I move:
That Seanad Éireann notes the supply services and purposes to which sums have been appropriated in the Appropriation Act, 1993.
Appropriation Act, 1993: Motion.
As the Seanad will be aware the annual Appropriation Act gives statutory effect to the departmental Estimates for the supply services both non capital and capital including all Supplementary Estimates which were approved by the Dáil since the last Appropriation Act. The 1993 Act appropriates to the various services listed in the Schedule the sum of £8,789,118,010. This comprises the original Estimates of £8,548,119,000 set out in the revised post-budget Book of Estimates and Supplementary Estimates totalling £240,999,000. Following the normal practice the Act also approves the use of certain departmental receipts amounting to £1,006,586,000 as Appropriations-in-Aid.
The Act also covers the excess Vote relating to 1991. The minor excess of £10 on the Vote for the State Laboratory arose from a miscalculation of PRSI liabilities. Following established practice, the Public Accounts Committee examined this extra Vote and had no objection to it. Apart from authorising the Estimates and excess Votes, the Appropriation Act also has another essential purpose. It provides a statutory basis for the calculation of the issues which the Minister for Finance is authorised, under the Central Fund (Permanent Provisions) Act, 1965, to make from the Exchequer towards meeting the cost of the following year's services before the Dáil has an opportunity to approve the Estimates for that year.
The Irish economy turned in a resilient performance during 1993 and that performance was all the more remarkable given the currency related turbulence at the beginning of the year and the sluggish international environment. Economic growth in Ireland last year was the highest in the European Union. Over the last five years GDP growth has averaged 5 per cent per year and this is one of the best growth rates in the industrialised world. In contrast, annual average growth in the European Union was just over 1.5 per cent, in the United States it was below that and in the United Kingdom GDP growth averaged less than 0.5 per cent per annum. Growth slowed down last year but this year our growth rate is likely to accelerate to 4 per cent which would again top the EU growth league.
Our exports have continued to grow at a faster rate than our markets and our trade and wider balance of payments have both remained in substantial surplus. A particularly positive feature of recent years has been the continued strong growth of industrialised exports despite the international slow-down. Indeed, our rate of export growth has far exceeded the growth of our export markets. In other words, we have been increasing our share of other countries' markets at a significant rate. According to OECD figures, Ireland's markets for manufactured exports grew by 3 per cent in 1992 and 1993; at the same time the OECD estimates that the growth in the volume of Ireland's manufactured exports has been over 15 per cent — about five times as fast as the growth in our markets.
We are sometimes told that Ireland is experiencing what is termed "jobless growth" and that we are failing to convert growth into jobs. We all know that we face an immense challenge on the employment front. Perhaps it is not so well known that employment growth here in recent years has more than held its own by international standards. Last year non-agricultural employment rose by about 13,000. By contrast, total employment fell nearly 2 per cent in the European Union as a whole. Indeed, non-agricultural employment here has continued to grow even through the worst years of the international recession. Not many other countries can say that. According to the latest EU Commission estimates Ireland was the only EU country, apart from Luxembourg, to show any employment growth last year.
The budget forecast for the live register was for an average of 309,000 in 1993 — an increase of 26,000 as compared with the 1992 outturn; in fact, the outturn was just over 294,000. Although this is still about 11,000 higher than in 1992, the trend in the live register has improved greatly. None of this should be taken to imply complacency about the scale of the unemployment problems we face. There are far too many people on the live register and long term unemployment in particular must be tackled as it leads to a cycle of poverty and deprivation. Creating jobs in Ireland for the unemployed is the Government's top priority.
This is not an idle aspiration. The Programme for a Partnership Government contains a long list of the actions we are taking and propose to take towards this end. Provision for many of these initiatives has been included in the 1994 expenditure Estimates published on 9 December 1993. In addition the expenditure and taxation measures announced in my budget last week will make a significant contribution to employment creation.
No matter how committed and energetic the Government is in devising and implementing policies to reduce unemployment, these will not be effective if wage increases are so high that we lose competitiveness against our main trading partners. While over the period of the Programme for Economic and Social Progress hourly rates of pay in the key manufacturing sector expressed in a common currency are estimated to have increased more slowly than among our main trading partners, we have no grounds for complacency about the future. The annual rates of nominal pay increases in these countries have slowed throughout the three years of the Programme for Economic and Social Progress and the latest EU forecasts point to a continuation of this trend in 1994.
In 1993, Irish wage competitiveness increased but only because of devaluation. The fact that the average rate of pay increase in the UK is currently quite low has to be taken into account in any consideration of appropriate pay rates.
It is also worth noting that our above average economic performance has been achieved without fuelling inflation or resorting to excessive public borrowing. Inflation here in recent years has consistently been below the EU average. In 1993 inflation averaged 1.5 per cent, the lowest for 30 years. The Irish economy has clearly shown its potential for rapid, non-inflationary, market-led economic growth.
At the start of 1993, interest rates were at high levels as a consequence of the currency turbulence caused by Sterling's withdrawal from the Exchange Rate Mechanism. Though the exchange rate difficulties facing exporters disappeared after the realignment of the Irish pound within the ERM at the end of January, it was only in March that interest rates started to fall. The climate of uncertainty which characterised the period of currency instability from September 1992 to early 1993 had a negative effect on business and consumer confidence at the time. Confidence has since improved in both areas however and the sharp fall in interest rates is a major factor behind this change.
The substantial reductions in mortgage rates during 1993 and again early this year represent a huge boost to the mortgage borrower. For example, the saving on a £40,000 20 year mortgage is about £175 per month compared to the levels prevailing during the currency crisis and about £90 per month compared to pre-crisis figures. Business borrowers are also benefiting from interest rate reduction with some AA lending rates four or more percentage points below pre-currency crisis levels.
I have recently pointed out the importance of the small business sector to the economy and I am concerned that not all interest rates for small businesses and farmers have been falling as fast as have interbank rates. I have been pleased to see evidence in certain initiatives taken recently by the main banks that they are starting to address these concerns. In addition, as I announced in the budget, arrangements have been made with the ICC Bank to provide long term fixed interest rate finance to small business at subsidised rates of interest.
The outlook for 1994 and 1995 is for a modest improvement in the international economic scene. Growth in the OECD next year is likely to be at least twice as fast as this year — about 2.25 per cent compared with the scant 1 per cent achieved in 1993. The European Union will return to growth after a fall in GDP this year. The latest Commission forecasts are for growth of 1.25 per cent in 1994 followed by 2 per cent growth in 1995.
In addition the UK economy is recovering. Following the recent budget the UK Treasury is now forecasting GDP growth of 2.5 per cent this year. Independent forecasters are on average predicting growth of 2.75 per cent. This may not sound dramatic until one remembers that output in the UK has been falling in recent years — by 2.25 per cent in 1991 and 0.5 per cent in 1992. Although recent indicators for the British economy are mixed, the current outlook for the UK represents a major improvement and a vital opportunity for our exporters.
In Ireland domestic demand is likely to continue to recover as consumers become accustomed to the new low interest rate regime. Investment will also benefit from lower interest rates and from the injection provided by the Structural Funds. While inflation will probably increase slightly from the exceptionally low levels we saw in the middle of last year, it is likely to remain moderate at around 2.5 per cent.
Overall, the outlook for 1994 is for a return to a vigorous rate of economic growth of around 4 per cent. Employment is expected to grow by 21,000, including the impact of the special measures announced in the budget. The average level of unemployment may fall by 5,000.
I am certain that the relative success of the Irish economy in all the areas I have outlined has been supported by the Government's stance on the budgetary parameters. The Seanad will be aware that the Programme for a Partnership Government makes clear that budgetary policy will be based on the overriding requirements of the Maastricht Treaty, in particular the condition that the general Government deficit should be kept to about 3 per cent or less of GDP.
It will be recalled that last year's budget had to accommodate a number of pressures, especially costs associated with the inauguration of the Single Market including the change from the imposition of VAT at point of entry for intra-Community trade and the new DIRT tax regime for special savings accounts. Despite these pressures and other commitments which arose during the year relating to Aer Lingus and public service pay arrears costing £145 million in total, the EBR was £690 million or 2.5 per cent of GNP. This was £76 million below the budget target.
In a difficult economic environment Ireland's fiscal performance in 1993 was among the best in the European Union. This underlying financial discipline assisted in assuring that stability and confidence quickly returned to the economy after the devaluation of the currency in January 1993 and contributed in no small measure to the good carryover into 1994 reflected in the budget last week.
Since 1987 we have made substantial progress in bringing order to the public finances. Ireland's Exchequer borrowing requirement, which exceeded 12 per cent of GNP in 1986, had been reduced to 2.5 per cent in 1993 with a target of 2.7 per cent in 1994. Against the difficult international economic background of the past few years this is a tremendous achievement.
Over the same period sound management of the public finances has ensured a significant reduction in the burden of the national debt. This has fallen from over 122 per cent of GNP in 1986 to about 102 per cent at the end of 1993 after taking account of the once-off adjustment resulting from the realignment of the value of the Irish pound within the EMS. The burden of debt service costs has also fallen, from 11.2 per cent of GNP in 1986 to 8.6 per cent of GNP in 1993. A reduction of 2.6 per cent is equivalent to an annual interest saving of over £700 million at 1993 prices.
It is essential to maintain the improvement of recent years in the public finances to free resources for the development of the economy and to facilitate the tax reform measures which will help to improve efficiency and create employment opportunities. The 1994 budget has made a major contribution to meeting these aims. We must maintain a disciplined approach to the management of the economy and the public finances to secure the progress we have made so far and to enable Ireland to take maximum advantage from the expected upturn in the economies of our main trading partners.
I am convinced this year's budget establishes the right fiscal and economic environment to encourage confidence and allow us to create sustainable jobs. As I said in my Budget Statement, the aims of the 1994 budget are to keep the public finances on a sustainable course; to maintain a stable exchange rate within the EMS; to facilitate a moderate evolution of costs and incomes; to develop Ireland's infrastructure further; and to ensure that public policies are still more supportive of employment and investment.
The Government adhered strictly to the stance of recent years with the projected EBR for 1994 being held to 2.7 per cent of GNP. This is the sixth successive year in which the EBR has been held below 3 per cent of GNP. Nonetheless, even within these tight fiscal constraints, we gave the bulk of taxpayers substantial relief, catered for the low paid, ensured social welfare recipients received increases higher than inflation between last year and this year, provided additional places for the long term unemployed on the new community employment programme and encouraged investment and economic growth.
All the measures in the 1994 budget and in recent budgets concentrate in one way or another on employment and social equity. By maintaining financial stability and confidence the Government has created the right conditions for stronger investment, increased output and more employment opportunities. Ireland is a relatively small open economy and we must adapt to world market conditions in order to generate greater economic activity. Improvements in competitiveness and productivity will enable us to build on the relatively strong economic performance of our economy in recent years as growth in the world economy improves. I am confident that the 1994 budget will ensure the translation of economic growth into additional employment.
The National Development Plan will be one of the cornerstones of the Government's economic strategy over the medium term. In framing the plan the highest priorities have been the creation of employment and fostering sustainable economic growth. The aim is to turn the investments in the plan into lasting jobs.
The basic elements of the strategy are investment in the growth potential of the economy in industry, tourism and services, agriculture and natural resources; investment in the country's infrastructure to improve the capacity and competitiveness of the economy; investment in the development of the skills of our people through education and training to increase productivity and growth capacity and a special increased emphasis on harnessing local community leadership and initiative, in particular with the aim of rebuilding the economic potential of unemployment blackspots. The plan is designed to reintegrate the long term unemployed and those at risk of becoming so into the economic mainstream. The plan is currently being discussed with the EU Commission with a view to agreeing the Community support framework.
I am certain that the measures set out in the budget, supported by the investment strategies contained in the National Development Plan, will ensure the best long term return to the economy by increasing output, economic potential and long term employment.
When the Government published the Book of Estimates last December, it estimated that it would spend approximately £8.944 billion. When publishing the Book of Estimates for the 1993 budget, the estimated figure was £8.312 billion. This, therefore, is a major increase in public spending. It is a 7.6 per cent increase or a total of over £630 million. A closer examination of some of these Estimates for different Government Departments provides some interesting information.
The areas that we should expand into are being reduced in these Estimates. Our resources need to be placed behind creating employment and wealth. Departments such as Enterprise and Employment, Tourism and Trade and Agriculture, Food and Forestry have the capacity to help create a climate for job creation. A sensible Government would look to these Departments to help solve the unemployment problem by retaining existing jobs and creating new ones.
However, every one of these Departments has had its budget cut significantly. The Department of Enterprise and Employment had its budget cut by 19 per cent, or £74 million. The Department of Tourism and Trade had its Estimates slashed by 26 per cent, or £25 million. Similarly, Forestry has seen a 57 per cent reduction, or a sum of £14 million, and the sum for Agriculture and Food has been reduced by 9 per cent. At a time when there is huge pressure on the Ordnance Survey Office and with the Government charging ever increasing fees for maps, this Office had its Estimate cut by 3 per cent, or over £310,000. The Office of the Ombudsman has seen its budget cut by over 2 per cent, or £19,000.
Some of the interesting increases in this Book of Estimates are in the Office of the Tánaiste, which has had its budget increased by 64 per cent, or a whopping sum of £587,000. The budget for the Office of Equality and Law Reform has increased by 68 per cent, or £4 million. Finally, our Secret Service has obtained an increase of over 31 per cent, or an actual increase of £58,000.
The worrying trend of these figures is that they do not help to create jobs or stimulate growth. They appear rather to be biased against employment; they are anti-jobs. In looking at these Estimates, one would consider looking to the Department of the Environment or the construction industry to generate jobs. However, in a change of previous policy, the Government is bringing in measures which will harm this industry. High interest rates and a European recession caused a slowdown in the demand for new houses over the last number of years. Regrettably, the changes proposed in the budget will have an effect on these Estimates, especially because of the residential property tax.
During the period when interest rates were rising, both the Tánaiste and the Minister for Finance repeatedly stated that these increases were due to international financial circumstances over which the Government had no control. Many families in modest homes were unable to meet their mortgage repayments. Debts started to accumulate and accounts which were normally paid started to fall into arrears. Many families, both then and now, find themselves trapped because of the debts incurred at that time. The fall in interest rates has been a great help to many of these families, but others are still struggling to survive.
The families either needed encouragement or to be left alone. Instead, the Government reduced their VHI allowances, cut their mortgage interest relief and extended and widened the scope of the residential property tax. Surely the Minister will agree that this tax is anti-family and definitely anti-home. Effectively, it is a home owners' tax and the Government would be wise to abolish it. It will cause enormous problems and will impact on many homes in the long term. It is currently causing considerable worry to many householders.
The Department of the Environment needs to re-examine its policies. While it is of major importance to have top class national primary and secondary roads, it is a shame to see what is happening to our county roads. The potholes in County Cavan are now known nationally. Yesterday, people from County Longford felt compelled to come to Dublin city to highlight to problems of the roads in their county. They want a share of the £15 million allocated in this year's budget.
The largely rural Laois-Offaly constituency has similar problems with potholes and bad roads. In County Offaly, many of our roads are in a deplorable condition. Life has become a hardship for many families living on such roads. Their cars are damaged, their tyres are being punctured and children going to school are regularly drenched with water by passing cars. We will also be looking for part of this additional £15 million. The roads in County Laois are in a similarly bad condition. With the proceeds from the tax amnesty, there was an opportunity in this budget to do something substantial about these roads. Unfortunately, nothing has been done. The Minister will have to seriously examine the whole rural road structure. If he does not, it will collapse and that will have devastating effects on rural areas.
Today the Taoiseach has gone to the west for the launch of the European study commissioned by the Catholic bishops of Connacht and County Donegal. This study predicts a population decline of 110,000 people or 20 per cent in this region between the years 1991-2001. Not since the time of the famine has there been such a decline in population. This decline should cause alarm to all of us. The Catholic bishops are to be commended for their efforts in getting the EU to sponsor this study. Rural depopulation is a feature of most countries.
There is a decline in the number of people joining the clergy and that must be halted also.
The Government will have to deal with it in the Estimates. Unless there is a major effort to tackle rural depopulation, we will all live to regret it.
In his speech the Minister outlined the budget increases. Many of the measures are harmful, especially residential property tax.
I welcome the Minister for Finance to the House. I pay tribute to him for the balanced way in which he has managed the country's finances since 1987. There has been tight control and management of the affairs of Government. The country's finances have been put on a solid basis and this will enable the economy to develop further. There are indications across the world that we are nearing the end of the international recession, which has affected every economy in recent years. It is important that the country's finances are in order if we are to gain the maximum benefit from any international economic recovery that takes place. The economy can respond quickly to changes in the international scene and this has been indicated before.
We must continue along the lines the Minister has followed — tight management of the country's finances, making sure that we get value for money and ensuring that we do not further depress the economy by having too rigid a control on expenditure. This is why I welcome the recent trend in the Minister's thinking in relation to giving incentives and opening up the possibility for further expansion of the economy through large scale investment in a range of important areas. With the aid of Structural Funds and the massive finances which have been devoted to economic development by the Government, we should see a dramatic change in the economy in the coming years and a dramatic improvement in the unemployment figures. While there are signs that the economy is steadying up and that the rapid increase in unemployment is beginning to slow down, we must be vigilant. We must ensure that we avail of the upturn in economic fortune so that we can provide more employment opportunities, especially in areas where there is still a dramatic fall off in employment. I refer in particular to agriculture.
It is significant that while we are discussing this Act, an important report about developing the west is being launched in Castlebar. One of the major factors that has inhibited development in the west is the huge number of people leaving agriculture to find employment opportunities elsewhere. There may be three or four in a family and one person stays to manage the family farm while the others must seek alternative employment. Unfortunately, alternative employment has not been provided in agri-related activities which can sustain employment in agriculture, if not in direct farming as was the practice. There is a necessity to utilise the reformed Common Agricultural Policy funding, which will now be made by way of direct payments to farmers, and every other assistance to endeavour to create a climate whereby employment can be created in the areas related to agriculture. This will, in some way, halt the decline in the number of people engaged in agriculture.
This must be tackled in a number of ways. I presume that the western development group will suggest the establishment of a western development authority. I come from the mid-west region and we have had some experience of that. Since 1959 the Shannon Free Airport Development Company has had a commitment to encourage and promote investment and development in the mid-west region. The success of that region is an example of what can be done. SFADCo has worked successfully since its establishment in endeavouring to find ways in which economic activity can be generated and employment created in large industry and in medium to small term industry, in agri-tourism and related areas.
I appeal for continuing financial support by the Department of Finance for agri-tourism projects. The fund which was operated in the mid-west by SFADCo ran out some time ago. Substantial funding is required to deal with the backlog of valuable projects, which are in the pipeline and awaiting Government support, These will generate employment, create more activity and provide much needed leisure and recreation facilities. If it is suggested today that a western development authority be established along the lines of SFADCo, I will support it.
I welcome the recent announcement by the Minister for the Environment of the establishment of the regional authorities. The old RDOs were abolished and I agreed with that because they were talking shops and did not have the power or authority to undertake the work that needed to be done. I hope that the new regional authorities can have organisations similar to SFADCo attached to them which will have the statutory power, responsibility and finance to undertake the work that needs to be done in area-based initiatives. I strongly suggest to the Minister for Finance that careful consideration should be given to setting up operations similar to SFADCo which would be linked to each of the new regional authorities. This would give them a democratic voice also. It would do many other things, such as ensuring that industry is developed.
The tendency in recent times to fragment regional development in a number of areas is detrimental. In the mid-west region, with SFADCo, the Leader programme, the county enterprise partnership boards and the county development initiatives, there is a multiplicity of agencies and personnel involved. There should be one development authority in each area, linked to the new regional authorities, with overall responsibility for the promotion and development of industry, whether it is big or small, within that region. It is a waste of public money and human resources to have a multiplicity of agencies with the same objectives and operating their own system of guidelines, with the need for excessive consultation. It is stifling opportunities for development and halting the prospect of the type of drive which is needed in this area. In an overall sense it is detrimental to the thrust of development which could come from one agency in each of the regions, with a link up to the new authority.
In his recent budget, the Minister made positive announcements in relation to small industry. Perhaps the biggest inhibiting factors in getting small industry off the ground has been the lack of finance at a reasonable cost and the lack of marketing personnel to ensure that the product is marketed and sold in the fiercely competitive international marketing arena.
The VAT changes are welcome and I compliment the Minister for introducing such changes for the smaller companies, including the adjustments in forms and form filling, the red tape and, above all, the availability of £100 million, organised through the banks and the ICC, to enable small industries to engage in new ventures and avail of every opportunity.
The Minister indicated that the new low interest loan would not be available for people who wished to restructure existing borrowings and existing loans. He should allow some latitude, especially for companies which are struggling to survive and have high borrowings, some of which may have been negotiated a year to three years ago. The pressures will now be coming on those companies especially when some of their competitors will be able to avail of loans at a lower interest rate. This could put some businesses out of operation and may not have the effect that the Minister desires.
If funding is available at a rate of 6.8 per cent for an industry, and one of its local competitors had borrowed at 12 or 14 per cent and is perhaps paying a penalty rate at present having exceeded its overdraft requirements, and if such a company wished to restructure, then the availability of the loan at the lower interest rate should not be confined only to the new loan arrangements.
It is important that the development of small industry, marketing and promotion be given more attention than in the past. Many small industries endeavouring to survive at present, and developing their new businesses in particular, cannot afford the services of professional accountants, management and marketing personnel. Some of the resources devoted at present to the enterprise boards, the development agencies and Forbairt should be utilised to hire and recruit skilled personnel in the management and marketing areas who would be made available to industry in local areas.
Such personnel could make a major impact on employment and the creation of new opportunities. In this respect I suggest that the Shannon Free Airport Development Company, which operates the tourism and the development of industry in our region, should have a budget which would enable it to hire skilled personnel. Such personnel are available, many of them are working overseas because of the lack of opportunities at home, but they would be more than willing to come home and take part in a marketing drive.
The Government should help to finance the acquisition of these personnel. I appeal to the Minister to assist in recruiting and organising management personnel, even on a temporary basis through the universities. The University of Limerick is producing excellent people in the marketing area, many of them unemployed at present and some of them must seek employment opportunities abroad. All of them wish to work at home and many of the small companies which could avail of their services full time cannot do so. Some body, such as a development agency, should have responsibility to organise this. I believe it is within the competence of the training agencies, the development companies, the Government and, ultimately, the Minister to find ways in which that can be done.
Western development, a topic that is much on the agenda today, has been hampered by lack of investment. The additional money being invested at present by the Minister in the county and regional roads is welcome. I pay a special compliment to the Minister for providing an additional £15 million to the existing regional county road network to enable work to be undertaken which will help to halt the decline of the county roads.
The county roads are in a terrible state, and the Minister is aware of this. Endeavouring to develop a tourism product at the Cliffs of Moher when one cannot even drive to them is pointless, as are attempts to develop the Loop Head peninsula. Some of the most attractive and scenic areas in Europe are inaccessible because of the unfortunate state of the county road system. This must be tackled as a matter of urgency.
This money is welcome, but I would like to see the amount increased substantially because we are all aware that the condition of the county roads is hampering tourism development in the west. It is inhibiting people from visiting the most scenic parts of Ireland and putting back development by many years. The Minster's news is welcome and I encourage him to continue on this basis, and, if necessary, to endeavour, through the EU, to seek additional resources from the Structural Funds to enable further investment to be made on our county roads.
The Minister has responded to the representations made from the Society of the Irish Motor Industry. The initiatives the Minister has taken in the budget in helping the motor industry are welcome and should be continued. The motor industry has been complaining for many years at the unfair treatment it has been receiving and I urge the Minister to continue along the lines he has adopted in the budget.
The capital allowances for tourism projects is a welcome development. Much of the development of tourism in the west at present is hampered by the lack of important tourism infrastructural developments. The provision of more amenities, especially all weather tourism facilities in the west, is long overdue. There is a growing need, especially in the resort areas, for substantial investment in all weather tourism and leisure facilities. The tourism industry in Kilkee, Lahinch, Ballybunion, Salthill, etc., resort areas that have been the backbone of the tourism industry for years, is going through a very difficult period. A result of this lack of investment is that there has been a huge drop in the number of tourists coming to the area. The weather conditions in the west must also be considered. Those tourists who do come do not always enjoy their holidays because of the lack of all weather facilities. Capital allowances for tourism projects should be provided for these areas and the Minister is moving in the right direction.
However, he could go further in the area of urban renewal by providing incentives in the tourism areas similar to the measures he has provided in the dockland area in Dublin. The Minister has been responsible for many of the initiatives in the dockland area where major developments have taken place. There are dockland areas in many other parts of this country which also require investment. That investment would pay off in enhanced tourism facilities and economic prosperity in those regions. For example, in the areas adjacent to the new marina development at Kilrush some of the old industries have ceased to operate — such as flour milling, trading, etc.
These areas can be easily identified; part of the old dockland area of Limerick city has been designated under the urban renewal scheme. Many small towns are dependent on the tourism industry for their survival, including places like Dingle, Cappagh, Kilrush, Liscannor and Doolin. If tax concessions, similar to those available under the urban renewal scheme, were available in designated areas, especially in the rundown parts of these towns, it would enhance them and provide investment opportunities for local people who are investing elsewhere.
I refer to the unemployment problem and the necessity to deal with it effectively. Many people suggest the unemployment problem could solved by financial measures, tax or welfare arrangements, etc. I believe it is necessary to provide long term sustainable employment opportunities for young people leaving schools and colleges. Our education system, our financial affairs and the way we handle industry are interlinked. In order to make progress in regard to employment for young professionals, in particular, I ask the Minister to look at new schemes which would provide opportunities for graduates who are forced to seek employment abroad or remain unemployed.
It should be possible for the Department of Finance to compile a list of unemployed professionals and to find ways in which they may be integrated into the various schemes being organised by the Minister. Development agencies could draw up such a list. The Minister for Social Welfare, Deputy Woods, does not have the data to break down the 300,000 unemployed into categories indicating whether they are professionals, university graduates, carpenters, labours, economists or politicians. How can one plan the future of any economy, if one does not know the basic facts about the unemployment figures? The Department of Social Welfare and the Department of Finance should get together to identify the 300,000 unemployed so the economy can be planned on the basis of this knowledge. People could then be directed to employment in small or large industries, agri-tourism, tourism or other sectors of the economy.
The Minister's speech indicated that under his control and management, we may be sure there is a sound man at the helm in the Department of Finance. He is managing the country's finances properly. Although the Minister is not entirely responsible for the archaic systems which he may be dealing with in the Department of Finance, they should be modernised. Civil servants should be given training to enable bureaucracy to be broken down in order to stop the duplication and multiplicity of agencies and organisations which are confusing people in regard to where to go for grants, etc. The new regional authorities should be linked to one regional authority for each area with the necessary power and finance to do what is necessary. If this is done over a number of years, major inroads can be made into the unemployment figure. A vibrant economy could be created with many job opportunities and exciting possibilities for people who are patiently waiting for this to happen in 1994.
I welcome the Minister to the House and I compliment him and the Government on their performance in putting the economy in a good position in 1993. Many problems were encountered in 1993, including currency related problems, and stumbling blocks were put in our way. Problems such as VAT at the point of entry, DIRT tax, Aer Lingus and public service pay arrears had to be faced. However, we got over these problems and 1993 ended well.
Jobs must continue to be a top priority for the Government and this House. Unemployment and emigration continue to be the scourge of young people at this time. The creation of jobs is of paramount importance if the unacceptable figure on the live register is to be reduced. Many young unemployed people have never seen their parents work.
I welcome the Minister's statement about the growth of industrial exports. They must continue to grow. Industry is especially needed in peripheral areas. I have seen the decline in agriculture as a result of set aside, quotas, etc. Many small uneconomic holdings have been sold and houses where families were reared are now derelict. Land is often bought by foreigners or hippies. Industrial jobs must be created in peripheral areas and industrial exports must maintain these jobs throughout the year. It is important to ensure that money spent by the State is used for production.
If the unemployment assistance paid to person living in a small town in a peripheral area was diverted to production — to develop tourism, fishing or to pay subsidies for sheep or cattle — in order to increase employment, create products and increase exports, it would be a job well done. Over the years politicians and economists have said that if moneys paid in social welfare could be diverted to productive areas, it would worth looking at.
We must monitor imports to the EU from outside. We produce goods which we cannot sell because we are competing with imports. A factory in my town halved its workforce because the goods it produced were being imported from Thailand. These goods were being sold to the same places which the Dunmanway plant supplied. Despite the GATT and other trade agreements, if jobs are being lost in that way, there is something wrong with the EU. We must look after our own interests and achieve the full benefits of EU membership.
Many people in receipt of social welfare payments, including pensions, have said to me that, as we experience economic growth over the years, we should consider bringing forward the payment of social welfare benefits from July to the beginning of the tax year. Over a period of ten years they could be brought forward by a few weeks each year. There is a long period between the budget and the beginning of the tax year on the one hand and the end of July on the other, when some receive their payments. I refer in particular to increases in pensions. It would be worthwhile considering this as economic growth continues.
I welcome the talks on a successor to the Programme for Economic and Social Progress because a wage agreement is of paramount importance to keep matters on an even keel. We must bear in mind that while inflation is low, we do not know what set of circumstances can be triggered off internationally so we must take care in the future. In the event of currency instability, we need protection for small exporters and businesses. I welcome that the ICC will have a fixed rate interest for such businesses. This is necessary because many small businesses were in serious financial difficulty during the last currency crisis. Sometimes bigger companies can cope better with rough times than smaller ones, which can be affected immediately. We do not want to see small companies fail because they employ people in small communities and are of vital economic importance.
I welcome this year's budget. It was very caring, but we have heard criticism of certain elements of it. As I said last year, one cannot discuss items of the budget in isolation. It is a unit. Those who suggest some measures and the abolition of others should recommend alternative ways to raise the money to compensate for the loss their proposals entail. Will they suggest the reimposition of the 1 per cent levy to compensate for withdrawing the proposed increases in the residential property tax, the reimposition of the employment and health levies on those earning less than £9,000 or reducing the moneys available for relieving hospital waiting lists and the building of schools? We must consider the budget in its entirety.
I am glad that Department of Finance officials, in examples they provided to "The Gay Byrne Show" on radio, showed that people will benefit from the budget. The great bulk of taxpayers have been given substantial relief. The low paid will benefit greatly from the total abolition of the 1 per cent levy, the abolition of the 1 per cent employment levy and the 1.25 per cent health levy for those earning less than £9,000 per year. This amounts to a considerable pay increase of 3.25 per cent. In addition, the budget provides for income tax relief and the expansion of the tax bands.
Social welfare recipients will receive substantial increases. Places have been provided for the long term unemployed on the new community employment programme. One cannot tamper with one item in the budget without interfering with others which are of great benefit.
I welcome the Minister's statement on the National Development Plan. This will lead to the creation of employment and the fostering of sustainable economic growth which will result in lasting jobs. Investment is needed in tourism, services, agriculture and fishing and I hope this will be done for the benefit of people engaged in these sectors. Our sea is a huge area of untapped resources, whose development can lead to the creation of jobs on a seasonal and on a permanent basis. It is often said that a person working at sea creates jobs on land in processing. We need to examine all these issues to keep unemployment from rising any further or, better still, to reduce unemployment and the numbers on the live register. I welcome the Minister and thank him.
I welcome the opportunity to speak on this Bill. I pay a special tribute to, and congratulate, the Minister on his work. Our country was never in a better position to advance than it is at the moment. I have no doubt we are the envy of the European Union. I see a bright future ahead. All the indicators are correct, thanks to the magnificent work of the Minister for Finance. The most important person in any business is the accountant, who controls the purse strings. As I used to say when I worked in sales, any fool can give goods away but what is needed is to sell them and receive money. If the money does not come in, the business cannot continue. The Minister has succeeded in raising money, keeping the country going, reducing inflation and getting our indicators right.
Nevertheless, our employment performance is disappointing. We do not have the volume of employment we should have. With so many jobs lost and factories closed down, the Minister should establish a group to examine in detail why industries are failing. What are we lacking? There are millions of people living in the EU. I accept there is a recession in the EU at present. Our industries are, by and large, manufacturing ones. Have we enough sales people making efforts to promote our businesses? While there is a greater emphasis on training people to sell, we need more people like Alfert Tac. He wrote books 40 years ago on the art of salesmanship. This is the one thing I see lacking today.
I spoke to the Minister for Tourism and Trade, Deputy McCreevy, yesterday about small industries. We should pay tribute to Gay Byrne and "The Late Late Show". He has shown us what small industries can achieve. It is the only programme which has given a national platform to entrepreneurship and progressive people, of whom there are many in this country. Many of them can manufacture high quality products but cannot afford the necessary sales personnel. An increase in sales of 0.001 per cent increase would probably be enough to create many jobs. I know that we have an Bord Tráchtála and so on but I do not think they are doing enough.
When I could not get any other job I started selling milk and, later, farm equipment. If I did not sell I got no money because I worked solely on commission. By the time I could get a week's wages I would not take it because I was making more on commission. As a result of that experience I am more aware that selling is the whole secret.
The Senator is improving with age.
We should have an organisation which would go to small units employing two or three people and offer to sell their products on the Continent.
I started in business in 1964 but I could not do it today because of the amount of rules and regulations. I decided in 1964 to build a garage and filling station. I found the site for which I paid £100 and I had a builder in the following Monday morning. Today, I would need to get planning permission and commission an environmental impact study which I could not afford. We must do something in this regard to put the clock back a little and make it easier for people to get into business.
I proposed for years at Sligo County Council meetings that we should get a small IDA advance factory for Grange, but no one would listen to me as they thought it would not be economic. However, I was so obsessed and convinced by the idea that I built a shed myself. Today, in my village — and I keep repeating this because I am proud of it — there are six little factories employing over 200 people. A couple of months ago the Minister, Deputy McCreevy, came down to officially open one of them which has expanded beyond all bounds and is now an international firm, one of the biggest in the country. It all started from building what I would describe as a shed. There is a man there who makes kitchen units. He is one of the best in the country and a member of the National Furniture Makers Association. This all sprung from small beginnings.
I ask the Minister to consider giving somebody who wants to start a small business the first year tax free because the first year is the hardest. They will still have to do their books and accounts because it is important for them to run their business properly. Someone said to me that when one goes into business one is on honeymoon for the first two years but the third year is make or break, which is true. If one succeeds in the third year, by and large one will continue to succeed. I would like to see something done for such people, as one who promoted and encouraged many of them. All the people who have created jobs in my little village are graduates of the local vocational school. They are all locals except for one man who is from Longford.
We are starting in the right direction now but for too long we attacked the self employed. We accused entrepreneurs of being speculators who raked everything off and paid nothing back. However, these are the people who create more work.
There are many fine unemployed people with years of experience which we are not harnessing properly. There should be a full and comprehensive survey of all our unemployed. People who are aged over 50 years may be past working but they have a wealth of experience which could help people. We should establish in each region the predominant trades and professions of the unemployed and how we could use them to create industry. I was told that the vocational education committee in Wexford did a pilot scheme in that regard but I never followed it up and I do not know what the result was. There should be a register for people starting businesses giving a breakdown of the trades and qualifications of the unemployed. Their experience and ability could be then channelled into productive work.
When I was collecting rates in 1954 times were hard. I would go to houses where people did not want to meet me, although my total warrant was only £7,000 and rates were as low as 30 shillings. A man who paid £10 was a big rate payer in my area but people did not have that money.
The first minor relief schemes were introduced in the early 1960s and people got two or three months work. They got full wages and their cards stamped. In those days 26 stamps entitled people to unemployment benefit over the winter, which was double dole. People made a great effort to get work because it would mean they would get more for the winter. They then cleaned up their land and did up their houses. Before that they had been demoralised and fed up because they had no interest. However, once they got some money and saw other people doing things, their morale was boosted and they started to get out and work and improved their homes and farmyards. We need something which will lift people out of the doldrums and show them that there is a life out there and that they would be better off working. It is essential that we provide everybody, particularly our young people, with incentives.
I once asked someone why so many of the people who went to England did very well while others did badly. He said that if they got a job soon after arriving in England they never looked back but, if they did not get work until three to four weeks later, they went to the pubs or stood around looking for a day's work here and there. In other words, they got into the wrong environment and failed. The same is true in every country. People have to start out on the right foot and get into the correct environment if they are to make it, and that is why the new community schemes are great.
The Minister may remember a conversation Deputy Mattie Brennan and I had with him four or five years ago. We believed then, and I still believe, that social welfare money and FÁS money should be put into a fund and the county councils, health boards and corporations asked to create jobs to get people working. Young people who have just left school sign on, and then go home or congregate in the street afterwards but they have nothing to do for the day. If they had to go to an office or to sweep a floor, they would at least have a reason to get up in the morning. They would be part of a workforce and they would not have time on their hands and, as a consequence, we would have fewer social problems and less vandalism.
The community scheme the Minister is introducing will help. The Conference of Major Religious Superiors recently suggested something similar. However, we need to go further. The Minister might consider giving people a full week's work and paying full PRSI or, alternatively, three days work and pay their stamps.
We should re-examine the opportunities presented by smaller employers. In every urban and rural area there are small contractors who employ one or two people to do repairs, roof houses, build sheds, etc. People are often employed in the country when households are getting ready for the stations. The present tax system makes this type of casual employment more difficult and many have ceased doing it. The businesses were too small to employ the necessary personnel because, whether one is employing two people or 30 people, the same amount of work is involved. Small industries are not able to carry those overheads and for that reason many of them went out of business.
The small industries section has great potential for job creation. I am pleased the Minister introduced the small business expansion loans. This will encourage industries to expand by offering finance at an attractive rate. However, there is one group the Minister might consider including in this scheme. One of the best employers in my village is a meat factory. The owner had to upgrade his factory to comply with EC standards. If he was exporting he would get FEOGA grants but because he produces for the home market he gets nothing.
Meat factories are big employers. This is a labour intensive industry. The owner of the factory I mentioned will not qualify for a small business expansion loan because they are aimed at manufacturing, international trade services and tourism; tourism has not been clearly defined as yet. The Minister should consider this industry because, although small, it is labour intensive. The meat factory in my area supplies many supermarkets, employs up to 20 people and has seven or eight vans on the road. That is a large amount of work in a little village with a population of 50, but as I said, unfortunately the owner does not qualify for any funding.
The new abattoir legislation prohibits butchers from killing cattle themselves; This means the killing is done by enterprises like the one I mentioned. I ask the Minister to look at those labour intensive industries. While they may not be exporting or manufacturing, they are still creating important jobs. Every job we create keeps a family in an area. If one member of the family is employed, the children will go to school in the area and use the local services. The industries in my village have kept many families in an area. I ask the Minister to examine this type of industry in the context of the small business expansion loans. I know he will do it because his heart is in the right place and he is interested in creating more jobs.
I welcome the Minister to the House and congratulate him on a farseeing budget. As he said, it continues from the programmes that were put in place by previous budgets. This budget is a budget for jobs and employment and many speakers mentioned the measures dealing with those issues. More importantly, however, it is a budget which focuses on social concerns.
The most positive measures introduced by the Minister relate to the use of money that came into the Exchequer from the tax amnesty. That money has been used to clear the debts of the health boards and reduce hospital waiting lists. The importance of this simple point may be overlooked but each of us knows, through making representations on behalf of constituents, the problems faced by health boards due to financial difficulties. This financial difficulty has, in turn, led to problems in the provision of services and resulted in long waiting lists. This is the most positive use of funding in the budget.
I congratulate the Minister on increasing the social welfare allowances. I also welcome the increase in the carer's allowance and the relaxation of the guidelines for those who qualify for that allowance because it has important socio-economic results. It is not a matter which has received much public attention but there are currently 60,000 people being cared for by relatives in their homes. I have been very vocal in many fora trying to highlight the importance of this issue and the lack of support given to these people. They are caring for their own relatives, thereby reducing the burden that would otherwise be placed on the State.
Caring for a relative in the family home also helps to maintain the proper structure of the family unit. It is very important, in the UN year of the family, that the family is given every support possible. We could learn an important lesson from the way the Chinese look after their families. The great-grandparents, the grandparents, the parents and the children are all an integral part of the family, each as important as the other, and when the parents or grandparents get old they are not put into a home or just forgotten about. Younger children are looked after. It is an integrated unit and if we concentrated more on that in Ireland and went back to basic values we would not encounter such a high level of socio-economic problems.
I know through my work with the Soroptimists Society of Ireland, who have taken the carer's issue on board, that we have to focus our support in future. It is essential to the quality of life of the person being cared for that they are not moved out of their home environment. The relaxation of the guidelines will help to increase the availability of the carer's allowance.
We must care for all of our citizens equally. While there are many deserving causes, such as the unemployed, those who suffer from disabilities and lone parents, we cannot forget the most vulnerable in our society, the young and the old. This budget goes a long way towards catering for those two sectors of our society. The increase in child benefit, which will be a huge help to families, and the carer's allowance will help to alleviate the financial difficulties that some families have fallen into. The increase in the family income supplement puts another support in place for the family, recognised as the basic social unit in our Constitution. Although we may not be under a constitutional obligation to protect the family, we are definitely under a moral obligation to do so, and I congratulate the Minister on the move he is making to protect the family unit.
Another area which comes up for special mention is the increase of £2.5 million in grants to voluntary bodies, on top of the £4.73 million allowed in the Estimates. A total of £7.23 million in total has been allocated to voluntary bodies. Some of this money will go to groups providing respite care for carers, to groups who assist the unemployed, lone parents and those most vulnerable in our society. It is a very welcome measure.
In regard to the economic and job creating potential of this budget, for many years the country had such huge budgetary problems to overcome that little room was available for expansion into new programmes to help people in training, in education and to get back into employment. We have been very fortunate that since 1987, when Mr. MacSharry was Minister for Finance, strict budgetary controls were in place. Fortunately, each successive Minister for Finance has been able to maintain those controls, and because of that we are able to reap the benefits in a small way in this budget. I hope in the next few budgets greater benefits will accrue.
I wish to mention very briefly the reforms put in place in this budget, such as the widening of the tax bands, the incentives given to enterprise to create jobs and the money put towards the creation of a modern infrastructure which will assist employers to employ more people. The most important area within the economic area which is at last being targeted is that of small enterprises. I congratulate the Minister on these measures. I saw recently that in the United States, the biggest capitalist economy of the world, 68 per cent of all businesses are small businesses. By small I mean a business which employs fewer than 50 people. Therefore 68 per cent of all exports and internally marketed products within the United States comes from small business.
In the 1960s the five year plans of T.K. Whittaker and Seán Lemass targeted the introduction of multinational industry into Ireland and advocated benefits in tax and grants to attract those companies. That has remained the target since the 1960s. Huge amounts of money have been given to the IDA, the majority of which has provided very good employment, but unfortunately it has provided employment in multinational industry to the detriment of small business.
The capital seed programme introduced by the Minister in his 1993 budget gave an incentive to small businesses whereby they could offset income tax that they had paid in the previous five years and use that as a capital fund towards the development of a new business. This budget goes further by reducing the employer's PRSI contributions for the low paid employee and giving other supports, more specifically to the small and medium sized employer.
I was speaking at a conference in west Cork two weeks ago and a member of the trade union movement surprised me greatly when he said there are 100,000 small businesses in Ireland. He said that if each of those small businesses could be encouraged to employ one person, we would lessen the level of unemployment by one third. It is as simple as that. By giving a small incentive to these businesses they will be able to employ one extra person which could create employment for 100,000 people. This would increase revenue coming into the Exchequer because those people would pay taxes and would be taken off the unemployment register.
Most people who are unemployed want to have a meaningful role to play in society. Unfortunately through the years the focus has been on keeping people out of employment, on preventing them from going into employment. The incentives have been there to stop people from working. We have over many budgets encouraged people to be idle, not to seek work, whereas now by a harmonisation of the welfare and the tax codes, the Minister is encouraging people, giving them the incentive to seek work so that they will not be at a financial disadvantage.
Education and training for work is an area which was previously targeted in a haphazard way, but it is essential to give people the necessary experience and skills for the marketplace. The education system in Ireland has served us extremely well, but it must be more radical in its outlook and it must focus the attention of students on an enterprise culture. The easiest way to solve our problems is to train and educate more employers than employees. By doing this, we give people the educational and training skills they need and this would go a long way towards solving many of our major problems in employment. We must target the incentives at a particular group of people and this process starts at second level education. This would create an enterprise culture where good business ideas would be nurtured and enhanced, rather than being stifled as has happened in the past.
Business people and those who have good business ideas often criticise the hurdles they must overcome when they are trying to set up a business. The biggest hurdle is not the business idea, which is relatively simple for the right person, or finance, which can always be arranged, but the fact that when a person decides to set up a new business seven inspectors arrive from different Departments and bodies with various forms which need to be completed. People are tied up because they must complete registration forms and go through the bureaucratic red tape. This is a disincentive to new ideas and businesses starting off.
I applaud the Minister for the initiative he showed in this budget by introducing a single tax registration form for businesses which allows them to register for all taxes. It also simplifies the tax clearance procedure for those people in the private sector who are looking for public contracts. A good friend of mine who is currently looking for public sector work had to send in seven different tax clearance forms in order, to get his C2 certificate. That is ridiculous.
Other incentives may have been mentioned already, but I would like to mention two particular incentives because they are relevant to the growth in tourism, not only in financial terms, but also in relation to employment and this resource has been underdeveloped for many years. The capital allowances and write-off periods for hotel buildings have been reduced from ten to seven years. Full VAT relief has been allowed for luxury touring coaches and this will encourage the private sector to invest money in the future and to put its resources behind expanding and providing a better service for the tourist.
The tourism market has become more competitive. Previously, we only had to compete in European markets in trying to attract tourists to Ireland, but we must now target American, Japanese and Australian tourists. The world has become so small that we are now a global village and access to the market is relatively easy. We can only maintain and increase the level of tourism if we provide up to date services. Not only must we provide proper flights and airline services to Ireland, maintain the regional airports so that they can cater for the overflow from the other airports and improve our roads infrastructure, but we must also provide the necessary tools for tourism such as proper hotel and bed and breakfast accommodation, and touring facilities such as buses and trains. I congratulate the Minister for choosing this area which needs an incentive to encourage more investment.
The urban renewal scheme is one of the greatest ideas in any budget over the past few years and the money which has been invested has revitalised many areas in Ireland. A large amount of money has been invested in the urban renewal area in Cork city and it has provided employment through the provision of new offices and new businesses in the city centre. It is difficult to get good residential accommodation in Cork city. I welcome any incentive in this area because when the construction industry is doing well every other sector of the economy benefits. I appeal to the Minister to extend the urban renewal scheme to Bandon in the future.
Rural depopulation and decline has been a problem in recent years. It is difficult to know what area one should focus on when trying to maintain people in rural Ireland. I am not only talking about agriculture, but about the overall picture. Last night I gave a lecture in Trinity College which was attended by Mr. Ray MacSharry, the former EC Commissioner and Minister for Finance. He stated that since 1975 40 million people have left rural Europe. He also said it was unfortunate that the emphasis of European programmes had only been targeting rural communities in the past four or five years in order to help them maintain the people in their own areas. The rural depopulation and decline in west Cork has had a socio-economic impact on the area. National schools, shops and pubs have closed and there is now only one family living in a townland where there used to be 20. This has a great effect on the area, not only for this generation, but for future generations.
Many programmes were initiated by Mr. Ray MacSharry when he was EC Commissioner, but I wish to comment on the Leader programme in particular. The Leader programme targets local community groups. It gives them access to financial resources and they can use the materials which are locally available for tourism or agriculture. They can use these in the best possible way to keep employment and to encourage people to stay on the land and in rural Ireland. I welcome the Minister's assistance in the agriculture, food and research area which is growing in Ireland.
I have made several representations to the Minister and I thank him for the reform of the probate tax. This tax is necessary, but I welcome the flexibility he has given to the system.
I welcome the Minister to the House. When Senator Crowley mentioned how great this budget was for the family, I could not help but wonder. I will go straight to one of the budget's biggest controversies, the property tax. If anything was designed to help split up families it certainly has to be the property tax because, when the joint income of everyone working in a household is taken into consideration, it leaves many such households liable for property tax. We believe that 40 per cent of households in Dublin, apart from those in rural Ireland, will be affected. Younger people, who are now living at home with their parents, will begin moving out because their income will be taken into consideration in calculating the tax. That measure did nothing but disrupt families. I hope there will be a review of this proposal, in the same way as last year's probate tax has been reviewed.
The probate tax should never have been introduced. It was similar to death duties, which were abolished by the Government of 1973-77. We now have a Government making decisions to introduce schemes that have to be reversed in the following budget because they were wrong in the first place. So it will be with the property tax.
I hope that before he introduces the Finance Bill, the Minister will consider changes that need to be made, in discussion with his colleagues in Government. A ludicrous situation is developing where £35 million is being made available for 40,000 people, 25 per cent of whom are long term unemployed. There is nothing wrong with that. However, I have gone around my own county in the past two weeks to visit all the engineering works. The engineers in charge inform me that 14 years ago, 50 local government road workers — or outdoor staff as they are now called — were employed in each of the six or seven areas. Today in each of those areas there are only between 15 and 20 such workers. There have been no replacements, yet a considerable number of jobs have been created in the indoor staff section. The roads remain in a deplorable condition.
To explain their inadequacy in not providing sufficient funds to repair local roads, a number of Ministers are blaming the messenger who carries the message. The Minister for the Environment, Deputy Michael Smith, has done this in the recent past by criticising local authorities for filling potholes, as he said, three times a year. Is it any wonder they have to fill the potholes three times year when they are not being given sufficient funds to tar the roads?
Many mistakes were made in last week's budget, and one of them was the provision of only £15 million out of the tax amnesty for county roads. The Minister and the Government had an opportunity to do a once-off job, and make a serious commitment to people living in rural Ireland, by giving £100 million from the tax amnesty to carry out badly needed repairs to county and class 3 roads. A monumental mistake has been made.
We recently saw details of what went on during the Beef Tribunal, including all the money that was paid to ensure that Ministers protected themselves from the consequences of their own actions. The Minister for Agriculture is using a public relations system now, blaming the farmers for their inability to fill out forms for subsidies they are entitled to. That, in all due respects, is——
His predecessor never did that.
I was just going to say it.
I thought you might.
Senator O'Kennedy, in his time, never blamed the farmers. The applications were made, the cards were sent in and returned six months later, often without being checked. I am sure, a Leas-Chathaoirligh, you are aware that applicants often get a letter asking them to forward cards to the office, despite the fact that the cards have been in the office for three months and have been returned without being checked. The Ministers are deciding on a new way of dealing with the general public because they have this dangerous overall majority of 38 or 39 seats and they are treating everybody in rural Ireland, and in the country generally, with contempt.
I am more than surprised at the budget. After all the pressure and representations that have been made over the years, help has not been given to people on higher wages who have children in third level education. All the budget does for those with incomes over £25,000 a year, whose houses are worth over £75,000 and who have a son or daughter in third level education, is oblige them to pay a little bit more because, according to the Government, they are not paying enough. Many people have made representations because they have been affected severely in recent years and have had to take out second mortgages to help educate their children. The interest relief is being reduced for the majority and will be phased out over a period of a few years.
I wonder where the Labour Party was when this budget was being put together. It reminds me of late 1981 or 1982 when a budget was being introduced and the then Minister for Finance was solely blamed for the proposed introduction of VAT on shoes. Four Labour Ministers were then in Government but they must not have been there when this proposal was brought to fruition and introduced in the Dáil. They are doing the very same now, running away, and there are six of them on this occasion. I am wondering if the Minister and the Tánaiste were missing on this occasion or were they on one of their frequent junkets around Europe or further afield? It looks as if they were. I caution the Minister, who will be dealing with his friends for another few years until the electorate gets an opportunity to say differently, to watch out and make sure that all of them are there the next time he frames a budget so they cannot claim they were pushed into a comer, as the elegant MEP, Niall Andrews, said recently as he set out on his merry way to be re-elected to Europe. I am sure we are going to have more people saying it was not their fault or their policy but other people's policy.
By last weekend everybody had budget blues and knew it was not what is was supposed to be. The bottom line is that £667 million more will be collected in taxation in 1994 than in 1993. They are the facts of the budget.
There are incentives to help tourism and other sectors of the community. However, the old reliables were hit in the budget: petrol, which had decreased in price would be an asset to the tourism industry if its cost was lower, the price of beer and cigarettes was increased as was the price of other items. These items are in demand by tourists. They may not use all the items but the majority of tourists must be able to travel around. Since these costs increase the cost of holidays, the budget did not do much to help the tourism sector.
Another aspect of the budget about which the Minister claimed praise was the £100 million from the tax amnesty which was allocated to help bail out the health boards. Since 1986-87 the health boards have not received sufficient funds to run their affairs and look after the sick. The small suppliers helped to keep the health boards going and were owed about £50 million by the health boards. Some health boards kept their affairs in reasonably good order and did not overspend. However, those that did not do so have been bailed out so that, in a few years time, they can do the same again and another magic wand or tax amnesty will be made available to pay their debts.
Many comments have been made about the extra £10 million allocated for hospital waiting lists. In the last election campaign everybody supported the policy that money should be made available to deal with waiting lists. However, I object to what appears to be a new deal being made behind closed doors. A total of £50 million of national lottery funds last year was spent on health. I do not accept that national lottery moneys should be used to provide buildings and facilities. National lottery money should be used for as long as it is required to reduce the waiting lists. It should also be used to provide better facilities for our youth to keep them out of harm's way. That is not the case at the moment. Admittedly, £3 million has been made available. However, I hope that the allocation of lottery funds will not be used as a slush fund for Ministers to use in their own counties at the expense of badly needed projects in other counties. That happened in the past. I hope the Minister will assure us that this will not be the case in 1994 and that everybody will be treated fairly and the moneys will be distributed equally across the country. After all, the money is being collected throughout the country.
I welcome the opportunity to make some brief observations on Government economic and fiscal policy. I will indicate what priorities should be pursued within that economic policy.
However, first I will deal with the irrelevancy of the income related property tax. It is important to put that tax into focus. The total Government expenditure on behalf of the taxpayers is £12.8 billion. The budget as an instrument of economic and fiscal strategy is charged with directing that funding to the priority target areas and raising revenue to balance the books. The latter concept was almost forgotten until recent times. The Minister and his predecessors — and I was involved in Government with the Minister for a considerable time — have revived that concept.
I do not blame the Opposition for using an opposition tactic. However, the focus since the budget was introduced to dispose of £12.8 billion has been on the extra £5 million from the income related property tax. If that happened in any other country the economic commentators, potential investors and analysts would explode with laughter at the way we discuss our economic policy. That tax represents, in terms of the overall budget, 0.04 per cent of total expenditure. There were children in the Public Gallery earlier and I had intended to ask them to do the sum because it would have been an interesting exercise for them. The total focus of Opposition criticism has been on 0.04 per cent——
Does the Senator remember his opposition to VAT on hurleys in the Dáil? It is still there and has not been abolished.
At that time that would have represented 0.002 per cent.
That was a lot less and the Senator spent a full day opposing it.
I have a high personal regard for Senator Farrelly——
The VAT on hurleys is still there. The Minister is now secure — he will not have any problem when he goes to Croke Park.
——and he will understand when I say that because of his opposition to this tax he will remain in Opposition and the Minister and his successors will still be on this side of the House.
I have no doubt that, as we go through the process of establishing fiscal policy — outlining expenditure in the Estimates, the budget and finally the Finance Bill — the Minister will take on board the views expressed on the property tax. If adjustments should be made to help those who will have difficulty coping with it, that debate should take place on the Finance Bill.
The promises in the advertisements would be more important.
Returning to what the reality of economic and fiscal policy involves, I welcome the fact that for the third or fourth year in a row — since the disciplines were put in place in 1987 when the Minister and I sat at the same table — we have made difficult decisions. That is the business of good Government. Any Government can make easy decisions. However, in 1987 we made difficult decisions. We were criticised for those difficult decisions because we were not spending taxpayers' money with sufficient generosity. As a consequence we have been able to put the basic fiscal policies back in order.
I am very pleased to note that last year — and these are positive signals to the outside world — Exchequer borrowing was £76 million below the budget target and 2.5 per cent of GNP, the current budget deficit, at £375 million, was £146 million below the budget target and our gross domestic product grew by about 2.25 per cent. In comparison with any other economy in Europe, our inflation rate was the lowest at 1.5 per cent. All these are indications of a positive well controlled economy.
Where do we direct our priorities in Government expenditure? We invest in our wealthiest resource — our people, particularly our young people. Second, we invest in our natural resources. I am more and more convinced as I watch the pattern of economic development around the world, that we must ensure that the capacity of our young people to compete with and beat the best is underpinned at all times. Therefore, I suggest to the Minister — I know it is a priority with him — that anything which will equip our young people to compete in the markets of the world and to realise new opportunities for our exports must be a priority. Through language training leading to a facility of communication with other people in their languages, we must equip our young people to go out to sell our products which are in many ways the most wholesome products in the world — I am talking about our agricultural products in particular.
I am critical of one trend that I do not want to endorse and I will illustrate it as it affects my own region of Tipperary. The role of Government should be to withdraw as much as possible, because the more Government agencies that are involved, the more it costs the taxpayer to subsidise those agencies. Unless the agencies are essential, I would prefer to see the taxpayer and the young people being given the incentive to create their own businesses. That is evident in the budget and I welcome it. In my region of Tipperary, to promote and encourage enterprise we have the following agencies. We have, as everywhere else in the country has, the Leader programme——
We have not.
I did not know that but we have it; we have the county enterprise partnership board — I presume Senator Farrelly has that——
Just about.
——and we have the FÁS agency, which is also nationwide — all promotional bodies. We also have the urban and county councils whose priority role, if we were to give them real meaning, should be as development authorities. Those in charge, the managers in particular, would be equipped to manage them as development authorities just as one would manage any other enterprise. They are not being given that positive development role and the members of the councils do not see themselves as charged with that responsibility because the structure is such as not to challenge them to achieve that goal.
In addition, we have regional authorities; the members of the urban and county councils and enterprise partnership boards who have the time to spare now have regional authorities. We also have Shannon Development——
They are biased in their appointments to the regional authorities.
——and the IDA. In the context of all these bodies in the one region, I would say that insofar as the Minister has set the fiscal parameters and direction so clearly and has targeted the priorities we should be pursuing, I hope his colleagues will support him in coordinating all these agencies and trimming down those that are not absolutely necessary. The taxpayer should not be required to pay for a plethora of agencies that are not essential.
I have dealt with the priorities relating to education and agriculture. I spent some time, as Senator Farrelly will appreciate, almost wedded to agriculture and everybody tells me now that I am looking much better because I do not have to worry about the farmers any more. In a competitive world we will have to gear our primary producers — our young farmers, our processors, be they in the dairy or the beef sector, and our marketers who will sell our products on the international markets — to the final sales outlet stage to compete with the best.
My final point may seem parochial but it has important national implications. Before I left Government one of the issues under national consideration was the need to establish an institute for rural development and agricultural development and marketing in rural Ireland. It is no secret that we have been campaigning for this for some time in that intensely agricultural area of Tipperary. I make the case as a national priority and not just as a local need; the sooner it is put in place the sooner we will have young people equipped to sell the most wholesome products in the world at premium prices in the best markets. That is the guarantee for the future.
I thank the Minister for setting the priorities by which his colleagues in Government can go about exploring and exploiting the resources which are there to be developed.
I thank the Senators who contributed to the debate this morning for their positive tone. Senator Farrelly asked for an assurance about the £3 million. As far as the criteria laid down by the Department of Finance are concerned, I am confident it will be used in a proper way under the normal procedures. The Senator knows that recently we improved those procedures in line with some difficulties which we had during the course of last year.
The Minister had no choice.
This morning I set out our policy to try and keep the public finances on a sustainable course, to maintain a stable exchange rate within the EMS and to facilitate the moderate evolution of costs and incomes. That is all part of the Programme for Economic and Social Progress talks in which we are involved at present. Trying to develop Ireland's infrastructure further is part of the massive programme of capital expenditure which we are spending as part of the ongoing work of developing the economy. Shortly the discussions with our colleagues from Brussels on the national plan will reach a formal stage — in about two weeks I think — and, hopefully, through the various programmes — such as the Community initiatives, the Structural Funds, the European Regional Development Fund and FEOGA — the contribution which the State will receive between now and 1999 will greatly improve the infrastructure. At the same time, we must ensure that public policies are still more supportive of employment and investment.
The two major issues in this debate on the Appropriation Act, 1993, are the servicing and control of the national debt and employment. I set out this morning in some detail the figures based on the Labour Force Survey, and it is ironic, in a country where we have so much difficulty with unemployment, that when we get some good news from a Labour Force Survey which should give us all heart, we totally ignore it, but when it is bad news it is hyped up.
The reality is that even though the six months of the currency crisis was included in the Labour Force Survey that came out last week, in the period up to April last year we still had the best employment growth rate in the European Union. That is how it is being reflected in Brussels and in the articles which I am sure Senators saw in The Financial Times and in The Sunday Times. It does not surprise me because I have been a Member of the Oireachtas for too long not to know that good news is ignored in this country. However, I bring it forward to this logical Upper House this morning——
The handlers are not being paid enough. We will play the violin.
I know that in the other House the Members would not want to look at this in a logical fashion.
We are much more honest here.
We will never forgive the Minister for putting VAT on hurleys.
This debate will highlight that, although the year to April 1993 covered the difficult period of the currency crisis, we had the best employment growth in the European Union.
We received bad advice during the currency crisis.
If we had the best results in Europe would the Senator not agree that everything turned out well?
We should have devalued the same day as Britain and it would not have cost us a fortune.
The Minister without interruption.
If the Senator believes that he needs to take a course in economics. If we had done that we would have had to devalue three or four times, as Spain and Portugal did. It would have been a disaster for the country but I will not argue with the Senator.
My second point concerns the burden of debt service costs, about which there has been much debate in both Houses over many years. I repeat what I said at the outset because it is an issue which led to criticism of politicians. If we look at the last seven years the burden of debt service costs has fallen from 11.2 per cent of GNP in 1986 to 8.6 per cent of GNP. Some may wonder what is the significance of a fall of 2.6 per cent in GNP but it is equivalent to an annual interest saving of over £700 million in 1993. That is the benefit of what Senator O'Kennedy has outlined and is the payback for what we have been through in the control of public finances. It also indicates the merit of following those policies because it is how we gain freedom within our budgetary framework.
The latest macro-economic figures we are examining in the Department of Finance indicate that the debt-GDP ratio, which stood at over 120 per cent not long ago, will be down to 80 per cent of GDP in 1996 if we continue current policies. Future politicians and Governments of whatever persuasion will then have resources to use to reduce income tax. Last week we substantially eased matters but there is still more room for improvement. We must free resources in order to do that.
I thank the Seanad for its co-operation in dealing with the Appropriation Bill, 1993, and I hope in years to come we can show figures as successful as those in this Bill.
The Minister can look forward to a taxing time on the Finance Bill.
Acting Chairman
Is that agreed?
I thank the Minister for his co-operation and for outlining different issues to us. I commend the Minister because when any business with which he is concerned comes before this House he always sits through the debate. That is setting a good example because he has the busiest Department. If he had followed another career it might have been medicine because of the attention he shows to every subject.
This has been a most co-operative debate.
Question put and agreed to.
Acting Chairman
Is it agreed that the Adjournment Matters be taken now? Agreed. When is it proposed to sit again?
Next Wednesday, 9 February, at 2.30 p.m.