Whatever about the need for the parliamentary vacation nobody can challenge the need to give the Opposition a rest to facilitate them in reassessing their own position. We have been promised the now traditional Fianna Fáil response to electoral defeats, another reshuffling of the Opposition front bench because those who are there presently have been found wanting. It does seem to me that a party in such total disarray should be glad of the opportunity to withdraw from the public gaze because every time they have gone to the public since the last general election they have lost ground.
The almost inevitable experience of democratic government is to be unpopular in the middle of their cycle of office and this tendency is certainly accentuated in a time of economic difficulty. At a time when this country, like so many others, is experiencing unprecedented economic difficulties one could have expected the Opposition to make hay while the political sun shone, as far as they were concerned, but instead of making ground they have actually lost ground. Over the three-and-a-half years after going into Opposition, a period during which they had every opportunity to take advantage of the Government, a Government subjected to global economic battering, they have lost political support. They are now three seats down and the Government are two seats stronger and somewhere in the wings is the malignant growth on the Fianna Fáil body, which is a cause of very great distress and worry to anybody who is opposed to Fascism and believes the will of the people should prevail.
This Dáil adjourns today for the summer recess. In our democratic situation the Government are faced with an Opposition which has no fight left, which is losing political support, which carries no conviction whatsoever of being capable of providing an alternative Government should there be a wish on the part of the people to bring about a change of Government. All electoral tests since the last general election have clearly shown that Government support is growing. This ought to bring home to the Opposition and to critics of the Government the fact that the people are not fools, that they understand what is happening in the outside world, that they appreciate the difficulties which face other countries and us, that they understand Ireland is an open economy and must accept the disadvantages of global recession in the same way as it has enjoyed in the last 15 years the immense growth that occurred because the world economy was expanding.
The country is aware that the world economy is now recovering, though at a rate far below that experienced in the last decade. Our growth rate in the future is unlikely to outstrip that of the countries with which we trade. Ireland is on a world economic escalator and, when that escalator is going up, we go up and, when it is going in reverse, we go into reverse too. The only action which can be taken to prevent a complete reversal is for the Government to inject considerable amounts of public money into public capital expenditure to allow the country to curb to some extent the global trend downwards of the economic escalator. That is what this Government did over the last three years in exceptionally difficult circumstances. Whatever our difficulties today, they would be immeasurably greater had the Government not implemented the financial and economic policies upon which we deliberately embarked over these last three most difficult years.
The time has now come for an end to the béal bocht. Unfortunately, we will continue to have the béal bocht from Deputies opposite and from some commentators. The interesting thing is that most of the exhortations coming from such quarters have not been matched by practice. One hopes that the behaviour of some people who have exhorted restraint, while they have been unwilling themselves to practice it, will at least expose them as being hypocritical. Perhaps they might now at this stage match their own practice with the exhortations they give to others.
This Government have matched their exhortations with practice. I would recall—I do not make anything of it— that the members of this Government have themselves personally foregone all income increases to which they were entitled under the National Wage Agreements since June, 1975. We have deliberately declined to take any increase in our incomes from June, 1975, to January, 1977, and so the Government have a right to ask others to make some sacrifice and to forego a little.
It has been suggested by the Leader of the Opposition and others, including commentators, that the Government are not giving leadership. Leadership in a democracy means endeavouring to persuade people to follow a line which the Government consider to be the right line. No Government have taken more time or care or have exercised more patience in this field than the present administration. Although history is seldom of interest or matter for headlines, I want to record it to remind people that the exhortations of the Government today are in no way different from what the Government were asking people to do in 1974.
In November, 1974, the Government published a White Paper dealing with the economy and with incomes in particular. In that White Paper—A National Partnership—the Government spelled out that the alternative to moderation in income demand would be a loss of competitiveness and greater unemployment. That view has since been endorsed by innumerable institutes and organisations—the National Economic and Social Council, the Economic and Social Research Institute, the Central Bank, as well as other institutional and individual commentators at home and abroad. That lesson is as true now as it was in 1974. The tragedy is that the Government's plea did not receive the proper response from the people.
We have had more meetings with the social partners, with the Irish Congress of Trade Unions and with organised employers, than any previous Government. I would remind the House that on 10th December last the Government had a summit meeting with representatives of trade unions, farmers, employers and industry. At that meeting the Taoiseach, in the name of the Government, addressed a special plea to the social partners. On that evening he went on television and radio and his remarks were carried in the newspapers the following day. The Taoiseach's message to the nation then—it is his message now and it is still the Government's message—was that without an adjustment of the attitudes and expectations of our people, particularly those in employment, there is little hope of improvement through budgetary or any other policy.
In December last, for the first time in our history, the Government gave the country a forecast of the budgetary position. This was illustrated on television on 10th December and in all the newspapers of 11th December, 1975, in graphs issued by the Department of Finance. It showed expenditure as demanded by public Departments and by Government agencies and it showed also the cuts that had been made at that stage in the demands by various Departments. The cuts were more than £300 million. The graphs also showed unavoidable expenditure which the Government said would have to be met by additional taxation because the possibility of additional borrowing was not on and even if it was it would be economically undesirable.
Of course the Government could have made further cuts but the consequence of such cuts would have been greater unemployment. That in itself might have reduced public capital expenditure but it would have added to the social welfare bill. I wonder what else can a Government do if democracy is to survive other than do precisely what we have been doing? We have put the facts to the people and we have endeavoured to persuade them to make decisions in their own interests. I am still satisfied that the overwhelming mass of our people are prepared to forego a little themselves individually in order that all can gain, provided no strong interest group runs ahead of everyone else. The best way to achieve that in a society is by exercising individual and community sanity. Other countries have done it; why must Ireland always be the last to move in the right direction?
This difficulty of which I speak is not of recent origin. It has existed in this country for the last couple of decades. As a country we will have to cop ourselves on. I am not saying other countries were not behaving in a similar manner. They were but at least they are now correcting their own attitudes and behaviour. They are now accepting the realities of economic life. We do not now live behind tariff walls. We could not survive and maintain our standard of living behind such walls and such protection. We have to be involved in free trade, we have to compete with the outside world, we have to sell our goods on an Irish market that is exposed to competition from abroad. We cannot face that competition if we price ourselves out of the Irish market by giving ourselves green confetti by way of income increases. We cannot compete on foreign markets if we give ourselves green confetti for our wages at home and, by so doing, increase the price of our commodities abroad.
No unacceptable sacrifice is being asked of anybody. All that is being asked is a little patience. We have to correct the difficult situation which arose in the last few years. If we are to remain solvent and credit-worthy our first commitment must be the repayment of loans that we deliberately made. I would point out that we borrowed with the full support of the business community, some of whom are now very vocal in attacking us for doing so. We borrowed with the full support of the labour movement some of whom are not hesitant in criticising the tax necessary to meet Government expenditure including repayment of debt. We borrowed with the full support of people who argue that the Government should make up for the shortfall in private expenditure. We borrowed with the full support of every international institution of which we are members, from the European Economic Community to the Organisation for Economic Co-operation and Development, the IMF and the World Bank. Without having made those borrowings, without having maintained Government expenditure at the level at which we deliberately maintained it—we are unapologetic for maintaining it at that level—our unemployment figure would have risen to 200,000 or more. That was not acceptable to us. It would have been calamitous from an economic point of view as well as from a social point of view.
We explained this in every budget we introduced. We also indicated that when the world economy began to pick up, when prospects improved to sell our goods abroad and at home, it would be necessary to change the direction of overall public expenditure so that enough money would be left for the private sector to reinvest and so that Government expenditure could be reduced. That was the direction of our budget last January.
When we met the social partners last December we explained frankly the need to increase Government revenue. In December nobody said we were wrong to spend the money—not one, from the left, the right or the middle. They accepted the need to maintain Government expenditure at the level at which we maintained it this year. They accepted also the reality that Government borrowing had reached a level it would be unwise to exceed. They accepted that to increase borrowing would be to commit further resources in years to come for the repayment of short-term debt instead of applying such resources to productive investment.
When the Government imposed the tax that everyone knew was necessary, instead of doing what we exhorted should be done in November, 1974, that those in jobs should not seek compensation for necessary additions in taxation, those in jobs insisted on getting total compensation for increases in expenditure taxation on some of the less essential items. For as long as we continue on the present course a very large slice of public expenditure will have to go on paying increases in public sector remuneration. The higher those increases the higher will be the revenue the State will have to collect and the higher the taxation the State will have to impose. It does not matter who is Minister for Finance. It does not matter what is the title of the administration. It does not matter if there is a national Government, an one-party Government or a ten-party Government, those are the realities of financial and economic life in the country and no critic can deny the accuracy of what I assert. In Heaven's name is it not time, therefore, that we put aside sectional interests, party interests, and accepted those realities of life as they have been accepted in every other country in the world?
We cannot afford in this country an upstairs and downstairs mentality, upstairs the well-to-do, the secure and well provided for, using their muscle power to extract even more out of the community. The consequence of that for those downstairs would be insecurity and unhappiness and an inability to keep up with the progress of those on top.
This is a Government who believe in social equity. All our policies, economic, social and fiscal, are pointed in this direction and have shown our conviction and our determination in the face of the most bitter, vicious and vehement opposition ever mounted in Dáil Éireann against social reform. We are determined to proceed on the path of social reform. The country, knowing it has a Government committed to the fair distribution of wealth, should accept the bona fides of that Government and the validity of the arguments the Government are advancing, particularly, when by accepting the policies which the Government are enunciating, nobody will be the poorer but everybody in the long run will be better off. The sooner these realities are faced the quicker will be the pace of recovery, the surer will be the recovery and the more certain will be the continuation of the country's progress.
Our problems would be great even if we had not got an increasing population. Our problems are the greater by reason of our increase in population, so also are our opportunities. The opportunities for growth in the Irish market are greater because our population is rising. It is a population which is an active, young, dedicated and generous population. It is an extraordinary thing that notwithstanding all the difficulties of the last few years our population has been increasing, not merely, by virtue of a rise in the birth rate but also because net immigration continued. We have more people coming into the country than going out. Gone are the bad old days when we had annually 20,000, 30,000 and even 50,000 people emigrating and had 90,000 or 100,000 people unemployed. If the bad old days of emigration were here then the Government could produce a much happier looking unemployment index and the unemployment figure could be down to 60,000. That would be the Fianna Fáil recipe, to let the people drift away.
This Government have not allowed that. They have maintained living standards as best they could in a very difficult situation. They have given people hope in their own land. They have given people prospects of living here. They have invested money in industry infrastructure and education. They are giving our people opportunities for the future. As we are educating our young, and otherwise providing for them, as we are building homes for them, we must also provide jobs for them. Is it too much to ask that those in jobs, who tend to be the parents of today, should put a little aside in order to allow their own children jobs in their own land? That is what incomes moderation is all about. I do not know any father and mother in Ireland who would not make a sacrifice for their own children. That is what we all, collectively, have to do. If we think that by demanding more now and consuming more now we can provide employment for our children in the future we are doing our children a disservice, not to talk about the disservice we are doing to ourselves as well.
We will have to be more moderate in our income demands in the next 10 years. The green plan will spell this out even though there may be those who will argue that the Government should not dare to spell out what the rate of income should be in the years ahead. It is not possible to plan unless everybody accepts the need to maintain incomes at a level which will enable the plan to work. Several of our plans in the past have been frustrated because income levels far outran what it was possible for our economy to provide without generating unemployment, unacceptably high public expenditures and economic distress. The realities will have to be faced.
There is natural frustration in the country that negotiations for the 1976 national wage agreement took so long and that the procedures to vote on the negotiated settlement are also very long. I have been arguing for several years, not merely from the Government benches but from the Opposition benches too, that there would be no economic sanity in the country until the Government became involved in income determination, not merely as an employer but also as guardian of the common good. Look at other countries where income levels for a year or more are detemined with far greater speed and with better results. In all those countries the government's voice is heeded. In countries with moderate income levels the government are not only not excluded from but they are welcomed into consultations, so that all can be made aware of economic realities, so that an objective assessment can be made as to what an economy can afford.
It was, and is part of our process of policy formulation and of improving public attitudes to involve the Government. That is why last November/ December and prior to that we had many meetings with the social partners. We spoke to the social partners and spoke to the nation as a whole, spelling out the economic budgetary realities. These are not the difficulties merely of whoever happens to be caretaking the economic and financial affairs of the country at any particular time. The national budget is the community budget, and nobody in the community can run away from the parameters of it.
We were told last December and January by the social partners that account would be taken of the economic realties facing this country. Can anybody say that all our experience in the last six months indicates that the economic realities are being faced by different sections of the community? There are many cases—I do not have to list them, I do not have to name them, for fear I am accused of an untimely intervention. I do not have to mention them at all but they are known to everybody who listens to or reads the media. The truth is that there are far too many people anxious to enforce economic realities on others but unwilling to have them applied to them.
I would like to deal with a report which hit the headlines this morning. It is the latest report of the Economic and Social Research Institute, their quarterly economic commentary for June, 1976. It contains a number of forecasts which are at variance with the forecasts from several other bodies. Of course, one of the drawbacks in relation to economic forecasting is that the latest forecast is always regarded as being valid and people forget what was yesterday's forecast and they seldom bother to check whether the people making the latest forecast have been proved right in the past.
I thought the country might find it interesting if I were to give a statement of the degree to which the Economic and Social Research Institute have been right or wrong in their forecasting since 1969, and it will be seen from this that they have seldom been right in the past; that is not to say they are not right today. The lesson from that is that one should not put too much reliance upon any individual forecast.
In 1969 the Economic and Social Research Institute in forecasting growth was wrong to the extent of 2.4 per cent. They forecast 2.4 per cent smaller growth than actually occurred. In 1970 they forecast .6 per cent smaller growth than occurred. In 1971 they forecast .7 per cent less growth than occurred. In 1972 they forecast 2.35 per cent less growth than occurred. In 1973 apparently overcome by the bad reputation they were getting for pessimism, they forecast growth 3 per cent in excess of what actually occurred. Not, indeed, that I would entirely blame them because that was the year of the commencement of the oil and energy crisis which sent everything into a tail-spin, but in 1974, when economies were very obviously in distress they again erred on the optimistic side and forecast a growth of 1.35 per cent above the growth of that year. In 1975 they reverted to their pessimistic role and they were 1.75 per cent less in their growth anticipation than what actually occurred.
So it may be seen that over a period of seven years they have been roughly between 1.75 and 2 per cent wrong in their forecast, and mainly on the pessimistic side. If that average figure is set off against their forecast published this morning it will be seen that there is room for believing they are being unduly pessimistic. Their latest figure of growth is that of only ½ per cent this year in contrast to the economic division of my Department who expect a growth rate of between 2 per cent and 2½ per cent. The Central Bank, I understand, will concur with this figure and the EEC expect that Ireland will have a growth of 3 per cent this year.
The figure of growth which we have given in recent times and earlier this year is influenced by the fact that the Government very deliberately in their budget last January increased the public capital programme by 27½ per cent. The Economic and Social Research Institute anticipate a fall-off in investment of 4 per cent this year. None of the other forecasting institutions and bodies which I mentioned expects to have a fall-off of that volume, and indeed it is very difficult to reconcile the calculations of the authors of the Economic and Social Research Institute report having regard to the massive increase in the public capital programme. We expect that the actual volume increase in investment this year will rise by about 4 per cent, not that it will be 4 per cent less as the Economic and Social Research Institute forecast. The indications are that we are justified in our forecast and that the Economic and Social Research Institute authors are wrong. For instance cement sales, one of the most sensitive indicators as to whether an economy is expanding or otherwise, for the first five months of 1976 rose in volume by 5.7 per cent compared with the same period last year. As regards investment in plant and machinery, to which the Economic and Social Research Institute does not refer, the value of imports of producers' capital goods—these are goods for investment purposes—rose in the same period of the first five months of this year compared with last year by 24.6 per cent. In Heaven's name, how can anybody suggest that investment is falling off when the indications are that investment is rising dramatically?
Whatever may be said about the longer term effects of the proposed national agreement on incomes, which regrettably does not involve as long a pay pause as the Government consider desirable, if it is adopted and implemented it will have the effect of increasing consumer demand in 1976. It was argued against the pay pause that a pay pause would have meant a fall-off in consumer demand and therefore an increase in deflationary pressures. That was a valid argument in the short term but the consequences of a pay pause and of greater income moderation this year would have been far greater competitiveness and a massive increase in exports and, therefore, greater employment levels. More people would have been employed, and, therefore, private consumption would have been not only maintained but after a few months considerably expanded. In the event, things have not happened that way, but the effect of implementing the national wage agreement with its comparatively high income increases would be to generate extra demand this year, yet for some reason which is not yet fully explained the Economic and Social Research Institute report is suggesting there will be a fall-off in demand this year.
There are, to say the least, a number of contradictions between the stated forecast of the Economic and Social Research Institute and the consequences of other economic forces which are at work in our midst, and there are clear contradictions between the economic indicators that are developing here which are showing growth and the pessimistic forecast of the Economic and Social Research Institute. As I said, their record tends to be one of pessimism, and even others who are not given to optimism find they have reason to disagree with the figures as produced by the Economic and Social Research Institute.
There are a number of other issues in the report on which I need not dwell too long in the House. It is, for instance, suggested that the figures for unemployment are unreal. Perhaps they are, but not for the single reason stated in the report of the Economic and Social Research Institute which suggests that the unemployment figure in Ireland does not truly reflect overall unemployment particularly among women. The unemployment statistics in Ireland include a number of groups which can hardly be regarded as being unemployed in the full and true understanding of that word. To be fully unemployed a person ought to be available for full-time, unrestricted work, but there are a number of groups now in unemployment statistics in Ireland who are not complying within that category. They include, for instance, farmers, persons aged over 65, relatives of farmers assisting farmers, persons who through mental or physical incapacity could not perform a full day's work or in many cases even part-time work. There is at present an interdepartmental committee examining the live register of unemployed people to see whether or not a better index could be produced. When that has been completed it will be time to challenge all the figures. Even among the categories of women which the Institute were at pains yesterday to identify, there is a number on the register who probably accepted unemployment voluntarily as soon as they qualify on stamps. This is a practice which is not unusual, particularly in families where more than one member of the household happens to be working.
I have been critical of the report of the institute but not of the value of the Economic and Social Research Institute. I believe in the valuable contribution that economic thought and debate can make to public understanding of the facts of economic life, but I would be failing in my duty if I did not draw attention to the number of unsure grounds on which the Institute advanced their prognosis for the Irish economy. Having criticised some of their calculations, I underline the general trend of their message, as I do of all messages issued, from whichever source which point to the need for restraint in income and also for the necessity for people in employment to accept their obligation to make their contribution to the possibility of increasing employment.
There is a notion abroad that the Government alone have responsibility for increasing employment, that a Government programme of extra expenditure could generate more employment here. The only way in which the Government could do that would be by expending more money from the public purse, and that could come only from taxation which would have to be paid by the private sector. It is far better to leave the money with the private sector to develop, to expand, to generate their own capacity and fund investment. We can help to keep our costs low by not having any taxation higher than is absolutely necessary.
All these elements run counter to the argument that the Government should spend more money to generate more employment. We have spent more public money than ever before in the maintenance of employment, in endeavours to generate employment during the recession. Now that the recession is gradually moving away is the time not to put as much reliance on public expenditure but to encourage the private sector to move forward on a path which will give the growth that this and other countries so anxiously require.
Some commentators not noted for being well disposed to me or the Government have spoken about "the untimely intervention of the Minister for Finance" in relation to the bank dispute. I will put a few facts on the record hoping they will be reported elsewhere. The Government have asked for a response from all sections of the community on the incomes front. In May of this year the banks made an offer to their officials which was rejected. On 2nd June a further offer was made which was in line with the national pay agreement. That was rejected. On Monday, 14th June, a third offer was made which was well in excess of the national pay agreement and strike notice was served that day after that offer had been rejected, the strike to take effect from 28th June. The only way in which that strike notice could have been prevented from going into effect was for a still greater offer to be made well in excess of what has been negotiated in the national pay agreement talks.
Four days after service of strike notice I said that what was developing in the area of bank pay was contrary to what had been said by banks themselves in their annual reports and in the recommendations which they had made regarding the running of our economy, no more and no less. It is straining words to the point of foolishness to suggest that to remind people of their own recipe for economic salvation is "an untimely intervention". I might remind the House and the country of a remark which was contained in the report of the inquiry into the 1970 banks dispute. I quote from paragraph 215:
Secondly, it is unlikely in these days that bank officials or any other substantial and visible group will be allowed to break clear away from the standards of pay generally accepted in the country, without other groups taking action to restore an acceptable balance... Bank officials are citizens of Ireland and not men from Mars entitled to expatriation allowances.
They are not my words. They were written seven years ago. Is it untimely to remind the country and the people involved in this dispute of those words, or do they challenge them?
Is it suggested that some people have a citizenship rights and a loyalty superior to that which they owe to Ireland? To judge by the behaviour of some of them, and I am not thinking merely of the banks, there are others who believe in entitlement to expatriation allowances at the expense of the remainder of the community. I do not believe it and the Government do not. We Irish have to exercise more discipline and unselfishness than has been our wont. If we do that the economy can recover. The Government's green paper will be saying this in clear, unambiguous, unemotional language, and we will be looking forward to getting a more positive response and we may move along the path that many other democratic countries have moved along, a path of prudence and of acceptance of the economic facts of life and of the need to understand that none of us can be an exception to the need to forego a little so that all can gain.
