Deputy Michael Noonan in possession.
Financial Statement, 1977: Motion (Resumed).
The debate resumed on the following motion:
That Dáil Éireann takes note of the Financial Statement made by the Minister for Finance on 26th January, 1977.
—(The Taoiseach.)
When speaking here the other day I was trying to identify the type of budget I considered this to be. It is certainly not for the social welfare recipients, it is not a businessman's budget or a worker's budget. It will be particularly galling to union men when they realise the treatment they have received from the Government who are part comprised of the so-called Labour Party. The Government as a whole have sat on the unions and on the individual working man, yet the Government boast of their labour achievements. There are no labour achievements. As regards the heavier end of the payee scale and the help it gives to industry, that is only window dressing and will involve us in far more expense.
Least help has been given in this budget to the farming community. This is an anti-farmer budget. There is no pretension in it of helping farmers. If anything it impedes the farming community from developing. There has been a great deal of useful and useless talk on the question of the taxation of farmers. When industry became an urgent factor in our development some 20 years ago the then Government encouraged industry to come into the country by asking foreign companies to set up business here on a tax holiday. This policy was followed by successive Governments because they saw the need for developing industry and the tax holiday is an incentive to set up industries. The tax holiday has since been extended because of the vast amount of employment in and the development of industry. That was a wise decision, a sensible and realistic way of introducing business into the country. For some unknown reason this Government will not view agriculture as a developing industry.
They are totally blind to the fact that the taking of an industrial outlook at agriculture has developed it enormously in the past 20 years. Agriculture is an important industry in the economic development of this nation. Agriculture had a great distance to travel just to approach the level of agricultural development in other countries. In some aspects we may be the most backward country in Europe, but on the other hand we have some of the best farmers in Europe. Nonetheless we have an agricultural industry which must not alone catch up in the areas of development, but it must also keep abreast in the sections in which it is proficient and it must develop far ahead of that in the European context so as to be on a level with Europe within the next ten or 15 years. If we put this case to the Government about an industry they would immediately give it all sorts of tax advantages because they would see the need for re-investment and they would voice the tax advantages to those who re-invest.
But the Government for reasons best known to themselves will not regard agriculture as an industry and they certainly will not encourage anybody to re-invest in agriculture, our most important industry. Indeed the tendency now is to get out of agriculture and certainly not to develop its potential to the fullest, and there is great development potential in agriculture. What sort of suicidal complex have we when we will allow a country of whose exports over 50 per cent are agricultural to be downgraded? That is the word to use at this stage because agriculture is an industry that has a vast opening for development and with even a little encouragement and incentive it could be developed to the point where close on 75 per cent of our total exports would be agricultural. From another point of view we could simply develop it to that level and develop our other industries at the same time, but develop it we must above all other industries. Agriculture cannot stand still. It must develop, it must have investment and research and there must be growth in the numbers employed in it. It must have growth in cattle numbers and in the acreage put to useful arable purposes. It must develop a dairy herd because, whether we like it or not, we cannot have a beef herd without a dairy herd. It must develop the level and quality of our beef and particularly the level and quality of our breeding herd.
In any context that must be regarded as industrial development and it must be given the incentive of industrial development, but our Government's refusal to do this is a suicidal policy. It is suicidal from the point of view of Government because the major arm of Government, the Fine Gael Party, always had a large measure of support among the farming community, particularly among the medium and large farmers. I can testify how accurate that assumption is; certainly there were rural areas where they did pretty well. Looking at it from the lowest level of politics it is distressing to see the mentality in a party which will allow that party to attack the vast majority of their own supporters, but it is easy to understand this when there is a tie-up between the Fine Gael and Labour Parties in this Government.
They attack not only their own supporters. When the farming community are attacked the entire country is attacked. The Government say to farmers "We will not recognise the development factor in agriculture. We ignore the need to look to you as a business people." This is a very sad state of affairs. They go on to say "We will not alone tax you but on top of that we will not give you any development funds. We will give you an airy-fairy type of sentiment and let you develop that if you can". But the necessary finance for agricultural development the farmers can forget about because it is not to be provided by this Government, an approach which I find difficult to understand. I cannot understand either how they can profess that they have the interest of the country at heart when they take half of the industrial output of this country—and I include agriculture in that—and say "Let us downgrade it".
Where therefore are we going to replace this national output? It is a truism, but a fact nevertheless, that our farmers do not object to carrying their fair share of the taxes. In years past they carried their share in many ways. They carried their share patriotically. The rural sector of our country was never known for any type of "under-the-bed" attitude during our worst years. Where they did not take part in the national struggle in the early part of this century they provided shelter for those who did, and that was almost as dangerous as taking part. In later years they were the worst sufferers in the economic war but again they carried their burden with the rest of the country and did not ask for more or less than the rest of the country got. During the war years they more than helped this country by taking on the sowing of crops and the development of foodstuffs very often in lines they were not used to; nevertheless they learned. Then came the 1950s and the 1960s which saw the development of large farming organisations and one of the touchstones of those organisations was a patriotic drive to develop agriculture as an industry. I was not saying that they deserve special praise or thanks for doing all this. It is the duty of any Irishman to help his country in peace or war, but they deserve as much as their neighbour who lives in a city or town. They have given a great deal of money, time and effort to the development of agriculture as an industry, and there-by the development of the nation's economy. They deserve encouragement and they are not getting it from the Government.
The taxation of farmers has been based largely on the notional method. No credit is being allowed for development and re-investment. Re-investment in any industry and above all in agriculture, is essential for development. I want to review the changes in the notional system as outlined by the Minister in his budget statement. The £40 valuation has been increased to £65. In a sense that is reasonable enough because it must be kept in line with the decreasing value of money. No one can doubt that, under this Government, money has decreased in value. In the past we took £100 as a static figure but now the value of money is changing from day to day.
The figure has been increased in one budget by over 50 per cent. This is a very large figure, indeed. Allied to the increase from £40 to £65 valuation is the drop in the valuation level from £100 to £75. The Minister said this was done in order to bring into the tax net some farmers who were not in it previously. That is not an honest suggestion because it does not do that. It imposes a double burden on them. It increases the burden on the man with the higher valuation, and it compounds the burden on the man with the lower valuation. It may be difficult to feel sympathy for a man who owns a few more acres than his neighbour, but we should have sympathy for the man with a smaller acreage and a lower valuation who is being salted in this budget. He has been brought into a much more troublesome net because he has to pay double the rate of what farmers paid last year even though they may have more land.
The Minister may say this is an equitable system of taxing farmers, but I do not agree. It is an exercise in hypocrisy by a Government who have become famous for hypocrisy, and it has been carried out by a man who is the chief spokesman on hypocrisy. What was done by the farming community in the 1960s will be a pale shadow of what the farming organisation will do in the months ahead because of this penal taxation and they realise fully how they have been attacked in this budget.
I hope the Ceann Comhairle will forgive me for dealing at such length with the agricultural sector but I do so for two reasons. One is that I am responsible for a large number of farmers in my constituency. Secondly, they have been neglected and attacked in the budget. There is no way in which this Government can claim the loyalty of the farmers either to themselves or their parties. They have been attacked in other ways as well but, then, so was everybody else.
Social welfare costs, which have risen dramatically, have been tied to the whim of the trade unions. This brings me to an interesting attitude on the part of the Government. They now tell us that being elected to the Dáil is not enough. Under the Constitution we are elected through free and open elections which are open to all members of the community but according to the Government that is no longer enough. You must join a trade union, because the trade unions have the final say so far as the Government are concerned. This budget hinges on the whim of the trade unions. If they agree to it the Federated Union of Employers have to be consulted, and if they agree to it there is still another factor, the Government as an employer at the negotiation table. This budget depends on those three factors getting together. Therefore the taxation concessions in the budget are dependent on the whim of the trade union movement and the decision of the Employer-Labour Conference on the wages settlement.
The vote of a trade unionist at local level may not be very significant. It is passed on to national level and eventually to the delegate at the negotiating table and by the time that happens the local decision may be very much diluted. The people have lost the right of going directly to their public representatives because their votes are no longer final in the House of the Oireachtas. The Minister for Finance may introduce a budget setting out income and expenditure for the year provided the unions, the employers and the Government as an employer eventually agree. This is an entirely new concept in Government which might be interesting if it were not so very dangerous. It opens the Oireachtas to the idea of a third house. I wonder do the people want a third house. Do they want three factors in Government, the Dáil, the Seanad and the Employer-Labour Conference? It is high time this question was brought before the people by way of a change in the Constitution. Perhaps it is time for a referendum.
I am not trying to introduce farce into the debate but I think the budget has come to that. A third element has been brought into the Government. We may have an opportunity of airing our views in the Dáil on this subject but we must first await the approval of the third factor. The introduction of this third factor in my opinion is not permitted by the Constitution and the matter was never decided by referendum or otherwise. If the people want it, so be it; but until they have expressed their view in favour of it, it should not be introduced. The Government if they are worthy of the name should be able to make their own decision as to what is best for the country and should not be dependent on the whim of an outside factor or a third house.
Therefore, this is a ridiculous question. It can have no good effect on the position of the Government and in my view it will earn a proper retribution from the electorate when they get the opportunity which I hope will be in the very near future.
The Deputy is joking.
No, I am talking very seriously about a serious matter. I am trying to develop the argument that the taxation relief in this budget is dependent on decisions taken outside the House and the Government. In my opinion that is a very serious business. I have no doubt Deputy Collins will have an opportunity to speak later.
The Deputy may be sure of that.
Whether in Government or in Opposition we have a duty to represent here the interests of our people and because they probably have the least resources our responsibility falls more on the side of the poorer sections. They deserve our attention before all else. That does not mean that we victimise anybody who happens to have a few pounds more for which he worked hard in an effort to improve himself and his financial position. We must never victimise enterprise without which the economic future is blank. It has been the Government's habit over the past couple of years to victimise enterprise. Finally, in an election year such as this they begin to see their folly but see it only in the purely selfish terms that they are unlikely to be re-elected. Be that as it may, the poorer sections got a very raw deal. The postage stamp was increased in price dramatically, more than 10 per cent. One must be careful in using the telephone because it is now only for those who can afford it and fewer people can readily afford this luxury.
Within the limited time at my disposal I have dwelt on a few aspects of the budget. There are many others which no doubt will be taken up by my colleagues. Every Government speaker in this debate so far has spoken about the increases granted to social welfare recipients and the Government have boasted about them. If we examine these increases and look at the rate of inflation over the last 12 months, which the Government were unable to halt, we will see that they are very small. If we look at inflation which has been running at the rate of 22 per cent per year over the last three or four years, and at the recent dramatic and steep increase in the price of coal, we will realise just how miserable the increases given to social welfare recipients were.
Let them compare the amount they get now in real terms with the amount they got during the last term of the Fianna Fáil Administration and they will realise that they were better off under Fianna Fáil than they are now under this Coalition Government part of which—the Labour Party—have as their policy the protection of the poorer sections of the community. When one examines their record with that of Fianna Fáil Governments one will realise which Government protected the poorer people. Even taking the latest increases into consideration these people were better off 12 months ago than they are now because this Government were unable to control prices. This budget has been termed an election budget. This Government are a dismal failure because they have been unable to produce an economic plan for the future. They are going from one crisis to another hoping something will happen to bring them out of the financial doldrums in which this country finds itself.
In the early days the Coalition blew their trumpets and said they had some of the best educated men in the country as part of their Government. How can they say that their mismanagement over the last four years has been a demonstration of intelligence? It has not. At worst, it was a demonstration of hypocrisy and stupidity. It is a demonstration of how one can misuse the national attributes and abuse the people through incompetence in the handling of their affairs. It is a demonstration of failure because who else turned their backs on so many of the people and still said "We serve you"? It is a demonstration of ineptness from beginning to end. This is not a budget, it is a panic-striken fumbling with the finances of the country.
This is a small country and is directed by the flow and ebb of the tide. Despite worldwide economic depression, this Government have done an excellent job of running the country over the past four years. Facts, however unpalatable, must be faced. We have passed through the worst economic depression the western world has witnessed for over 50 years. It is necessary that I stress this fact at the outset for various reasons. First, Ireland has to contend with a position not of her own making. As a small export dependent economy we are badly hit by the worldwide recession in economic activity. Because of our size and vulnerability we have suffered in many ways more than any other country. Secondly, while the Government's economic policy has consistently been to try to safeguard employment and living standards at the expense of considerable budget deficits, there are limits to such a policy. Thirdly, now that the long awaited economic recovery has come there can be no assurance that it will restore fully the patterns of growth to which we were accustomed in the sixties. These limitations on the Government's freedom of action mean that the highest priority had to be given to tackling the one economic problem that is to some extent within our control, namely, inflation.
The declared objectives of the Minister for Finance are to maintain and improve economic growth, to encourage greater enterprise, increased productivity, higher employment, to make the agricultural sector pay a fairer share of taxation, to reduce our dependence on borrowing and to maintain the real value of social welfare benefits.
The following are some examples of the effects of improvement in social welfare. When this Government took office on 14th March, 1973, a contributory old age pensioner had to be 70 years of age with an adult dependant to get the paltry sum of £10.35 per week. From April next a contributory old age pensioner with an adult dependant will get £24.40 per week and from October next £25.60 per week with the qualifying age reduced to 66 years, also from October next. At present a married man with three children drawing unemployment benefit is getting £26.80 per week; from April next he will receive £30.60 per week and from October next £32.15 per week and in addition he may be entitled to pay-related benefits. From April next a widow or deserted wife with three children in receipt of a contributory pension will get £25.35 and in receipt of a non-contributory pension she will get £23.45 increasing to £26.60 and £24.65 respectively in October.
An old age non-contributory pensioner can now earn up to £6 per week and will be entitled to full non-contributory pension from April next of £11.75 per week and from October next of £12.35 per week. Under the previous Government if that pensioner earned as much as one penny he would not be entitled to any non-contributory pension. A married couple over 67 years of age will get £23.50 increasing in October to £24.70. From April next an old age pensioner living alone will get an extra £1 per week which is essential for people in that category. Invalidity pensioners, subject to the usual conditions, will be entitled to free travel, free television licence and free electricity from April next.
A widow or single woman to qualify for unemployment assistance must have 52 contributions paid over the four preceding years. I am glad to say that the Minister has now reduced the number of contributions to 26. All in all, this Government have done more for social welfare recipients than any other Government since the foundation of the State.
I now come to the subject of rates. As part of the 14-point programme the present Government have removed the housing subsidies and health charges from the rates to the tune of approximately £90 million. Were it not for these concessions the ratepayers of Cork city, which I represent, would this year be paying £15.45 in the £ compared to £9.40 in the £ which they are now paying. The Government will now pay 25 per cent of all domestic rates. Rates due for the first half of the year must be paid in full but the rates due for the second half will be reduced by 50 per cent. The Minister must be congratulated for giving this rates relief which the people wholeheartedly endorse.
The Newsletter of the Confederation of Irish Industries in summing up the budget states:
The overall budgetary policy is welcomed by the Confederation. The public capital programme will undoubtedly raise employment and together with the income tax reductions will help to maintain the buoyancy of domestic demand. The budget, too, has provided more money for industry not only through its increased grant allocations but by the overall reduction in corporation profits tax—which was a necessary prerequisite to investment. It is hoped that those industries which have been hardest hit in the past three years may find conditions improved and help them get back to profitable enterprise, and that those who are able will increase the level of investment and output so that the economy may be able to come closer to the necessary growth rates required for economic and social development.
I believe that the budget meets these objectives. The Minister's package of tax cuts, rates relief and investment in job creation exceeds what was promised in advance. The trade unions have reacted cautiously and have complained that the new tax concessions still do not do enough for those on lower incomes, but the Government have not only met their obligations but have also moved to increase employment. They have raised the food subsidy, which is now costing about £48 million. They have spread the tax net of farmer taxation and dealt fairly with recipients of social welfare benefits. All these things should in my opinion create a favourable climate for acceptance of the draft national pay agreement.
The Minister for Finance has called this an incentive budget whilst the Opposition called it an election budget. I honestly believe that the Minister's description is the fair one because the incentives are there to give a much needed stimulus to the economy. If other favourable conditions follow, such as wage restraint, industrial peace, lower interest rates and flourishing world trade, then this budget will mark a most important stage of our way back to real economic wealth. I am glad to see that the bank rate has fallen this morning by ¾ per cent.
I should like to thank the Minister for Finance for his handling of the nation's purse strings over the past four years. I believe he has steered the economy through several crises, surviving abuses and other interference from the Opposition and from the press. He has brought the Department of Finance to a high level of performance and maintained its integrity and freedom. I congratulate the Minister on his good work.
Much has been written and said during the past few weeks about the budget and it is right that some of the back bench Deputies should also have their say. At this stage we are able to assess the reaction to the budget and most people have come to the conclusion that there are no real benefits to be gained. They see all around them rising inflation, high unemployment and a trade deficit which was worse than ever in the month of January. Previously they had listened to the Minister for Finance telling them that the recession is over and that he does not want to hear any more about it.
My good friend, Deputy Liam Burke, said that we are now on our way back, but we are on our way back from a situation where things went very wrong. This Government have made many mistakes. Since 1973 this country has been mortgaged to the hilt. The national debt has almost trebled. At that time Deputy L'Estrange was tired from shouting about our national debt which then stood at approximately £1,387 million; today it is in the region of £3,000 million. From every £3 raised in taxation, £1 must be used to pay for our national borrowing. This cannot continue. The economy was mismanaged and grave mistakes were made. The Government themselves admitted that they had not got the money when they said in October last year that they could not give increases to certain social welfare recipients. All of a sudden we turned the new year, good spirit in our hearts after Christmas, and we are told that the recession is now over. It is far from over. There is an article in this morning's Irish Times written by Paul Tansey, the economic correspondent. He stated:
Ireland recorded its worst-ever visible trade deficit in January. Figures released last night by the Central Statistics Office show that the value of goods imported during January exceeded the value of exports by over £90 million. If this trend were to continue throughout 1977, then the trade gap, the excess of imports over exports, would be in excess of £1 billion.
The Deputy I am sure will appreciate that the nature of the imports is important. A good deal of our imports is machinery.
He further stated in this article:
This could lead to serious balance of payments problems later in the year.
We had a trade deficit in January of almost £90 million, which is almost £3 million per day, £1 per person including man, woman and child. What is the Minister doing about this?
One of the major items imported is a turbine for Bord na Móna. We either import a turbine or we do not increase our energy.
There are other things involved. We had to import those in the past and we had not the grave deficit we have now. I admit that import figures can vary from month to month. If this trend continues for the year where will we land ourselves? This economics correspondent goes over the various facts and says that, perhaps, some of it is due to the recovery, which is what the Minister is talking about, more of it is due to the decline of sterling during 1976 and still more of it is due to the continued high rate of inflation which we have not controlled. The economic correspondent later made the statement:
Finally, the continued high rate of inflation in Ireland has probably led to Irish manufacturers losing sales both in the domestic and export markets, as Irish goods become more expensive relative to the cost of goods produced elsewhere.
That is a fair summing up. There are no signs that the recession is over. Unemployment is still increasing. We have a recorded figure of over 118,000 but there are many more not recorded.
Fianna Fáil have for a long time been pressing for some easing of the income tax burden payable by the ordinary working people. It is a very heavy burden at the moment. A person working in a food processing plant remarked to me that there were two people paid for one job. I asked him how was that and he replied that he was paid and out of his money another man was paid social welfare benefit of some description. His remark referred to the high rate of income tax he had to pay every week. He said he had a good income but that income tax took a fair proportion out of it.
People all over the country had been pressing for an easing of the income tax burden paid by ordinary working people. Every party had been pleading for an easement of this burden. Anybody who thinks he is a socialist, a Member of this House and a follower of the Government and who looks at the chart presented with the budget will surely shake his head and say that he has qualms of conscience about voting for it. If we look at the category of people who get the various benefits we see that the Government have brought in a new category, that is, people on certain levels of income who are better off single than if they were married. These people gain more by being single than being married with two children. Down the country we would say about that that the Government believe in living in sin rather than encouraging people to get married.
I doubt if there are many people in the £20,000 bracket. Does the Minister think it is right that they should save £2,088 if they are single, £2,048 if they believe in marriage and only a saving of £1,967 if they have two children? There is no allowance in this budget for people at any level who have families. We have always believed in the family. The Irish family believe in a man and wife living properly together, rearing a family and the State giving whatever help it can to house them. Not alone are the housing grants gone from those people but they can hardly qualify at all for them.
When we come to the new structure of income tax those people are almost completely wiped out. A single man in the £2,000 income bracket will have tax savings of £50. If he is married he will get £57.40. Is it any wonder the women organisations throughout the country think they are being discriminated against? There is only an allowance of £7.40 for that poor woman. If the person in the £2,000 income bracket has two children the tax savings are only £48.60. Can the Minister or the Government stand over a man earning £40 a week who has two children now getting tax saving of £48.60, whereas if he is single he will get £50 and a married man without children £57.40? There is no incentive for anybody to rear a family when it comes to this budget. The Minister should have a rethink on this. We have always boasted of being a good family country. This Government are breaking down the harmonious relationship of marriage by their tax savings in the budget. I know that Deputy Collins will agree with me.
The Deputy is raving.
Does the Deputy believe that there should be a tax allowance for children? The Deputy can answer that when he speaks. I will debate this outside the House with the Deputy. There is no tax allowance for those children. Families all over the country will suffer as a result of this. The only man left is the Minister for Defence. He is the only pious man the Government have now and I cannot see how he agrees with this. The Minister should bring about a change before this budget is passed.
The Children's allowance went up.
The Minister was thinking of getting rid of that but pressure all over the country caused him to change. A tax saving of £2,000 is a large sum of money to give to a person in the £20,000 bracket.
We should compare that figure with an income of £2,500 and then consider what that man is getting from society now and what he got some years ago. Even if that man has four children he gets no help from the State. He does not qualify for a state grant if he wishes to construct his own house nor does he qualify for a supplementary grant. He does not qualify for an SDA loan because his income is in excess of £2,350. How is he to live? He is badly hit. That shocking low income limit should be increased considerably. In January, 1976, the Minister for Local Government made an order specifying that anybody with an income of more than £2,350 would not qualify for a supplementary housing grant.
The Minister for Finance who is involved in the negotiations on a new national pay agreement has told us that the tax savings for a single man this year will be £62.80 per annum while for a married man the tax saving will be £62.40. For a married man with two children the tax saving will be £57.60. Is it any wonder that the latter type of person is fed up with the present regime and is clamouring for a change? We have heard a lot of talk about tax savings and wage agreements but those in power never consider the person who must use a car to get to work. Many people must travel 40 miles round journey to and from work but they do not receive any allowance. It is not possible for everybody to live adjacent to his employment. Only a few small cars will do 40 miles to the gallon today and, again, they suit the single person. The result is that a lot of people pay more than £1 per day to get to work. Such people are at a terrible disadvantage. The tax concessions or the new pay agreement will not be of much use to them. We all want national pay agreements but we must look at the realities of the situation. It is not surprising to hear married men with four children saying that they would be better off drawing unemployment assistance or benefit.
On the question of children's allowances I should like to remind the House that it is not too long since somebody, when thinking aloud, suggested that children's allowances be got rid of. That would be a shame. It is right that children's allowances be paid to the mother of the children because in most cases it is better spent by the mother. To substitute that allowance either by way of income tax savings or in a national pay agreement would be ridiculous. The money is often used by the less well off to help pay the monthly grocery bill or to buy clothes for the children. The Government should get rid of the notion of doing away with children's allowances. Long may it be the right of the mother to have such allowances. Hands off the children's allowances.
Fine Gael have claimed great credit for this budget and Deputy Liam Burke boasted about what he described as improved social services. In this connection I should like to quote from a letter published in the Cork Examiner on Tuesday, 15th February. The lady who wrote it is a colleague, in politics, of Deputy Liam Burke but yet she has her priorities right. She is chairwoman of the National Association of Widows in Ireland and did her best to be nominated as a Fine Gael candidate in a Cork constituency. I admire her for being interested in politics but I also admire her for adopting an independent stand in relation to social welfare increases. That lady lobbied us when we were in Government and I should like to quote what she had to say on behalf of the widows of the country:
Any increase which is a percentage increase hits those on lower income—it widens the gap in cash terms between them and the better-off. Widows, for instance, who, a year ago, were drawing at 67, £1.00 a week less than old age pensioners, are now drawing £1.30 a week less. All widows are drawing less than AOPs but the injustice is particularly noticeable when they are old age pension age themselves. The new rates are OAP, £13.90; widows, £12.60 if they are receiving maximum contributory pensioners. Many widows draw far less.
The budget was just a facade, a pretence of helping the less well-off.
It is signed: Maureen Black (Mrs), National Chairwoman of the National Association of Widows in Ireland. That lady has shown that there is discrimination against widows. We have heard a lot of talk about the increases given in social welfare compared with 1973. We all knew that once we entered the EEC the age limit for an old age pension would be reduced within five years to 65. One year has been lost in that battle because the age limit has been reduced to 66 only. What happened to the £35 million bonanza resulting from our entry to the EEC?
Increases to social welfare recipients are not keeping pace with inflation. I should like to tell the Minister that at a meeting in Cork recently the Parliamentary Secretary to the Minister for agriculture proposed that steps be taken to get the Government to pay a coal allowance to old age pensioners. That is a castigation of what the Government are doing for these people. We have also been told that the waiver of rates scheme is to be extended this year. I should like the Minister to clear up a problem about the free fuel and waiver of rates scheme. Can we in rural councils expect to be recouped from the Central Fund? These schemes were of immense benefit to rural local authorities. Dublin, Cork and other local authorities can get their money back. Does the same apply to us?
Rates are still going up although the health charges are being financed by the Central Fund. Up to three or four years ago people got value for the rates they paid on their properties and there was little talk about ability to pay. Fianna Fáil brought out a programme to get rid of rates completely on private dwellings and of course this copy-cat Government moved towards that, but only half way. Can the Minister tell me if the quarter remission of rates will be bolstered in the next two years to cater for inflation? This year the Minister has not mentioned any concessions to local authorities in respect of amenity grants, and therefore we must take it that the rates will have to pay for them. These grants enabled local authorities to help voluntary organisations to provide such things as playgrounds for the very young, community halls and pleasure grounds for the old.
On the matter of health charges, we had good services when the rates were paying their share. Now health services are non-existent in some areas at a time when the charges are met by the Central Fund. We have no transport to hospitals and clinics for the old, the feeble and the very young. They now have to hire taxis and have to pay £12, £14 or £20 and then try to recoup that money from the health boards. Most of our hospitals are understaffed at a time when there are fine strapping young nurses unemployed throughout the country. Hospital matrons are not permitted temporarily to replace nurses who are absent for one reason or another. Hospitals are not allowed to appoint temporary caretakers. Our health services generally have deteriorated in the past four years and anybody living in a rural area will back me up in what I am saying.
As well as that, our roads have been allowed to deteriorate terribly. Some of our main roads are reasonably well kept, but minor roads, on which most of our ordinary rural people have to travel, are in a shocking state. We are being told there is no money in State funds to finance road maintenance. Our minor roads are impassable because of potholes. Indeed, a wag who saw a flock of wild duck flying over one of them on a rainy day said the duck did not know which side of the road to land on because both sides were covered in water.
This year's budget is particularly noteworthy for lack of mention of the Old IRA. They seem to be a forgotten group. There are very few of them left. They went out to fight so that we could have a Parliament of the kind we have today. They are now the forgotten members of our society. No Irish Government should be afraid to honour in a tangible form the men with 1916-1921 service medals. No Government should be afraid to give each one of them at least £5 a week irrespective of his income. People on the opposite side tell us we should not mention them at a time when we are sending ambassadors abroad to independence day celebrations in newly-independent nations. The Government should not be afraid to honour the men who survived the GPO campaign and other such campaigns. That is the nation's right and the Government should never be afraid to organise some simple ceremoney at the GPO each year to honour these men and not to be leaving it to voluntary organisations and others.
The Deputy is straying from the budget.
I am fighting for the men who fought to give us a free Ireland. They have got very little in financial terms from the Oireachtas which they helped to create. In most other budgets there was special reference to them, and I could quote from the records of both Houses. What we have this year are references to Articles 2 and 3 of the Constitution to take people's minds away from the real problems. It is another election year gimmick.
The Minister made no reference to any provision for school transport. Someone who was thinking aloud a few months back said there should be changes in the school transport system because, he alleged, there were abuses. I can quote the Fine Gael viewpoint from the Corkman of Friday, November 26th last. At a Fine Gael meeting, reference was made to the school transport system and it was stated that “The scheme as at present administered was blatant robbery”. That is how the scheme was described, “blatant robbery”. “Taxpayers would not object to free transport to national schools but in so far as transporting secondary and vocational school students free of charge it was simply ridiculous.” That represents the Fine Gael philosophy in my part of the country. “Many of these students spend the weekends at dances and it is only right that, if transport is provided for schools, they should be made pay their way under a new scheme.” Senator P. Burton, a good friend of mine, said that the scheme was introduced without any attempt at planning or costing by Fianna Fáil.
Obviously this Government are going to do away with the present transport system to our secondary, vocational, community and comprehensive schools. If children in the 14 to 18 group are able to go to dances at the weekend, free transport will be completely out. The Minister made no reference to that in his budget statement. He did mention children's allowances. It is obvious to me that school transport will get the hammer. What about the children of the small farmer, of the agricultural workers and the council workers? Some of these live 15 and 16 miles from schools. If they have the brains are they not entitled to climb to the top of the academic ladder? It will be a crying shame if school transport is done away with. It was the late Donogh O'Malley who brought this scheme in. He did not go to the Arabs for the money. The system was financed out of our own resources. Neither did the Fianna Fáil Government go into debt up to the neck or put on more taxes in budget after budget to provide for it. I am stating the plain facts. It is down here in black and white what the present Government will do about school transport.
I am a farmer and I know the outcry against the Minister by the farming community. He has provided very little under the disadvantaged area scheme. This scheme is supposed to help farmers in the lower valuation areas mostly along the western sea-boards and in parts of the south. Actually you can find these farmers in any area. You can find them in Kildare. No proposal has been made to Brussels by this Government to bring these farmers into the scheme because the Government are unwilling to provide the necessary finances. We get 35 per cent of the money from Brussels and we have to fund the remainder ourselves. Every year names have been submitted for additions to the disadvantaged area scheme. Should we talk of disadvantaged areas or disadvantaged farmers? Small farmers, wherever they are, are disadvantaged. Brussels have never refused an extension yet but no request has been made to Brussels for many extensions submitted. It was not Brussels that refused to do anything. It was our own Government.
The Minister for Agriculture has been accused in the last few days of not paying up the various grants. The heading in today's Independent reads: “ `Cattle cash. No election gravy train,' says the Minister”.
Acting Chairman
This would be more appropriate to the Estimate for the Department of Agriculture.
That may be, but we are providing money in this budget and it is not being paid out. There is a big row going on at the moment between farming organisations and the Minister. Is the money there to pay the disadvantaged areas grants? Mr. Joe Ray, the IFA Deputy President, said that cattle headage payments are being exploited as a kind of election gravy train. He quoted the west Mayo by-election. I heard the then Minister for Lands, Deputy T.J. Fitzpatrick (Cavan) on a Sunday morning telling the people outside a church gate that if they did not get their cheques by the following Wednesday morning— polling day, he said actually—do not vote for the National Coalition candidate.
Acting Chairman
This is not appropriate. It really is not.
I am entitled to comment on the way money is being spent. The same Minister said Verolme Dockyard was a waste of time and should be got rid of. If you do not get your cheques do not vote for the National Coalition candidate.
Acting Chairman
There will be plenty of time to discuss these matters on the Estimate for the Department of Agriculture.
If we reach it this year.
The Deputy will have a full year to do so.
Good enough. The Minister mentioned that farmers who supplied liquid milk were getting an increase of 7p per gallon. In a farming supplement to The Cork Examiner—and I compliment them on it— there is a report by a correspondent who visited the liquid milk producers and asked them what they thought about this. The report is in The Cork Examiner of February 17th. It is stated that liquid milk producers are angry because of the long delay in granting them the necessary increases to maintain parity and they accuse the Minister for Finance of blocking on budget day because they were entitled to 3p a gallon since 1st October last: “The anger of the liquid milk producers has been fuelled by the prolonged delay in granting the increases to maintain parity with their counterparts supplying milk to creameries. They have accused the Minister for Finance of blocking when he told the nation on budget day that he was granting an increase of 7p per gallon to them when they were entitled to 3p per gallon since October 1st last and two green £ adjustments should really have meant an increase of 7.86p per gallon.” That is what Dick Cullinance wrote.
I do not think these men who supply milk to our cities and towns make any money over the winter, but they have to work 12 months the year round and they are out on Christmas morning and every Sunday morning. They have to keep up the supply of milk. It makes no difference what happens their herds, whether they suffer the scourge of brucellosis or they are hit by bovine tuberculosis and have to sell out their herds, they must replace them immediately with other cows to keep up the supply of milk.
The Minister was quite unfair when he said on budget day he was granting an extra 7p a gallon for milk. The farmers should have got 7.86p per gallon a long time ago. Their costs are increasing and all they want to do is to keep in line with everyone else. One man who had a herd of 55 Friesians lost £400 during the four-month period when he should have been getting the extra 3p. It is not necessary for me to make any further comment.
With regard to taxation on farmers, everyone accepts the principle that those who are in a position to do so should pay tax. What we are arguing about is the way it is proposed to collect the money. It is obvious that we should not impose taxes that will inhibit development and neither should we severely tax savings. The present allowance of £70 which is not liable to tax is a very small amount. Anything in excess of that amount incurs heavy taxation and there is no encouragement to save. Some years ago the present Government even tried to do away with the £70 allowance but they reconsidered the matter and the allowance was restored. The amount should be in the region of £400 to £500. Most people who save do so in order to pay for extra expenditure that may be incurred in their business. We should help them to save rather than hinder them.
One of the major complaints of farmers is that they cannot plan ahead. They do not know who will be taxed next year or what kind of multiplier the Minister will use. In farming it is necessary to plan for months ahead. For instance, farmers must purchase fertilisers in the autumn rather than waiting until the spring of the following year. In the budget the £100 PLV limit has been reduced to £75 and the question being asked is whether it will be reduced to £50 next year. The Government have an obligation to tell their intentions in this regard. It is generally accepted that the limit will be reduced to £50 or £60 next year and consequently many more farmers will be brought into the tax net. Another question being asked is whether the multiplier will be increased to 100 or 110 next year. The Minister for Finance has an obvious duty to tell the farming community what he plans to do in this area.
The major complaint of farmers is that the income tax assessed for 1977-78 will become due for payment on 1st September, 1977. That may or may not be all right if a person is operating on the notional system, but if he is not it will not be feasible to make the necessary calculations. The dairy man will have a problem because his cattle will still be milking. The remainder of the year could be a disastrous one or a very successful one for him. It will also affect farmers who deal in grain because the crop will not be cut by then. In addition the beet harvest will not be completed until the early days of January and consequently the final accounts will not be available until 1978. How can such a farmer pay taxes in 1977? Will it be the case that the money he will receive in 1978 will be carried into the accounts for the next nine months, thus mixing the business of two years? The Minister was ridiculous when he said he could tax anyone in a year when the accounts would not be completed for another three months.
It is thought that the Minister will change all of this as soon as the national wage agreement is signed. It is said that when the Finance Bill comes before the House the Minister will tell us he will not charge the tax until the following February. I do not know if there is any truth in that but the Minister should tell us what he intends to do. People involved in the dry cattle trade will not sell their cattle until December and there is no way in the world they can make out their costings. They can accept the notional system but that means they will have to pay for every £ valuation multiplied by 65. In addition the Minister has abolished many of the items of costing that were allowed last year.
The farming organisations have made certain proposals to the Minister and he would be well advised to listen to them. They have stated they want to pay income tax, that they want to play their part with everyone else in funding the nation's finances. However they have also pointed out that the system proposed will affect development. Agriculture is the backbone of the country and farmers should be helped. It is my belief that there will never be more than 25 per cent of the farmers who will be able to pay income tax. In the south the vast majority of the farmers have small farms and this applies also to the west.
From the returns under the farm modernisation scheme it is obvious that only 2 per cent or 3 per cent of the farmers in some areas are developing or commercial and that most of them are classified as transitional farmers. Under the present regulations that means they cannot make a living out of their land. When we talk of taxation of farmers we are referring to 25 per cent at the most who in due time will pay some tax or other. Those people probably own land which is very valuable but it is another thing to be able to get a decent living from the land. It is rather like a situation where a person inherits a house with a valuation of £40 but whose income is only about £40 per week. In such a situation that person would find it very difficult to pay the rates on the property. The Minister should reconsider this matter. Deputy Noonan has dealt with this matter very competently and I do not wish to repeat his arguments. Nobody wants to pay tax on 1st September, 1977.
People are concerned that the £75 will be lowered to £65 next year and that the multiplier can be increased from £65. Last year the State hit the co-operative movement. All co-operative societies should be given special concessions to help them to survive. The Minister should reconsider the farm taxation system. It is ridiculous that it is payable on 1st September.
Small farmers with a valuation of over £20 will not receive any social welfare assistance. Farmers between £10 and £20 PLV are not to get any increase this year. That is an injustice because some may have reasonable incomes but the majority have not. The majority of farmers who have valuations under £10 own only six or seven cows or bullocks, and that is all they have to live on. They are still trying to eke out a living and are in need of assistance. If these people were included in the disadvantaged areas scheme, a worthwhile disadvantaged areas scheme, they might prosper. It is only a matter of time before the Government remove their small supplementary allowances. People in the rural areas have not got the benefit of public lighting and sewerage and many of them have no telephones. They live in isolation by modern standards but many of them are happy. Whatever money they have they spend in their own villages.
Acting Chairman
The Deputy has four minutes.
The Government cannot take away the dole without giving the people something to live on. Now that the school buses are being taken off the roads the people in rural areas will have the extra worry of trying to get their children to school. Society should not shun those who were by accident of birth born on small farms in rural areas. Society should devise a plan to provide them with the benefits enjoyed by other citizens. Everybody shouts about removing the farmers' dole. They point to the few who have taken advantage of it without considering the many who need it.
When the budget was announced there was a great blare of trumpets. We were told that the recession was over, but it is far from over. The national wage agreement is under ballot at present. Any agreement that includes an inability-to-pay clause which can be enforced is not a true agreement. The people will see the hypocrisy of this election-year budget. Many people, including the unemployed and the school leavers, have not gained anything from this budget. Last year we were told that there were schemes for school leavers but many of them are still unemployed. When Fianna Fáil left office four years ago school leavers had a future. The Government are trying to provide money for such schemes in an election year at the expense of previous years.
The budget has been welcomed by most people. It has not been welcomed by the Opposition, but that is to be expected. They are entitled to criticise the Government. In four years the Government have introduced socially sound and industrially acceptable budgets. The Opposition are upset by their failure to tackle many problems during their term of office. I am afraid they are going to be upset for a long time because they are devoid of policies, talent and incentives. It is generally accepted that they have condemned themselves to staying in Opposition.
The last speaker talked about rates relief and the fact that the Government were abolishing a quarter of the rates on householders in the current year. He pointed out that under his party there would be no rates on domestic dwellings. People will see through that statement because Fianna Fáil introduced that policy two weeks before the last election. Prior to that they published a White Paper and said that rates were an essential part of the taxation system. They have not acted responsibly. They are split. I do not know who the leader is, whether it is the supposed leader, Deputy Jack Lynch or Deputy Haughey, Deputy Colley or Deputy O'Malley. One is confused with the statements that are issuing. I do not even know who are the spokesmen in the various fields, because time and again a spokesman speaks for a spokesman. I suppose in time they will sort out their problems.
The philosophy behind this budget is a welcome one. For the past few years everyone has seen the effect of the world recession, the damage which has been caused to our industrial structure by the massive increases in oil prices. There has been an unacceptable rise in the level of unemployment and inflation. This has been caused partly by the oil crisis and partly by monetary instability in the western world and especially in western Europe. This country suffers more, perhaps, than other because it has such an open economy and depends to a great extent on imports and exports. We have the worst of both worlds. We suffer while our imports rise in price and we also suffer when demand for our exports slackens. Unfortunately, in the past three years the price of imports has risen at a rate which has damaged our investment potential at home and our export markets have suffered from a reduction in demand. The results have been a recession in Irish industry and a serious increase in the level of unemployment in the State.
It is against that background we must view the last few budgets. I welcome this budget particularly because it tackles the two basic problems facing our society. One is the need to give confidence to industry in order to encourage greater investment, and create an air of confidence in industry among producers on the home market and the second is the need to expand the export potential of our industries.
The Minister is to be congratulated on the whole package he has presented in this year's budget. He has also successfully protected the incomes of those people who are old and infirm and who depend on the State for a living. I have heard the Opposition speakers moan and groan about our social welfare policy. I think it is more in jealousy than anything else. I do not intend to quote statistics in regard to the benefits, allowances and so on that have been given in the last few years because statistics can be twisted and presented wrongly. However, I speak for many people as a public representative and I believe that those people who are in receipt of sickness, unemployment and other benefits are satisfied that they are substantially better off now than they were four or five years ago under the last Government. It is thanks to the social conscience of this Government that that is the position.
One of the other advantages of this budget is that it protects family living standards. It is a householder's budget and the policies which have been adopted and which I will discuss in a few minutes go to the heart of the problem. The tax allowances, the rates relief, the increase in children's allowances, are all very progressive and sound and will in no small way help householders not only to maintain their present living standards but to improve them. Taking these householders' reliefs in conjunction with the hoped-for national wages agreement, there will be a substantial improvement in people's living standards over the next 12 months.
I was rather amazed at Deputy Noonan's criticism of the National Employer-Labour Conference, the national wages agreement, and the attitude of this Government in that respect. The Deputy's attitude was most irresponsible, and one wonders if that is the official Fianna Fáil policy in relation to the development of an incomes policy. The Government's attitude, which I support fully, has been one of consultation, one of developing an incomes policy with the people involved, with the Irish Congress of Trade Unions, with employers, with all those interested in the economy and its expansion. That policy is in stark contrast to the jackboot-type policies which, apparently, from what Deputy Noonan says, the Opposition support. However, I do not want to make a contribution which seems to be carping at the Opposition because I do not think they are of any significance. I would prefer to confine myself to the budget.
Another aspect of the budget is the development of an equitable tax system. Again, in relation to personal reliefs and the introduction of the new tax bands and the question of taxing farmers' incomes, the policy being adopted here is sound and equitable and deserves the support of the House. It is a policy that is understood by the majority of the people.
I should like to turn now to four other aspects of the budget on which I have concentrated and which, in my opinion, will have the effect of tackling some of the problems in our society. The measures taken to reduce household costs and, consequently, to protect family incomes and living standards, are generous. This year the Exchequer will carry the cost of half the second moiety of household rates. This concession will result in a substantial saving for householders. It will benefit not only people who own their own homes but also those who are tenants of local authority dwellings. It has been said often, both here and elsewhere, that our rating system is inequitable and requires revising. Perhaps in time rates on private dwellings can be abolished. Such a development would be very sound but we must remember that revenue lost in this way would have to be found by other means. Fianna Fáil talk about abolishing rates. They have merely some sort of magic wand remedy for replacing the revenue that would be thereby lost. In this budget the Minister has taken a first step at revising the whole area of rates. This follows on our policy of transferring to the central fund, the health subsidy aspects of the rates. Unfortunately, the effects of inflation countered our policies in this respect but the reduction in the rates payable this year will help to redress the situation.
To be welcomed, also, is the extension of the rates waiver scheme. This will cost the Government about £2 million in the coming year but it is a move that is desirable socially. Many cases have been brought to my attention which concern old people or others, who through no fault of their own, found themselves in changed circumstances and who were finding it very difficult, if not impossible, to pay their rates. Sometimes the loss of a spouse can result in someone being put into this situation. In other cases the people concerned had been comfortably off but because of inflation had exhausted their savings and were too proud to seek help. Sometimes a social welfare officer has difficulty in convincing such people that they are entitled to a waiver of rates. In these circumstances I welcome the extended scheme.
The extension in respect of food subsidies will cost about £9,500,000 but this device should prove anti-inflationary. It is aimed at countering the effects of the CAP on food prices within the Community. It is a measure that will help to keep the consumer index at a reasonable level. The British have been using such a measure for many years in an effort to counter the effects of inflation. In time we may find that the British system in this respect is attractive in terms of countering inflation.
All these measures combined with the new tax bands should prove very effective. There is a substantial saving for income tax payers and this saving, together with the benefits that will accrue from the national wage agreement, will increase substantially the incomes of workers, including those who are self-employed. This measure, too, will help to counter the effects of inflation in so far as family income is concerned.
The Opposition have criticised the increases in personal taxation but our policy in this respect during the past four years has been successful. This year's measures have a constructive part to play in the acceptance of a national wage agreement.
Another aspect of the budget that has been welcomed widely relates to corporation tax reliefs. Worth-while changes in this area are the reductions in the main corporation tax rates from 50 per cent to 45 per cent and from 40 per cent to 35 per cent. This measure was needed in order to restore confidence among both large and small businesses. The introduction of a reduced corporation tax rate of 25 per cent deserves to be commended. It should prove an added incentive to firms to embark on investment programmes and to increase their level of employment. We are experiencing a recovery from the recession. This is due mainly to the taking-up of a substantial amount of the slack in industry and the situation should be improved further as a result of the introduction of the 25 per cent corporation tax rate. I trust that this innovation will find favour with manufacturing industry. It is something that we can discuss in detail when the Finance Bill is before the House.
Allied to these changes in taxation are the increases in the tax thresholds for small businesses. The present thresholds of £5,000 has been increased to £10,000—that is for the purposes of the 40 per cent rate—while the £10,000 threshold has been increased to £15,000 in respect of the 50 per cent rate. These are marginal changes but they will help the expansion of small businesses in the current year. Allied to the reductions in these tax bands, the capital allowances are also being extended to expenditure incurred up to the 31st March, 1979. That is a guarantee for the next two years. It is a package deal which is very attractive—100 per cent initial allowance on new plant and machinery, free depreciation for new plant and machinery, 50 per cent initial allowance for expenditure on industrial grievance and so on. These are necessary for the expansion of industrial activity.
Perhaps the Minister might consider looking further ahead and evoking an industrial policy stating that certain allowances will be available for the next ten years. There may be some difficulty in relation to EEC competition policy but, as one of the countries accepted within the EEC as needing further industrial development, we would probably get a good hearing in Brussels for the evolvement of a proper and exciting industrial policy over the next ten years. The fact that stock relief is being continued is welcomed but I understand from a number of industrialists that the question of recovery by the Revenue Commissioners of stock relief granted is not as clear as they would like it. Certain conditions must be met in relation to the writing off of stock reliefs, and, perhaps, when the Finance Bill is introduced the Minister will be more specific in explaining to industrialists when stock relief is not to be recovered and under what conditions stock relief granted will be recovered by the Revenue Commissioners. Greater clarity would be welcomed by industrialists.
The industrial policy as announced in the budget is backed up by an employment creating expenditure package which involves a massive amount of capital being devoted to areas of Government involvement, for instance, the IDA is getting £5 million extra. Telephones, education and the whole broad spectrum of Government activity are being included in an expansion programme which is allied to the development of industry. Stamp duty relief on office buildings is a short term relief, but greater emphasis should be given to decentralisation of industry and greater incentives should be given for industrial expansion outside of Dublin. Dublin is growing at an unprecedented rate. The growth of Dublin is affecting the development of the infrastructure, and rather than committing the metropolis to massive expenditure to provide the infrastructure, the infrastructure could be provided more cheaply by developing industrial centres outside Dublin. It is important to develop centres outside of Dublin from a national point of view. It is not good for the country that Dublin should be overbalanced from the point of view of population or industry.
The expansion of Government policy in relation to the taxation of farm incomes has caused most criticism. The lowering of the threshold from £100 to £75 as and from the 6th April will bring 6,500 more farmers into the tax net. Allied to this, the notional system is being made somewhat harsher. It is generally accepted that the farming sector of Irish society has prospered over the past few years and that is in stark contrast to the prosperity of business people and workers. The farming organisations have accepted that the farming sector should pay a fair share of the tax burden. The Opposition party have also stated that they would tax farmers. Deputy Gibbons, the spokesman for Fianna Fáil, says that income tax should be extended to include all farmers.
There is no real political controversy in so far as it is generally agreed that farmers should pay a fair share of the tax. The farmers are up in arms at meetings throughout the country. Their criticism is not valid. They have done well under this Government. Average agricultural land values have increased from £300 per acre in 1972 to £1,000 for the same acre in 1976. This is a fair increase which is far in excess of the rate of inflation. That is a special reserve which all farmers have and which many industrialists, commercial people and workers have not got. Good luck to them; farmers are the backbone of the country. They are a solid hardworking group of people who deserve whatever prosperity comes their way. When campaigning for Ireland's entry into the EEC, I remember that one of the basic reasons for our entry was that the farming community would prosper in the EEC. That has come about and they have prospered under the EEC more than any other sector of Irish society. They will continue to prosper and they have succeeded in prospering right through a serious recession. They have had solid increases in income when people were being made redundant in industry, when industries were closing, when people were finding it very difficult to survive. They are a responsible body of people and I think they will accept the principle of paying income tax.
After all, why does one pay income tax? I do not think income tax paid by anyone is going to be put under the bed or locked up in a bank. The reason we pay income tax is to provide educational services, hospital services and social welfare services. That should be kept in mind because one feels that there is a mental block about paying income tax which is not quite fair to the Government. I have discussed this question of taxation of farmers' incomes and a number of well-to-do farmers who were initially caught, so to speak, in the last year's income tax policy stated quite specifically that the threshold of £100 was unfair and that the only legitimate approach to taxing farmers' incomes was on an income basis so that those who had a good income from farming were taxed and those who did not have a good income were not taxed. That is generally the attitude among farmers. I feel that the Minister is trying to move them in that direction by increasing the multiplier. I think he is trying to get away from the principle of the multiplier and to bring farming into the tax system by assessing them on their income rather than having an artificial multiplier system.
In time the most equitable system for taxing farmers' profits will be on the basis of income tax based on the actual income as returned by farmers. This is exactly what happens with a person in a small business or working for industry or owning his own industry. He pays on the actual income and that is the fairest method of all. No one likes paying income tax and everyone will take whatever legitimate ways are open to him to avoid paying it.
Another aspect of the budget policy which has caused controversy is the abolition of the £50 threshold in relation to a farmer paying income tax who, or whose spouse, has another income outside agriculture. It is stated specifically that from 6th April, 1977, holders of farmland who, or whose spouses, are also engaged in another trade or profession will be liable to income tax on farming profits. This needs some clarification. I understand that it does not affect a small farmer who works in a creamery or who does a bit of contracting during harvest time or some ploughing or other work for some other farmer. I take it to mean that a farmer whose wife works as a teacher, for instance, will be subject to income tax on farm profits. I also take it to mean that the farmer who has, say, a shop will be taxed, but I am not quite sure about this and it is certainly an area which has caused some comment and criticism.
It does not include any person who is an employee but it does include any person who is described in the law a sole trader, a person who is self-employed.
Yes, but it seems to be a grey area in which there is need for clarification. For instance, if a small farmer does some contracting is he liable for taxation on farm profits?
We will be spelling it out in the Finance Bill.
That is fine because it needs clarification. I take it that the general approach of this income tax policy would not be to damage the small farmers who have to supplement their incomes outside farm profits. This would be an unwise policy which would be against the whole philosophy of the objectives of the budget.
Another matter which has caused some concern is the fact that income tax will become due for payment on 1st September. I would point out that they will be paying income tax for two years in the year. When you are introducing a new sector of the community to paying income tax this should be done with great understanding. Perhaps the Minister would look at this aspect of his policy and ensure that no hardship is caused on the one hand, and that the system which he introduces is seen by those concerned to be an equitable one which does not bear harshly on any other sector. I am not aware that any other sector under this schedule would have to pay income tax for 1977 in 1977. However, this is a matter in which I know the Minister will be generous in the light of the need for farmers to expand. For a farmer to expand at this time usually means an expansion in a capital-intensive way; capital-intensive means spending a lot of money. This budget should not be a disincentive to expansion, especially in the farming community. They should be given every encouragement to expand. Taking into consideration that such expansion is costly, to ask farmers to pay as from 1st September, 1977, on 1977 profits is a bit harsh and may be a disincentive to the full expansion of agriculture.
In relation to the multiplier certain allowances which were formerly given have now been excluded. I am not a great admirer of a multiplier system. I know the farming organisations favour it. Many farmers favour it because they did not practice the compilation of accounts down through the years and this is new to them. It is correctly used in an interim period in order to give farmers time to compile accounts.
I have come across a number of farmers who want to compile accounts but who do not seem to be getting the right advice. They seem to be going to the wrong people. They are going to half-backed people who are unqualified in this field and doing their own cause a substantial amount of damage. The only competent body of people who should be approached by farmers who are serious about compiling accounts and getting the best advice about what allowances they are entitled to, and the best advice as to what policy to pursue, are professional accountants. If I were asked by any farmer who he should go to to get his accounts done, I would say without hesitation that a proper firm of qualified accountants are the people to go to. Any other firm or any other type of person will only arrest the development of farm accounts. They are a number of such people on the go.
The Minister for Agriculture should be quite categorical about this and the Minister for Finance also. Everybody knows that the income tax inspector prefers to deal with professionals of his own standing in relation to income tax matters. I say that without any qualms of conscience. I have seen accounts which were drawn up and which caused farmers to suffer.
In relation to developments in the EEC, last year the increase in the monetary compensatory amounts did great damage to the development of the beef industry and the livestock export industry in Ireland. The MCAs went to such a level as to price our agriculture out of the European markets. I know this because I am involved in the meat industry and I saw it at first hand. One of our great problems since our entry into Europe has been the development of the MCAs plus the fact that we are still in a transitional period in relation to the pricing of our agricultural products. We still have to get over customs duty going into Europe.
These MCAs should be abolished. There is no justification for them. We have an underdeveloped country. We have a vast potential in relation to our agricultural produce. Of all the hindering factors facing Irish industry based on agricultural products, the most serious and the one which is causing the most trouble, whether it be from the point of view of livestock exports or beef exports, is the existence of the MCAs. To a large extent in the past 12 months they have countered the benefits of the price increases we gained by joining the EEC.
The sooner we stand up and say: "Abolish the MCAs; do away with them", the better. If they had not been there during the past 12 months we would have had a fantastic year for agricultural exports. They are harmful, dangerous, regressive and most damaging to agriculture.
The lack of a common sheep policy has done serious damage to the development of our sheep flock which is continuing to fall. The French have been most intransigent in relation to the introduction of this policy. We have been fighting for it down through the years and we have not made any progress. There is no sign even of an interim sheep meat policy. When our transitional period ends I wonder what the position will be. I hope we will take the French to the European Court of Justice on this matter. They have been most unhelpful. I would go as far as to say to them "If you will not take our lambs we will not take your produce. You export to our country many consumer durables such as motor cars, consumer products and engineering products. Either you take our sheep, or we will not take your products". I would have a bilateral war with them. I would be as hard as that because they have the only real market for our sheep meat. We must stand on our own two feet and say "We want a sheep policy or else". If we do not do that we will be doing ourselves an injustice in relation to our sheep industry.
Currently there is a controversy about the role which CBF should play in relation to exports. It goes from one end of the spectrum to the other. Should CBF have powers to buy and sell, or should CBF get a levy from the meat trade? It is a pity this controversy should have arisen. CBF perform a function. I am inclined to believe— and it is not a belief which is popularly held in the trade—that CBF should be given the powers to purchase and sell on the strict understanding that no loss would be subvented. There are new markets which commercial firms are slow to undertake. They are markets on which we should keep an eye. CBF have an important role to play. The meat industry should give them equal support to the livestock industry. The Government should be more generous in their approach to CBF. They have failed to back CBF as an export-oriented State body.
I am quite pleased with our fisheries policy. I am delighted we have introduced a conservation measure which will exclude large trawlers from a 50-mile zone off our coasts. This was needed. I have some knowledge of the herring industry because Dunmore East is in my constituency. That industry has suffered badly over the past two years because of the lack of a herring season. Of all the policies which have evolved over the past few months, I am particularly proud of our attitude to fishery limits and fishery conservation.
I spoke during the discussion on the Maritime Jurisdiction Bill and I condemned then as I do now the fact that Fianna Fáil sold our fisheries industry down the drain when we entered Europe. They negotiated an extraordinarily bad deal for the Irish fishing industry. It was left to this Government to rectify a disastrous situation. We now have something which was almost inconceivable five years ago. We have a 200-mile economic zone. This Government succeeded in negotiating with their EEC partners and introducing a 200-mile economic zone which may have very important consequences for Ireland in the future. We have now introduced a solid, constructive fish conservation policy by which in effect and certainly from the point of view of the raping of our fish resources, we have taken measures that keep out the fishing fleets that have done most damage to our resources. The large fishing fleets of Russia, Germany and Holland will now be excluded from our 50-mile band. That is a great step forward in conservation and it is allowable under the EEC treaty because it is not discriminatory; it affects all fishing trawlers of 110 feet length. This is a measure which we should not be slow about using at any time in the future. We must now back it up by having a policing force second to none. I visualise a greater part being played by our Air Corps and I am pleased to see in the budget moneys for an extra fisheries protection vessel. We may need two more and, if I may, for my own constituency, I plead for the permanent location off Dunmore East of a fishery protection vessel. This is very important during the herring fishing season.
I must also plead for a major industry for my own constituency. We have suffered more than any other city from the present recession mainly because a number of our older industries went by the board in the last few years. I have aired this matter before but I must repeat my views here: we need at least one major industry in Waterford to take up the slack from the present recession. We also need a second bridge. The existing old bridge does not adequately serve the city in its present industrial capacity. If anything happened to that bridge Waterford would be isolated. The city's industrial potential is being negatived by the lack of a proper approach road. The necessity for the second bridge is quite obvious and perhaps the Minister would take note of this and keep it in mind when discussing the development of the south-east with his Cabinet colleagues.
One other problem that has arisen is the necessity to replace the courthouse in Waterford. There is a mandamus against the Minister for Justice for this and the estimated cost is anything from £400,000 to £600,000. It is most unjust to ask the people of the city and county of Waterford to finance a courthouse to that extent and perhaps new legislation will be introduced to make this a charge on central funds.
This was a most disappointing budget for the ordinary man and woman. Obviously the Minister made a major blunder in bringing in an election budget without giving a thought to putting the nation first, adequately financing priorities and stating clearly the Government's fiscal policies and development plans for the coming decade.
The budget has done nothing significant (1) for the promotion of industry, (2) for development of our educational system and preventing the phasing out of the school transport service, (3) for the proper planning and financing of the local government service so that it will at least keep pace with inflation, (4) to encourage semi-State bodies including Bord Fáilte, the ESB and CIE, (5) to make proper provision for the financing of our health and social services, (6) to develop our great agricultural potential, (7) properly to develop and finance an adequate land policy and forestry development plan, (8) to provide sufficient funds for an adequate Garda protection and security service for the ordinary citizen, (9) properly to tap and develop what I think is one of our great natural resources, the fishing industry, (10) to make adequate provision for job and employment opportunities, (11) to encourage the people of the Gaeltacht and let them see that there is something other than a good PRO job being done for them, (12) to say whether the Government are again afraid this year to have a census of population carried out, (13) to provide finance to develop our amenities, (14) to make further and better provisions for IRA veterans and widows and (15) to provide a proper tax system and better all-round facilities and opportunities for lower paid workers. I maintain that on each of these 15 scores the Government have failed in their budgetary provision.
I intend to develop each of these points as far as time allows me. Nothing significant was provided in the budget to ensure that we would have the necessary number of jobs for the unemployed and potentially unemployed. In my constituency of south Kerry, particularly on the southern and eastern side, in the Killarney-Kenmare-Castletownbere area no new industry was provided in the past four years. There is mass unemployment there. The position of the IDA and the Department of Industry and Commerce is such that a site recently acquired by the IDA in Kenmare was offered to Kerry County Council for a burial ground. In Killarney a sizeable acreage of land was purchased as an industrial site some years ago. It is not even serviced yet which shows that the intention, never mind the will, to provide industry in this area does not exist.
The amount provided in the budget for education, particularly the amount over and above what is mentioned in the capital programme, will not be nearly sufficient to enable that Department to carry out their programme for 1977—if the Department have a programme at all. It is well known that schools that were to be completed last June or July have not yet been finished. Due to lack of funds there is no sense of urgency on the part of the Minister or the Department and no one is pushing the builders to keep to schedule and complete the schools needed to provide the educational facilities for the pupils in areas with an increasingly high young population.
How many schools in Killarney?
There are two. Could the Parliamentary Secretary tell me why one which was to be finished last June has not yet been completed?
A committee was set up to investigate school transport. We were not told the purpose of this committee but it is well known that the school transport system is about to be phased out by this Government. It is also well known that the transport system from closed school areas is in serious jeopardy. This is very serious and is causing grave concern to the parents of school-going children in these areas. It could cause serious difficulties in the immediate future. The Government should clearly state their policies, where they are going and where they are leading the people because, as I said, there is great unease among the parents in rural Ireland about the transport system.
There is nothing significant in this budget which would lead me to believe that the Government are seriously considering adequately financing the local government services. I also believe that inadequate housing and unemployment provide the greatest social evils here to-day. The budget provides a very minor increase for housing when compared with housing needs. The test in real terms is not the amount of money being provided compared with previous years but the waiting list for local authority housing. This is the acid test. Are the waiting lists being reduced? If not, there is something seriously wrong. It is my honest opinion that they are not being reduced.
No serious worth-while provision was made in the budget for financing sanitary services. It is practically impossible to get a new sewerage scheme under way in any village. It is extremely difficult to get an extension to any sewerage scheme in any rural area to-day. The capital allocations for water schemes merely enable the local authorities to carry on with existing schemes. No provision has been made to eradicate this very serious problem. No financial provision has been made for the improvement of the natural environment. The general public are very interested in this matter. The local authorities which are probably the greatest polluters, are hindered by a lack of money. The members of all local authorities are very concerned about this. They realise how serious these problems are but without a properly financed programme nothing can be done.
I was very disappointed that no provision was made for the improvement of the scale for eligibility for housing grants and loans. We all know how serious the housing problems is but, as I said previously, nothing significant has been provided in the budget for people in need of rehousing. If something significant had been done to make more people eligible for housing grants and loans it would have been welcomed and would have had an impact on the housing lists. The majority of people building houses no longer qualify for housing grants and local authority loans. This means that eventually these people will find their way on to the local authority housing lists for rehousing.
I cannot understand the thinking behind this policy—if there is any thinking behind it—except that there is a lack of adequate finance and capital. The position in relation to finance for the maintenance and improvement of our roads is very serious because the amount of money needed is substantial and local authorities must meet these charges by increasing the rates. The amount of State grants is diminishing in real terms. Lack of adequate finance is preventing local authorities from planning the improvement of both national and secondary roads. This is a sure sign that they have no confidence in the future because they do not know what grants they will get in the coming years. The problem is particularly serious from the point of view of the motorist. We all know how the rate of taxation on cars and petrol has increased and it is only right that a fair proportion of this money should be ploughed back into the development and improvement of our roads.
This lack of adequate finance is also having an impact on the employment situation because road works were a great source of employment and many people were involved in the maintenance of the machines used in such work. In many local authority areas the grants have been raised this year by no more than 15 per cent despite the fact that the Minister promised an increase of 30 per cent in his budget speech. Everybody knows that the cost of some raw materials, particularly bitument, chips and machinery, went up by over 50 per cent during the past year and an increase of 30 per cent in the grants would not keep up with these inflated costs. It is quite obvious that within the local government service as a whole there is no positive planning because there is no guarantee of financial backing and I would appeal to the Minister to take some action to improve this situation.
I mentioned earlier the inadequate financing of transport and power. It is well known that Bord Fáilte's development plans and marketing programme are hindered by lack of such finance. I was surprised that the Government do not comment on the disastrous report published recently by CIE. This calls for a special statement by the Taoiseach about the Government's intentions regarding CIE. The transport services provided by CIE should be seen as a social service and should receive the necessary State backing.
Lack of finance is also hindering the ESB. Recently a Bill went through this House to provide £300,000 for the provision of electricity for certain categories of persons but so far the ESB have not been informed by the Department of Transport and Power as to the exact position. This is very serious because the general public have a right to know how they stand. Many areas were promised electricity at a substantially reduced rate and the people should be fully informed of their entitlements. When this Bill was going through the House the Minister said it was intended to introduce a scheme to assist people who are building new houses in rural areas. This scheme has not yet been announced and the ESB have no details about it. I was amazed that there was no mention in the budget of any provision for this scheme. We do not know when it will start or finish and the general public are concerned about this matter.
Our health and social services are now at breaking point due to inadequate financing. They are in complete disarray for the want of adequate money. The health boards are in serious financial difficulty. I cannot see them providing additional jobs, as forecast by the Minister in his budget statement, because the additional money provided for them is urgently required to meet the ordinary day-to-day services provided by them. The withdrawal of so many medical cards recently by health boards clearly indicates the financial difficulties they are in. In County Kerry more than 1,000 medical cards were withdrawn over a period of a few months. Despite the increase of the guide scale, I believe there is still discrimination against various sections of the community who apply for medical cards. Small farmers are having their applications for the renewal of medical cards turned down. Are the health boards on the verge of bankruptcy? They are withdrawing medical cards from young married people whose only source of income is a small wage and small farmers who have a very low land valuation.
It is amazing that when the crunch comes it lies heavily on the less well-off section of the community. The Minister should tell the health boards to give a statement to each small-holder and to each person in the less well-off section of the community, whose medical cards are not being renewed, setting out the reason why and what the income limit is in the particular health board. The least a small farmer or a working man is entitled to get with his refusal docket is a statement setting out clearly how the conclusion was arrived at that he is not entitled to a medical card within the guide scale laid down by the health board. People who appear to be eligible for medical cards but are not getting them are greatly concerned about this. Those people are entitled to more than the blanket circular stating that they do not appear to be eligible.
The medical and nursing staffs of hospitals throughout the country are very concerned about the inadequate maintenance and upkeep grants for those institutions. This is particularly serious in institutions where no repairs and maintenance have been carried out for the past two years. The staff fear that money will not be available for this purpose for a few years when the cost of doing the work will be so great that the health boards may be forced to shy away from their responsibilities.
The health and social services in the country, due to lack of finance, are in complete disarray. The public are seriously concerned about the delay in considering applications for unemployment assistance. It is now virtually impossible for self-employed people, who are now unemployed because of the serious economic crisis due to the mismanagement of our financial affairs, to get the maximum rate of unemployment assistance. I have a question down to the Minister for Social Welfare on this matter next week. The Department of Social Welfare have either not sufficient money to pay unemployment assistance at the maximum rate or else the instructions that went out to the officials of the Department have been misinterpreted. This matter requires clarification. Many former self-employed people, who are now unemployed, only get 50 per cent of the normal rate of unemployment assistance.
Many people in the agricultural community cannot understand why there is such a long delay by the Department of Agriculture in paying the EEC cattle headage grants and the farm modernisation grants. The Minister should state clearly what the financial position of his Department is. I believe the farmers would understand if the money is not there. Many farmers are waiting for substantial grants for long periods to pay builders and to pay their ordinary debts. This is leading to a serious crisis between the farming community and the Department of Agriculture. It is well-known that it is virtually impossible for farmers to get their grants without making representations to public representatives. That is a sorry state of affairs. The pressures on the farming community are so serious that they are very short of working capital. The Minister should tell us whether he is not getting the money from the EEC or whether he is not getting sufficient finance to back-up EEC grants.
The budget did not make any provision for the creation of worth-while opportunities on the land. It did not contain any financial plan for the development of agriculture. Some incentive should have been given to owners of smallholdings to improve their output, particularly in relation to horticulture. Owners of smallholdings should be encouraged to develop their land in an intensive way because that is the only way they can derive a gainful livelihood from their farms.
There is no reference in the budget to any proposals to introduce an adequate land policy. I can recall that when a Bill concerning land was going through this House some time ago the then Minister for Lands told us that a scheme would be brought into operation whereby the payment for land acquired by the Land Commission in the form of land bonds would be phased out but we have heard nothing about that since. The Land Commission should be given sufficient cash to enable them to buy land on the open market. There are various ways that can be done without the Land Commission being identified as the purchasers. Until sufficient cash is provided it will be impossible for the Land Commission to produce a land policy.
It is also impossible to prepare a proper programme for the development of our forests without sufficient finance. That industry holds out great potential. I have always maintained that more money should be provided for the development of our forests. Land not suitable for agricultural purposes should be planted. I am also concerned that no additional finance is being made available to extend and improve the services carried out by the Garda. It is accepted by everybody that overtime in the force is essential. Last year the Minister for Justice announced that it was his intention to recruit an extra 500 gardaí but in my view it will take a few more years before that is done. The strength in some rural stations has been reduced by approximately 20 per cent. I am aware that in one provincial town the number was reduced from 22 to 18. This was done at a time when the population was increasing. It should be remembered that some of the 18 gardaí must do duty outside their district and along the Border.
I was surprised to see the paltry sum made available for the development of our fishing industry. The figure is insignificant in comparison with the amount required to improve this industry. The provision in the budget will only buy one good fishing vessel. It is time an imaginative scheme for the improvement of that industry was introduced. More people should be trained and new piers constructed. Our harbours and fishing plants should be improved. Fishing is one of the greatest of our natural resources and it is a pity that industry has not been financed adequately, particularly when fish are becoming scarce and when fish stocks are running low in the world's seas.
Unemployment has reached a critical stage but it was glossed over in a glib fashion by the Minister in his budget statement. It is well known that the additional money being made available to the Departments of Health, Education and Local Government, money which on the surface would provide additional employment, will barely cover day-to-day administration in these Departments. In view of the serious unemployment problem, it is tragic that this money could not have been earmarked specially for the provision of new jobs instead of being glossed over by the Minister. I hope he will answer me in his reply as to what significant steps have been taken since budget day to provide job opportunities in these three Departments. A great opportunity was lost in the budget in this respect.
Last year the Government were afraid to carry out a census of the population because, as the public know, the figures would have shown up a serious lack of planning in respect of schools, housing, roads, sanitary services, environment improvement generally. I am firmly convinced that the population has been growing at such a rate that the number of people under the age of five years is far more than the Government would like us to know because of their lack of planning in relation to schools, housing, road improvement and general services. There is an absolute lack of a positive physical planning policy.
Earlier in my remarks I referred to the absence of worth-while budgetary provision for Old IRA veterans and their widows. Earlier today Deputy Meaney outlined the position. There are many IRA widows who need financial assistance by way of allowances and other concessions and the Minister should reconsider the Department of Defence Estimate to allow for an improvement in the lot of these people.
The budget has done very little for the less well-off sections in industry indeed, the greater the income, the better a person will fare under this budget. I would appeal to the Minister, if there is any use in appealing to him, to examine the position in regard to the taxation of workers' insurance contributions. I cannot understand why a worker must pay tax on his social welfare contributions. This is a matter that should be straightened out immediately between the Minister for Finance and the Minister for Social Welfare because, as the system is operated, there is something radically wrong with it.
In conclusion, I believe that the kernel of the problem is the lack of leadership. There appears to be no real leadership. This is evident from the fact that the Government have failed to come to any conclusion in regard to carrying out a census of population. One Minister argues publicly against another Minister, as happened in the case of the Minister for Finance and the Minister for Agriculture on a few occasions last year. It also happened in the case of the Minister for Finance and the Minister for Health when the Minister for Finance, as spokesman for the Government, stated it was the intention to discontinue the children's allowances scheme. We had another glaring example of lack of leadership recently when, despite the fierce opposition of the Minister for Foreign Affairs, the Minister for Fisheries did exactly the contrary of what the former wanted. We had the Taoiseach forecasting gloom and doom late last year and then we had the Minister for Finance coming along trying to cod the general public by saying in his budget statement the recession was over when everybody knows we are in the height of a serious economic crisis because of the grave mishandling of the affairs of State by the Taoiseach and the Minister for Finance.
It is my belief that the general public have taken very little notice of this latest budget. The people regard it as an election budget and nothing more, but they are seriously concerned about the real crisis facing the country in the coming months. It is quite obvious we are running into probably one of the most serious economic crises that ever hit this country or, indeed, any country in western Europe. The evolution is quite evident now due primarily to the fact that nothing significant has been done to relieve the situation since the day the Minister for Finance made his budget statement.
This budget has been hailed by Government speakers as one which will be of tremendous benefit to the country as a whole and as one which will do something positive to restore the economy to a healthy state and thereby provide the impetus to do something worth while. The Taoiseach describes it as an incentive budget. It has been spoken of in similar terms by other Government speakers. When one teases out the figures, however, it is very easy to see that we have nothing like what has been promised by the Minister for Finance or his Government.
One of the most important Departments is the Department of Local Government. Here we find one of the biggest problems. Here we find the greatest lack of investment to ensure the smooth operation of that Department. Every Member is aware of the serious housing problem. Even though revenue was buoyant and the Minister had more money available it is quite amazing to discover he was not able to do something for the housing section of the Department of Local Government. There was no reference to the housing grants which were removed. There was no question of increased loans and no question of improving income limits. We are all aware of the tradition. The biggest percentage of our people want to provide and own their own homes. Since this Government took office we find ourselves in a situation where the State is taking over and local authority homes are being provided for the people. The last thing most people want to do, particularly in rural areas, is to ask the local authority to provide them with houses. But that is what they are being driven into doing because the incentives which were there by way of loan and grant are no longer there.
All this is a sad reflection on a Government which calls itself socialist and tries to create the impression that it is working in the interests of the downtrodden and the less well off. The Department of Local Government is in the hands of a member of the Labour Party. One would think he above all should make some effort to get the necessary finances from his colleague in the Department of Finance to alter and improve the present unsatisfactory situation.
Debate adjourned.