The Dáil has today voted in favour of the Government’s package of economic cuts by a vote of 76 to 66. The motion on Expenditure Measures for the Stabilisation of Public Finances was carried following an earlier debate in the House.
A salary-based pensions levy is part of a package of measures designed to cut €2 billion in Exchequer spending in 2009.
Earlier, Minister for Finance Brian Lenihan defended the Government's handling of the economic crisis. Responding to questioning from Fine Gael finance spokesman Richard Bruton, Mr Lenihan said the Government’s announcement on cuts this week built on earlier steps.
“The fact remains that those earlier decisions in July of last year to target public expenditure . . . started the process of financial stabilisation. In relation to the budget, the Government came up with a number of difficult decisions relating to public expenditures, those were essential and important,” he said.
“As a result of those decisions, there are already substantial savings factored into public expenditure for 2009,” Mr Lenihan said.
The Minister said he welcomed the “widespread welcome” that the international financial community had given the Government’s latest announcement on expenditure cuts. He said if further potential savings were identified by his expenditure-control group, these would be assessed.
Mr Lenihan said it would not be easy to implement the public sector levy, but he appealed to the public service to come with the Government on what he said was a “difficult journey”.
Referring to criticism that the Government had bailed out the banks, Mr Lenihan said it was an “incontestable fact” that no taxpayers’ money had been invested in the banks yet, adding recapitalisation talks with AIB and BoI were ongoing.
Labour finance spokeswoman Joan Burton asked the Minister whether there were proposals for cuts in the numbers of ministers of state and Oireachtas committees. She also called for a cross-party discussion on TDs’ expenses.
Mr Lenihan said he had to be guided by the advice on the Oireachtas commission in relation to the numbers of ministers of State and TDs’ expenses, but he noted the Taoiseach had no immediate proposals to cut the number of those ministers.
Speaking in the Dáil earlier, Labour leader Eamon Gilmore clashed with the Ceann Comhairle as he called for the legislation on the pensions levy to be published.
"We have a situation where people don’t know how this is going to affect them. We also have a situation where it would now appear that this levy is now going to apply to earnings that themselves are not pensionable. I don’t know whether that is legal. Has the attorney-general an opinion on that?”
“There are almost 400,000 people for whom this is not a pensions levy, this is a special tax which is applied only to public services . . . which wouldn’t end the tax holiday . . . given to tax exiles or the tax exemptions,” Mr Gilmore said.
Former Labour leader Pat Rabbitte said the Government’s economic package “neither fair nor balanced”, was biased against those on low pay, and was “riddled with internal inconsistencies”.
“The framework document, and the Taoiseach argued for a system of social partnership that would share the burden . . . the inverse has happened. He has come to the House with an income levy, not a pensions levy.”
Mr Rabbitte said the Government had been denial over the economic situation and had now taken on ideas put forward by Labour at the party’s conference. He said Labour was ignored when it pointed the dangers of the over-reliance on the property sector. “If those views of the Labour Party had been followed, we wouldn’t have been in quite the extent of mess we’re in.”
He also criticised the allocation of five minutes each that TDs were given to discuss the issue in the Dáil.
Galway West Fianna Fáil TD Frank Fahey called for a new department of public service innovation, containing the best public servants, in addition to people from the private sector, to streamline and reform delivery of services. He also called for the Minister of Finance to open his department’s books to Labour and Fine Gael.
FG TD Olivia Mitchell said the pensions levy disproportionately hit the lower paid, and that it was “grossly unfair” that young people on modest interests with financial commitments were being targeted. She said it was “absolutely indefensible” this money was going to be diverted into the “black hole” of Government spending.
FG colleague Bernard Durkan said he was “amazed” to hear Mr Fahey inviting the Opposition after the Government had ignored the Opposition’s warnings on the economy.
Sinn Féin TD Martin Ferris told the Dáil many of those leading the calls against the public sector profited from the Celtic Tiger years. He said there was therefore “understandable anger and resentment” among those who have lost their jobs and those in the public sector being asked to accept the pension levy.
The new pensions levy will be calculated on gross pay and will range from a 3 per cent contribution for workers earning €15,000 up to 9.6 per cent for staff earning €300,000.
