An Cathaoirleach:   That was the situation but, apparently, the automatic pairing of a Minister visiting this House is not available to Government at present. Senator Joe O’Toole: Is the Cathaoirleach informing me the Opposition parties will not allow a pair? An Cathaoirleach: That is my information. Senator Joe O’Toole: That is appalling. An Cathaoirleach: I do not wish to get involved in what goes on in the other House. That information has come to us. Senator Maurice Cummins: Previous information stated it was not even requested. Senator Donie Cassidy: The Leaders and Whips will try to correct the matter. I understood the situation to be as Senator O’Toole described. In fairness to Senator Cummins, we had an understanding that pairing happened when requested. I got an instruction from the Government Chief Whip and Senators will know that I must take instruction with regard to these matters. With the permission of the House, I propose that we have a sos from 1.30 p.m. until 1.50. p.m., if that is agreed. Senator Maurice Cummins: On a point of information, the last time we had a situation like this in the House, I checked with the Opposition Whip in the other House, and there was no request for a pair. I wish to clarify that. The situation may have changed in the meantime but I speak of past experience. An Cathaoirleach: Perhaps the Whips may be able to sort out the matter. The Leader has requested a sos from 1.30 p.m. until 1.50. p.m. Senator Donie Cassidy: I also propose, with the permission of the House, that the Minister will be called upon at 3.45 p.m. and will have 15 minutes to respond to points made by Senators. Senators Cummins, O’Toole, Hannigan, Ó Murchú, Coghlan, Harris, Ormonde, Healy Eames, McCarthy, Regan, Buttimer and Ross expressed their serious concerns about the economy, especially with regard to the new unemployment figures. It is a serious and difficult time for all of us in the Oireachtas, and for the people, in particular those who are unemployed and those who have been let go, especially people who never experienced this before. We must be confident that the measures announced by Government in the past 48 hours are the start of what will be the corrective path to assist these people. As Senators have noted this morning, our priority must be the creation of jobs. Senator Keaveney asked for a debate on innovation and the role of the entrepreneur. That must be our preoccupation. Senator Ross is correct. The ESB is not leading by example in any national sense. I heard the interviews on the radio this morning. The Minister said he expects energy costs will be reduced to double digit figures. They are unsustainable now. Senators: Hear, hear. Senator Donie Cassidy: They are 30% higher than they should be. The Government has a duty to ensure those who are in employment are given a level playing field with regard to the cost of energy. There are many very decent people employed in the ESB who always answered the call in all kinds of emergencies. I compliment them and acknowledge their actions. They have one of the top best-serving chief executives our country has ever had. However, in the national interest, the gesture is required. We are all in this together to help and do everything we possibly can to maintain the jobs that are there and to support those who are unfortunate to be unemployed. Energy cost is a major contributory factor. After wages, insurance costs used to be the second largest expenditure on the balance sheet but now energy costs are in that position. I can tell the House at first hand that energy costs have increased by 50% in the past 12 months for most businesses in Ireland. Domestic energy costs have increased even more. This hits everybody in society. One the one hand, I compliment the ESB, and the workers were entitled to the increase, but a gesture is needed in the national interest and I call on the ESB to do that. As Senator Ross correctly pointed out, as soon as one organisation thinks it can get away with this, it is human nature for others to follow. The example has been given, and it is not the one we need. Senator Hannigan spoke the great work done by the Irish Film Board. He congratulated Pat Shortt and all his team on the film “Garage” and the great acknowledgment of our country. I have supported this industry all my life. I know many who participate in it and live on a wing and a prayer most of their lives. They got very little from the State, and did not want anything, but they are great innovators and entrepreneurs whom we should support. I will pass on Senator Hannigan’s views to the Minister after the Order of Business. Senator Coghlan called on me to ascertain the date of the refinancing of the banks. The Minister will be in the House this morning and I suggest all those questions be directed to him during the debate on the economy. He will be able to give up-to-date information on that, and on pension entitlements and what we will do for people who have been making contributions all of their lives in good faith to pension funds, whether private or public. A whole new look is urgently needed, particularly in light of the Waterford Crystal debacle. Senators O’Toole, Norris and Mullen all welcomed the good news and good wishes were extended across the board by the Independent Senators to each other. We are all very happy for them. The Holy Father will intervene and assist them in any way he can. Senator David Norris: I am afraid I would not feel in a position to accept his divine intervention. Senator Donie Cassidy: It needs somebody of his power and strength at times to help the Members who have made such marvellous contributions here down through the years from the Independent benches. Senator David Norris: I did that entirely unaided by the Pope. Senator Donie Cassidy: Regarding the article by his local Deputy which Senator Norris outlined to the House, articles are published in magazines to promote the magazines and get people to read them. I could not think of anybody more popular or deserving of the credits than probably the most successful Taoiseach the country has ever had. He should be acknowledged. Senator Liam Twomey: I thought the Leader was talking about the Holy Father. Senator Donie Cassidy: The people of Ireland must be allowed to be reminded of the good old days, which are only a short time ago. Senator Maurice Cummins: He is the real Pope. Senator Donie Cassidy: Senators Norris, Ormonde, Healy-Eames and Mullen expressed their serious concerns regarding human rights issues and everything pertaining to them. I can pass on their strong views to the Minister. The Minister for Education and Science, Deputy Batt O’Keeffe, was to be in the House this week but, as we know, he has accompanied President McAleese to the Gulf. I have another date arranged in the Minister’s diary. On Tuesday last the Taoiseach and Government made an extra allocation of funding to the Department of Education and Science and the Minister. Senators Keaveney, McCarthy and Callely called for the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Coughlan, to come to the House to discuss innovation and entrepreneurship. At that discussion or perhaps today, the spokespersons should make an issue of the concerns we heard this morning on the radio and in the newspapers regarding the low level of students taking up science and maths. I will be guided in this House on how we can play our part. When I was Chairman of the enterprise, trade and small business committee I proposed that an extra 50% of marks should be given in the leaving certificate to encourage students in maths and science to take these two subjects because this is where the high end jobs will be in the future when the global economy begins to pick up. Senators McCarthy and Buttimer called for a debate on the sports capital programme, the success of which has been fantastic. Every parish in Ireland has benefited over the years from the national lottery funding. I very much admire the Minister, who has been very willing to come to this House in all the portfolios he has held as Minister or as Minister of State. If I had a criticism of the Minister it is that if I were in his shoes I would not have announced the funding until early this year because he got very little credit and thanks for it. Now he has to say truthfully and honestly the funding probably has to go to health. He says it is going back into the Exchequer. However, those of us who are here a long time know it is probably going into the health portfolio because that is where the money is needed most. We have to understand that. The use to which the national lottery funding has been put throughout the country has been immense. We have seen it in all voluntary organisations. I ask the people of Ireland to continue supporting the national lottery because if the funding is going to health it is going to an equally, if not more, deserving cause in the circumstances in which we find ourselves. I will pass on Senator Callely’s views to the Minister regarding the particular school. However, as the Cathaoirleach has correctly pointed out, this could be a matter for an Adjournment debate when the Senator could make his very worthy case. I will have no problem holding a debate on Senator Mullen’s serious concern regarding what is taking place in the courts regarding human embryos. Private Members’ time is coming up for the Independent Members in a few weeks’ time. If legislation does not allow us to take it in the House, perhaps Senator Mullen can discuss this with his Leader and see how this can be achieved. Senator Buttimer called for the Taoiseach to come to the House. I discussed this with him during the Christmas recess. He is very anxious to avail of the opportunity to come to the House and I have asked him to update us on North-South affairs, which was always the subject of the visits to the Seanad by previous Taoisigh of all Governments. I hope this will happen as soon as possible. Senator Twomey made a point and I will pass his strong views on to the Minister after the Order of Business. Order of Business agreed to.  Stabilisation of the Public Finances: Statements.
An Cathaoirleach: I welcome the Minister of State at the Department of Finance, Deputy Mansergh. Minister of State at the Department of Finance (Deputy Martin Mansergh): 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. Senator Liam Twomey: 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.  12 o’clockThe 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. Deputy Martin Mansergh: I have done so frequently. Senator Liam Twomey: The Minister of State did not. He is doing it now because it suits him to do so. |