were Senator Boyle, that is the area I respectfully suggest we should start to address. I wonder if he would be interested in bringing forward proposals on those issues, including the sheer number of Ministers of State currently in the system. He decried a lack of willingness to change the way we behave in a political system. That is one area we could quickly start to address. If there were such a proposal from Senator Boyle or his party or any other Member on the other side of the House, I, and I believe my party, would support it.

I wish to deal with the question of social partnership that has been raised by a number of speakers on the other side who are either labouring under a misapprehension as to the Labour Party's view on social partnership or else they are being somewhat mischievous. I am sure it is not the latter, so it must be the former. Social partnership is a crucial element to our system and the way in which issues, particularly but not only issues related to pay, are negotiated with the trade union movement. I and other Members on this side have said it should not replace, supplant or be an alternative to the political system. The social partnership process should not be where the Government goes almost exclusively with its proposals, as appeared to be the case last week and the week previously when documents expressing the Government's position were published for the social partners and put into the media but they were never tabled here. That is wrong. It does not constitute any criticism of social partnership for politicians to stand up in these Houses and say that we have a role to play, that we are elected Members of these Houses and our role should not be supplanted or replaced, in some sense, through a reliance on social partnership.

I heard speakers on the other side laud social partnership and remind us how important it is. It may just be a footnote but it is important to remind ourselves that the measures agreed in the other House today were rejected in the social partnership process. If the other side is so committed to social partnership, is it not odd that they were in any event prepared a number of hours later to go ahead with proposals that had been rejected in that system of which they proclaim themselves to be so supportive?

The difficulty with the measures announced this week is that they have been decided on by the Government, announced to the public, and agreed in the other House in circumstances where they are being dealt with in isolation. They are not being tabled and brought forward as part of a broader plan and strategy to get the country back to work, which is what we all agree we need to do. It is instructive to consider that the 120,000 people who joined the live register last year cost the Exchequer at least €1.3 billion in direct payments and almost another billion in tax forgone, costs which effectively wipe out the €2 billion savings announced this week. The difficulty I have with these measures is that it appears that the Government, rather than focusing on creating jobs, is focusing on taking money out of the economy and scapegoating, in particular, nurses, teachers and gardaí for the Government's mismanagement. That is unfair. It is unacceptable that people in the public service, particularly low and middle income workers, should be scapegoated in the manner in which they have been.

Surely the key to this crisis is not how much the Government can take out of the economy but what it can create. We have been waiting for a glimpse of a strategy from the Government on job creation, turning the economy around, moving money into the system and dealing with the banking crisis. I believe it was Senator Daly I heard speak about the Labour Party balking in regard to the banks. I gasped when I heard it. The Government has now presented us with its fourth or fifth proposal for dealing with the banks but the situation remains unresolved. This is the Government which said there was no need to recapitalise the banks before altering its position and taking the action that even the dogs on the street saw was necessary. This is the Government which said the nationalisation of a bank would be a last resort. That has now been done in the case of Anglo Irish Bank.

The Labour Party did not balk at anything. We supported in principle the guarantee that was extended to the banks at the end of September 2008. However, we introduced amendments to that legislation calling on the Government to deal with the issues of executive pay, funding for small businesses and the other issues pertaining to the financial institutions which urgently required to be addressed. None of those actions has been taken. Far from balking, the Labour Party was entirely prescient in its approach to the banking crisis.

Photo of Ivor CallelyIvor Callely (Fianna Fail)
Link to this: Individually | In context

I welcome the opportunity to participate in this debate on expenditure measures for the stabilisation of our public finances. I listened with interest to what Senator Alex White had to say. I am somewhat surprised at some of his comments. He affords no recognition that the Government has worked hard to negotiate, discuss, seek advice and consult in order to devise a framework within which we can best ascertain policy direction, the priority being to stabilise the public finances. These are precisely the actions for which Senator White has called. The acid test in regard to criticisms of such issues as the numbers of Ministers of State, ministerial support staff and so on is what those making the criticisms did when they were in Government.

Photo of Alex WhiteAlex White (Labour)
Link to this: Individually | In context

Our record speaks for itself in that regard.

Photo of Ivor CallelyIvor Callely (Fianna Fail)
Link to this: Individually | In context

I recall the Government jet being abused via journeys up and down to Kerry. I recall stays at the Waldorf Astoria.

Photo of Alex WhiteAlex White (Labour)
Link to this: Individually | In context

Senator Callely has a small mind.

Photo of Ivor CallelyIvor Callely (Fianna Fail)
Link to this: Individually | In context

I recall Ministers of State who wanted to be elevated to "super junior" status.

Photo of Alex WhiteAlex White (Labour)
Link to this: Individually | In context

The Senator is a small-minded man.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

Senator Callely should be allowed to continue without interruption.

Photo of Ivor CallelyIvor Callely (Fianna Fail)
Link to this: Individually | In context

The sad reality is that the world is going through an exceptionally difficult period and that the economic and financial global outlook is extremely challenging. In anybody's language, Ireland is vulnerable to the global fallout. Our public finances are spiralling out of control, with an estimated shortfall in 2009 of €18 billion, which equates to a daily borrowing requirement of €50 million. This is simply not sustainable.

Nobody believes we can ignore this level of shortfall or that we are cushioned from the global difficulties, as though the economic and financial difficulties gripping the world around us were of no concern to us and had no implications for this State. Most people recognise the seriousness of the current difficulties and take a responsible view of the situation. There is an appreciation and acceptance by all that an exceptional effort must be put forward at this time.

The expenditure measures announced by the Taoiseach on Tuesday have provided everyone with an opportunity to take stock of the seriousness of the challenges we face. The Taoiseach, Tánaiste, Minister for Finance and colleagues have discharged their duties diligently, honestly and openly. They have consulted widely and taken on board the best advice available. I understand there has been careful assessment of the extent of our problems and of the exceptional efforts required to improve the situation. This is not a party political issue but rather a national issue, one that warrants unity of purpose, firmness of resolve and belief in our ability to overcome.

The measures to ensure savings in public expenditure of €2 billion in 2009 present a framework to allow us to turn the tide of the present difficulties. We can seek to put our economy back on a sound footing once the public finances are under control. This is not a pleasant or popular package for any Government to implement. However, this Fianna Fáil-led Administration is determined with every beat of its heart to put in place this framework to resolve the acute difficulties confronting the State.

I make a plea today to all members of society, including politicians, economists, trade unionists, journalists, civil and public servants, entrepreneurs, employers, employees, pensioners, young people and the elderly, for a universal commitment to drive ourselves out of the current difficulties. We all have a stake in each other's commitment and success because the more each individual succeeds, the more Ireland succeeds. Let us not underestimate our challenges or overstate our difficulties. Most importantly, however, we should be positive about our future and the opportunities that present.

There are those who will say, and some who are already saying, that we cannot succeed. There are those selling us short as a nation by claiming we have limited resources. There are those with a defeatist attitude, writing us off as a people and a nation, and claiming we are not capable of recovery. I categorically reject all these suggestions. I warn those putting forward these accusations that the public is sick and tired of their claims. Several names are on the tip of my tongue but it is best not to mention them.

I am asking people to have hope and confidence in our future. It is no exaggeration to assert that we are now at a point in our history where we have never been able to see more clearly what we can achieve. Ireland has undergone a transformation. We are a small, open and pulsating economy, now energised by some of the most sophisticated industries and services in the world. Our recent economic performance, especially during the period 1995 to 2005, consistently reflected our success. We earned great dividends in that period in terms of employment and greater prosperity. Ireland's performance in attracting foreign direct investment has been a great success. We have the entrepreneurial capacity to drive projects and an established reputation for our ability to succeed.

We are a friendly nation and the international community's view is that we are a positive and successful people. Ireland was a leading light on the international stage for several years in a row. We were the leading OECD country in terms of growth and development. We performed above the European Union average, attracted and won more foreign direct investment compared with other leading global destinations and enjoyed industry and services in every region. We enjoyed the correct policies and capital investment programmes for success.

Every Member who has been abroad in recent years has had the experience of being congratulated and questioned on our then economic success. The essentials have not changed. The ingredients for success remain. The Irish "can do" attitude has characterised our success before and is all the more necessary now. I regret that my time has run out as I wished to say more.

4:00 pm

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

I thank Senators for their contributions to this thoughtful and high level debate. As a former Member of this House, I deprecate some of the attacks made on its usefulness, usually by those who take no obvious interest of any type in its proceedings. Among our commentators there is generally interest in the power play and in particular personalities, but there is often insufficient interest in serious policy debate such as took place in this House today. The Seanad has always been characterised by a somewhat less partisan spirit than that which often reigns in the Dáil.

Senator Twomey questioned whether anybody acknowledged the role played by Mr. Alan Dukes in the Tallaght strategy. I have done so. If he cares to look at my contribution in this Chamber on 2 November 2005, he will find a reference in this regard. I have made several other complimentary references to the commission on the future of agriculture which the then Deputy Dukes was asked to chair by a Fianna Fáil Minister for Agriculture, Fisheries and Food.

Reference was made by way of differentiation to benchmarking. It is worth bearing in mind that, as a former president of the University of Limerick has observed, if there were to be another benchmarking exercise today, any revisions would most likely be in a downward direction. Decentralisation is another initiative that was castigated as a failure by Senator Twomey. I am surprised to find this attitude in a Member from a provincial town. Fine Gael is very much in favour of particular decentralisation projects at a local level and wishes to see them completed.

I agree with Senator Twomey when he said the Opposition should not be expected to come up with a grand plan because such is not its role. He said the Opposition would produce ideas, provide opinions and back the Government with some of its suggestions. That is fair comment. It is the job of Government to take the hard and necessary economic decisions and, as Senator White acknowledged, to be accountable to the Dáil in that regard in matters strictly related to finance.

In the exceptional and difficult economic times we now face, the budgetary choices before us are stark. It is clear we must all help shoulder the economic burden. I agree with Senator White that the Government does not expect plaudits, does not expect to be regarded as courageous for taking decisions on how that burden is to be distributed or taking other necessary measures. It is simply our responsibility and our duty. The approach we adopt seeks to share the burden as fairly as possible across all sectors of society and of the economy, public and private. On a progressive basis, it asks the better off to do more in order that impositions on the less well off can be minimised.

This was bound to be very difficult. The most difficult matter to reach consensus upon is equity. What is fair to some people seems very unfair to others. I would prefer that somebody, even a relatively low-paid person, would complain about the unfairness of what has been decided rather than that he or she should be without a job. The Government's approach emphasises supporting and maintaining jobs, rather than supporting and maintaining incomes. This will be difficult.

I agree with Senator White that it is important to have analysis of what went wrong and how we got into the present situation. Equally, I agree with Senator Bradford that, to a very great degree, all of us have been part of the problem and all of us, or nearly all of us, must be part of the solution. That does not deny that some may have been more responsible than others.

In both Houses, there was a critical undertone in some contributions with regard to social partnership. I do not for a second suggest that social partnership should be regarded in an entirely uncritical manner. It has served the country extremely well. The social partners came a long way with the Government in agreeing a basic analysis of the situation and of what needed to be done, even if it was not possible for them to share the responsibility for the decisions that must be taken now.

The Government has already declared it will prioritise school buildings. There is an interesting paradox with regard to energy costs. We all agree that electricity and gas costs are too high and must be reduced. The Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, said as much at the end of a Private Members' debate in the Dáil yesterday. However, another strand of thinking which comes from environmental concerns states that in order to create proper incentives energy costs should be higher. We must think our way through those issues.

Certain Senators suggested tax changes. No changes will be made before the next budget. With regard to the cross-Border situation, the British decisions are of a very temporary nature, to last a few months. That, at least, is the theory. However, the main pressures have been caused by the exchange rate rather than by the differences in VAT.

With regard to social welfare offices, personnel have been transferred from other parts of the Civil Service to cope with the extra demand. My office, the Office of Public Works, will also examine in which ways it may be necessary to expand accommodation.

Reference was made to the banks. As a German economist put it in a German political magazine during the past week, it might not be particularly palatable to support private interests at this time and thereby prevent far worse damage to the common good. However, it may be necessary. Questions of appropriate rewards and how money can be channelled to meet the needs of small businesses lie within the capitalisation proposals being discussed with the banks. All these issues must be at the top of the agenda. The Office of the Director of Corporate Enforcement is charged with scrutinising actual and alleged misdemeanours in the past.

The question of professional fees must be addressed and is dealt with, to a limited degree, by the Government's programme. For example, there is a gulf between the cost of private dental treatment in this jurisdiction and in Northern Ireland. Court procedures often seem extraordinarily antiquated. My consitutency colleague was involved in a case which was called on several different occasions, each time requiring barristers to be paid in full. However, I acknowledge that recent entrants to the legal profession may find it very difficult to make a living. That was always the case in the past.

Senator Shane Ross suggested we should lower the level of corporation tax. I do not believe that would be a wise move. We must take into account a broader European and international context. My argument would be to leave well alone.

The issue of Ministers of State was raised. I have made known my views on that subject.

I reiterate the rationale for seeking an additional pension-related contribution from public servants. This recession is affecting people across the private sector. Unemployment figures are now reaching an unprecedented level, perhaps not in percentage terms but in absolute numbers. Against this background, it is not unreasonable to ask public servants, who enjoy norms of secure employment and guaranteed pensions, to share in the burden of economic adjustment that is borne generally across the economy.

Some Senators criticised the fact that pension payments are tax-deductible and stated this is unfair to the lower paid. We have sought consistently to ensure that, as far as possible, the lowest paid are kept outside the income tax net. Of our workforce, 38% pay no tax and, in addition, many pay no employee PRSI. The wealthiest 5% account for half of all income taxes paid. Almost nobody working at a full-time job in the public service is paid as little as €15,000, but I have not had time to check that. A 3% levy would be the only imposition such a person would pay rather than in addition to other payments. The money must be raised.

Senator Quinn made the point that business is not always fair and, unfortunately, we cannot proceed on the basis that life is always fair. However, we are protecting the livelihoods, jobs and living standards, with some reductions, of the entire population. Even if not everything is perfectly fair, unless we take the necessary action now, rather than later, although further instalments have to follow, we will be in far more severe difficulties and services we take for granted will be seriously at risk. The Taoiseach has made it clear that his door is still open to the social partners regarding details of how matters might be applied. The legislation still has to come before both Houses. To use his words, subject to tweaking of the details, the steps have to be taken to ensure our credit-worthiness. Our credit-worthiness, when we are in a deficit on the scale we are, relates directly to our ability to pay for our day-to-day public services, not to mention investments. The bottom line is that action must be taken. It is unfortunate, and I have every sympathy with people. This may apply to a very large number of people who will have to struggle to adjust to the new circumstances facing society. However, unfortunately, we have to do it.

Photo of Pat MoylanPat Moylan (Fianna Fail)
Link to this: Individually | In context

When is it proposed to sit again?

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
Link to this: Individually | In context

At 2.30 p.m. next Tuesday, 10 February 2009.