Hysterical response to proposals by pensions industry, says Noonan

 

PRESS CONFERENCES:THE PENSIONS industry has been accused by Minister for Finance Michael Noonan of reacting in a “quasi-hysterical” manner to the 0.6 per cent levy imposed in the Jobs Initiative.

At a news conference in Government Buildings last night, he said the Government was “pulling back a very small proportion” of the tax relief enjoyed by the industry over the years.

Accompanied by Minister for Public Expenditure and Reform Brendan Howlin, Mr Noonan said the levy did not have to come from pension funds and the industry could choose to absorb it instead.

“The reaction has been quasi-hysterical by the pension industry,” he said and pointed out that in recent years pension funds had not been invested in the Irish market.

Mr Howlin said public sector employees were already paying a pension levy and the new levy was being imposed “on money that has been put away without paying tax”. The new levy was intended to help in “restarting our economy” and such a development would be good for pension funds.

Mr Noonan said fees charged in Ireland by the industry were “substantially” larger than in the UK and there was scope for reductions. “I’m disappointed by the outcry from some in the pension industry because it is totally exaggerated,” Mr Noonan said.

He said the Government was trying to make the tourism industry more competitive as part of its Jobs Initiative. “You remember the time when you had to take out a mortgage to take your friends out for a meal,” he said.

Mr Noonan said the Jobs Initiative was “not a package of bits and pieces, it is a very carefully thought-out package”.

At an earlier press conference outlining the plan, Taoiseach Enda Kenny and Tánaiste Eamon Gilmore said the Government was looking to specific sectors such as tourism to generate employment.

The Government had inherited an enormous fiscal and economic challenge, Mr Kenny said, and it was meeting that challenge “head-on”. There were 440,000 people unemployed: that was why the Government had “acted so swiftly”; that was why the Government had “hit the ground running” and was announcing the Jobs Initiative after 10 weeks in office.

The Government was forecasting “a net additional 100,000 jobs by 2015” and it would like to go beyond that target if possible.

“The 12.5 per cent corporation tax remains unnegotiable, we have said that now repeatedly and that is the position,” Mr Kenny said.

Mr Gilmore said: “The whole focus of this Government’s activity and our work is to bring about economic recovery and to get people back to work.”

He added: “We committed in the programme for government that, in our first 100 days, we would introduce a Jobs Initiative. That has been delivered upon today.”

The Labour leader described the announcement as “a significant set of proposals amounting to €1.8 billion over a four-year period”.

The initiative was also “focused” on particular sectors where people could be got into work in the short term.

“One of those is tourism,” he said and the Government was conscious that the 2011 tourism season was just starting.

There would be a “huge focus” on Ireland, arising from the visits by Queen Elizabeth and US president Barack Obama.

“Therefore we have decided to concentrate the reduction in the VAT rate on tourist-related activity in order to generate reduced costs and generate some tourist activity,” Mr Gilmore said.

Responding to Fianna Fáil’s claim that the pension levy was “a smash-and-grab raid on the savings of ordinary people”, Mr Kenny said: “The pensions referred to here were built up with massive tax reliefs over the years and most of them are involved in overseas assets.

“What’s involved here is bringing back a very small percentage of this, at 0.6 per cent.”

Asked if the proposal that some of the funding for the initiative is to come from reallocations within departments would affect the prospect of savings from the Croke Park deal being returned to lower-paid public sector workers, Mr Kenny said this was not precluded.

Asked what would be the actual number of new jobs created under this initiative, Mr Kenny said: “It’s impossible to put a figure on the extent of jobs that can be created through a resurgence of confidence.”