Deputy Fergus O'Brien was in possession. The Deputy has 29 minutes left.
Financial Resolutions, 1975. - Financial Resolution No. 3: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law relating to inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance).
When we reported progress yesterday I was speaking on the building industry and the effect the budget will have on it. I believe it will have a very significant impact on it because of the type of money that is now flowing in, the £40 million over the next two years from the banks and the £10 million current expenditure by the Government. The building societies are taking in very considerable sums of money in comparison with last year and that will make a big difference in the employment content. The building industry has a very high employment content and a low import content and that is why it is important to get it into full swing. I have no doubt the coming months will see this happen. Increased employment will mean less social welfare to be paid out and also a greater revenue from tax, and this is very important from the point of view of the Exchequer.
There has been much talk about the fall in sterling and about what we should or should not do. We have not reaped the full benefits from the fall in sterling because rising wages have made our goods more expensive. When you have depreciation in your currency your goods are cheaper to export but costs must be kept right at the same time if you want to obtain full advantage of the depreciation. Imports are dearer because of depreciation, which means that manufacturers are in a more competitive position on the home market but this depends on keeping wages and other costs as low as possible. This we have done and in this way also we have not gained as much as we should from the depreciation in sterling. I am not advocating depreciation in money, but if it comes about we should reap any advantage it may offer.
I think that breaking the link with sterling is not on at present because of our high inflation rate. If we had lower inflation than England we could, perhaps, consider a break with sterling, but I am not an economic expert and I would not see the full implications of such a move. One does not need to be an economist to realise that if costs are rising at a higher rate than that of the country with which you are operating sterling, if you consider breaking with sterling, you must face the question: where do you go? Who wants to know you? It would be an unwise move. We should be concerned rather with trying to develop exports and expand our markets and so increase production. This would also affect the home market because, as goods are produced in greater quantity and as we are now in the EEC, we have an open market for them and it is a matter of getting into the particular market for which we have suitable products and developing that market. This would lower the cost on the domestic market, helping to stabilise the situation.
It is important that before we talk of breaking with sterling or changing our financial structure in any way we must put our house in order. We must become more viable, and that can only be done by restraint. The options are clear: if we want more out of the economy, higher wages and profits for our own benefit, that would only lead to more unemployment which would tend to lower standards. The more unemployment the lower standards will become even for those currently working. Their standards will drop because they will be bearing a greater tax burden and their spending power will be reduced even though in figures they may be getting a greater amount of money.
By concentrating on exports and developing markets we can improve our balance of payments and within a period of time work towards a surplus, and when we achieve that situation we can, if we wish, examine the question of a break with sterling. Many people who talk of a break with sterling seem to believe that this will be a panacea for all our ills. That is woolly thinking: nobody will solve our problems but ourselves. Unless we get down to hard work and face our responsibilities we shall continue to be in trouble. We should get our present problems solved without indulging in any airy-fairy ideas. There is no easy way. Many people, when we were going into Europe, thought that would solve our problems, but we must solve them ourselves.
I was glad that the Minister some time ago announced the setting up of an all-party committee to look into semi-State bodies. There have been astronomic increases in some charges in semi-State bodies. They have no competition and it is very difficult as a result to get a yardstick to measure their performance. Therefore, it is very important when this committee is set up that they can examine the running of the organisation. I am not criticising semi-State bodies, and, indeed, the committee may find that they are highly efficient and doing the best possible job, but so long as they are not in competition and are not answerable to the House it is very hard to come to grips with them.
They are under starter's orders, too, in the budget.
Yes, they are. It is important that when the all-party committee is established it should scrutinise all aspects of semi-State bodies because of the amount of money we are asked to give them from time to time without any real accountability. I hope this committee will be set up fairly quickly.
Increased Government expenditure is another reason given for increased inflation. Obviously the fact that Government expenditure is so high does cause inflation, and it is important that such expenditure is seen to be used in the best and most effective way and that there is no waste involved.
In the field of public expenditure, education is a matter that should be examined. I see the Opposition spokesman is there and he might be able to contribute something in that respect. The subsidisation of education does not seem to be fair or satisfactory. The people who pursue higher education reap great benefits from the money spent in that direction, but those who do not go further than the primary school have very little money spent on them. According to a survey carried out in 1972-73 the amount of subsidy for a primary pupil is £76 per annum whereas for a university student it is £525 per annum. In other words, somebody going to a primary school for seven years gets the same amount by way of grant as a student going to the university for one year. That is a tremendous differential. It will be seen therefore that the less well-off are paying tax which is benefiting the better-off in the community. The people who can afford it should pay tax. Those who are paying additional taxes now will benefit from the large subsidies towards the education of their children. I am not saying they are all getting it, but we can see that it is the middle and higher income groups who receive most benefit from university education. If we want to pride ourselves on being a just society, we should have a strict sense of justice.
As I said the last evening, our whole education system is geared to the academic. In joining the EEC we have entered among the most industrialised countries of the world and we are not equipping ourselves properly. The Minister for Finance should ensure that we get the best value possible for the money spent on education. We must consider the question of vocational schools and colleges of technology and see what greater incentives and benefits we can give. The grant system should be reviewed. Should we not give money by way of low-interest loans paid over a period of time, and should we not give greater encouragement to the lower income group by way of investing more money in primary education? It is a cliché to say that all the children of the nation should be cherished equally, but it is obvious from the manner in which our resources are distributed in regard to education that we do not cherish all our children equally. Therefore when money is being allocated for educational purposes I hope all these aspects will be considered. People who can afford it should pay additional tax. They may say they are being mulcted, but we do not ever hear a whisper when large amounts of money are expended by the Government on education for their children.
I think this is a first-class budget in the sense that we were all expecting something a little rougher, but it is easy to see why the Minister's action is correct. Imposing additional taxation in various areas would only increase the cost of living and what the Government intended to do was to reduce this spiralling inflation. The subsidies which were introduced will do this effectively. As I have said, the £12 will give an incentive to the employer who will want to be an pushing forward in the industrial sphere. Undoubtedly there will be an upturn in the world economy, and certainly the larger industrial nations are not expecting the downward trend to continue. The predictions are that there will be an upturn in the economy in 1976-77 but if we are to cash in on this improvement, we must be geared for it.
The £12 employment premium will give to employers who may not be in a very strong position the opportunity of taking on people because this premium will go some way towards meeting their costs and consequently will help them to equip themselves for the predicted upturn. Depressions seem to occur in world economies at intervals of ten or 15 years but we have enough faith in ourselves to weather the storm of the present economic difficulties. In this budget the Government have made a start but it is only a start. They are giving the employers and the trade unions an incentive to renegotiate the national pay agreement. I believe that common sense will prevail and that the agreement will be curbed in the interests of the workers and also in the interest of ensuring more employment.
There may be other ways in which the problem can be tackled but the best way is by incentive and encouragement because our people will not respond to dictation or to statutory measures in this regard.
The Opposition are very concerned about the high rate of borrowing. They say that there is not enough investment in such areas as education, the building industry and so on but at the same time they oppose increases in taxation. Perhaps, they might tell us what are the alternatives. If we are to expand we must have money and either we can raise this by way of borrowing or we can impose heavier taxation.
The Government are doing both.
They have done both but we are raising taxation equitably. Although capital gains and wealth taxes are accepted in most other countries, the Opposition have been fighting their introduction here. One can only be surprised that capital gains tax was not introduced long before now. The Opposition must face up to their responsibilities. If they have plans which in their opinion would cure our ills they should let us hear them but so far there has been nothing but criticism from them. At least some of the Opposition realise the necessity and the desirability for these wealth taxes if we are to develop our economy. They know, too, that we must take the money from those who can afford to pay and not from others.
Much hysteria has been engendered in relation to the wealth tax in particular. From listening to the Opposition one would think that this tax was some sort of socialist ploy devised to rob the rich in order to feed the poor. It is devised to ensure that we have sufficient capital to develop our economy. We can look forward to the development of our natural resources in the coming years. This development will play a significant part in our future but in the absence of a wealth tax, people would be making vast sums of money and making very little return to the Exchequer. The Minister for Industry and Commerce has succeeded in getting an admirable deal in respect of our offshore oil and gas. He has done what is best in the interests of the people of Ireland.
It is important that we have a tax system that is geared to changes we can expect in the future because we will need money to re-equip and develop and to meet the increasing demands on social welfare, health, education and all the other services, demands which, for a small country, are very great in the context of our present resources. The Government are gearing us for this situation by laying the foundations now. I commend the Minister on this budget and I am confident that the people will respond to it and that, consequently, the inflation rate will begin to decrease.
I wish to comment briefly on these financial motions. The Minister's speech was bespattered with such words as "inflation", "emigration", "unemployment", "revision" and "renegotiation", all of which point to a failure on his part. The Minister did not do his duty in directing, persuading and guiding the Irish economy. He has been guilty of neglect and he conveniently looks around—that is traditional with interparty or Coalition Governments—because the cause of course is not himself; it is not his own Administration. It is Suez or Korea or, in this case, world conditions. It would not be fair to claim—in fact, it would be palpably dishonest—that world conditions do not affect our economy. They affect all economies and, as has been said, particularly an open economy. We listened to this hvmn about world affairs, this hymn about all the deficiencies in our economy being due to world conditions, for a long time until, finally, the Taoiseach spoke out and said that much of the inflation was domestically created and many of the problems were created at home and we would have to face up to that. The Central Bank, the commercial banks all pointed out the effect domestically created inflation was having and asked that something be done but, until we had reached crisis proportions, nothing was done. Then the Minister comes in with a second budget this year. As had been pointed out by other speakers on this side, there is a concatenation of budgets issuing from this Administration—two in this year already and nobody knows what will happen in the Fall; it is generally expected it will be necessary to take corrective measures and bring in yet another budget.
The Minister said in his budget statement that a resumption of the export-led growth depended on what is now called the upturn in the world economy. There is one thing I should like to ask the Minister about individual industries. It is generally realised, even by the Minister for Industry and Commerce now, that the shoe and textile industries are in very dire straits. I should like to see precisely, leaving out the macro elements altogether, a costing done. I should like, for example, a statement as to how much wage increases were responsible for the decline and fall of the footwear industry in places like Carrickmacross and Dundalk. I should like to see that stated specifically. It is easy to talk in broad terms and to paint with big brush strokes when dealing with the economy but, when one makes a statement that wage increase are mainly responsible for our present unsatisfactory condition on the export market, then I should like to see costings done specifically with regard to one pair of shoes or one bale of cloth.
The Minister for Foreign Affairs, commenting on the budget, explained to us what had happened to the footwear industry. These explicatory economics have always puzzled me because these economists seem to be able to tell one when things went wrong, why they went wrong only after the whole thing is over. It is one of the facets of what is called the science of economics. Now I do not want to act the Philistine with regard to economics. Economics are very important, but I should like a little diagnostic economics and a little more ability to tell beforehand what was going to happen and I should like Government to take action on that particular diagnosis. Full employment, the Minister tells us, will depend on export-led growth. I think the exercise I have suggested is a very necessary one if you are going to have an economy depending on export-led growth. The costings should be done. They should be available at micro level and they should be available to management, staff, et cetra. Then we might see—I do not know— that there are other very important factors and that hammering wage increases, which is a national pastime, is not the only answer for the failure of many of our industries. For example, what effect have imports from Third Countries had on the industries about which I am talking? How does that effect relate to the effect of increased wages? How do the quality of the machinery, the organisation and the management in particular industries contribute to the difficulties as compared with the difficulty created, and it is a difficulty, by increased prices?
The Minister pointed out that public sector pay and social welfare payments are now about 50 per cent of the current costs of running the country. One shudders to think what the position would be had not this party, when in Government, admittedly aided by the Fine Gael Party, led the country into the EEC because the vast increases and the vast amounts of money available as a result of membership of the EEC were distributed in social welfare payments. We must continue to remind the expert economists of the Labour Party here that they opposed our entry and consequently opposed these sources of finance for the payment of social welfare benefits.
It is frightening to think of the amount of money being paid out in the service of debt and this particular budget adds yet another £10 million to the amount required for servicing our debt. Time and time again the Minister talked about the growing uncompetitiveness of Irish industry and stated that lay-offs and short-term working are directly the result of this uncompetitiveness. Again, I appeal for a spelling-out at micro level of this because we have never got that. We have not got the proof—perhaps the proof is there—that it is the rise in wages and the rise in wages only which is responsible for our lack of competitiveness in export markets.
Deputy O'Brien talked about the world economy and the upturn in the world economy. Again big bold brush strokes. The whole thing seems to me to degenerate into a swapping of clichés. What exactly does this upturn in the world economy mean? Does it mean a steadying of the economy in Britain which takes a great deal of our exports? Does it mean heavy reflation in Germany and France? That has not been spelled out. It seems to me to be a useful kind of alibi for the Minister for Finance in his present circumstances. The world economy is an exhausted lion and the Minister is watching, waiting for it to wake up, and feed its cub, the Irish economy. He should, in fact, be telling the cub that it should be up and foraging for itself and it will then be able to take advantage later on of whatever breaks will come from an improvement in the world economy. There seems to me to be a washing of hands and a standing aside, waiting for the world economy to revive, and I believe that is not worthy of an Irish Minister for Finance.
In his opening statement the Minister said something which bears out the accusation I am making:
Events have shown that our economic difficulties would be less acute if these precepts had been taken fully to heart. It is now clear that the current national pay agreement gives increases in pay, including increases reflecting taxes on alcoholic drink and tobacco, which cannot be paid in present economic circumstances without doing serious economic and social damage.
Surely the Minister knew that when this national wage agreement was being worked out. He stood on the side-lines. He allowed the Employer-Labour Conference to work out an elaborate wage agreement. Only now he has the honesty, when he is forced into it, to admit that it went too far. Where was his fiscal leadership? Did he exercise his muscles in such a way as to impress on the Employer-Labour Conference that this was the position? Did he introduce subsidies which would make it easier to work out a realistic wage agreement? No, he did not. Not that he was not told that could be done and should be done, and that it would have an effect on the national wage agreement. This is post factum administration. Let the thing go. Disaster is looming and then intervene. The more positive approach would have been far better but the more positive approach was not followed by the Minister.
Already the baby has been handed over to the Employer-Labour conference and already there are rumblings. Shots are being fired by the FUE. The Irish Congress of Trade Unions are a source of recriminations. There is talk about equal pay. There will be a quarrel about that. There is talk about the 5 per cent ceiling. The unions are agreeable to indexation but the employers say 5 per cent must be the limit no matter what happens to the consumer price index.
You can see the line of argument I am following. Had the Minister taken action in time, had he listened to the Opposition, the wage agreement would have been more realistic. He did not do so. Like Micawber he was waiting for something to turn up. Perhaps the thing would iron itself out. Maybe with a bit of luck the world economy would take an upturn. If so, everything would be all right. That is not fiscal leadership. That is not financial leadership. That is not the way to run the country.
I mentioned revision and renegotiation. Every "re" is an indication of failure on the part of the Minister for Finance. We had the Minister for Labour trotting out the old shibboleths in his speech when he said that shortly they would turn on dividends. Speaking on the Wealth Tax Bill, I pointed out that there is a lot of musty thinking about modern industry and modern business. I pointed out that in the large industries the shareholders have very little say and that power lies, for the most part with management. I pointed out that it was more than important that money should be available to industry from their own funds for development.
It is popular in the Labour Party— and it is near their ideology I would hope to find myself but not with allegiance to outworn shibboleths which are not relevant to a modern industrial society—to say: "We will stab those who are making the big money out of business and industry." This is what is frightening people with capital and business and industries with capital which must be used for development. I have with me the Cement Roadstone Accounts for 1974. It is worthwhile quoting the percentages to indicate what I mean by the statement that the Labour Party are following outworn shibboleths.
Of the total amount of money involved, 62.0 per cent went on materials transport and other costs. Wages and salaries accounted for 27.4 per cent; taxation 5.2 per cent; invested in the business, reinvestment, the type of money I have been talking about on the Wealth Tax Bill, 3.1 per cent; and dividends were at 2.3 per cent. What the Minister for Labour was saying was great heady stuff. It goes down very well at Labour Party club meetings but it is not realistic. It is related to a different age and a different phase.
We must discard the shibboleths. We must realise what modern industry means. It means capital and I, for one, would be very glad to watch capitalists very carefully and to see to it that they have neither an undue influence in the economy nor too much return for their capital. It means labour, skilled labour, technology. It is important that they have their own capital and that they can form their own capital. This kind of Administration with the emphasis on wealth tax, capital gains tax, capital acquisition tax, gift tax, and all sorts of tax, will not create confidence among the people upon whom we must rely to develop the economy.
Woodrow Wyatt, the Labour theoretician in a comparatively recent book pointed out that the modern imperative for the Labour Party and any other party is to create wealth, to make more wealth, and to concentrate the effort on making more wealth, because you cannot distribute wealth equitably in the economy until wealth is created. Hurler-on-the-ditch administration, waiting-for-something-to-turn-up administration, depending-on-the-Employer-Labour Conference administration, will not direct the economy in the way it should go so that more wealth will be available for social welfare payments and for everything else.
In the Minister's speech there is also the indignity of a threat. He speaks of a revocation of the price reliefs if he does not get what he wants. This goes back to where the rot started. This side of the House pointed out that certain subsidies which the Minister has agreed to give now could have been introduced at the end of 1974. They would have been taken into account when the wage agreement was being worked out and negotiated. This was not done. Now we have the threat: "Look here, you chaps. Come to an agreement on the wage agreement. Scrap one of the phases or lower the two phases. If one does not, then the price reliefs will no longer be available to one." Judging by the amount of courage the Minister for Finance has put into his financial policy since he assumed office, I do not think he will have the courage to revoke the price reliefs as he says he will. I do not think he will have the courage to do so even if no progress is made with regard to the national wage agreement.
With regard to the public capital programme, there are plenty of suggestions. These are not "fly-by-night" suggestions for the improvement of the economy, for the preparation for the time, the millenium, when all the economies of the world are going well again. I failed to get in yesterday on the Industrial Development Bill, but in my own area the IDA have pointed out that there is vast need for infrastructural work, for roads, telephones and water, all over the area to enable them develop the area industrially. This is a field the Minister should consider if the employment situation worsens. He should consider it anyway at present but, if the situation worsens, he should consider it very seriously indeed. Actually Dublin Corporation, I think under the leadership of Deputy Seán Moore, have some kind of suggestion about a public works programme to relieve unemployment in this city. I agree with the Minister and with people who maintain that such public works programmes should not be programmes merely to provide employment; they should be implemented on an organised basis with a definite purpose. In the infrastructural activity, in areas that are so under-developed such as the area, part of which I represent, I suggest that is the way the public capital programme should be developed.
Deficit budgeting has come under the hammer. This was an imaginative and worth-while advance in economic thinking when first introduced. It was pointed out from this side of the House that it is effective in improving the economy only if used in its promotion. Most of the deficit budgeting seems to be now for current account spending which, as the Minister well knows, does not produce any economic progress.
There is contained in the Minister's speech a fairly ominous paragraph. I do not know whether it was highlighted very much by the media—it may have been but I missed it anyway—reading:
Existing expenditures are being reviewed to identify those that might be curtailed or eliminated. Such expenditures would, for example, include those which are no longer appropriate——
This is a kind of sibylline statement
——because of changes in the circumstances which gave rise to their introduction in the first instance or because of changes since then in the circumstances of the sectors or groups of individuals who benefit from them.
I call upon the Minister, in his reply, to specify precisely what he means by that sentence.
There is another point—and this must surely gall the Labour Party— the Minister continues to say:
Consideration will also be given to making realistic charges for public services which are either provided free at present or are charged for at uneconomic rates.
I ask the Minister also to make it clear to the House and the people what exactly he means by that. In fact, I ask him to make it clear to the Tánaiste and Minister for Health, does he mean health charges, for example, or how does this square with the Tánaiste's view that all, no matter how wealthy, should be provided with free hospital services.
The Minister says then:
This may involve a review of the pricing policies of some State bodies.
All of us in this House realise what has happened to the ESB in rural Ireland. The pricing policies of the ESB there have put electricity out of the reach of very many young people building houses.
The Minister says further:
Exchequer subsidies to various bodies which should more appropriately be supported from other sources——
again, unidentified—
——will also be looked at critically. In general all low-priority services, particularly those which have a small or negligible employment content,
I do not mind that—
——will be reviewed to see what economies can be achieved.
The House and the country are entitled to some elucidation of that paragraph.
As I have said already, the subsidies are welcome, as is the removal of VAT from clothing and footwear. It seems to me that this is a kind of lifeguard or beachguard action on the part of the Minister for Finance with regard to the footwear and clothing industries. We on this side of the House, and in particular Deputy Faulkner, have been hammering the Minister for Industry and Commerce to do something about the footwear industry long ago. The Minister, when he speaks, is most persuasive, rational and calm—everything is under control—but he seems to be paralysed when it comes to making a decision or taking any action. Deputy O'Malley has been in Brussels a few days this week and we hope we will have some kind of word from him about what will happen with regard to footwear and clothing. This rescue exercise seems to me to be too late. The Leader of our party said the budget was too late and too little. The rescue operation seems to me to be too late, particularly for the footwear industry. The Minister is swimming out to rescue the bather and, it seems to me, will come in with the corpse of the footwear industry in this country. It is really bad, and it is no consolation to know that the funeral expenses will be free from VAT.
I support the Leader of the Fianna Fáil Party when he says that every effort should be made to deal with the national wage agreement problem in the interests of the country. But if what is happening now with regard to the national wage agreement were to be in any way damaging to the principle of a national wage agreement, I would demur. I do not think it necessarily will be but if it is I would prefer it not to be a success than that the principle of a national wage agreement be damaged utterly and irrevocably. Do not forget that, under Fianna Fáil Administration, national wage agreements were worked out and, more than important, were paid. I would be chary of this Government because their economic forecasts have been so wide of the mark.
With regard to the employment premiums I find it difficult to see how they will operate. We await with interest the statement by the Minister for Labour, fore-shadowed on this morning's Order of Business, as to how they will operate. They were welcomed and, in so far as they may increase employment, they are to be welcomed. Of course, it will be important that the £12—and £6 later on—will be added to sufficient money to bring wages above, say, the pay-related plus unemployment benefit rates. This will be important seeing that the pay-related benefit period has been extended and power has been taken to extend it still further.
If the amount of money involved is reasonably large I wonder why a public works programme of the useful nature I mentioned earlier could not have been embarked upon instead. If the Minister for Finance wants to know where I think this public works programme could best be initiated I will tell him without charging him any fee. In my constituency we need roads, telephones, water and power. In that constituency there are 52 per cent under-employed in agriculture and we have the lowest number employed in manufacturing industry in the country.
Of the £27 million increased public capital provided for in the industrial section £4 million goes to Fóir Teoranta. There is no consolation to me in the extra money allotted for industrial development in the budget. Fóir Teoranta is a rescue operation but if we have not the industry we cannot rescue it. I would have thought that £5.2 million would have been better distributed on the areas that are so far behind in industrial development.
It is a pity that the same section of the population seems to be hammered all the time. The loan charges on the Local Loans Fund are increased by 1 per cent and the period for repayment of these loans has been shortened. That will be an extra hardship on the people. It may not be as significant as the increase in the interest rate but it is a hardship. The people who are being hammered all the time are those who are buying houses and want to have their own houses. The sluggard who says, "To hell with this game, I will make the local authority provide me with a house" is not giving the same hostages to fortune; he is not giving the chance to people to raise interest on him. His rates and rent may be increased but he has his built-in safety device if he hits bad times.
The 10 per cent surcharge on income tax is hammering the people who have initiative and who are great contributors to the economy. The idea of tax all the time can be very frustrating to people who are in that category. According to the issue of The Irish Times of 3rd July the governor of the Bank of Ireland, Mr. John Ryan, was critical of the Government, as the Central Bank and individual banks have been. He suggested a compulsory savings scheme, which might be a better idea. I should like to know from the Minister if this was considered. Admittedly, if it is a savings scheme the Minister will have to pay interest and he will not get the direct result he gets by adding 10 per cent to 35 per cent, bringing income tax up to 38.5 per cent on certain categories. If this scheme was studied in the Department of Finance why was the decision made to add extra taxes? We are gone crazy on taxes. Everything is taxed. When Deputy O'Brien spoke about this a few moments ago he referred to the position in other countries. Anybody who talks like that should read the industrial history of our country. They will realise that many of the countries they are talking about had a long start in industrial and social development on us.
The deficit of £241.6 million is frightening; so frightening that I will not talk any more about it. Reference was made by the Minister for Foreign Affairs to the inflow of money here and he said that this showed a confidence in our economy. There is no doubt but that there was an inflow and that gilt-edged securities were bought up a few weeks ago. I will let someone who is more expert in these matters elaborate on why this was so. Is it dangerous money? Is it money that could just as quickly be taken out? Had it anything to do with the kite Senator Halligan flew about breaking the link with sterling? The Minister for Finance should answer these questions for the people because they are entitled to answers.
On the day the Minister announced his budgetary measures I had a question on the Order Paper asking the Minister for Finance if he would think of introducing a CPI related saving scheme. The House had reached to within two questions of my question and it would have been interesting to see how it would be handled seeing that it was incorporated in the budget. I suppose there would have been a kick to touch to take us over the half-hour or so until it was revealed. However, I am pleased with the Minister's measure. In his speech the Minister said there were certain dangers in it but that he was announcing the details later. He also said that he was introducing the scheme for the right people. This is fair, just and good. Old careful people who have saved money and have a fixed income got scared with the erosion due to inflation. In most cases those people have given service to the country and have been solid citizens. This kind of scheme should cushion them against the type of inflation we are having. It is a good idea and one that should commend itself to everybody.
Breaking the link with sterling has been mentioned by a number of people by way of kite flying. It seems to me that international monetary reform, economic and monetary union in Europe, all need political action. I am informed by somebody who should know that there is a system ready, blue printed, for dealing with the international monetary situation in the light of the failure of the Bretton Woods Agreement which operated so well for so long. I understand that all that is needed is the political will of the committee of nations to bring this about. It is essential for the growth and health of all economies. We have not made progress in Europe. I do not know about the whole sterling business but we went into the snake and came out fast. I believe one month was enough of the snake and we had to come out when Britain left. The effect on the common agricultural policy, the compensatory payments and so on, makes planning and ecomic life difficult for us. There must be a solution.
People will begin to say, "in the formally controlled economies one does not have this; one only has this because jugglers with finance are making good money out of this international money game". There would be a lot of ignorance in that criticism. Nobody here would advocate the kind of formal control of the economy that means interference with people to the extent that people are interfered with in the formally controlled economies. Nobody can stand for that. The idea of freedom is a poor consolation to a man who has not a job. A great number of people will come to that conclusion if unemployment rises. They will come to the conclusion, which was enunciated by a Senator in the Upper House a few days ago, that this so-called free economy, the so-called free economic system, is not worth a canter and that we should turn to something else.
I know our power to influence settlements on the international monetary scene may be very light but the size of the wallet does not always indicate the size of the material between the ears. We could have a contribution to make in that particular line. We could have a political contribution to make in hammering away at the people responsible to come to some international monetary arrangement to replace the Bretton Woods' one, which served reasonably well for so long.
I would like to say a few words about youth. The youth of Ireland were beginning to stay in the country. It is very important to provide employment and further opportunity for them at the moment. It is important that they retain the confidence that has been building up in them over the last few years. I have been amazed in my own area at the recovery of the rural community. It has not shown itself in increased population except in areas where small industries have been developed. In such areas the last census showed a rise in population.
Emigration became a habit of mind and I believe we were just breaking it. A serious onus rests on the Government to stop that habit of mind developing again. It will develop if unemployment increases because emigration from all areas, particularly from rural undeveloped areas, is the collorary of unemployment. People with ambition and initiative will not stay around no matter what social payments you make them. There is a serious obligation on the Government to see to it that that habit of mind, the solution being the boat, is not an easy one nowadays because Britain, which took a lot of our young people, is in a serious economic position.
There is a serious obligation on the Government, and I do not think they are living up to it, to see to it that the confidence of youth is not shattered. They are better equipped, educationally, due to decisions taken in the past than we were. I am asking them to stand their ground. This side of the House, and particularly the Government side of the House, are all too smug where decisions have to be made. We should see to it that pressure is brought on the administration to provide jobs so that our youth will not go away as people had to do in the past.
There is no greater obscenity in a community than unemployment. Perhaps an equal obscenity, the result of it, is emigration. I plead with the Government to examine the position, particularly in regard to young people who are now coming out of school. The Minister for Finance spoke about open-ended grants and when the money was exhausted schemes would have to be left over for the following year. Does he include in that grant money for university students? Does the Parliamentary Secretary know if university grants are included in that?
The Minister will deal with that later.
I hope university grants are not included in that. We heard a good lot of simplistic talk about education from Deputy O'Brien this morning when he talked about one year in the university, seven years in the primary school, and he said that we were too academic. I believe a great deal of nonsense is talked about that nowadays. We have more technicians than we have jobs for. In a recent survey by Dr. Roy Johnson of Trinity College it was pointed out, although I think it needs a bit of qualification, that we have more technologists than we have technological jobs.
Many of the top economists and business executives in the world claim that a liberal Arts degree is about as good a foundation as can be got on which to build expertise in commerce, business and economics. We talk a lot of nonsense in that line but I hope that out of it there will not come any urge to curtail still further spending on education. It is worthwhile to read people like Ilya, who is a bit daft and a bit theoretical, but from his ideas on that we can examine our consciences as to whether we are spending money on things like education and wealth in the best possible way. I would not like a climate of opinion to be created that there was too much money spent on education. We want people with expertise and we want them on the ground in Ireland. We want the jobs which they fill.
These are my comments on the second budget of the year. If the Minister for Finance, backed by the other Ministers in the administration, cannot provide the economic climate I have been appealing for young people, let him go in dignity but let him go and leave it to somebody else to try because that person cannot do worse than he has been doing.
In common with other speakers I welcome the provisions in the budget. The subsidy in regard to CIE is particularly welcome. It is much better to fill our trains than to give CIE huge sums every year. When we have to travel by road we find the roads are overloaded with traffic, much of which could be accommodated on the trains. The provision in the budget is the right way to subsidise a transport system, which will always have to carry some subsidy. It would also help if something could be done with certain aspects of the road haulage system.
CIE are providing an excellent train service on the main lines. It is a good safe way to travel. Deputy Wilson said that everything was "re" this and "re" that, but there is one "re" I would like to mention here, that is reaction. The reaction to this budget has been most favourable throughout the country. That is the best way to judge any budget or any piece of legislation. I can certainly say that the people are charmed with this budget and they believe it is a start to try to conquer inflation, which is rampant in these islands. The Minister has started in the right place in trying to hold the cost of living, the cost of food, footwear and clothing. It is not fully appreciated until you find a pair of shoes are £1 or more cheaper. That is very significant in the cost of living. With this excellent start by the Minister I am confident that everybody will row in. The whole exercise could be abortive if everybody did not co-operate in getting the economy moving in the right direction. We are totally dependent on exports.
It has been said that we have to get money either by borrowing or by taxation but there is a third very important source of income—profits from sales—and that is the source I should like to have fully explored. It is the best way of getting revenue in the long run. As in the case of private enterprise borrowing is not the best way for a country to do business. No banker will be very pleased if you cannot improve your fiscal position and if you continue borrowing year in, year out. You must reach a profit-making situation. We can do that through exports and by buying our own products. Everybody talks about buying Irish but very few do anything about it. There is no EEC regulation which says you may not buy Irish. This must be hammered home. When it is said that we cannot do anything about imports from EEC countries, that we must accept Italian shoes and all sorts of goods from Europe, we should realise that these goods can be left on the shelves. There is nothing to stop an Irish citizen who is serious about his country's future and the prospects of his children from buying Irish products, which are as good if not better than anything coming from abroad.
I would agree with the previous speaker about some of the advice given by top economists. I should like more common sense and perhaps we should take the advice of more business people rather than economists. Economists are like retired generals, always fighting the last war. Very often their projections are wildly inaccurate. They can tell you why such a thing happened in the past but, for goodness' sake let them give an honest projection of what will happen in the future. Very often a good businessman can do this better than an economist. We could, with advantage, also have a savings scheme.
I should like to touch briefly on agricultural exports. Since we entered the EEC I think we have become a bit lazy in our sales efforts. We have far too much reliance on intervention and so on and not sufficient emphasis on what really got this country going, our ability to go out and sell our products. Years ago when I was a member of a small co-operative society we were looking around for markets for conventional dairy products when somebody suggested: why not try something not so conventional? That type of approach actually got this co-operative out of its difficulties. At that time it was moisture-free butter for the Lebanon, followed by frozen cream for the Heinz complex. This got us going, and the same considerations apply today. The French and the Germans and others will buy our agricultural products if we go out and sell them and make them attractive in packaging and so on. Much work has been done in this regard and we should not allow images such as that built up by Kerrygold to be neglected.
The same thing could be done for beef because without doubt we have the best beef in the world. Because of the way it is put into intervention at present it is not always the most attractive proposition for our salesmen. I have that information direct from people making a living selling our products abroad. These people should get the type of product they want but, at present, due to EEC regulations and other factors they are not getting it; they have to buy a product out of a ship in Bantry, unstamped and unmarked, and they cannot determine the quality until they get a reaction from the customer, which very often does not come for five or six months.
What is being done about our adverse trade balance with countries like Japan? There are all kinds of Japanese products on sale here, cars, motor cycles, television sets and electronic equipment, but how much processed foods are they buying from us, if any? We have good stocks of these products. If somebody sells something to me I like him to buy something in return; that is the only way we can survive. There is no use in going to people with whom we are not dealing at all. We have Czechoslovakian tractors in practically every farm. Some of this equipment is good and comes at the right price, but the Czechs should be compelled to buy from us in proportion to their sales here. Are they doing this? If they were I do not think we would have some of the sales problems that we have.
The budget is really only a starting point. There is a great future facing the country at present in view of the finds of gas and oil and our new industries. There are great opportunities for the young people. I appeal to the Government to get on with the job in regard to gas and oil. One of our problems at present is the high cost of fertiliser, but here we have in the gas a ready source of nitrogenous fertiliser and the sooner that is landed and spread the better for everybody, apart from our present difficulties in regard to employment. Probably 500, 600 or 700 people could be employed in actually laying pipes. We should get on with this job and not wait any longer. This is the right type of borrowing we should engage in, borrowing for productive purposes. Every Government would be justified in borrowing to the limit of what the gas and the oil are worth in order to get these projects going.
The previous Deputy mentioned the technological side of this question. Whether we like it or not, a substantial number of technological people are still coming from abroad. Especially in the petro-chemical industries we shall have in Cork Harbour, we shall not have the personnel to fill all the top jobs. Therefore I would like to see more emphasis on technological training. I am all for a Cardinal Newman type of education for people; a degree in Arts is a very good thing to have, but from the Leaving Certificate stage onwards we should be thinking in terms of training people for the type of jobs that are and will be available. At the moment we are doing very little to prepare people for employment in the petro-chemical industries that are about to be set up. I do not see why every industrialist should be allowed to bring in people from all over the place, because invariably they stay here and it means a loss of jobs for our young people.
I agree with the suggestion in regard to the public works programme. This £12 premium scheme is a very good idea, but seeing that dole money has to be paid out of the Exchequer, this scheme should be extended to cover public works and any type of work that a local authority could provide, such as cleaning hedgerows or painting railings. Were it not for the drought, the weeds would be meeting in the middle of our roadways. It would be better for people's morale to employ them on such work than have them queuing up for the dole each week. On both sides of the House it is our responsibility to provide jobs wherever possible. Surely local authorities can provide such jobs. We are relying on a few machines in each county to clean our hedgerows. It is work that was always done well by a comparatively small number of people and it could be done again.
Group water schemes could also benefit from the scheme. In my own area there are 50 or 60 of these schemes in abeyance for one reason or another. Water will have to be provided sooner or later and if some of these people were employed on these schemes it would be a great help. I would also like to see the £12 extended to agriculture to cover an additional worker on our farms. While our farms have been understaffed in the past due to mechanisation, we have come to the stage where the law of diminishing returns is starting to apply, where farms are producing less because of not having enough staff to use the equipment. As well as being of benefit to the farmer, this would be a useful way of employing people.
Now that the wages of agricultural workers are coming into line with those of industrial workers, farm work must be an attractive way of life for young people in the future. I know what I am talking about. It is a tough life for part of the year but it has its own rewards and attractions. Young people who have had a short experience of working in a food processing plant or in a factory will tell you that if they thought there was a future in it they would prefer to work on a farm.
Therefore I would like to see courses in our vocational schools which would train people for farm work, for instance, dairying. Places like Moor Park are doing a limited amount, but this should be extended to our vocational schools to give an opportunity to young people who want to go into farming. Maybe at a later stage the Land Commission will change their mind about the allocation of land and give such people a farm in due course, and remove the stupid stipulation that you must own some land before you can get some land. That might have had some relevance in the past but not any more. Numbers of young people who would have made excellent farmers have been deprived of land because of this stipulation.
A serious effort is being made in this project to stop the spiralling of inflation. There will be some control on the price of food and clothing, which are very important items in the family budget. We must not let things drift back into the situation where prices will increase again and there will be further inflation. We must get industry and employment going. Somebody said we should wait for something to happen, but I think we should make it happen. We can all help in our own way, for instance, with local co-operatives, or if there is an industrialist coming into the area we can talk nicely to him, facilitate him by providing a suitable site and so on, and, most important, provide the people to take up the jobs thus created. From my experience of being involved with food factories and co-operatives, I have met many people, and I can say that boys and girls working in industry are anxious to see their particular industry succeeding. They are anxious that their industry be able to continue in production. Despite the difficulties most of our industries are doing well. Very often, though, there is not the market for a good competitive product. This is where we fall down. Every effort should be made to put the best salesmen we have in the market fields in Europe because we have the products and it is for us to ensure the best market possible for them.
We have, perhaps, the most stringent regulations in Europe regarding milk and milk products. We had the bacterial test for milk long before it was introduced in Europe. Although this test and other such tests sometimes involved hardship for the farmers concerned, they realised the necessity and the importance of it and we can now boast about the hygiene that we apply to our dairy products. Our Irish Blue cheese, for instance, is probably the best such product in the world.
I would like to see greater quantities of our meat being marketed directly rather than adopting the attitude of letting meat mountains occur. We should endeavour in so far as possible to ensure that for every £'s worth of goods we import from European countries, they should import goods to the same value from us. A nation like ours which depends so much on exports, particularly agricultural exports, cannot survive by importing inferior goods from Teheran or elsewhere and, at the same time, hoping to export our food products to people with whom we have no trade.
We must endeavour to begin the exploration of our mineral resources as quickly as possible. The gas that is off our coasts will not be of any use until it has been harnessed and is being used for energy and for the production of fertilisers. On the question of fertilisers, perhaps the Government would consider the introduction of subsidies in this area. It would seem that because of the sudden big increase in fertiliser costs, there has been a cutback in the use of the products. I would not consider that to have been a good reaction to the situation, but in order to maintain employment in the industry it is necessary that the Government take some action.
Hear, hear.
Adequate use of fertilisers now will ensure greater milk and beef yields next year. In regard to borrowing, credit must be given to the Minister for borrowing money that will be used for productive purposes. I trust that these measures proposed by the Minister will bear fruit and that the people will row in behind the Minister and accept their responsibility in these times of difficulty.
The question of the link with sterling must be kept under close observation. Should the British economy continue on its merry downhill trend, we could not afford to follow suit. The time may well come when we shall have to look at our economy vis-à-vis the British one and we may have to bring our rate of inflation down to the level of whichever economy we may latch on to, whether it be Belgium, Germany or elsewhere. In such case we would have to think in terms of an inflation rate of 6 or 7 per cent. Therefore, before we begin to consider the break with sterling, we must begin to control our inflation.
I endorse everything being done by the Minister in this budget. However, this is only a beginning and we can only hope that in the months ahead there will be co-operation from everybody so that we can get our economy moving again. We can look forward with confidence to the future because of our oil and gas finds and also because of our ability to produce topquality goods at the right price. We have always boasted that we could produce goods cheaper than they could be produced elsewhere in Europe. We have always produced better than our counterparts in the United Kingdom. That was our boast. If we adopt that sort of selling attitude now there is no reason why we should not succeed. There is no reason why we should not succeed as the Germans did after the last war if we make the effort. Our people are as good as the next. The goodwill is there and so is the energy. There is nothing to stop us.
This budget, the manner of its presentation and the whole exercise surrounding it, reminds me of the man who some years ago used to cycle across the Border every Thursday with a bag of sand over the handlebars of his bicycle. The customs officers were very interested. When the man reached the customs post he emptied the bag of sand and then refilled it. The men on duty never found any contraband. This went on for quite some time and then one of the customs officers was being transferred to another area; he met the cyclist in a pub and asked him to satisfy his curiosity and tell him why he carried this bag of sand. The man looked at him, and said: "It was bicycles I was smuggling." That is what is happening in this budget. A bicycle is being smuggled. The attention of the people is being focussed on subsidies to take their minds off the massive deficit which will reach £300 million by the end of this year. How much longer can we expect to be treated to Government policies expounded in a manner resembling share promotions? That is what this budget is. A deficit of £300 million is beyond the comprehension of most, so far beyond that it does not have any impact.
In order to understand the effect we must first of all understand what a deficit means. It means the Government have spent or are spending more than they will get by way of revenue and the only way they can bridge the gap is by borrowing. Now the borrowing has to be serviced by interest payments and ultimately the principal has to be repaid. The country cannot find the money and consequently the bulk of the borrowing is done overseas outside the sterling area. In addition to having to pay interest the lenders will also require certain guarantees to compensate for the reduction in the value of the £ sterling: £100 million borrowed in 1971 at 9 per cent is now actually costing 9 per cent plus 30 per cent of 9 per cent; this is the additional interest for compensation for the diminishing value of sterling since 1971. That means the Government will be meeting interest charges at a rate of nearly 12 per cent on that part of the deficit financed by overseas borrowing. In addition, the capital sum to be repaid has also been increased by nearly 30 per cent. That means that if the Government borrow £100 million they will have to repay £130 million for each £100 million borrowed already. If sterling continues to decline at the same rate as it has declined over the last four years the Government will have to repay almost double the amount borrowed with a ten- to 12-year life, together with interest, and the real cost will be up to 20 per cent per annum. We see now what the smuggled bicycle means.
How can any self-respecting Government continue the pretence of being in control of our economy when it supports the Minister who has mismanaged our present and is mortgaging our future? We should not, of course, be surprised at the mismanagement. We all know what happened last December. The same Minister for Finance tried to persuade the people that the 15 pence extra tax on petrol was for their own good. He also told us that sales to Northern Ireland motorists at the time were a drain on our own reserves and not a gain. In due course he lost the substance of that argument, as we know, and produced a shadow of an excuse; he said these sales did not get into our statistics and overseas lenders looked at statistics.
Is this not proof that last December the Government were aware of the real financial state of the economy, out did not admit it. They were concerned to dress up the accounts, as it were, for the benefit of foreign lenders. That is what was going on. That can only be described as share pushing. The Minister should tell us now how he proposes to service public debt and repay the borrowing entered into to meet the deficit. This is something we should be told.
We have heard it suggested by a Senator who can be regarded as being in the inner councils of the Government that we should break the link with sterling. That was so much kite flying. As a result of that exercise between £30 million and £40 million came into the country in the purchase of Government securities from across the water and the Channel Islands. This money came from speculators, not from investors. The reference by the Minister for Foreign Affairs to overseas investment of this amount in the first five months of the year is a misrepresentation of the facts. The movement of this money was pure speculation. If we separate from UK sterling as was indicated by a recent statement from a Senator——
There ought to be no reference here to a Member of the other House.
I apologise. If we break with sterling Irish stocks will be designated as foreign securities. This will enable the proceeds of the sale of these stocks to benefit in time from the dollar premium which is now costing somewhere approaching 100 per cent. That was the purpose of this speculation. The statement by the Minister for Foreign Affairs in Brussels in the past few days will add further fuel to this speculation. To feed the flame of speculative demand, the Minister for Finance created a further issue of this gilt-edged stock to Government Departments and so the share pushers' merry-go-round rolls on and on.
This is the road to ruin. The Government are driving the country to ruin. They are not fooling all the people, and they will not continue to fool anybody for very long. The Government should tell us in detail how they can propose to service the borrowing which is necessary to finance the deficit. They should also tell us how they propose to absorb the Government stock which they have pushed on overseas investors when, in fact, there is no separation from UK sterling. The Government have used the share pusher's rumour factory to convert what were unmarketable stocks held by Government Departments and they are now spending the cash realised as fast as they can.
That money can only be spent once. When it is spent, what will they use to pay for the same stocks when they are put back on the market by disillusioned speculators? Will they proceed to monitor the ongoing situation in the normal way to the point where the gilt-edged market, like everything else in the country, goes completely out of control, thereby leading ultimately to an economic crisis? If it were not so serious, it would be laughable. The Government of the so-called talents are displaying a complete inability to manage our affairs. They seem to be incapable of seeing the problems their inactivity has caused since the question was first posed in 1973. They are ready to blame everybody but themselves for our present predicament.
We are intitled to remind the Government of the old Truman motto: "The buck stops here." They have moved so far away from where the buck stops that this debate on this budget is not even real. We do not know whether the proposals before us will be carried out. The Government tell us this will depend on the reaction and agreement of others. We have been elected to this Dáil to determine policy for the benefit of the country as a whole. The two parties opposite decided to coalesce and form a Government. There should be no passing of the buck to the Arabs, or the multi-nationals, or the FUE, or CII, or the Congress of Trade Unions. Undoubtedly participation by these bodies is worth while, but this is the Government's baby. However unfit they have shown themselves to be in the past two-and-a-half years, it is still their baby and their responsibility, not the responsibility of the Congress of Trade Unions, the FUE and the other bodies to which they have kicked it over.
Until they are thrown out of office the Government will have to continue to govern. We are entitled to demand that they do their duty and govern. They should not use groupings outside this Chamber who are not answerable to Parliament for this purpose as they have been doing. The financial effects on the country of the Government's lack of action and inability to cope with the problems of the increased cost of oil and energy are now very evident. At the time of the energy crisis I repeatedly tried to draw their attention to the economic effects of the energy cost increase, but nothing happened. There was no action except that we were told we would never again have cheap energy. We still do not see any action or any attempt being made to deal with our energy problem.
Now that the situation has become so desperate I see a continuation of the new management techniques which this Government practise so adroitly to such an extent as to justify any change, or any type of share pushing, or any means of getting money, such as the means we have seen over the past few weeks with regard to the gilt-edged market. Our financial difficulties cannot be corrected by these gimmicks. The deficit cannot be made to disappear. To finance a deficit of this magnitude it will have to be serviced and repaid, and we are entitled to ask how do the Government propose to do this. I estimate that this is virtually impossible without imposing an intolerable burden of taxation on the people, further taxation on the already over-taxed work force. The cost of the interest for the Government's deficit forecast for 1975 would absorb more in taxation on its own than we raised with all the increased taxes in the January budget.
Do the Government intend to move into a simple form of tax raising such as pricing a packet of cigarettes at £1, or a pint at £1, or a glass of spirits at £1, or by raising the standard rate of tax to 50 per cent or more, and pricing a gallon of petrol at something like £2? Is this what the Government intend to impose on an already over-taxed population? This is the reality. These are not figures taken out of the sky. A deficit of the present size in a country of this size cannot be sustained, whatever the political pressures behind the Government. The Government's policy of inaction and continued vacillation in every sector has brought our economy into an area which is fraught with danger.
There is no sign in this House that this situation is being dealt with honestly. We do not believe it is being dealt with properly. The measures announced a few days ago will not have the effect we would all like to see in order to correct the rate of inflation as it is running today and, above all, to get people back to work. We do not see that happening as a result of these measures. It is very wrong and very irresponsible for any Government elected by the people to govern the country to try to put the responsibility for corrective measures on to the trade union movement, or the Federated Union of Employers, as the Government have done in this case.
We are now discussing what could be described as the second official budget this year. We seem to have budgets every second day. If there was ever an incomplete package brought into this House, this budget is one of them. The power that should be vested in Dáil Éireann is being taken from it completely. Yet it was a budget which was heralded with high publicity at a cost to the ordinary taxpayer.
The Government have been in power now almost two-and-a-half years and, at the end of that period, we can see we are going from bad to worse. We and the public were led to believe there were days and nights of hard work; the midnight oils being burned; Ministers sweating in their shirt sleeves, meeting anybody and everybody; they were going to produce a super budget to cure all our ills. After all the labour pains and time spent in the labour ward, they produced this budget which could be described only as a little dormouse. In the papers we were told and, through the Government Information Bureau, one person after another was sending out Press releases to the effect that they had met this organisation and that organisation. The Minister in his speech expressed his thanks to all the representatives of labour, industrial and agricultural interests and to the National Economic and Social Council. After all those discussions one would have thought the Government would have introduced something that would not have to be referred further. The success of this budget seems now to revert to the Employer-Labour Conference. Certainly it is a body that should be consulted, but I claim that nobody has the right to decide what should happen except the democratically elected representatives of the people in Dáil Éireann.
If this Government introduces similar budgets in the future they will be saying to the agricultural community: "The success of our budget is over to you now." Of course, there is no fear that the day will arrive when the unfortunate recipients of social welfare will be asked: "Will you accept this? We cannot put the budget through if you do not accept it." No; they are not sufficiently strong; they are not a pressure group; they are not a sufficiently-united group and have not sufficient organisations to speak for them.
It is obvious that there were differences of opinion between the Government Parties as to what would be done when this budget was presented. Once again they kicked to touch, took the easy way out and brought in an incomplete budget. They tried then to put across that they were a Government of consultation, a Government who would meet the people, a Government who wanted to be generous with everybody. Of course, that is merely another fallacy. There are people affected by this budget who cannot kick out. There are changes to be implemented in the income tax code affecting many people. Were those people consulted before these proposals were introduced? Certainly, they were not. At the end of last year were the motorists of Ireland consulted before an extra 15p per gallon was put on the price of petrol? Were young house builders consulted before the increased mortgage rates were announced in this budget? No; the Minister thought he was in a sufficiently strong position to take a swipe at certain sections of our community but he thought others might rebel, causing him some annoyance and trouble, and he decided he would not bother with them.
It is obvious and agreed by everybody that inflation must be tackled. Deputy Hegarty said this morning that a start had been made. We, in Fianna Fáil, told the Government last autumn, and long before, that remedial measures would have to be taken. But they refused to implement such measures at that time. They went away budgeting for this or that deficit; at all costs they would remain popular; they were the people who, at all times, would hand out the goodies. But the day of reckoning has to come. Now the pigeons are coming home to roost; the country is in a shocking mess; there is no confidence in the building industry amongst industrialists, amongst the agricultural community or workers, when they see factories and so on closing down all round them; they see the unemployment figures rising. Conservative estimates show that, for the first time in our history, we may hit 130,000 unemployed around next September or October. God forbid that that will happen but what measures are being taken to prevent it? Unfortunately the provisions of this budget will not counteract it. There are not measures in this budget which will create employment. Where do our school leavers, young boys and girls, stand today? Where do people who have undertaken courses and obtained their Higher Diplomas in Education stand? I can speak of my own area, where the Cork County Vocational Committee held interviews last week. They had approximately 30 vacancies and 520 applicants. In order to curtail it to a manageable size—and the Parliamentary Secretary is as aware of this as I am—nobody who received their H.Dip this year was considered for a post. That is very sad indeed and is the result of mismanagement of the Government. This was not the position obtaining three or four years ago—approximately 103,000 unemployed with a prospective jump of another 25,000 or 30,000. Our economy was handed over in good repair to the present Government. They have completely mismanaged it for the simple reason —as we pointed out on many occasions—that the two philosophies of Fine Gael and Labour could not join for the good of the country in producing policies so that we might go abroad and hold our heads high amongst the nations of the world.
Government speakers are all attempting to say that there is nothing in this budget except that it is up to the Employer-Labour Conference. But even in that respect the Minister's statement is contradictory, where he says—on the subject of inflation——
By whatever detailed renegotiation is necessary we must take immediate steps to ensure that the measures which the Government are taking to wind down inflation will be matched by an appropriate provision of the remaining national agreement increases—for example, by dropping the third phase or by modifying the third and fourth phases or some equivalent adjustment. How exactly the agreement should be revised to achieve this end is a matter for consideration in the first instance by the Employer-Lobour Conference and I am asking the Chairman of the Conference to have it convened urgently to put this examination in hands.
I wonder was that discussed at all in all of the pre-budget talks we heard about? Was it ever discussed and, if so, what was the result? What happened? Was there disagreement and, if there was, are the Government unwilling to take a decision?
The Minister continued to say:
I want no misunderstanding to arise. There is no question of reneging on or abandoning the national agreement.
In the past, national wage agreements were established under Fianna Fáil and were always honoured; it was understood always that once they were made they were honoured.
The Minister continued further to say:
If, on the other hand modifications of the national pay agreement should be refused or if they should be inadequate, the government would be reluctantly obliged to consider revoking the price reliefs which are a significant feature of this budget.
What is that? Is that a threat? Is it a declaration of intent or policy, or will the Minister implement it?
Then the Minister continued to say:
If people insist on maintaining all the terms of the national pay agreement intact it would simply not be possible for the Exchequer to meet the increased cost of today's package of proposals plus the cost of implementing in full the national pay agreement.
How can one equate those two statements? In one part of his speech the Minister told us that there was no question of reneging or abandoning the National Wage Agreement but in another part he told us that if people insist on maintaining it the Exchequer will not be able to meet the increased cost. The Minister should explain what he means by those statements.
Since the Minister's statement the ICTU rejected his proposals and the FUE have indicated what they think should be done. Are we back to where we were a long time ago? Are we back to the stage where renegotiations will have to take place? The Minister for Finance is the cause of all this. Responsibility for this rests on his shoulders and he should try and rectify the position.
If there was ever a loser in this budget it is agriculture. That industry only gets a few lines in the Minister's statement. It has become the poor relation of this Government, who seem to have thrown it to the wind. We were told that £3 million would be given to agriculture, but what is that to be used for? The Minister should tell us how it came about that that money is wanted in the agriculture industry. There is no word in the budget statement about the undeveloped areas. What about the £6 million that was passed in the January budget? Was that spent on something else? The undeveloped areas were mapped out and brought about in a reckless fashion. Mountain ranges were divided and people living on one side qualified while those on the other side with the same type of land did not qualify.
Agriculture, and those involved in it, have taken a severe knocking from this Government. The Parliamentary Secretary who comes from an area of small farmers knows that. He and the Government have thrown their hats at the agriculture industry and let those involved in it sink or swim. The farming community were never worse off. They cannot buy fertilisers and men are being laid off in Goulding's because farmers are not using fertilisers. Were did the rot set in? In my view the rot set in when the Government took away £1.2 million in subsidies for fertilisers after they were one month in office. At that time I said it would have a bad effect on the farming community and would result in less fertilisers being used. I also pointed out that it would result in less produce from the land and, ultimately, result in unemployment at the processing plants. The Government were told those things when they rushed around trying to save money.
What about the price of milk? Nobody knows what milk will make. The leaders of the farming organisations, the economists and the Government speakers at one time told the people that the price of milk delivered by farmers to creameries would be 32 to 33p per gallon. The farmers were told that this concession had been received from the EEC. The Minister for Agriculture and Fisheries when he arrived back from Brussels on one occasion announced that he had negotiated a great deal for the farmers and forecast an upswing in price. The farmers can tell the Minister that in their June cheques for the May supply very few were paid 29.5p per gallon. Where has the other money gone? Millions of pounds are involved in this. There is no incentive to produce if the farmers do not know what is going to happen.
We know that the pig industry is in a bad state. I hope there will be an upswing and that it will go back to the traditional producer. Pig producing has fallen into the hands of the bigger producer, and that is a pity. It was a source of income to small farmers who had to produce something other than milk on account of their small holdings. The Minister told us that he had discussions with the banks in relation to intervention beef. He stated:
The commercial banks have accepted, following consultations with the Central Bank, that it is appropriate that moneys for intervention purposes should be provided through the banking system and have already agreed to provide £58 million for this purpose, being the amount advanced by the Exchequer for this purpose to 31st December last.
Do I take it that the Government do not have to provide that money now?
The statement continued:
Discussions are now being opened with them on the additional £38 million required in the coming year.
I hope the Minister refers to a story in one of today's newspapers to the effect that there was a racket in the Irish beef intervention system. That story was to the effect that there was a racket of the magnitude of £10 million. The Minister should tell the House whether that is true or not. The hint in the newspaper was that from discussions in the EEC they would not allow Ireland to participate in the intervention scheme this year.
What will happen to the £38 million? How will it be distributed? We had the shocking spectacle last year of the £58 million falling mainly into the hands of a few people. It did not work its way down to the man who produced the cattle or the small farmer who had to sell off his cattle. I understood the Government had initiated an inquiry into this system and had sought advice on how the system should be changed this year. I expect to hear some proposal in the near future. The Minister should see that the £38 million is distributed to the man who rears the calves and has to sell them when they are young stores. We should not allow the situation to continue where marts are filled with cattle, buyers paying big prices but farmers are not adequately compensated for producing the animals. We brought that to the notice of the Government several times last year but they took no action. Will we have the same position in 1975? It appears that the £38 million will only benefit a few while the hard-working and depressed small farmers will be thrown to the wind.
There was no discussion with the farming organisations before the Government decided to do away with the subsidies on fertilisers. Discusions take place on matters that suit the Government and they take decisions if they think they will be popular or if they think the group affected cannot have a swipe back at them. If powerful groups are involved the Government do not seem to be able to reach a decision at all. Agriculture deserves an injection of millions of pounds. I should like the Minister to tell the House what money is owed to the ACC: what money was not paid on the gale days on which it was due? What money has been lent to farmers, in general, by that organisation compared with the amount lent to the co-operative societies? I am convinced that most of the money lent by the ACC, an excellent body, goes to the big co-operative societies. Many farmers cannot meet their commitments to the ACC to pay back their loans.
There is no mention about any commitments we may have to the intervention system for skim milk powder. I do not want to hear sorrowful stories from the Minister for Finance during the summer recess about what he had to provide for it. It is obvious that stocks are building up all over Europe and that they are also building up in this country. Would the Minister let us know if we will be paying money for this or if he has arranged with the banks to provide money for the intervention system for skim milk powder?
Everybody agrees that we should be tackling inflation and creating employment. It is very important to provide employment now because the emigrant ship is no longer available for people out of work. During the time of previous Coalition Governments when people were out of work they went on the emigrant ship and could be working in London, Coventry or Birmingham the following morning, but this can no longer happen. This budget has done very little to create employment.
We are told in the budget that employers who employ men signing on at the labour exchanges will get £12 per person. This is a good innovation but it is hard to know how it will work. What categories are involved in this? We are told that it is a temporary scheme of employment premia for manufacturing industry other than some highly seasonal food-processing operations. The Minister told us:
This will subsidise employers who recruit from the Live Register net additions to their full-time work force. Up to 31 March, 1976, the premium will be at the rate of £12 a week for each additional worker employed.
Is this not a very narrow area in which to employ those people?
Farmers during the summer months often employ extra labour. If any of those farmers employ an extra man to trim hedges, carry out farm improvements or do work which is badly needed on his farm, will he qualify for this employment premium? Surely he is entitled as much as anybody else to avail of the £12 premium? Those people seem to be cut out again in the budget. Agriculture has suffered in the proposals in the second budget of 1975. The Government seem to have thrown their hats at them and left them behind and do not seem to care if farmers sink or swim.
Some other Deputy mentioned local authorities. If they have water extension schemes, sewerage schemes or any other schemes like that can they qualify if they take men from the Live Register? They are giving as good a service as anybody else. This scheme can be a good one if it is properly implemented. What about builders? Are they involved in this? It would be a good thing if they took on extra men and were given a subsidy. Somebody has to place the order with the manufacturing firm before he can take on some of those people on the Live Register. You cannot employ a man if you cannot sell the goods. A builder cannot build a house unless somebody has ordered it and will live in it.
A man who is working is much happier than an unemployed man, unless he is a complete dosser. We all want to get work and take pride in our work. The Minister should state clearly if the building industry will qualify, if farmers will qualify and if he has a scheme for local authorities. There is no mention in the budget for the development of bog roads. Would such a scheme not be a good one to get local authorities involved in? If they were subsidised at the rate of £12 per person for everybody they employed developing bog roads it would give access to many of our bogs which have not been used for years. Anybody who lives near bogs knows that people are going to the bogs day after day. They are cutting and saving turf the same way as they did 30 years ago. As I commented before, between shahs and sheiks you can meet many people on the road with sleans and pikes. That is the position today. We are not providing access roads to bogs. Some of them were taken over by the Land Commission but they will not repair them. Flooding and hardship during the winter have created such bad conditions on those bog roads that lorries cannot travel over them.
The worst feature of this budget is the increased charges which people who get house loans have to pay. The Minister said in his budget speech:
As from today, therefore, interest on new advances from the Local Loans Fund to local authorities for these loans will be increased from 10 per cent a year to 11 per cent and the repayment period will be reduced from 35 to 30 years. As a consequence, the normal interest rate of loans to new borrowers will be increased from 10½ per cent to 11½ per cent a year. For those who avail of the maximum loan of £4,500 the net additional charge to the borrower will be approximately 75p per week when income tax relief at 26 per cent on interest payments is taken into account.
Does the Minister know what he is talking about? Is he taking into consideration that most of the people who build their own homes and have a loan of £4,500 to pay back have to furnish them and have a fair standard of living and they have not got an income high enough to be taxed? They are mostly people with young families of up to five children who are finding it very hard to live. It is no consolation to them to tell them that the additional charge they will have to meet is 75p per week because most of them do not qualify for that.
Why should they be at a loss of 75p per week? Why should anybody, who has been thrifty enough to save £3,000 or £4,000 and had to pay tax on it and who, if he invested it in a bank or elsewhere had to pay further tax if the interest was over £70 per annum, when he seeks a loan of £4,500 have to pay from 75p to £1 per week more now in order to build his own home? For being thrifty, for paying tax while at work and for paying further tax on savings the Minister for Finance says in effect you must pay another £52 per year. This is nonsense when we are trying to create employment. These people would create employment if we gave them a chance.
Fianna Fáil introduced a motion during the year to exempt people from double taxation to a certain limit. That motion suggested that if £4,500 were invested in a building society the interest would be free of income tax. That was a good motion and one which the people want to see implemented. Are young people who are being taxed at work not entitled to try to put together the price of a house and try to build it with the aid of a local authority loan? But the Government seem to be trying to ensure that people who are thrifty and try to help themselves will be taxed to the hilt. That message runs through all Government policy. It may be right to tax people at one level but we should not tax thrift.
The Minister for Local Government talks of all the houses local authorities are building but instead of providing extra money would it not be better if the Minister said the loan interest will be 11½ per cent if your income is £X and it will be reduced pro rata down to 2 per cent if your income is at a lower level and the £4,500 will become £6,000. That would be a good policy because the State will have to pay for building houses in any case. Is the man who gets a loan even at a low rate of interest not better than a man filling up a form for a council house while himself and his wife live in a bad home? Even though under the managerial system public representatives have no function these people go from one public representative to another, as we all know, asking them to intercede so that they will get a decent house to live in. Would it not be better for the State if that man with an income of, say, £30 or £35 per week could get a loan almost free of interest to build his own home? Such people would take more pride in that than they can take in the degrading system whereby the house is built for them and they have to wait in a queue and then be told that they have to wait for another three years or so. They are exasperated because they are taxed to the hilt and cannot get a proper house.
You do not get good citizens unless they have good homes to live in. We want private enterprise and not State monopoly which is what we are heading towards. It seems to be Government policy that the State should first own all the houses and then hand them over to the people.
I want to dissuade the Deputy from going into detail on housing matters which would be more appropriate to the Local Government Estimate.
I have made my views clear on that matter. We have had changes in value-added tax. In his speech the Minister said:
As I stated earlier, the Government have decided that, with effect on and from 1st July, 1975, the zero rate of VAT will be applied to the following categories of goods which are at present subject to the 6.75 per cent tax rate:
(a) clothing and clothing materials and footwear;
(b) electricity and heating fuels generally.
That is very welcome and should have been done, as we have said, long ago. At the time of the introduction of the green £ we said that food subsidies should then be introduced.
As regards clothing, I should like to know what is the position about stock on hand? The Minister should explain that. Many people have a good deal of stock on hands and have paid VAT on it and would be selling it at a certain price. Will they have to sell to the public at the old price or can they be recouped from any source? If they get in new stock VAT at zero rate will apply. The Minister should clarify what will happen regarding existing stocks.
I understand that imported clothes and footwear will qualify for zero rating even if they come from Taiwan or elsewhere. Can that be remedied? These are not EEC countries and the Minister for Industry and Commerce knows all the mechanics of the position. These goods are imported here using England as a back door. Why should they qualify for an advantage of 6.75 per cent? Why should we have to subsidise them if this can be avoided? We should be increasing VAT on such goods because they have a detrimental effect on our textile and footwear industries. We have exhorted the Government many times to try to safeguard our footwear and textile industries which are now in a shambles. In Brussels now we are at last trying to do something about this but in the past we have been lackadasical and it is now very late in the day. I will pay tax with any man but I do not feel happy paying tax to reduce the price of imported goods manufactured in the Far East by big industrialists who pay only slave wages to their workers. There is a big principle involved here.
What are clothing and clothing materials? I am very interested in this matter because in my area there are factories that manufacture blankets among other things and I am told blankets will not qualify. If you go into a shop and you belong to the chinchilla or Canadian squirrel grade to buy a fur coat you will get a good reduction. There is something completely wrong if a man in the upper stratum of society can buy his wife a Canadian squirrel for £3,000 and get a 6.75 per cent reduction while if Mary Murphy, an old age pensioner goes in shopping for her husband who may be sick at home and if she wants to buy three sheets and two blankets, the shop-keeper will tell her there is no reduction in VAT on those items. That is the position at present. Are we mad? Should people try to make a dress out of the blanket?
This is a serious matter and I want to point out the bankruptcy of the Minister's speech. It was silly. Let him say that clothing, footwear and bedclothes will qualify for zero VAT rating. The wealthy person who buys beautiful clothes will get the full benefit of zero rating. On a fur coat costing £2,000 6.75 per cent would involve a considerable reduction. The amount of money involved in that could be used to reduce the price of blankets and sheets for the poor person, who does not seem to matter nowadays with the pseudo-socialists and super-socialists that are around. They seem to have sold out on their socialism.
There has been a reduction in the price of butter. There has been a reduction in CIE fares. There is a complete lack of policy. Not so long ago the Minister gave permission to CIE to raise fares. Now they are to come down. I understand the axe is to fall on CIE personnel and that the nice hostesses on the trains are the first to be given protective notice. What is the policy? Will there be further increases in rail fares? I have always said that the railways should be regarded as a social service. The railways reduce the number of motorists on the roads. People who commute to Dublin would travel by train if the cost were comparative. If rail fares are increased people will be driven on to the roads which are not geared for the heavy volume of traffic coming on to them. What is the policy in regard to CIE? What will the rate of subsidy be from now on? Will they merely have to present their accounts to the Government and be subsidised? Can I take it that in the next 12 months there will be no further increases in CIE fares? We need a clear declaration of intent from the Government in regard to train fares and CIE in general.
The price of butter is reduced by 10p. One week after the 15p was put on the gallon of petrol the price of butter increased. The Minister explained that the increase of 15p on a gallon of petrol was to make the price the same as in Northern Ireland and Great Britain. He widened the gap between the price of butter here and the price in Northern Ireland and Great Britain. It was proved to me at that time that because of the differential in price a person who smuggled in ten tons of butter from Northern Ireland could make a profit of £4,600. Smuggled butter from Northern Ireland was selling freely in my county because it was cheaper to the housewives. The Government removed the subsidy although we exhorted them to leave the subsidy on butter. Now they are giving a subsidy of 10p a lb. The price differential will not be so attractive to the person anxious to make a quick profit.
The price of liquid milk is to be reduced by 2p. Milk is an essential commodity and the ordinary person should be able to buy it at a fair price. What is the policy? Will the subsidy continue? Will the subsidy continue on the loaf of bread? Will there be smaller loaves? The yo-yo policy of taking off and putting on subsidies undermines confidence in the Government and in the country as a whole.
As a nation we are not paying our way. There is a huge deficit, a huge budget deficit. The balance of trade is not favourable. Measures must be taken. Otherwise the child born today will have no means of repaying the national debt. Everybody at ministerial level is in the air. The Minister for Finance has been in the Middle East negotiating a loan. Rumour has it that he has not been so successful. As a layman I would like to know the position. If the £ keeps falling what will we have to pay in respect of these loans in addition to the normal interest rate? Rumour has it that the Minister for Finance is to take to the air again and to have further talks in the Middle East in regard to loans. Experts writing in the papers say that money is not as plentiful in the Middle East as people believe it to be. There seems to be nothing in the Government kitty, no money available for necessary things. The Minister, for all his travelling abroad, does not seem to have brought back the money. I understand that our EEC partners must act as guarantors in regard to all these matters. When the Minister is concluding the debate I hope he will refer to that matter and give us the true position.
The budget was designed to reduce the consumer price index and to give employment. There are certain categories of people who have been badly hit by the budget and who will continue to be affected. They are people who are thrifty and inclined to save. People now say there is no point in saving or being in credit in the bank, that it is better to be in the red nowadays because those who were thrifty are being taxed on their savings.
A people can be divided into three categories, the young, the able-bodied workers and the unemployed, the aged and the infirm. The able-bodied workers have to support the rest of society. These people are becoming poorer and poorer and have to pay more and more and they are becoming fed up. There are people working very hard today only to find that the last penny is being taken from them in taxation. If a single man has about £800 in the bank and is looking forward to marrying the girl of his choice and having a home of his own, the bank manager reports him to the Minister for Finance and the interest on his deposit is taxed. This is in addition to the ordinary income tax. There is taxation on top of taxation. The Minister should ensure that people who are thrifty and want to help themselves are recognised and helped by the State. The budget has done nothing to help those people.
The budget offers nothing for agriculture which is our greatest national asset. We have not the raw material for manufacturing industry. The Minister must make a much more elaborate statement on this matter when he is concluding the debate.
We have a Government who have been guilty of a lot of patronage. This is what happens when you have a lot of patronage. People are infiltrating the civil service, sons-in-law of various people. I will not dwell on that.
What this country wants is clear thinking on where we are going, and it is obvious this Government cannot provide that. It is about time the people had an opportunity of finding out who wants to govern. No Government could have made a greater mess of things than this one. They are devoid of idea, thought and purpose, and the only way to bring back credibility in our standing, not only here but throughout the world, is to have a change of Government.
I can see that the circumstances of great difficulty in which the economies of the world in general and of this country in particular find themselves at present would furnish something of a dilemma to an Opposition. At times of difficulty, of rising unemployment and very severe inflation, the temptation to indulge in destructive criticism can often, particularly to inexperienced people, be almost irresistible. I even made reference in previous debates to that tendency on the part of the Opposition and my argument has been countered with the reply that I was simply trying to head off perfectly valid, correct and justified criticism.
Before entering on to the main part of what I intend to say, I want to give an example of the sort of destructive criticism from Opposition speakers in this debate which I came on reading the unrevised record. I shall give as close a reference as I can, although it is not from the formal record. Not alone does it exemplify the sort of opposition we have been having, which perhaps is depressing because we have criticised that sort of opposition, but it is extremely damaging not simply to the work of Ministers and the Government, because they are fair game in difficult times and the Opposition must make the best they can of the straws they can pick up, but to the efforts of dedicated public servants. I want to give the example and then I want to put on record some statistical material, not to indicate that the situation is easy, because we know it is not easy, not to make the difficulties go away with words, because we know they are real, but to put them into the context of difficulty but not destruction or despair. Let me give this example which I found so profoundly shocking. I am quoting the unrevised typescript of a speech by Deputy Colley on 26th June at approximately 4.40 p.m. I cannot give a more precise reference than that but it will appear very soon in the Official Report. I quote:
If you put yourself in the shoes of a foreign investor and take a look at what is happening here because of inflation and the heights to which it has been allowed to go, the effect that has had on wage rates, would you seriously consider setting up a business in this country so long as that kind of thing is allowed to go on?
Now comes the sentence to which I want to draw attention:
It would be cheaper to set up an operation in the United States of America.
That is not the casual crossroads, churchgate, backbench throwaway line. That is the considered statement of a man who has had a number of posts in Government, most recently in the Department of Finance; that is the Finance spokesman for the Opposition.
Is it accurate?
I am coming to that in a moment. There is the sentence: "It would be cheaper to set up an operation in the United States of America." I have a document which was prepared in the public service but prepared some months ago not in reference to that speech, because nobody could know at the time that Deputy Colley was going to say such a thing, but in relation to the costs in different countries. It is a column of 15 countries around the world and by accident the first of those is the United States of America and the second last is Ireland. I shall give the total labour costs, which are made up of the hourly earnings plus the indirect labour costs in pence per hour, first for Ireland, and it is 88p. The figure for the United States is £2.24. That comes from a document not prepared to refute that monstrous sort of statement but prepared in the public service.
In the first place the rate is nearly three times ours in the United States, and, secondly, we have a larger battery of State aids, which are very near the limit of what is possible in the Community and which we are continually defending, and of a kind which the United States do not have. All the aids we give—export tax relief, direct grants, training grants, subsidies, help with exports, help with design, help with research and development, help with finding sites, and infrastructural things—would have to be added to that difference in labour costs. Yet, Deputy Colley, who has been a Minister for Industry and Commerce concerned with promoting industrial development and who has been a Minister for Finance, can say it would be cheaper to set up an operation in the United States of America.
Put that statement into context now. Leave the Minister out of it. This country has a staff of very dedicated public servants who are scouring the world at this moment to the detriment of their health trying to keep up industrial investments. Deputy Colley knows them. He was Minister for Industry and Commerce and travelled with them. Apart from the give and take of political abuse, what is he doing to them, to their efforts, to their morale, when he is quotable in every country in the world on the record of this House as an ex-Minister for Industry and Commerce and Finance as knocking the basis from under the efforts of those people trying to promote industrialisation, job creation, exports. What a thing to do at a difficult time?
What is the date of the Minister's figures?
March, 1975, some months ago. I did not prepare any new documents. I just took a recent document.
Would Deputy Colley not be basing his argument on a rate of inflation of 25 per cent here as against 8 per cent in the United States?
The figures are for March, 1975.
Was he not comparing the rates of inflation?
The Minister must be allowed to speak without interruption.
Those differentials over a period of a few months which exist would not have so altered the circumstances that a thing is three times, or more, as dear in one place as in another. I appreciate the Deputy is doing the best he can for his colleague.
No, but——
The Minister must be allowed to make his own statement.
Would the Minister not agree that if an inflation rate of 25 per cent is to continue here——
The Deputy can make his own speech, but I do not know how somebody who has been a Minister can make such a damaging statement at a time like this without thought of the ramifications, without thought of the fact that every other industrial country is now bidding for industrial investment in competition with us for those overseas industrial investments that are available. In those circumstances, how can an ex-Minister hand them that weapon to use against us? It seems to me, of course, extraordinary but also to exemplify the sort of damaging and begrudging opposition we have been getting.
What is the date of that reference?
The time available is limited and speakers must be allowed to have their time.
I want to put on the record something of our general economic performance. I have affirmed the difficulties, but let us please put those difficulties into context. My responsibility is with industry so I shall talk a little about industrial production. I hear again from the Opposition a certain resentment to making international comparisons, but we had moved into a free trade situation before our membership of the Community by way of the various GATT rounds. We are shopping for investment all over the world. We are part of a Community of nine which may grow bigger. It is not only permissible but obligatory to measure oneself against comparable places. This is the only way to measure performance whether in good times or bad times.
I wish to quote now from the most recent issue of a periodical which gives the main economic indicators and which is published by OECD. I am referring to the June, 1975 issue in which the figures for industrial production are given. These figures are a little out of date because up to date figures are never given in international statistics. They are half a year out of date. For the last quarter of 1973 compared with the last quarter of 1974, the whole of OECD industrial production was down by 5 per cent. In the whole of the EEC—a smaller group and more initmately related— industrial production was down by 4.3 per cent. If one takes the worst country on the list, Japan, one finds that their industrial production was down by 11.9 per cent. All countries suffered a decline but the best on the list were Belgium and the Netherlands with a rate of decline of 0.8 per cent during the 12 months. We find that our decline was 1.9 per cent, that in the UK it was 2.7 per cent, in Italy, 7.5 per cent and in Germany—the economic miracle and the tremendous strength —the figure was 6 per cent.
Nobody likes a decline but there was not a rotten performance on our part. The figure for Ireland was better than the average for the whole of the OECD and for the EEC countries. Only two of the EEC countries had a smaller decline than ours. I am not saying that this is good or that this Government are satisfied with the situation, but in context the figure is not an indication of catastrophe or incompetence.
We are entitled, too, to put the unemployment situation, serious as it is, into context with the rest of the Community. Comparing the period to April, 1974, with the same period in 1975 our increase in unemployment was 41 per cent. For the comparable period in Denmark the figure was 340 per cent, in Germany, 110 per cent, in France, 72 per cent, in Belgium, 70 per cent, in the Netherlands, 55 per cent and then are listed the countries in which the situation was slightly better than ours—Britain and Italy. But of the nine countries, one starts at 340 per cent increase and that does not make allowance for the "guest" workers who went home from such places as Germany, the Turks, the Spaniards, the Portuguese and the Algerians who did not come back because the jobs were not available for them. Here again the figure so far as we are concerned is not an indication of catastrophe or incompetence, although it is very serious, but let us put it in context.
It is suggested, too, that we have some sort of catastrophe in our export industry which bears directly on me because it is in that area that I have Ministerial responsibility. If we take the months January to April, 1975, and compare them with the same months for 1974—I am taking those peculiar months because I have not got reliable figures which go beyond April—we find that the figures for manufactured exports show an increase in value of 20 per cent. This amounts to very little growth in real terms but what there is is a very substantial growth compared with lots of other countries. I read in today's Financial Times that Japanese chemical exports are declining. Our chemical exports were up by 42 per cent during that 12 months. This was in the middle of a desperate world recession. Our machinery and transport equipment was up by 34 per cent while the general category of manufactured articles not exactly specified was up by 20 per cent. Regardless of what the Opposition may think, I am very proud of the performance of our industrial exports and of the people who are chalking up that performance. They are doing extremely well in desperate circumstances in the world.
Would the Minister agree that the criteria applied for arriving at statistics differs from one country to another?
Speakers are limited to one hour during this debate. The Minister is entitled to his time.
While agreeing with the Deputy, I think the point is still valid. I have been talking about industrial export performance but I have not mentioned other areas such as the food industry. It is worth noting that food and live animal exports are up by 47 per cent. That is an excellent performance. All of this reflects itself in our balance of trade. Traditionally we have always had an import excess. I have here accumulative totals for the previous 12 months—one takes a 12 months' which ends in, say, April and, then, the 12 months that end in May and one rolls on the 12 months' excess from month to month—and these figures indicate that the import excess is the lowest, in May, 1975, of all the figures before me. There are various other ways in which this can be turned around but let me quote from the CSO figures for the 18th June, 1975 which show that external trade for May, 1975 was £27.7 million. I note that in May, 1974 the figure was £66.7 million. The change since the same month last year is that we have £39 million less of a gap between exports and imports. I am not trying to minimise the seriousness of the situation. I am trying to put in the context of a world recession and of the performance of other countries what are in many instances the heroic efforts of our industry, of our exports.
It would be damaging and harmful to indicate that our situation is worse than it is. Our balance of trade is improving dramatically. I should add that, in a way, that is not especially cheering because while our exports can go on increasing, part of this is due to a diminution in the demand for imports which would be used in manufacturing for subsequent export. Part of the narrowing of the gap is due to a slackening of imports because of a slackening of industrial activity. However, it is still a very heartening narrowing. It means that our rise in exports is bigger and more dramatic than our rise in imports, and that is something that is very useful at a difficult time.
Before going on to talk of other matters I wish, merely for the record, to try to answer what I consider to be a damaging assertion, not, perhaps, damaging for the Government, though Government deserve damage if they are acting improperly, but damaging for industry too because we are at a time —this is not my opinion; it is the indices—of crisis. On that point of indices, let me quote a source if people want to look it up: a magazine in the United States keeps a very up-to-date analysis of statistics. I wish our statistics were as up-to-date.
It is an up-to-date analysis of a very wide-ranging series of indices of the level of business activity and it does show that the American recession is not any longer going down; it is on the bottom and there are signs of it lifting. There are signs of recession lifting in other places as well. One of the points here is we are getting out of synchronisation. Our problems are continuing when other people's problems are beginning to end. That means we must be ready for the upturn when it comes and that means that confidence is important but, apart from confidence, it is the task of the businessman to see the situation exactly as it is and the task of the industrialist not to be too pessimistic or too optimistic but to see things accurately as they are.
I am simply trying to restore balance to counter the accusation that, and I quote "this Government is doing nothing about support for industry". I am not going to enter into details. I just want to put the global picture in my time of responsibility for public moneys for industry on the record. Before doing that, I would point out that our level of support both in the form of money and range of services is among the greatest in the world and is much greater than it is in many of our Community partners and competitors. Indeed, there is a school of economic thought which says they are too high and therefore detrimental. I hasten to add that I do not belong to that school, but they are very high.
Let me give you now the movement in budget funds for industry in the public capital programme in the last year of Opposition and in the period in which I have been Minister for Industry and Commerce, either by direct subvention, through the IDA, or SFADCO, or Gaeltarra or by nonfinance industry. We will take those two as global sums because I do not want to drown either the record or the House in statistics. These two categories together show that in 1972-1973 the total sum was £42 million; in 1973-1974 it was £50 million and in 1975 it was £89.6 million. In the period of two-and-three-quarter years form 1972-1973, before we changed the basis of our financial year, the total sum subvented to industry was increased by 112 per cent and there is now, as announced by the Minister for Finance, an additional £4 million for Fóir Teoranta and an additional £2 million for Gaeltarra Éireann, apart from the employment premium scheme and moneys for the building industry and other payments. This is —let me say it again for the sake of the record and for the sake of balance —a support for industry, for economic activity, using public money to provide the range of services which, both in the form of money and extent, is unprecedented, matched by very few countries and, indeed, being monitored continuously by the Community. With very great difficulty, if at all, can it be increased under the Community rules and the thrust of Community action is to bring it back. We are doing all that much in a relatively poor country by way of support for industry in all sorts of ways and to say we are doing nothing is simply a monstrous travesty.
I want now to turn to some particular activities of my own Department because this is a special time. It is a time that calls for special measures. We have had a good record from Córas Tráchtála of promoting exports. Córas Tráchtála is a promotional concern. I want to tell the House now that the Government have decided to participate with a number of prominent private business concerns in the establishment of an Irish trading company. I do not have authority to give the names of the participating firms, but there is an equal share by the individual large companies and the State. The intention is that this trading company will purchase products of Irish manufacturers and sell them in selected overseas markets, which will bridge the gap in the marketing resources of many Irish companies and their potential because there are export markets all over the world which the little company cannot reach. A trading company, such as the kind that has played a very great part in this field in Japan, will bridge that gap. It will also in appropriate circumstances buy up raw materials and other products required by Irish industry which many smaller firms have difficulty in procuring.
We are convinced that the time has come for the State to play a more active role in export promotion. Perhaps the word "promotion" there is wrong because I have used it already in a restricted sense in regard to CTT. CTT does very useful work. It is a service of exhortation. It cannot participate in direct buying and selling. When we saw the great success of the Japanese trading companies we thought this action was appropriate here and the certain share of State participation indicates a standing and stability which should improve the trading capability of this country in some eastern countries. I do not suggest it will produce a dramatic change. It obviously will not. That kind of change will take some time.
How does the Minister visualise the company working? Will it be in competition with private companies?
No. The mechanism is that a number of companies which have themselves large sales will inject their products into the company and move their own products. If other companies come to them and say they cannot have a selling network all over the world and ask if they would like to handle their products they can do that. It will be used for selling to and purchasing from; it is not visualised as a competitor. It is visualised as an aid to a company which has a good product but is too small to sustain an overseas trade.
I want now to return to the matter of buying Irish, which has a long history and which generated in the past admirable things and a little cynicism as well. It is desperately important now, important as a matter of survival for people's own jobs. In the slogan of the transport union they should put their money where their jobs are. It is also very important that people buying Irish and using Irish are critical of the Irish product, not to the point of rejection of it but to the point of making their criticism known so that Irish products will become in every sense in the international market place more acceptable and more and more competitive.
I considered what the past campaigns had achieved. I thought while they had been temporarily successful in the way of exhortation for the consumer only, there were large areas of information and large areas of purchasing, such as industrial purchasing and farm purchasing, as distinct from what a person does at the counter of a retail shop, which had not been touched in past campaigns. I set up a small committee some months ago which produced a report. It is a practical report. It is not a flag-waving exercise. It is not a high profile exercise. I did not ask for a public campaign. There was a limited campaign before Christmas.
The task of the committee I set up was not to indulge in a public campaign then but to look at all the organisations in the State which could be co-ordinated into a public campaign, to look at the target areas, to suggest to me a budget and an organisational structure for particular target areas, so that we could have a long and sustained Buy Irish campaign which, in the circumstances of the freeing of world trade, as exports become more and more important for us and therefore the market acceptability of our goods is more and more important to us, in the circumstances of the on-going liberalisation of trade within the EEC, would be not just a once off romantic spasm but a conscious and sustained will to Buy Irish which is extremely important for the future of our whole industry.
In these circumstances the working group saw as one of the most urgent tasks the need for an effective system of communication to both the distributive trade and the consumer; in other words a knowledge of the wide range in variety of Irish merchandise available, an information role. They decided also that there was an urgent need for a specific identification symbol for Irish goods. The details of this symbol are not yet in final form but will be made available to Irish manufacturers who are committed to the concept of consumer satisfaction and its use will be monitored by the working group. Of course, this will be promoted by a campaign in the various media. I believe and hope that Irish manufacturers will quickly realise the advantage of using the symbol as a sophisticated marketing tool and as a continuing reminder—I will use the phrase again because it seems to me to be a good one—to people to put their money where their jobs are.
The question of promotion, lecture campaigns, the whole use of the media has been examined by this committee. We had people who were experts in communications on it and they will continue to use their expertise in the mobilising of the whole of the media in this way. The National Development Association, whose general manager is acting as the co-ordinator of the working group, has already a trade and consumer shopping service of limited scope in Dublin in Ireland House. It is proposed to extend this service. I am making available a sum of £60,000 in the current year for these activities and that is over and above the Exchequer allocation of £40,000 already made to the National Development Association for their on-going work.
I should emphasise that I think work like this should not be a brief spasm at the consumer end. It has to permeate every buying decision. Immense buying decisions are made by people invisible to the public in industry or in agriculture or in the State sector. It should be continuous. It should be sophisticated. If we do not expect miracles, if we use all modern techniques, and if we stay with this task in the circumstances of Community free trade, it will prove useful and helpful.
I want to refer now to something which has been the subject of criticism, rather to my surprise. I want to refer to the matter of export credit finance. We had a scheme which existed in the past and I often had occasion to intervene on behalf of particular companies in the operation of the scheme, companies who are having some difficulties with export credit. Although it got harder and harder, in the vast majority of cases we did not lose trade because of lack of export credit finance. As I say it was getting harder and harder and there was a real danger that we would begin to lose trade as other countries made their export credit package more attractive which, for example, the British seem to be doing.
Recently we announced new arrangements. I think it fair to put them on the record of the House and to make a few points on them. The first is that this is the first time in the history of the scheme that there has been a State subvention to it. It was operated as a result of what you might call exhortation by the commercial banks in the past. Secondly, there is no ceiling on total lending. Thirdly, it is available at preferential rates. This is a new departure because it is committing public moneys to subsidising the availability of preferential rates. This scheme has been welcomed by industry. It is a good one. Therefore I was a little surprised to hear it criticised. I wanted to put those points on the record of the House.
I want to say something now about clothing and footwear. Let me try to give the House a statistical picture first. This I know—and I know it for the best possible reason; I know it from intimate contact with firm after firm and delegation after delegation —these two traditional industries in Ireland are in severe difficulties. From large amounts of public money at one end to the invoking of Community action at the other end to defend us against Korean imports—and we were the first Community country to do this—we are carrying out a continuous range of activities aimed at minimising the dreadful effects of world recession. I could give figures from all over the world to indicate that there is no country in the market economy world where there are not very severe difficulties in the textile and footwear industry. I want to try to put that into context. If we do anything unilateral for the alleged protection of domestic industry without agreement, we run the risk of reciprocation and, in areas where we are important exporters, that reciprocal restriction on us will hit us harder than facing the competition we currently experience, even though I am completely at one with the spokesmen of the industry in indicating how severe that foreign competition is.
Let me try to give a picture about clothing. It is alleged in the clothing area that our industry is being simply destroyed. I cannot put a lot of figures on the record, but I want to quote a number of tariff headings for clothing. Under the tariff heading that covers knitted underwear, which excludes legwear, comparing the most recent figures we have for 1975 with a comparable period in 1974, for that category, our imports went down by £9 million. Our exports rose and the difference over that 12-month period is that, where there was an excess of imports last year, there is an excess of exports this year. I merely choose that as the first category tariff heading on the list. For example, in the biggest category, in terms of volume and value—women's, girls' and infants' outerwear—imports this year, for a comparable quarterly period last year, rose by £500,000. Exports rose by very nearly £1 million. That is a category, as are most of the categories on this list, in which we export more than we import. But in those 12 months of world recession and of terrible recession in Britain, the excess of our exports over our imports—and indeed in most of the tariff headings categories in front of me—rose. If one endeavours to put that in global terms, one can say that in regard to clothing we would lose more than we would gain by dramatic restrictions across the board. Of course, that is not to say that if we could possibly prove there was dumping we would not be able to act legally and briskly and that we would not get advantage from so doing. Of course, we would. What I am saying is that if one seeks across the board restrictions then, in the case of clothing, the loss would be greater than the gain.
I wish I could say the same of footwear, but I cannot. We observe a very dramatic, increasing penetration of imported footwear into our home market. For example, in the first quarter of this year compared with the first quarter of last year, we see that production is down, that imports are down a little, that exports are down dramatically, that home consumption is down. We have a recession with which to deal as well as intensifying competition from imports. As a result of that, we see that imports as a percentage of total consumption have gone up in the past year—as indeed they have for a number of years past. It is not a new phenomenon but is a particularly and acutely accelerating one at present which poses a fundamental threat to the continued existence of our footwear industry.
Last December we approached the Commission. Of course, we have had contacts also with the United Kingdom under EFTA. Last December and at the beginning of this year, when the task force came to Ireland —that task force from the Community looked for very detailed statistics, sector by sector, different supplying markets, different categories of imports, different markets we supply, different categories of goods, different sorts of shoes, different sorts of clothing and textiles—we did not then have the statistics we have now. In the light of the most recent statistics I have declined to accept the adverse response we got from the Commission earlier this year. We have gone back to the Commission, specifically on footwear, in the particular context that we could make the case, different from footwear and from clothing I indicated very briefly here, without using a wealth of statistical detail. I am unable to tell the House what is the result of that. But I want to assure the House that we have always acted to the limit of what is possible without upsetting the apple cart. But when the footwear and textile industries of the world and of competing countries were experiencing as severe and in some cases more severe damage than ours, we continuously had to weigh the danger of provoking a retaliation which would have damaged us as an exporting nation more than the endurance of competition. There is a distinction to be drawn between on the one hand clothing, where our exports exceed our imports, and on the other hand footwear. Specifically on the footwear issue, we have not accepted the previous response and have gone back again, though I cannot say what will be the outcome of that most recent approach. I have had an Assistant Secretary in Brussels in recent days. I have had some discussions here also and on the telephone with the responsible Commissioners.
I wanted to say those things in the course of this debate. I have done two things. I have indicated some initiatives relative to my Department and I have endeavoured to put the very real difficulties into context. I have endeavoured to indicate—I gave an example at the beginning—that in regard to criticism which starts out perfectly validly I, and the Government, will bear responsibility for things we do inadequately or wrongly. We are not trying to evade that. We also have sufficient self-confidence and courage to accept obviously good suggestions coming from the Opposition. I hope I never would, not would my colleagues ever reject a good suggestion merely because somebody else in Opposition thought of it first. That is all a perfectly proper and legitimate working of the democratic process. But I did draw attention to what seemed to me to be a passing over of criticism into an area where it inflicts real damage and I gave an instance I found particularly shocking.
In concluding, let me spend a few minutes speaking about the place of our economy in the world and what should be our strategy. Let me speak of the global situation. Last year we had very severe inflation. It was due to causes which we could enumerate, which were enumerated at the time, and which we do not need to reiterate; they are known. They triggered off very severe inflation. Whether it was raw materials, the fact that we were adjusting our agricultural prices to the EEC, whether it was high world interest rates, whether it was speculation in some commodity, the downfall of sterling or whether it was—I put it last, though it was not last in importance—the increase in the price of oil, all of those things were genuinely matters over which we had no control and were applicable in other countries also. Those real causes outside our control, as a small, open, trading economy did trigger off a round of inflation and that, in turn, triggered off a round of wage demands.
Last year, when other countries' rates of inflation were rising also, when they also had to pay increased prices for oil and increased interest rates, there was a difference in the performance on the one hand of many world economies and on the other hand those of the United Kingdom and ourselves, the latter two being extremely closely tied. We find now that our inflation is not ebbing as it is elsewhere. We find also that a lot of that inflation is generated internally by a round of wage demands, triggered off by external causes but which can be self-perpetuated because those wage demands can raise prices which in turn raise wages. The whole thing is selfrenewing, self-perpetuating and a vicious circle. Then one might say: "Ah, yes, but what difference does it make because the prices go up, wages go up; nobody is really any the worse off, because one rise is compensated by another?" Were we a closed system that would be true but we are not. We are a small, open economy that must export. If that process continues here at a rate two or three times as fast as it does in other places to which we have to sell, the net result, quite quickly, would be that we could not sell there.
In classical times it was said that there were two ends of the tug-o'-war, that as employment went up inflation came down, and as inflation went up employment came down. It is not that way now. Things are linked now because of the fact that we are part of a larger system but we are not behaving in the same way as the other bits of that larger system. If we go on now as we are we will not have the jobs because we cannot sell the stuff. We are not a closed system and we have to look at what other countries do.
Recently Britain took a vigorous move but late. Their lateness, indeed, was an embarrassment to us in two senses—firstly, because there was a referendum and that influenced so many fundamental decisions here, and, secondly, because our two economies are ultimately connected. There is a serious economist who contends that we cannot diverge more than a percentage point or two from their inflation rate whatever we do. That may be a bit pessimistic, but obviously what happens to their economy influences us profoundly. They are taking resolute action. The whole content of this budget is concerned with, as was emphasised by the Minister for Finance, immediate measures. The budget does not contain middle-of-the-year measures, between the main long-term or medium-term measures. It is an immediate package to deal with the situation, an immediate but very dangerous situation. That situation is that our competitiors control their inflation while we do not. Our cost structure then becomes impossible and we lose our employment and exports. It amounts to the same thing; if one loses one, one loses the other.
I do not wish to lecture any sector or to dwell on whether past price rises caused wage rises or whether wage rises caused price rises because sometimes it was one and sometimes the other but mostly it was a bit of both, they both led and followed each other. We are now at the critical juncture where, if we can get by with calm and discussion, agreement and recognition of the peril, a dramatic scaling down in the rates of increase of the quarterly consumer price index, and match that with a corresponding scaling down in wage increases then we have turned the vicious cycle into a benevolent one. Instead of having what in electronic circuitry one calls a positive feed-back, where the response gets bigger and more dramatic, one would slow it and have negative feed-back. We are at the time when we want to turn a self-accelerating destructive cycle into a self-slowing benevolent cycle.
I have contended with figures that we do not need to be ashamed of our economic performance, that it will stand comparison with other places, that we do not need despondency, alarm, wringing of hands or wailing. We need to see the difficulty as it is in the context of some serious failures, serious inadequacies and some strong points and some victories. In that context this is a package saying it is significant because of the divergence of our performance from the performance of other countries. We have done our part to try and break one cycle and start an opposite one. If we get a response that process can go on and we can get our inflation rate down and get our wage explosion rate down. If the two decline at the same rate nobody is worse off; it does not mean robbing anybody; it simply means that internationally we can compete better. Industrially it has shown itself in this difficulty, agriculturally it has also shown itself, in this difficulty. We may get some input from resources and, hopefully, with peace we can resume growth with input from tourism also. With those four inputs potentially there and if we get through the next slowing down period of one year or 18 months we are basically sound, our future is basically bright, strong and healthy.
The task for us is to do what we can, to make dramatic efforts to curb the rate of price increase and calling, in response, on those who determine wage levels, to make a comparable dramatic effort so that we contain the two together. Nobody loses by containing the two simultaneously in relative positions, and everybody gains. That is the whole trust of this; it is the task of it. I hope all sectors, Government, Opposition, people, trade unions and employers will so see it. If we were to believe our situation worse than it is now we would take hectic and ill-judged decisions which would in fact produce the crises that the Jeremiahs are predicting, because sometimes the prophesies can become self-fulfilling. If on the other hand we see circumstances are difficult but not impossible, and if we do the appropriate things, as I believe the Government have done in this budget in their area of responsibility, I am convinced we will look on this as a gap of danger, retrospectively, through which we came successfully and through which we came in a way that proved the stability and maturity of our people and of our institutions.
Listening to the Minister for Industry and Commerce one must say that he had a beautiful bedside manner, but, unfortunately, as far as the patient is concerned, he is not responding to the treatment the Minister has prescribed. The patient is dying fast in his hands and in the hands of the consultants whose responsibility it is to rectify matters. In his speech the Minister has given us a great deal of statistics in relation to what the Government have been doing, in relation to spending, the work of the IDA and other organisations. However, he cannot get away from the facts and figures which show that our unemployment situation has never been as bad, that we have been over-borrowing and that we have a huge deficit in this budget. These are the statistics which the ordinary citizen has to face and which this country at some time will have to try to overcome.
We were told by the Minister that the budget was introduced to try to do something urgently to help in a serious situation. We have been pointing out over a period that it was necessary to take steps similar to those taken by the Government to rectify the serious position which had occurred. If the Government had taken the necessary steps at the correct time they, and the nation, would not now have to face the terribly serious position we are in. There is an Irish saying to the effect: "Tosach maith leath na hoibre". If any Government in the history of the State had a chance to make some impact this Government, when they took office had an opportunity to get the economy booming. Having come before the people with all the answers and "a guarantee of strong and stable Government capable of dealing with the nation's problems" we expected more.
This budget gives us an opportunity to go back over the ground and see how far the Government have gone to live up to that responsibility or reputation. One of the main planks in their 14-point plan was stopping the price rise. They told us that the immediate economic aims of the new Government would be to stabilise prices, to halt redundancies and reduce unemployment under a programme of planned economic development. We have seen the result. There has been no effort made to stabilise prices. As a result, we have had increased wages and housewives unable to buy the necessities of life for their families. The Government took over two years to wake up to their responsibility in relation to this matter.
Recently there was a Bill before the House dealing with social services. We were told that the result of this Bill would be to reduce poverty but we have seen what has happened. In my county it will mean that we will have to put a huge sum on the rates to meet the Bill even though the Government, when going into office, promised to reduce the rates and help local organisations. Instead of that we have had increased unemployment and no effort made to do anything positive to help the country.
The situation in regard to many aspects of industry has got worse since they came into office. The Minister for Agriculture and Fisheries and other Ministers give the impression that everything is fine and that there is no need for complacency. The Minister for Agriculture and Fisheres was quoted recently as saying:
Let me nail the old chestnut of the small farmers losing all asides after 1977.
The fact is that part-time farmers have lost many advantages provided in the EEC schemes. The Minister does not seem to realise this, particularly where the small farmers of the west are concerned. Many of them are part-time workers and they are not in a position to avail of many of the grants which were there for them up to recently.
In relation to fishing, the Parliamentary Secretary and the Minister for Agriculture and Fisheres have been making very little progress. In 1982 the Treaty of Accession will be open for renewal. Article 103 states:
Before the 31st December, 1982 the Commission shall present a report to the Council in the economic and social developments of the coastal areas of the member states and the state of stocks. On the basis of that report and of the objectives of the common fisheries policy, the Council, acting on a proposal from the Commission, shall examine the provisions which could follow the derogations in force until the 31st December, 1982.
If the Government do not do something about producing a fisheries policy we will not be able to convince the other member states that we are in a position to exploit our waters. We will then have foreigners coming right on to our doorstep. It is necessary to have some plan prepared to ensure that progress is made in relation to this industry.
The Government recently voted against the idea of preparing a plan which would help to get over our problem when the Treaty of Accession comes up for renewal. There is no planned development and the Government in the budget do not make any reference to the necessity of doing something in this respect. There are many aspects of the proposals which the Minister put before us which will not confer any benefit. When we look at the record of the Government during the last two years and the promises they gave us when they came into office there is a vast difference.
We were told that as an integral part of their economic and industrial relations policy the new Government would introduce worker participation in State enterprises and the election of worker representatives to State boards. If one goes back on the record of the past two years, one finds that nothing has been done in that respect. The various points put forward at that time have been forgotten. We were promised that price rises would be stopped and it is only now, after two and a half years, that the Government have decided to do something positive in this respect.
We were also told that there would be a great deal of social reform and that we would have the elimination of poverty. We do not find any of this in the present budget. Instead, people are finding it harder to live day by day. Small farmers in the west have not benefited in any way and although the Minister for Agriculture and Fisheries tries to give a different impression there is no aid or protection for the small farming community.
In this country we encourage people to build their own houses and this is commendable but in their 2½ years the Government have done nothing as regards increasing the loans available to people who want to build their own houses. It is easy to prove that no grant is being given by the State at present because the amount collected in VAT balances the grant payment. You may get the grant but you may pay it out in VAT charges. That has been the case for the past 2½ years even though we are told that this is the Government of all the talents with all the answers for all the problems. In simple matters concerning the everyday life of the people they do not seem to realise what is happening around them.
We have seen no attempt to stop prices rising. Before this Government were formed one of the points put forward stated that the immediate economic aims of the new Government would be to stabilise prices, halt redundancy and reduce unemployment under a programme of planned economic development. We know what happened. We can go through all the points in the package put forward by the two parties now composing the Government and we find that none of them has been honoured. It was said—this is one that might apply to my own area—that small farmers would be helped by curbing non-farmer speculation in agricultural land, a vigorous land reclamation programme, encouragement of long-term leasing of land and low interest loans. We were told the Government would plan greater investment in harbours and fisheries so that our fishermen would get maximum advantage out of the opportunities offered in the EEC. I have seen no example of that and I do not think that this package has done anything to help in that regard.
We have the same story in education. We have large classes; we have a great number of teachers trained and now we have a situation in which they will find it impossible to get jobs because the Minister for Education failed to honour a promise to reduce the size of classes. One can go on talking about the mismanagement of the Government but they still try to paint the picture that they are the be-all and end-all of everything. If the people had their chance at this stage, I think they would give the Government the answer they deserve. I hope we do not have to wait too long for that day.
In reading last Tuesday's Evening Herald I noticed that whoever wrote the leading article seemed to be under the impression that the budget debate had finished last week through lack of interest on the part of the Fianna Fáil Party. This is what was largely implied.
Debate adjourned.