Ivana Bacik

Second Stage Debate

Senator Ivana Bacik: I echo Senator O’Toole’s words because I, too, watched the news at 9 p.m. and the one in ten figure stood out starkly for me, as it is doing for people all around the country tonight. Clearly, there is a lack of confidence in what the Government is doing to tackle the enormous economic downturn and problem we are facing. There is a will among people to share the burden. All of us want to play our part in trying to bring about an economic recovery. That includes Members on both sides of this House and of all shades of political opinion in the country.

What we are not seeing from the Government is any leadership or sense of strategic planning to get us through this economic recession and to point us towards recovery. Instead, we are seeing some piecemeal measures. In fact, Senator Boyle referred earlier to the Bill before us as an introductory measure, the start of a series of measures. Where is the series? Where is some sense from the Government of the shape and structure the series will take in the coming months or years? We just do not know.

The ICTU has done us all a favour in putting forward a coherent ten-point plan. It said itself that it is flawed, that it is by no means perfect, but at least it is based on a model of recovery that was used in Sweden. Many of us heard the architect of that plan, the Swedish policymaker, speak about it and he said the main point of the plan was that it hurt all interest groups — that everybody complained. He knew then that it would be more effective that way. It was fair and it had general application. That is exactly what we are not seeing from the Government’s Bill before us tonight. We are seeing a mere tweaking of cost cutting in this plan but what we are not seeing, as Senator O’Toole said, is any honesty about the need to raise revenue by raising taxes through a progressive taxation system that hits the rich and those on high incomes, both in the public and private sector.

I have put on record previously the fact that I approve in principle of the need for public servants to pay a levy, if one wants to call it that, in recognition of the fact that we have secure pensions. What I do not approve of is the inequitable application of the levy to those on very low incomes in the public service. All of us on higher incomes should be paying something more than those who do not have security of tenure and the benefit of a public sector pension. I do not believe the low paid, namely, nurses, firefighters and those on entry level in the Civil Service, those we saw out on pickets from the CPSU today, should pay a levy of 3% or even 6%. The threshold should have been set higher.

The Government had to tweak what it called the 1% levy — the income tax measure that was introduced last year — to exempt those earning below a certain amount. I do not know whether the Minister is listening but it is fair to say that his colleagues said initially there would be no tweaking of the 1% levy and there was subsequently a tweaking. It is unfortunate that people then came to expect when the pension levy was introduced that there would be some tweaking or adjustment. There is some indication in section 8 that an exemption can be provided if the Minister so wishes. There is an uncertainty about the application of the levy.

I have been approached by people who work in the public sector who do not have security of tenure, who are on fixed-term contracts but who get some payment in lieu of pension and therefore will be covered by the legislation. They are concerned about having to pay a levy on very low incomes. Clearly, it will hit them more than it will hit those of us on higher incomes in the public service. What we need is a more coherent plan, one that will impact fairly and equitably on all sectors of society, especially the higher paid.

Committee Stage:

I welcome the opportunity to support the amendments, both of which have the same effect by providing for a sunset clause. I echo the comments of Senators Twomey and White. The Government refers to the Bill as an emergency measure, which is not a tax. However, this comes down to honesty. If the Government parties want to be honest, it would be more honest and straightforward to raise taxes. Instead, the measure is presented to us as an emergency levy and, therefore, something that will not be permanent, yet when the Opposition seeks to insert a clause seeking to provide for it to be temporary, that is apparently opposed by the Government.

The difficulty is the Government’s attitude to this has contributed to uncertainty among the public, which was exemplified in today’s opinion poll. The crisis in confidence is contributing to the poor state of the public finances because when there is a lack of public confidence, people are much more reluctant to spend and, for example, enter contracts for the sale of houses and so on, and this is having a spiralling, knock-on effect on the likelihood of an economic recovery, which is serious. We need an indication from the Government about what the package of measures will be, of which this legislation is apparently only part.

As I said on Second Stage, I approve, in principle, of the need for a payment by higher paid public sector workers, given that we have tenure of employment and a better pension. The key to imposing such a levy is the need to be seen to be equitable and not to scapegoat, but public servants feel they have been scapegoated. The Government has clearly attempted to drive a wedge between the public and private sectors and that has been resisted. Last weekend’s march brought out people from both sectors. They also rightly object to the inequitable application of this measure. I examined the Minister of State’s figure carefully and although the percentage levy on low incomes is lower, it will still impact more heavily on those earning less. A firefighter, a nurse or a civil servant in an entry grade will feel the impact of the levy more heavily than those of us on higher pay in the public sector.

There is no comparison between the imposition of a 10% levy and the loss of one’s job. The tragedy of job losses for people in Waterford Wedgwood, Dell, SR Technics and smaller firms around the country, which are bearing the brunt in the private sector, must be acknowledged. However, people must feel they are fairly being asked to play their part. Public sector workers, in particular, are willing to play their part. The Swedish recovery model has been adopted by ICTU and it has been presented as a plan for an economic recovery. When the architect of the plan visited Ireland, he said there was a need to ensure the burden of spending cuts and revenue raising measures is felt equally and the pain is felt by all interest groups. There is a difficulty when a number of such groups feel they have been unfairly targeted. We must ensure equity in this measure and that it is seen as part of a much wider plan for recovery, in which everyone will play a part.

A significant step in this would be to make clear to the public and, in particular, public sector workers that this will only be a temporary measure. Providing that this would be done for only two years should be an integral part of presenting a coherent package of revenue raising and cost cutting measures to the public. I am not sure why the Government is opposing the sensible suggestion to impose a deadline by which the Bill would have to be reviewed and the measure amended. I do not see the problem for the Minister in doing this. We are all trying to work together in a spirit of solidarity, understanding the enormous problems facing us at this time. I do not disagree with the measure in principle, but we must ensure it is imposed equitably and fairly, as part of an overall package that is coherent and appears to be part of an economic recovery, and a sunset clause is vital to that.