Statements on the Stabilisation of the Public Finances - 5th February 2009

Statements on the Stabilisation of the Public Finances - 5th February 2009

Senator David Norris: 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.

Senator Eoghan Harris: Hear, hear.

Senator David Norris: 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.

An Cathaoirleach: The Senator’s eight minutes have expired.

Senator David Norris: 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.

An Cathaoirleach: 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.