Two non-events of this financial year were the January budget and the recent budget. The Minister rightly described the January budget as a holding operation. It was holding on to the status quo and holding on to a situation where the financial house was tumbling about their ears. In view of the fact that the January budget did not have any beneficial effect on the three major problems of the economy, inflation, unemployment and the lack of confidence among people, who would invest in industry and other productive schemes, one would have thought that the Minister would have taken steps to ensure that the fiasco created by the January budget was not repeated.
I imagine that what the Minister meant by the January budget being a holding operation was that it was to hold the situation from getting any worse. This budget is a pulling operation. He is trying to pull back from the situation mainly created in the January budget of the economy going into reverse. This budget can also be described as a holding budget with a certain element of pulling away from a regressive situation.
When will the Government get down to a serious effort at tackling problems which are affecting the country, unemployment at such a very high figure, increase in inflation and the balance of payments which is a catastrophe for the country? Will we have more financial measures in the autumn? Are we to go into 1976 and have a budget in January of that year with a situation where inflation is rising, unemployment rising further, a balance of payments problem and a budgetary deficit of between £250 million and £300 million? One can visualise the measures which will then need to be taken, despite their unpopularity, so that if this Government are still there they will have, for the first time, to get down to work and to make up for the neglect of the two or perhaps three budgets of 1975.
Before dealing generally with the provisions of the present second budget of 1975 now under discussion it would be a good idea to let the Minister know how this budget will affect the economy of Donegal. I should mention the transport problem and the subsidies paid to CIE. There is a very serious transport problem for manufacturers, industrialists, farmers and fishermen in the northern half of county Donegal. In that part of the county freight and passenger transport services were provided by the Lough Swilly Railway Company whose head office is in Derry city.
A month ago 50 employees of this company were notified of their impending redundancy in the freight section of that company. We appealed to the Minister but nothing has happened. These employees will lose their jobs. The industrial economy of the area will be seriously affected. The agricultural community, because of the distance from centres of population in the rest of the Republic, already have serious transport problems.
The Lough Swilly Railway Company will continue to operate some part of the freight service. CIE are being allocated the remainder of that service in that area but the employees are not being taken over. The existing company are handing over a major part of their freight transport to CIE. The employees are being made redundant. There is no responsibility on CIE to re-employ them. They are falling between two stools. There is a complicated freight transport position at the moment. Nobody knows how much the Lough Swilly Railway Company will continue to carry or what items CIE will carry. The freight services in Donegal should be taken over completely by CIE.
The Lough Swilly Railway Company have received a subsidy before now, but unless they are given a subsidy and all the freight there will still be a complicated situation. CIE have already got a subsidy and they should get an increased subsidy to cater for this position. They should get all the freight so that the workers will know where they stand, as well as the agricultural and business communities. The situation will be neglected. I would advocate that some of the subsidies being granted in this budget should go to create a transport system which will be satisfactory to the community.
I also wish to speak about the textile industry. I have raised this problem before on a number of occasions during debates, by way of Dáil question and in discussion in time allocated for Private Members' Business. The only concession given in this budget to the textile industry in Donegal and elsewhere—and especially to the shirt industry which is a major part of the textile industry in Donegal—is the abolition of VAT on clothing and other commodities. I inquired from the Minister at the time of his budget statement whether the abolition of VAT on home-manufactured clothing would apply only to home-manufactured clothing or to imported clothing also and the answer he gave me was that it would apply also to imported clothing.
The precarious position of the textile manufacturers has been mentioned in the Dáil. Reference has been made to the problems of my constituents and of the fears of redundancies in the shirt and hosiery industries. The problems of unemployment and of the closing down of shirt factories have been mentioned. There is nothing in this budget which gives the employees any hope. Unfortunately the Minister for Industry and Commerce refuses to take any steps to remedy the situation. There is a dumping problem but the Minister refuses to admit to its existence. He refuses to tackle it. He could impose import duties and quotas on foreign goods but this has not been done.
The Minister for Finance gave the impression that he was going to do something for the relief of the shoe manufacturing industry and the textile industry. He said that the abolition of VAT would be of assistance to them, but it will also be of assistance to importers and to manufacturers in Korea, Thailand and Hong Kong. The Minister for Industry and Commerce will meet a deputation from Donegal next week. I hope he will have something hopeful to say to those engaged in the textile industry.
There is nothing in this budget which will help those engaged in agriculture, fishing and services such as water and sewerage. No provision is made for the small farmers of Donegal or the west generally. We have the situation in the west where the farm modernisation scheme which we on this side opposed does not cater for the vast bulk of farmers and there is no other farm grant scheme which does cater for the smaller farmers. We should have had some indication in these budgetary provisions of what the Government were going to do by way of grant to the smaller farmers who cannot become transitional farmers, cannot become development farmers and who, because they are not classified as either of these, cannot avail of grants as from 1st of February, 1974.
Even if there is delay in carrying out the Directive No. 161 on the disadvantaged areas agreement in the meantime the Government should not sit back and say "We will do something for you when the finer points, the nitty-gritty points, of the disadvantaged areas scheme are sanctioned". The Government should step in now, because I would hope that when the disadvantaged areas scheme is in operation there will be a substantial contribution by the national exchequer on top of whatever grants may be available from the EEC scheme, but it is not good enough in the interregnum period to sit back and wait. If the Government can take no action to speed up the operation of this scheme, they should at least in the meantime pay grants and adopt schemes.
In the case of the other two directives, Nos. 159 and 164, one providing for farm pensions to get small farmers off the land, the Minister for Lands boasted that he went much further in that direction, with much better grants than his EEC partners have done and has given better terms in order to get small farmers off the land. In the case of the farm modernisation scheme, 75 per cent of the grants available are moneys provided by the national exchequer, only 25 per cent coming from EEC funds. Will the Minister be able to boast when the disadvantaged areas scheme comes into operation that he has done better vis-á-vis his EEC partners in respect of that scheme and will he be able to say that the Government and the Department of Agriculture have agreed to give 75 per cent of the moneys for this scheme? It will be interesting to see, and I warn the Minister that if he does not do as well in respect of the disadvantaged areas scheme we will be asking pertinent questions in this House.
In the meantime, it is not enough, in relation to the 80 per cent of farmers who are classified as small farmers, for the Minister to sit back and say: "This scheme is not in operation yet. It has not been fully sanctioned and the terms of this scheme are being negotiated." That is not enough. Since 1st January, 1974, the small farmers are twiddling their thumbs, not able to provide for very desirable schemes, and if there is to be a further delay, the Government should step in and say that these grants are available from national funds now. As a matter of fact this should have been done 12 months ago and the Minister is not doing it in this budget. I criticise the budget for that neglect and especially in view of the overall fact that in this budget the farming community are receiving the lowest allocation of funds for the development of their industry. The sum of £3.8 million or £3.5 million for the farming industry is the lowest of any of the provisions announced by the Minister in this budget.
I will not follow up the fishing industry where Deputy Burke has made a very good case for the giving of aid. The fishing industry people have in their minds a number of question marks as to what is to happen about the fuel situation, about limits, about prices and about fish imports. We would excuse the Minister bringing in a third or fourth budget this year to provide for these people and remove the question marks from the minds of fishermen and the minds of many others engaged in the economy of the country. The sooner the better.
Again, and this applies nation wide, there is the matter of water and sewerage schemes. The Minister for Local Government announced recently that the provisions in this budget will provide 2,000 extra jobs in the building industry. This, again, is trying to pull back the building industry from the situation in which it is in reverse gear, and when an industry is in reverse gear the pulling back process can be a more difficult one than any holding operation the Minister for Finance talks about. In the past few months, about 1,000 people have disappeared from the construction industry and I fear that the Minister is more than hopeful in saying that he can, in a reasonable length of time, add 2,000 to the dwindling figures of employment in the construction industry.
Dealing with the west of the country, I would ask how much is in this budget for the Gaeltacht areas. It is not enough after two-and-a-half years for the Minister for the Gaeltacht to continue to engage in a publicity campaign to show on paper new projects starting up here and there, new projects in the pipeline and new projects being announced, some of them being announced three and four times. The people of the Gaeltacht deserve an answer to the questions they are now asking. Where are these industries? When are we going to get them? What is the position about the small farming community in the Gaeltacht? When will grants be available for farm operations, for specialised farming? What about the factories needed there such as that which Deputy Faulkner as Minister had built, in Gweedore, for example, and also throughout the country where advance factories were provided? Are there any plans to train workers for these factories or to train local people for management? I see no provision here in that regard. It is good to provide industrial employment for the people of the Gaeltacht and western counties, but if we are to be serious about the Irish language we must ensure that not only are those on the shop floor Irish speakers but that management and key operators and technicians will set an example. Unless that is done there will be a serious problem. A start was made on this four or five years ago at the AnCO training centre at Gweedore. But that is not enough; there must be progress in this type of training.
Regarding the very serious problem of inflation the Minister in his speech said that the future prosperity and growth of the country depend on exports and to remedy the inflationary situation we must produce and we must sell. What is there in the budget to encourage manufacturers to produce more at prices at which we can sell? The 4 per cent reduction in the cost of living envisaged by the budget provisions is already partly eroded by increases in electricity and other charges since announced. In regard to the part of the package which is dependent on the agreement of the workers, if agreement is not reached reasonably soon the workers may not be able to accept the reductions the Minister devoutly hoped for because many workers are affected by the increases in charges that have taken place since.
If future prosperity depends on exports, in order to increase exports one must pour money into the industries we have. They must not suffer from lack of investment, but at present, money which should be available for investment in industry and agriculture is fleeing the country. That is partly due to the situation created by the Minister for Industry and Commerce whereby if manufacturers increase their production they have no confidence that they will not be deprived of part of the home market because clearly this country is being used as a dumping ground for industrial products. One has only to go into the shops to see that the gist of that statement is correct. Not only are EEC countries but all countries in the world are using this country as a dumping ground. This is the effect of the negligence of the Minister for Industry and Commerce. That Minister's hands may be tied, but one of the bitterest speeches made in this House on our accession to EEC was made by him. Is that Minister's heart in his job? Why is he not taking action? If he is debarred from taking action why is he not spending more time negotiating some deal and putting our case abroad?
The EEC Minister who arrived here about eight days ago said he was meeting the Minister for Industry and Commerce. He said that for the first time the Commission had received a report on the twin problems of footwear and textiles and that he would be discussing possible solutions with the Minister. This is an unbelievable situation. Instead of Mr. Borschette saying that here, our Minister should have been saying it 12 months ago and should have been putting forward the case for antidumping provisions and exceptions to be made in the case of this country.
The other problem in the industrial field is lack of confidence in the case of those in our own country who would be prepared to invest money in new industries or in extending existing industries. These are people who would be prepared to do this under a good Government. Confidence is seen to be eroded. If any industrialist walks through the shops in Dublin he might ask himself what encouragement is there for him to manufacture or increase the production of this, that or the other item, items which are freely on sale throughout the Republic.
There is no price control. A proper system of price control could negative some of the difficulties created by the lack of effort on the part of the Minister for Industry and Commerce. If the Minister for Industry and Commerce is prepared to allow these imports then price control would to some extent reduce the incentive to import. The Minister because of his lack of price control is actually making the incentive to import more attractive. In a small shop in this city there were goods marked "Made in Korea". The goods were shirts. There was a certain brand name which I shall not mention. The same shirts in another part of the country had a sticky label placed over the "Made in Korea" label. The shirts were £1 dearer. They appeared to be identical. I removed the sticky label and found that the cloth label which should have been underneath had been cut out. The sewn edges were showing. The first shirts I mentioned were retailing at £2. The latter were retailing at £3. The genuine "Made in Korea" shirt was selling at about 400 per cent of the cost of import. The Minister for Industry and Commerce can come to his own conclusions as to what happened.
Since there is no price control is it not being made more attractive to say "No" to the Irish manufacturer of shirts and "Yes" to the traveller who comes in with South Korean shirts and says they are good value at such and such a price? Of course it is made more attractive to say "Yes" to the salesman for Korean shirts and "No" to the salesman for Donegal shirts. That is one aspect of the problem about which the Minister has not bothered his head. It is symptomatic of the malaise affecting industry here. There are a hundred and one difficulties put in the way of our own manufacturers. State aids and State assistance are not sufficient.
I believe it is fair to accuse the Minister for Industry and Commerce of neglect of our industrial arm. There is no indication that this budget will improve the present unsatisfactory situation. The Minister for Finance will have to make some provision in future—he has not done it yet—to protect our industries and assist them to export. People in industry must be given confidence, so much confidence that they will be prepared to invest their profits in industry. Every section should have confidence in investing in industry. Steps must be taken to ensure that those who were encouraged to come in here with their money and their skills will not be left sitting on the fence waiting to see what is going to happen with capital gains tax, wealth tax, capital acquisitions tax and generally in the financial sphere.
The Minister in his budget statement said that other countries, including our partners in the EEC, had taken action, in some cases quite drastic and unpopular action, to curb inflation. As the team with the highest score inflation-wise could the Minister, the Taoiseach or any member of the Government say there is any worthwhile measure in this budget designed to do what other countries, including our partners in the EEC, have done to curb inflation? Why is something not being done? As I say, we are at the top of the league inflation-wise. Is there something preventing our Government from taking unpopular and quite drastic action? We would like to hear the answer to that question. The measures taken elsewhere have been beneficial. Should we not take similar action? We have a more serious series of ailments to remedy. The Minister wound up by saying we must do the same or suffer the consequences if we do not.
In the first bite of the cherry in January we could excuse the Minister for not doing the same but, in the light of what has happened in the intervening period, and in the light of his experience of other countries which have taken action—Italy, for instance, reduced her inflation rate from 24 per cent to 12 per cent—in the second bite at the cherry it was expected that the Minister would take action. He says we are in this together and we must all pull up our socks. We know we are all together in a situation of high unemployment, high cost of living, high inflation, high adverse balance of payments and high budgetary deficits. We have got to remedy this sooner or later, and the sooner the better. The Minister and the Government must set the example for others to follow.
The Minister said:
The situation is now extremely grave. There is a growing threat caused by our intolerably high rate of inflation, to employment and to business generally. There is now an inescapable obligation on all of us to accept that——
We on this side of the House accept that. He went on:
——collectively and individually, steps must be taken to curb inflation. The withdrawal symptoms will undoubtedly be painful but they will be far less agonising than the dreadful consequences that will ensue if we fail to correct present tendencies.
The cost of living was reduced in the budget by 4 per cent on a certain limited number of commodities. If the period which must be allowed between that announcement, which was the only one worth talking about in the budget, and the other one which was left hanging in the air, that is, the wage agreement, becomes too extended, a problem must be created. Those provisions which affect the cost of living and bring it down by 4 per cent will not last for ever. In the meantime they may have to give other concessions. Is he prepared to do this?
The Minister said:
The Government will maintain as high a level of expenditure on the public capital programme as is possible in the light of the available resources.
That is quite a vague statement. He went on:
The first priority will continue to be investment which creates permanent and self-sustaining employment. While every effort will be made to maintain a high level of social investment, expenditure on industrial, agricultural and infrastructural investment will have first call on scarce capital resources because this kind of investment is a pre-condition of growth.
Later we will be asking the Minister to indicate what investment has been made in the various spheres of productive industry and productive expenditure. So far, there is no indication that the unemployment situation has improved. There is no indication that, in the long term, the evils we have been discussing in this budget will be cured.
The £12 industrial subsidy will not be sufficient. Factories have closed or gone on short time for many reasons. First, the cost of production is too high. Secondly, goods imported from low cost countries are affecting them. Thirdly, there is an inability to sell on foreign markets. I do not think the £12 subsidy will generate enough activity to bring back very many short-time workers into factories, and it certainly will not cause any factory to be reopened.
It has been decided to subsidise butter. We have been advocating this for some time. I tabled questions in the Dáil about it. I urged that we should avail of the EEC subsidy which Britain availed of. By availing of that subsidy for butter, and by adding the statutory subvention from the Exchequer, the British were able to sell butter very much below the Irish price, in some cases almost 20p below the Irish price per lb. The Minister for Agriculture and Fisheries consistently refused to avail of the EEC subsidy and, as a corollary, to add so many million pounds from the Exchequer, as is required, to carry out the same operation here. Now he has done it.
Why is the subsidised price here, which is 10p per lb less than it was heretofore, still about 12p per lb higher than the price in Northern Ireland? Is there something Britain can do that we cannot do? Butter is an important commodity in the household budget. While we welcome a reduction of 10p per lb, why is it not on the same line as the reduction presumably made in the same way and under the same EEC conditions in Northern Ireland?
I mentioned the disadvantaged areas and I notice the £27 million stimulus the Government propose to give generally in this respect by way of public capital programme. The Minister for Local Government has told us he expects that 2,000 extra people will be employed in the building industry but I am afraid that by his lack of finance for water and sewerage schemes the Minister is hampering building development. People in the private sector and small contractors who would be willing to build will find that lack of these services will be a drawback not only because of difficulty in relation to planning permission but also because local authorities are not very anxious to have small housing schemes built if the supply of these services is limited to springs for water and septic tanks for sewage disposal.
Therefore, the lack of finance for these services will bring building construction throughout the country, especially of houses, to a full stop. In County Donegal no new water or sewerage schemes can be commenced this year because the amount of money available is not sufficient to finalise schemes at present under construction. Therefore, I urge that a reasonable proportion of the £27 million be utilised for the provision of these services which form the infrastructure for house building.
Another matter in regard to house construction which it is legitimate to mention in regard to budgetary provisions is the matter of grants which have not been increased in the past four years. It is the policy of Fianna Fáil to increase such grants by 50 per cent.
I hope the Minister will explain in relation to income tax collection how he proposes to introduce PAYE in relation to the Civil Service, teachers, gardaí and the Army. Has he made some arrangements to switch over without giving it in the neck by way of double taxation to these categories? I should like to be assured that those who have been paying tax on their incomes for the financial year 1975 will not now have to do that and at the same time be switched to PAYE.
