National recovery plan needed, not unfair levy - Gilmore moving Dail motion
Issued : Tuesday 17 February, 2009
Speech by Eamon Gilmore TD
Leader of the Labour Party, Tánaiste and Minister for Foreign Affairs & Trade
No one in this House would deny that we are at the beginning of what may be the worst economic crisis in living memory. All around the country tonight - around kitchen tables - people are wondering just how they are going to get through it.
How they will manage with less take home pay, but the same bills.
How they will pay their mortgage, and what will happen if they can't.
How they will keep their business afloat.
How their retirement will be, now that the pension they saved for so long, has evaporated along with trust in the banks.
How they will cope now that they have lost their job. In January alone, 36,000 people found themselves asking this question for the first time. People who, just twelve months ago, had good jobs, reasonable incomes, hope for the future, but who now find themselves queuing along the street for the Dole office. Bewildered by their first ever experience of seeking assistance from the State. Embarrassed and humiliated by their new fate.
My thoughts tonight, firstly, are with the 140,000 people who have lost their jobs over the past year. Those who have seen the doors close in SR Technics, Ericsson, Waterford Crystal, and Dell, to name but a few. There are as many untold stories about businesses closing down, redundancies, and reduced hours as there are new people signing onto the live register.
I say this because now is the time for solidarity. Now is the time to recognise that what happens to our neighbours, our colleagues, our fellow citizens, matters to each and every one of us.
There has been, since the start of the economic downturn, a deliberate attempt drive a wedge between those who work in the private sector, and those who work in the public sector. It has suited some people, including Government ministers, to imply that public and private sector employees exist on separate planets. That, public servants were, in the cynical, headline-chasing words of Minister of State John McGuinness, "featherless but still plump State hens".
That public service workers are impervious to this recession, while all the pain is being felt in the private sector.
This is rubbish. Of course public servants are not indifferent to the plight of private sector workers. In many cases, they are married to them. They are their brother, their sister, their parents, children and friends. And now, more and more, they find themselves struggling to support a household that has suddenly found itself with only one income.
The real wedge is between those who were responsible for our current mess, and those who were just getting on with their lives - work, rearing a family, paying taxes - until the rug was pulled from under them.
Yes, this is a global financial crisis, on a massive scale. The global boom - which made our own Celtic Tiger possible - has now become a global bust. No country is immune from its impact.
But Ireland is different. This economic storm is battering Ireland harder than our fellow EU member states because, by the time it arrived on our shores, we were already fatally weakened.
For the past six years, our economy had been artificially propped up by our own construction boom. Addicted to the revenue that concealed our economy's deep-seated weaknesses, Fianna Fáil again and again failed to intervene in runaway property speculation, and unsustainable lending practices by the banks. Failed to hold those in the golden circle to account. And now we are all paying the price.
We are all paying the price, but not fairly. Not equally. Not according to our role in the crisis.
The thousands losing their jobs every week didn't inflate the property bubble.
The children losing their special needs teachers didn't cause it to burst.
Those paying through the nose for health care, medicine bills, care for their elderly parents now that home help hours have been cut: they didn't buy land banks for billions, in the hope that they would sell them on for even more billions.
Public servants, just by doing their jobs, did not cause the problem in our public finances. They were not borrowing millions from a bank, to invest in the same, failing bank.
And yet, who is asked to take the pain? Who is asked to "readjust"?
It is some irony that nurses, teachers, Gardaí, and county council workers are now being asked to pay more into a Pension Fund, half of which is to be handed over to banks, whose top executives are still paid in millions.
It is an irony not lost on the Irish people. They can see through a strategy that scapegoats public servants. It is the strategy of a government unwilling to go after the big guys.
In their haste to take money from public servants to give to the banks, the Government chose to unilaterally impose a so-called Pension Levy on every worker on the State's payroll. No other "adjustments" were made. No changes to the cost of living - just to how much public servants would have to in their pockets to pay for it.
And as with any unilateral, late-night, back-of-an-envelope proposal, it was not thought through. It took two days for the Taoiseach and the Minister for Finance to get their story straight about whether the levy was on gross income, or whether it was net of tax.
Now that we do know that the levy is net of tax, we are left in the dark as to how much it will actually raise. One thing is certain: it is unlikely to be the €1.4 billion Brian Cowen announced.
But most of all, this pension levy is unfair.
It is unfair because it singles out one category of worker in our economy for a unilateral pay cut. It is unfair because it will be levied on income that will not ultimately be reflected in many public servants' pensions. It is unfair, because it fails to take into account the differing contributions public servants already make to their pensions. And it is unfair because it places a disproportionate burden on low and middle-income public servants.
It doesn't take an economist to work out that a clerical officer on €25,000, will find that she feels the pinch of €1000 missing from her pay packet, more than the Minister for Finance earning €250,000 would miss the €14,000 missing from his. She is paying an additional levy of 4 per cent of her gross income towards her pension, while he is only paying a levy of 5.6 per cent on his.
In some cases, lower paid public servants actually pay a higher levy than those on higher pay. How is it fair that a person on €39,000 will pay €2120, when their colleague on €44,000 will only pay €1858?
Despite what some would like to imply, the vast majority of public servants earn a modest wage. No one signs up to be a clerical officer, or a primary school teacher, because they want to make big money. Most of those who have contacted me earn between thirty and forty thousand euro a year. They are working people, who have to pay for everything. Many have made considerable sacrifices to save up enough money to buy their own home, at a crippling cost.
These are not the cosy, cosseted elite that it suits some to caricature.
Last week, I received an email from a separated mother of four teenagers. She works for the HSE, and earns €31,000 a year. The Government deem this family's income low enough to be eligible for the Family Income Supplement. But this same Government also wants to levy €1,480 from her take home pay.
Another woman told me how, after her mortgage, childcare, life assurance and petrol, she, her husband, and their three children, had €450 month to live off. This is before she is required to pay the pension levy.
A nurse in the children's hospital in Tallaght wrote to explain how, now that her husband was unemployed, all of her income was consumed by keeping her family afloat. Like many of the public servants who got in touch, she accepted the pay freeze. She accepts this, like she accepts the HSE staff embargo, that has put her and her colleagues in the emergency department under great strain. But she simply cannot absorb another pay cut.
And there were many others. Hundreds of stories that reflect the high cost of living in Ireland, whether you work in the public or the private sector. Stories about spouses or partners losing their jobs. Stories about the cost of medicine. And stories about fear - fear of not being able to make ends meet. Fear, even, of losing their home.
Almost every single public servant who got in touch with me said that they appreciated that the public finances were in trouble. That they were willing to contribute to fixing the economy. They just wanted that contribution to be fair. And yes, many said that they would be willing to contribute more to their pension.
This is why, when the Taoiseach abandoned partnership negotiations, it was a missed opportunity. If public servants were willing to cooperate with a reduction in the public service pay bill; if the trade unions had agreed a €2 billion adjustment; why did the Government decide to effectively collapse the talks, and unilaterally announce badly thought-out cuts and levies?
As time goes on, it seems that this Government is more concerned with public perception - with being seen to be tough - rather than taking the right and fair decisions.
What is fair about taking money from an employee on €15,000, but asking nothing of banking executives or super wealthy developers?
What is right about a move which does nothing to reduce the cost of living, or to restore consumer confidence?
Or a decision which offers nothing in the way of new jobs, and only vague promises about retraining?
And it is jobs that our economy hinges on. It is job losses, business closures, the drop in consumer activity, and the consequent loss of tax revenues which has caused the critical problem in the public finances - not the other way around.
Every job lost in the economy costs the public purse €20,000, between social welfare payments and less tax revenue. That is not including secondary benefits such as rent allowance and mortgage relief.
The cost to the exchequer for January's job losses alone is therefore €730 million - over half what the Government hoped to raise in the Pension Levy. If unemployment rises to 400,000 by the end if the year, as the Taoiseach predicts it will, that's another €2 billion.
This is why the fixation with cutting public expenditure alone will not solve this problem. Because the more jobs there are lost, the more that will have to be cut to pay for them, which in turn shrinks the economy - until we reach a point, where there is nothing more that can be cut.
This is not to say that the public finances are not important, or that public servants have no role to play in our economic recovery. They do, and they have signalled that they are willing. But, ultimately, saving jobs and putting people back to work is the only sustainable way out of this economic crisis.
There is no public-private sector divide. Just citizens who desperately want to know that their sacrifices will have a purpose.
I, and my party colleagues, have been arguing for some time that we need a National Recovery Plan. A road map which describes where we want the country to be at the end of this recession, and how we will get there. A clear understanding that everyone will be required to contribute, according to their means. No more hiding places for those who think tax is for the little people.
I am calling on the Government tonight to suspend the introduction of legislation to impose the pension levy on public servants, and to re-enter negotiations with the social partners to reach agreement on a fair and equitable set of proposals that would meet the adjustment of €2 billion already agreed.
That is just the start of what must be a national effort. We in Labour are proposing a new national agreement for economic recovery, negotiated not just between Government and the social partners, but involving the whole of society. Such an agreement should be framed over at least a three year period, and would address jobs, pay, tax and public services. The time for incremental approaches, which only chip at the edges of these questions, is past.
This would be a deal between citizens. There would be no room for scapegoating. No room for finger pointing. And no place for those not willing to put their shoulder to the wheel.
And there will be no room for the kind of reckless, arrogant behaviour that has destroyed our banking system, and the reputation of our country with it. The first principle of a national agreement should be a cleaning out of the boards of the banks. And if people in that golden circle are found to have committed a crime, let them account for their actions before the courts.
This is a time for pulling together. For working together. For unity among working people in the public and private sector. For understanding each others fears and risks. For refusing to be divided. For determining that we can come out of this recession to a better place.
I disagree with Brian Cowen when, in the Four Seasons Hotel, he told Dublin businessmen that the future might not be as good for our children as it has been for us.
That is defeatist talk. The future can be better for our children, if we are all willing to make it so. But better, not measured in material things and consumer goods, but by the quality of their lives, by the fairness of society and by the sustainability of both our economy and our environment.
I commend this motion to the house.
